Bloomberg News

Statoil Sees Acquisition Opportunities After Market Decline

September 01, 2011

(Updates with comment from CEO on Libya in 15th paragraph.)

Sept. 1 (Bloomberg) -- Statoil ASA is looking at acquisitions and partnerships after a plunge in stock markets created “opportunities,” company executives said.

“A market that’s volatile does create interesting opportunities,” Chief Executive Officer Helge Lund said in a phone interview yesterday. The company’s recent oil discoveries off Norway “will make us a more attractive partner,” he said.

A four-week slump in global equities wiped out more than $8 trillion in stock values on concern global growth is slowing as European leaders struggle to contain a sovereign debt crisis and after a downgrade of U.S. debt. Crude oil traded in New York fell 7 percent last month.

“It’s too early to say whether this is just some volatility that’s to be expected or if this is the beginning of something dark and deep,” Chief Financial Officer Torgrim Reitan said today in a separate interview.

Statoil has over the past four years bought stakes in U.S. shale gas licenses and a Canadian oil-sand company, as well as sold part of a field in Brazil to China’s Sinochem Group. In 2007 it acquired the energy unit of Norwegian competitor Norsk Hydro ASA for about $28 billion and operates about 80 percent of Norway’s petroleum production.

Reitan said the company is “well-positioned financially, we’re well prepared for the crisis, but the crisis will also provide opportunities.”

“Over the past 10 years we’ve used acquisitions of new assets consciously in the development of our strategy to build a critical mass,” Reitan said. “The Gulf of Mexico is a good example of this, where we’re now the fourth-biggest license holder and we haven’t reached that position just by participating in licensing rounds, we’ve also bought us into other’s licenses.”

Eyeing the Arctic

Statoil and competitors are expanding in unconventional gas, harsh-environment and deepwater areas such as the Arctic, off Brazil and in the Gulf of Mexico. The Norwegian company this year made the biggest discovery off Norway since the 1980s and also said it “cracked the code” after making an oil find in the Barents Sea, off Norway’s northern tip.

Exxon Mobil Corp. this week announced it has replaced BP Plc in a partnership with Russia’s OAO Rosneft in the Arctic, one of the last untapped oil frontiers. In exchange for access to potentially billions of barrels of crude, Rosneft will get stakes in Texas shale fields and U.S. deep-water projects.

Lund declined to comment on whether Statoil had sought to reach a deal with Rosneft. “The Arctic is an area of interest to Statoil, both because we believe there’s a large resource potential there and also because we believe we have the operational experience and the technology to explore and develop the resources in those demanding areas,” he said.

Reitan said Statoil was also looking to expand in Brazil, Angola and Indonesia.

‘Considerable Interest’

This year’s discoveries have raised interest in Statoil’s exploration, Reitan said. The company and Lundin Petroleum AB have announced that two finds in the North Sea may be linked and create a deposit with 500 million to 1.2 billion barrels of recoverable oil, the biggest find off Norway since the 1980s. Statoil earlier this year said its Skrugard prospect in the Barents Sea may hold 250 million barrels of oil equivalent.

“We’ve seen a considerable interest in us within exploration,” Reitan said. “The industry noticed what happened recently, and that’s interesting, it could provide opportunities.”

Statoil shares are down 8 percent this year, compared with 15 percent declines for larger competitors Total SA and Eni SpA. Royal Dutch Shell Plc, Europe’s largest oil company, has dropped 4 percent.

‘Little Governance’

Lund said he expected the resuming of petroleum production in Libya would take time and that the company had not been in contact with rebel leaders fighting to end Muammar Qaddafi’s 42- year regime. “It’s a country that right now has very little governance and public institutions in place, so I would believe that it would take a while before we get going” on oil and gas production, he said.

Libya, home to Africa’s largest oil reserves, produced more than 1.5 million barrels a day before the start of the civil war in February. Statoil participates in production and exploration at the Mabruk field, operated by Total SA, and in the Murzuk basin, operated by Repsol YPF SA. Statoil’s share in production from the fields was 4,200 barrels a day prior to the conflict.

As rebels close on the remaining towns held by Qaddafi’s forces, the international coalition that helped push out the Libyan strongman is meeting in Paris today to discuss support for reconstruction and a transition to democracy. Italy’s Eni SpA has been in contact with rebel groups throughout the conflict to ensure it doesn’t lose ground to French, U.K. and U.S. petroleum companies, according to a person with knowledge of the company’s strategy.

“We haven’t taken any such initiatives at this time,” said Lund.

--Editors: Jonas Bergman, Will Kennedy

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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