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Equinor (EQNR) Makes Oil Discovery at Svalin Field, North Sea

Equinor ASA EQNR, the Norwegian state-owned energy giant, has announced a new oil discovery in the North Sea off the coast of Norway. The discovery was made using the semi-submersible rig Deepsea Aberdeen, operated by Aberdeen-based offshore drilling contractor Odfjell Drilling.

Details of the Discovery

According to the Norwegian Offshore Directorate, the discovery was made at the well 25/11-H-1 H, located at the Svalin field. Preliminary calculations estimate the recoverable oil equivalent to be in the range of 0-0.1 million standard cubic meters, or up to 0.6 million barrels. The well had oil in thin sandstone layers less than 3 meters thick, with very good reservoir quality in the Balder Formation, part of the Rogaland Group.

Partnership and License Information

Equinor, which has a 57% stake, operates the license for this well, while Petoro holds 30% and Var Energi another 13%. The production license 169 was awarded on Mar 1, 1991, and is valid until Mar 1, 2030. The Svalin field is located in the central part of the North Sea, six kilometers southwest of the Grane field, at a water depth of 120 meters.

Historical Context and Future Plans

The Svalin field was initially discovered in 1992, with the plan for development and operation approved in 2012. Development included a multilateral well drilled from the Grane platform (Svalin M) and a subsea facility tied into Grane (Svalin C). Production at the field began in 2014.

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Earlier this week, Equinor added eight more wells to the Deepsea Aberdeen rig’s backlog. This expansion was facilitated by a contract between Odfjell and Equinor, originally signed in November 2020, following a letter of intent in October 2020. The 2014-built Deepsea Aberdeen is a robust, harsh environment semi-submersible rig capable of drilling up to 10,670 meters and operating in water depths up to 3,000 meters.

Strategic Implications

Kjetil Hove, Equinor’s executive vice president for Exploration and Production Norway, emphasized the company's commitment to continued development and value creation on the Norwegian Continental Shelf. This determination was further highlighted by a recent asset swap agreement with Petoro, which aims to optimize Equinor's portfolio and enhance its operational efficiency in the region.

Conclusion

This small but potentially significant oil discovery underscores Equinor's ongoing efforts to exploit mature fields and enhance recovery techniques, supported by favorable conditions and strategic partnerships. The continued investment in advanced drilling technologies and methods like carbon capture further aligns with the global trend toward more sustainable and efficient energy production.

Zacks Rank & Key Picks

Equinor currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy sector are Marathon Petroleum Corporation MPC, SM Energy Company SM and Sunoco LP SUN. While Marathon Petroleum and SM Energy currently sport a Zacks Rank #1 (Strong Buy) each, Sunoco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Marathon Petroleum's acquisition of Andeavor has expanded its foothold in the Permian Basin, creating an enviable retail and marketing portfolio. MPC’s emphasis on operational excellence, safety and environmental responsibility, coupled with investments in low-carbon initiatives, positions it well for sustainable growth and continued value creation for shareholders.

The Zacks Consensus Estimate for MPC’s 2024 EPS is pegged at $19.28. The company has a Zacks Style Score of A for Value. It has witnessed downward earnings estimate revisions for 2024 in the past 30 days.

SM Energy is set to expand its oil-centered operations in the coming years with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.

The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $6.60. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $5.07 and $4.47, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 in the past 30 days.

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