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Statoil Inks Deal to Expand Footprint in Brazilian Basin

Statoil ASA STO and Queiroz Galvao Exploracao e Producao (QGEP) have inked an agreement wherein the former will purchase QGEP’s 10% interest in the BM-S-8 license located in Brazil’s Santos basin.

The additional 10% equity will enhance Statoil’s operated interest in the license to 76% from 66%. The transaction is valued at $379 million.

BM-S-8 comprises a considerable part of the Carcará discovery including high-quality oil of about 30° API. It also holds related gas in a thick reservoir with excellent properties. Per Statoil, the recoverable volume within the BM-S-8 license is estimated to be in the range of 700 million to 1,300 million barrels of oil equivalent.

Subsequent to an agreement in 2016 with Petróleo Brasileiro S.A. or Petrobras to acquire its 66% operated interest in BM-S-8, this is the second transaction for Statoil. This agreement reinforces Statoil’s position for operatorship of the unitized Carcará field.

50% of the total consideration will be paid on closure of the transaction while the balance will be paid when certain conditions have been met. These are partly associated to the license award, but are primarily related to the future unitization of Carcará.

Brazil is an important region in Statoil’s portfolio. The latest transaction strengthens the company’s position in an outstanding asset with its competency and capability. The transaction is in sync with its strategy to follow high value and low carbon prospects.

Shares of the company have lost 11.8% in the last six months compared with the Zacks categorized Oil & Gas – International Integrated industry’s decline of 9%.

Statoil is a Norway-based major international integrated oil and gas company. In recent times, the company has delivered strong exploration results. It has made significant additions to its resource base through several high impact discoveries. The latest finds give the company access to new regions in Norway, Russia, Azerbaijan, Tanzania and Australia, which ensures long-term growth.

Statoil currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same space include Delek US Holdings, Inc. DK, Cheniere Energy Inc LNG and Canadian Natural Resources Limited Ltd. CNQ. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek US Holdings delivered a positive earnings surprise of 148.48% in the preceding quarter. The company beat estimates in each of the trailing four quarters, with an average positive earnings surprise of 60.68%.

Cheniere Energy delivered a positive earnings surprise of 162.16% in the preceding quarter. The company beat estimates in one of the trailing three quarters, with an average positive earnings surprise of 14%.

Canadian Natural Resources delivered a positive earnings surprise of 30.77% in the preceding quarter. It surpassed estimates in two of the trailing four quarters, with an average negative earnings surprise of 275.46%.

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