TLM

Statoil ASA’s (STO) production was hit hard by a fire that broke out at its Huldra platform in the North Sea. The company said that the fire was spotted in an air compressor compartment on the platform, situated west of Mongstad.

While none of the 19 persons on board were injured, gas and condensates production was halted in the Huldra as a preventive measure. Statoil reaffirmed that activities will resume once the situation normalizes. The cause of the incident is yet to be explained.

Located in blocks 30/2 and 30/3, the Huldra platform lies about 16 kilometers from Veslefrikk. Gas from Huldra is shipped through a 140-kilometre line to the Heimdal field for processing and subsequent transmission to continental Europe.

Statoil owns 19.88% share in the Huldra platform. Other associate partners are ConocoPhillips (COP) with 23.34%, Total SA (TOT) with 24.33%, Talisman Energy Inc (TLM) with 0.5% and state-owned Petoro with 31.96% interests. The Norwegian oil company, Statoil and its partners were looking to deliver 1,000 barrels of oil daily at Huldra and 0.46 billion cubic meters of gas this year, per the Norwegian Petroleum Directorate.

Although Statoil is facing production glitches of late, it is continuously shifting its focus to the still-unexplored areas of the Norwegian Sea, and intends to recover 4.2 billion barrels of oil equivalent in the coming years. This will enhance the company’s volume growth prospects going forward. Management is targeting an oil recovery rate of 50% by 2020.

Statoil expects steady or lower equity production in 2011 compared with 2010. Management also said that it would deliver a compound annual production growth rate of around 3% between 2010 and 2012. It also expects maintenance to have a negative impact of around 70 thousand barrels of oil equivalent per day (MBOE/d) on equity production in the third quarter and of 50 MBOE/d in 2011, of which most are liquids.

Our long-term Neutral recommendation remains unchanged and the company holds a Zacks #3 Rank (short-term Hold rating).

 
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