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Statoil Advancing U.S. Shales, Dipping Into Australia

Shale and tight oil plays are key components of the North American portfolio of Norway's Statoil ASA, executives told investors in New York City Wednesday. The company also has announced a farm-in agreement that gives it early entry into an Australian shale play.

In the last decade, Statoil's North American portfolio had a compound annual growth rate of more than 20%, the company said. "Average production from our U.S. and Canadian fields in the first quarter 2012 was 149,000 boe/d, up as much as 75% compared to the corresponding quarter in 2011. We are on track to reach our ambition of producing above 500,000 boe/d in 2020," said Executive Vice President Bill Maloney, head of Statoil development and production in North America.

"Safe and responsible development of new U.S. onshore resources is strongly underpinning the growth strategy. We now have production from more than 1,000 wells and hold more than one million net acres in three of the best U.S. plays," said Maloney.

"The acquisition of Brigham Exploration last year [see Shale Daily, Nov. 11, 2011] has provided us with first class tight oil assets in North Dakota and Montana and valuable organizational capacity. The integration process is progressing well and according to plan. In parallel, we are moving forward on the development of an operational organization in Houston for our Eagle Ford operatorship, commencing early 2013."

In 2010 through agreements with Enduring Resources LLC and Talisman Energy Inc., Statoil acquired 67,000 net acres in the Eagle Ford.

This week Statoil announced that it has farmed into Calgary-based PetroFrontier Corp.'s four existing exploration permits (103, 104, 127 and 128) as well as pending exploration permits (213 and 252) in the South Georgina Basin in Australia's Northern Territories in a joint venture. PetroFrontier, which is listed on the Toronto Stock Exchange, holds a 75-100% interest in the four Georgina permits and the pending permits.

"These exploration activities are in line with our objective to access shale plays at an early exploration stage, at low cost and develop them into potentially high-value assets," said Atle Rettedal, Statoil senior vice president for new ventures.

This is an "early entry at scale into more than 13 million acres of immature, but potentially highly prospective play at low cost, with high risk but also with significant upsides," Statoil said. The partners will potentially drill 10-20 wells by 2017 in three phases to demonstrate prospectivity.

PetroFrontier will operate the first phase of the program while Statoil has secured options to operate from the second exploration phase in addition to increase ownership interests from 25% to 65% of PetroFrontier's interests. Statoil has committed to contribute US$25 million for the first phase of the exploration program, which could be increased to US$200 million through phases two and three depending upon exploration results.

Statoil's largest unconventional acreage position is in the Marcellus Shale, where it holds 680,000 net acres, according to company documents. The company also has substantial holdings in the Bakken (375,000 acres), Canadian Oil Sands (279,000 acres) and Eagle Ford Shale (80,000 acres).

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