(STO) Statoil ASA and SOCAR to Explore Caspian

Norwegian giant Statoil ASA (STO) has inked a memorandum of understanding (MoU) with the State Oil Company of the Republic of Azerbaijan – SOCAR.

Per the agreement – signed by the company’s chief executives in Baku – both the companies will jointly explore and develop the Zafar-Mashal structures in the Azerbaijani sector of the Caspian Sea.

The memorandum of understanding delineates the framework under which the companies will exploit the opportunities, carry out discussions and agree on key commercial principles and terms in the 12-month period from the date of signing the memorandum.

Located 100 kilometers southeast of Baku and south of BP plc’s (BP) giant Shah Deniz gas-condensate field, the Zafar-Mashal structures were earlier known as Blocks D-9 and D-38. The structures lie in water depth of 550–900 meters. The area was licensed to ExxonMobil Corporation (XOM) by the government of Azerbaijan at the beginning of the last decade. ExxonMobil was unsuccessful in its attempt to unearth any hydrocarbons in spite of injecting 3D seismic.

Statoil has been present in Azerbaijan for the last 20 years. With this new agreement, Statoil has strengthened its position as well as its relation with the state-owned company. The agreement is also in sync with the company’s exploration strategy which focuses on high impact prospects and expanding operations worldwide.

Statoil has made several high impact discoveries that consist of the finds in offshore Norway, Tanzania and Brazil. Further, exploration with its Azerbaijan partners will confirm the potential of the Caspian Sea.

Statoil carries a Zacks Rank #2 (short-term Buy rating). However, the Zacks Ranked #1 Range Resources Corporation (RRC) is expected to outperform the market over the next few months.

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