Statoil Farms Out of Kwanza Basin Block 39 - Analyst Blog

Norwegian major Statoil ASA STO has inked an agreement to farm out a 15% interest in block 39 offshore Angola in the Kwanza pre-salt basin to WRG Angola Block 39 Limited (“WRG”).

WRG is a 50-50 joint venture between White Rose Energy Ventures and Genel Energy plc. Statoil, the operator of block 39, retains a 40% interest after the farm out. Other partners are Sonangol P&P, Total SA TOT and WRG holding 30%, 15% and 15%, respectively.

WRG has also farmed in 15% interest in the Statoil-operated block 38 from China Sonangol International Holdings Limited. Statoil's stake of 55% remains unchanged, following the acquisition. The remaining 30% interest is held by Sonangol P&P.

In addition to the Statoil-operated blocks 38 and 39, the Norway-based company is also a partner in blocks 22, 25 and 40 in the Kwanza basin. The blocks were awarded by Sonangol in Dec 2011.

In Jan 2013, Statoil along with Total and BP plc BP completed the world's largest 3D appraisal spanning the licenses covering blocks 24, 25, 40, 38 and 39. The appraisal covered 26,300 square kilometers.

The partnership in the Statoil-operated blocks 38 and 39 is now highly developed with the in-house processing of seismic data and prospect assessment for the future drilling program.

Statoil intends to commence drilling in its Kwanza-operated portfolio during the second quarter of 2014. The first high-impact prospect to be drilled in block 39 will be Dilolo-1. With the completion of drilling of Dilolo, Statoil will operate its second commitment well in Block 38 to the north of Block 39. Statoil plans to participate in a total of eight commitment wells in the Kwanza basin over the coming two to three years.

The transaction is in line with the company's active portfolio management strategy. The Angolan continental shelf is the largest contributor to Statoil's oil production outside Norway and forms an important part in development of its international business. In 2013, Angola's yield of about 200,000 barrels of oil equivalent per day in equity production was equivalent to 28% of its total international oil and gas output.

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