Statoil (NYSE: STO) Eagle Ford Shale Investing

Brian Hicks

Written By Brian Hicks

Posted July 2, 2013

Starting July 1, Norway’s Statoil (NYSE: STO) is strengthening its presence in the Eagle Ford shale by becoming a major operator in the region.

The international energy company is not new to the area, but for the first time it is breaking off and taking control of its holdings. Yesterday, July 1, was when Statoil officially took over operations in half of its joint venture with Canada’s Talisman Energy Inc. (NYSE: TLM).

Eagle Ford Statoil has no plans as of yet to acquire Talisman’s stake in the remaining asset, but that too is likely on the horizon. Its Canadian partner will still operate in remaining drill sites.

The move to operator is pivotal for Statoil’s long-term presence in the U.S.

Statoil currently operates in 35 different countries and has more than 40 years of experience in oil and gas production on the Norwegian continental shelf.

With its success as an operator in all parts of the world, it has a strong commitment to providing energy in a dignified and responsible manner.

U.S. Shale Presence

Statoil is already comfortably positioned in other major U.S. shale plays, including the Marcellus and the Bakken. It established presence there in 2008 as the U.S. oil boom started to heat up.

By 2010, Statoil had its eye on the Eagle Ford, and that’s when it entered into a contract with Talisman through a 50-50 joint venture.

At the onset, and right up until Monday, Talisman managed all of the drilling operations under the condition that Statoil would eventually operate half of the total acreage.

That time is now. Statoil will operate in four south Texas counties: Live Oak, Karnes, DeWitt, and Bee County.

Talisman will continue to operate in the remaining acreage, mostly in McMullen, La Salle, and Dimmit Counties.

The transition has been in the works for months now. Statoil started to ease into its position as operator when it began running three rigs in April.

This further solidifies Statoil as a major player and operator in each of the three major onshore U.S. shale assets.

The joint ownership of the venture will not be affected by the change, and everything is still split down the middle. However, there are reports that Talisman is looking to sell its Eagle Ford acreage and raise $2 billion in asset sales.

For now, both sides are committed to continuing the relationship while executing the transition safely and responsibly and creating maximum value.

Statoil will be responsible for producing wells, other facilities, pipelines, and the infrastructure in its operating counties, as well as its field office located in Karnes County.

This latest move may also mark the end of joint ventures for Statoil, which is now confident it has successfully learned the proper techniques to develop and operate in the U.S. shale and can move forward by operating its own assets.

The Eagle Ford

Certainly, at any cost, the Eagle Ford is a great place to start. It seems impossible to fail in Texas.

The way the Eagle Ford has taken off in production levels, there’s just no telling when it will top off; month after month, it continues to set new production records, much like its counterpart to the north, the Bakken Shale in North Dakota.

I can tell you one thing: the Eagle Ford has seen production grow 2,983 percent since 2010. And if you want to take a look at levels in 2008, production has soared an astronomical 132,744 percent. What!?

Yes. And today, it’s the most active shale play in the world, with over 200 rigs in operation. It’s the perfect place for Statoil to distance itself from other companies and solidify itself solely on its own merit.


It’s not known what Statoil’s next plan of attack will be, but other players like EOG Resources (NYSE: EOG) are doubling down efforts in the Eagle Ford as well. EOG, like Statoil, has operations all over the world, but its holdings in Texas are showing grand results.

EOG has completed 27 wells that are producing 2,500 barrels per day. Things are going so well that in 2013 alone, the company plans to drill an additional 425 wells.

Whether Statoil will double down on its own efforts is still unknown, but there have been ramblings about further developing in the region. The company holds about 73,000 net acres in the Eagle Ford and produce roughly 20,000 barrels of oil equivalent per day (boepd) from about 300 wells.

Likely, Statoil is going to be making more headlines in the coming year. Whether that involves buying out Talisman’s acreage or finding additional acreage on its own, we’ll have to wait and see.

But it’s not done by a long shot. Statoil’s long-term goal is to produce 500,000 boepd from its North American projects by 2020 and raise its global output to 2.5 million boepd.

The Eagle Ford would certainly put it on that track.


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