Bloomberg News

Det Norske Rises to Record on Possible Norway Finds: Oslo Mover

September 07, 2012

Det Norske Oljeselskap ASA (DETNOR), the oil explorer with a stake in Norway’s biggest find since the 1970s, rose to a record after reporting two new possible discoveries.

Det Norske jumped as much as 4.8 percent to 99.30 kroner, the highest level since it listed on the Oslo stock exchange in December 2006. The company “received indication of hydrocarbons presence” in the Barents Sea’s Salina prospect and Garantiana in the North Sea, it said today in separate statements. Neither Det Norske nor operators Eni SpA (ENI) and Total SA (FP) would elaborate.

The stock has soared since the first estimates of reserves at the Johan Sverdrup field in the North Sea, the biggest find off Norway in almost 40 years with as much as 3.3 billion barrels of oil equivalent, were released in autumn 2011.

It rose 2.9 percent to 97.5 kroner by 3:12 p.m. in Oslo.

“Interest in the company is building,” said Lars Henrik Roeren, an analyst at SEB Enskilda. “With a reasonable market, it won’t be long before this stock reaches 100 to 105 kroner.”

Last month, Det Norske and partner Statoil ASA (STL) struck oil again at nearby Geitungen, which is probably linked to Sverdrup and may increase reserves by as much as 270 million barrels.

Drilling is still in an “initial phase” at the possible finds, Det Norske said today, adding separately that it had begun informing markets at an earlier stage of developments at its wells and information was “subject to reassessments.”

Eni’s Andreas Wulff said it would be weeks before Salina was confirmed, while Total’s Leif Harald Halvorsen said it was too early to call Garantiana a discovery.

‘Significant Potential’

“You shouldn’t overestimate the value of today’s update but it has significant potential,” Roeren said of Salina. “It’s only right that it should rise a little on this.”

Det Norske Chief Executive Officer Erik Haugane said last month he hoped the Salina prospect would contain oil and not gas because he’s concerned that smaller gas finds in the Barents Sea won’t be developed without a southbound export pipeline.

Statoil, which may decide in November to boost output from its Snohvit field in the area, has said it favors expanding its liquefied natural gas capacity rather than building a pipe.

“It lies close to Snohvit so the infrastructure is nearby,” said Roeren, who recommends investors purchase the stock. “If it’s gas, this isn’t the worst place to be. There are more than enough other reasons to buy Det Norske.”

SEB Enskilda raised the price estimate to 130 kroner from 110 kroner after the explorer’s second-quarter earnings last month. The stock now seems “much cheaper” than last time it peaked at 96 kroner in January, Roeren said.

The shares may rise again with new estimates for Geitungen, two appraisal wells that will be drilled on Johan Sverdrup in the autumn and the Geite prospect in the North Sea, he said.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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