(SLB) Statoil Opts Schlumberger Services

The world’s largest oilfield services provider, Schlumberger Limited (SLB) has been contracted by Norwegian energy firm Statoil ASA (STO) for electric wireline logging services on the Norwegian continental shelf (NCS). The four-year deal is valued at $342 million, and is expected to commence in February 2013 with extension options. The contract is applicable to all production and exploration licenses on the NCS.

The work scope of the agreement covers the provision of open-hole logging, cased-hole logging, as well as borehole seismic and perforation services. Statoil expects Schlumberger to move forward with novel solutions for formation evaluation and drilling and well operations. The use of advanced technological equipment with the application of new technology is also expected.

Management at Statoil believes that improved logging services will help in detecting reservoirs during the exploration and production phase of projects. Therefore, such moves provide accuracy to the company’s estimation of hydrocarbon volumes and enhance recovery.

Earlier in 2012, Statoil had signed a NOK 900 million ($155 million) contract with a unit of Schlumberger — Framo Engineering — whereby the unit would design and build subsea gas compression plants for the Gullfaks field.

Statoil is a Norway-based major international integrated oil and gas company. Though the company has operations in all major hydrocarbon-producing regions of the world, it has an upstream focus on the NCS.

Houston, Texas-based Schlumberger Limited is a leading oilfield services company, providing technology, project management and information services to the global oil and gas industry.

We believe the company is favorably positioned to benefit from the current trends in oilfield services, given improving activity levels and greater need for stimulation and completion of services in North America.

Longer term, we maintain a Neutral recommendation on both the stocks.

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