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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