Statoil boosts exploration as cost cuts give more bang for buck

[OSLO] Statoil ASA, one of many international oil companies to slash spending during crude's collapse, is increasing exploration for the first time since 2013 as cost cuts and lower fees from squeezed suppliers allow it to get more work done for less.

Statoil plans about 30 exploration wells as an operator or partner in 2017, up from 23 last year, the company said Wednesday in a statement. As many as 18 will be drilled off Norway, where it's based, with a focus on new blocks in the Arctic Barents Sea.

"Taking advantage of our own improvements and changed market conditions, we have been able to get more wells, more acreage and more seismic data for our exploration investments," Tim Dodson, executive vice president for exploration at the Stavanger-based company, said in the statement.

Mr Dodson said last month that Statoil would spend about the same on exploration this year as in 2016, when it invested US$1.5 billion searching for new oil and gas fields. That's far from the record US$3.75 billion of 2013, before crude tumbled. Still, the planned increase in wells indicates renewed optimism in the industry after oil prices recovered to an 18-month high.

Statoil will drill five to seven of its 16 to 18 Norwegian wells in the Barents Sea, where it hasn't explored since 2014. Industry observers will keep a close eye on the Korpfjell prospect near the Russian border, in a new exploration area, which partner Lundin Petroleum AB has said could hold "several billion barrels" of oil. Oslo-based consulting firm Rystad Energy AS has estimated Korpfjell's maximum potential at as much as 10 billion barrels of oil equivalent.

"The Barents Sea has yielded several of Norway's most significant oil discoveries in recent years," Mr Dodson said. "This campaign can provide us with crucial information about the long-term future of the Norwegian shelf."

BLOOMBERG