Big Oil in Angola
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Cobalt International Energy (NYSE: CIE), a deep-water oil explorer, said test results at an oil discovery off Angola were better than the company’s expectations. Work at the Cameia-1 well confirmed a 1,180-foot (360-meter) oil column and Cobalt and its partners will now begin an appraisal drilling program to evaluate the size of the discovery, the company said in a statement. The Cameia well may have the potential to produce more than 20,000 barrels of oil a day.
Back in December, shares of CIE first popped 30% on news that they signed a deal for blocks in Angola's pre-salt ultra-deepwater fields, believed to be similar in magnitude to what has been discovered off the coast of Brazil. The company will be the operator of Block 20 with a 40% working interest, partnering with Sonangol Pesquisa e Producao S.A. (30%), BP Exploration Angola (20%), and China Sonangol International (10%). BP, ConocoPhillips, Statoil (NYSE: STO), and Total are among oil producers that won licenses in Angola’s pre-salt areas.
Today’s news seems to confirm the belief that this new discovery could be significant. On the negative side, Angola does have its fair share of problems. The government has been accused of misplacing $32 billion in oil revenues. On the positive side, Cobalt also has working interests in the Gulf of Mexico. And if the Iran situation heats up the price of oil is likely to rise. The CIE share price has risen from a low of $6.30 back in October 2011 to nearly $24 today and looks to have momentum, especially with this latest news.
A lower risk investment for the long term that also has an interest in the Angola play is Statoil ASA. The stock of this Norwegian oil and gas company is currently trading for around $26 a share with a trailing P/E of 7.8. The company just reported earnings for the latest quarter. For the quarter ended Dec. 31, 2011 (Q4), Statoil beat expectations on revenues and earnings per share. Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share increased significantly. They also raised their dividend from NOK6.25 to NOK6.50.
Statoil's oil and gas production rose by 1.5% to 1.975 million barrels of oil equivalent a day in the fourth quarter, from 1.945 million barrels a day in the same period of 2010.
In 2011, Statoil delivered strong exploration results, adding more than 1 billion barrels to its resource base. This year the company expects to spend $17 billion to develop its existing resources and a similar level of exploration activity as last year.
In addition to the Angola fields, the company purchased U.S. shale oil and gas producer Brigham Exploration in 2011, targeting the American energy boom to add depth to its global operations. For additional diversity, the company is engaged in a project with the Department of Energy to develop floating wind turbines off the coast of Maine. Statoil also recently discovered one of the largest reserves in the North Sea, estimated to contain 900 million to 1.5 billion barrels of oil equivalent.
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