Equinor Gets New Drilling Permit, To Stay In UK Despite Brexit

Equinor ASA (NYSE:EQNR) recently received a drilling permit for a wildcat well located in the North Sea from the Norwegian Petroleum Directorate (“NPD”). The Transocean Spitsbergen semisubmersible drilling rig of Transocean Ltd. (NYSE:RIG) will be used to drill the well 36/1-3, which is located around 40 kilometers east of the Peon discovery. Moreover, per Reuters, Equinor plans to commit to the British continental shelf even if Brexit takes place.

Wildcat Well Permit

Notably, the well marks the first one to be constructed in the production license 885, which was granted in Feb 10, 2017, and incorporates the southeastern parts of the Blocks 35/3 and 36/1. With an ownership stake of 20%, Equinor is the operator at the site. Capricorn Norge, Wellesley Petroleum, and Petoro are the partners of Stavanger, Norway-based Equinor in the project, with 30%, 30% and 20% stake, respectively. Drilling works for the well were planned to commence this month and initially estimated to last for 35 days, which can continue further to 52 days in case a discovery was made.

Equinor to Stay in U.K. Continental Shelf

Equinor intends to remain committed to the mature U.K. continental shelf, with or without Britain remaining in the European Union. The company has extensive knowledge about operating in the North Sea. Hence, the decision is expected to enable the company get the maximum out of the prolific shelf. The knowledge gathered by Equinor can help to not only reduce breakeven prices for the projects in the region, but also increase recovery rates from the online fields.

Notably, to strengthen its U.K. portfolio, Equinor agreed to acquire 40% stake from Chevron Corporation (NYSE:CVX) in the Rosebank project in October. It further reflects Equinor’s focus in the region. Following the closing of the deal, the company will have Suncor Energy Inc. (NYSE:SU) and Siccar Point Energy as partners in the project.

Moreover, the company has planned to start production from its Mariner heavy oilfield, located in the U.K. North Sea, during the first half of 2019. Discovered in 1981, the oilfield is expected to have recoverable reserves of 300 million barrels of oil. It is to be noted that the company has stakes in more than 20 licenses to explore offshore Britain. It plans to drill at least three exploratory wells in the region next year. This confirms that the U.K. assets, wherein it intends to replicate its success in Norwegian offshore, are valuable to the company.

Price Performance & Zacks Rank

Equinor has gained 9.5% in the past year compared with 7.4% collective growth of the industry it belongs to. Currently, the company has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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