Statoil: Eyeing Acquisition Opportunities

HOUSTON Sep 6, 2006 (Dow Jones Newswires)

Statoil ASA is eyeing acquisition opportunities following its "successful" purchase of Algerian and Canadian assets, the company's Chief Financial Officer Eldar Saetre said at a conference in the U.S. Wednesday.

"We're definitely looking at inorganic opportunities," Saetre said. "We've made a couple of acquisitions, in Algeria, and (from) Encana (ECA.T) last year and both have proved quite successful," he added.

"That doesn't mean we will continue to do this more frequently, but we have responsibility (to our shareholders) to look at those kinds of opportunities, and we are, pretty much everything that's around," Saetre said.

In 2003 the Norwegian company acquired significant stakes in Algerian gas and condensate fields In Salah and In Amenas from BP (BP.LN), while last year it acquired Canadian company Encana's entire deepwater portfolio in the Gulf of Mexico, consisting of 239 blocks with an average interest of 40%.

"We'd have to find a strong strategic fit," Saetre cautioned. "We have to see (an acquisition) not just as exchanging cash, but representing growth potential" for Statoil, he said.

Saetre didn't comment on the specific regions or companies in which Statoil is interested, but a Norway-based analyst said the company would do well to focus its M&A activity in the international areas where its production is under the 50,000-100,000 barrels a day.

With the exception of Statoil's Angolan and Azeri production assets, Statoil falls below this target.

"Statoil is in so many areas at the moment, it should try to focus on companies or assets that will support those areas," said Martin Molsaeter, senior financial analyst at First Securities.

"In many regions, Statoil is too small to achieve economies of scale, so it needs to build up in the areas it's already present in," Molsaeter said.

While the firm has the significant deepwater expertise crucial to succeed at a number of its international sites including the Gulf of Mexico, it does not have the local knowledge and expertise which acquisition of small companies could fulfill, analysts said.

Despite this, Statoil announced earlier this week with Chevron (CVX) and Devon Energy (DVN) that successful testing at several deepwater fields in the Gulf of Mexico could indicate a discovery of between 3 billion to 15 billion barrels of oil which would be the largest U.S. oil find for a generation.

Saetre said Wednesday that the testing process had proved "very encouraging."

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