In recent months the company, 67% owned by the Norwegian government, has announced a raft of new discoveries and acquisitions in waters off Tanzania, in the Espirito Santo Basin off Brazil, and in the ocean off Newfoundland and Labrador.
Add in continued expansion of the company in U.S. shale regions including the Bakken formation of North Dakota, Montana, and Saskatchewan; the Eagle Ford in Texas: and the Central Marcellus in the Eastern United States, and you can see one of the sturdy legs of the companyís global strategy.
The other leg is enhanced recovery -- that is getting more of the oil and gas in the ground out of the ground -- from the companyís existing wells on the Norwegian Continental Shelf. The companyís recovery from these fields has gone from a planned 30% to 50% in 2011 to a goal of 60%. That goal would add 7.5 billion barrels to Statoilís reserves on the Norwegian Continental Shelf. Testifying to Statoilís commitment to enhanced recovery is a budget that puts 50% of the companyís research spending into enhanced recovery.
The distribution of Statoilís exploration and acquisition spending reflects the companyís sense that global market demand for oil on purely economic grounds is likely to stay relatively weak but that the geopolitics of oil means that a significant portion of global production comes from risky regions and countries such as Iran, Iraq, Sudan, Russia, and Venezuela. In that environment the goal is to expand production -- up 10% at Statoil in the first nine months of 2012 -- while avoiding increases in geopolitical risk.
The New York-traded ADRs closed at $25.15 Monday. Even with Mondayís 1.2% decline, the price is toward the upper end of the recent range of a $23.58 low on Nov. 16 and a Sept. 14 high of $26.99. I would look to initiate or add to positions toward the lower end of that range -- anything below $24 looks attractive to me. In Jubakís Picks I have a target price of $29 an ADR by May 2013. Statoil pays a dividend yield of 4.24%.