Statoil Follows Shell in Quitting Alaska
November 17 2015 - 11:40AM
Dow Jones News
OSLO—Norway's Statoil said Tuesday it had decided to exit
Alaska, echoing a recent move by Royal Dutch Shell to drop the
high-cost Arctic frontier area.
Explaining its decision, Statoil said its exploration activities
in the Chukchi Sea couldn't compete with projects elsewhere.
"Solid work has been carried out, but given the current outlook
we could not support continued efforts to mature these
opportunities," said Statoil's head of exploration, Tim Dodson.
The Norwegian oil and gas producer, which entered Alaska in
February 2008, said it would close its office in Anchorage
following recent exploration results in neighboring leases, and
exit all its operations in the Chukchi Sea.
These operations include 16 Statoil-operated leases, located 37
miles north of Royal Dutch Shell's Burger discovery, as well as
stakes in 50 leases operated by ConocoPhillips, which expire in
2020.
The Chukchi Sea is believed to hold about 15 billion barrels of
recoverable oil, but weak oil prices are reducing companies'
appetite for high-cost exploration in Arctic frontier areas, where
they face long transportation distances, a challenging environment
and lack of infrastructure.
Shell announced on Sep. 28 that it would stop its exploration
activity in Alaska for the foreseeable future, as its discoveries
were insufficient to warrant further exploration. Analysts welcomed
Shell's move, highlighting the environmental risks and high costs
off Alaska.
Statoil's Alaskan exodus didn't come as a surprise, as the
company needs to cut capital spending to cover its dividend payouts
to shareholders next year, said Oslo-based Swedbank First
Securities analyst Teodor Sveen Nilsen.
The exit is another sign that Statoil's management is doing
whatever it can to cut spending and give priority to dividend, Mr.
Nilsen said. Statoil recently delayed another Arctic project, the
Johan Castberg field off Norway, in a bid to improve its
profitability.
Statoil didn't mention the financial impact of exiting Alaska,
but is likely to record some impairments in the fourth quarter, Mr.
Nilsen added.
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@wsj.com
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(END) Dow Jones Newswires
November 17, 2015 11:25 ET (16:25 GMT)
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