Lundin Petroleum AB, the Swedish explorer focused on Norway, rose the most in three years after making what may be the biggest oil find in the nation’s Arctic Barents Sea, potentially accelerating development of the region’s resources.
The shares rose as much as 8.4%, the most since Oct. 21, 2011, and traded 4.5% higher at 106 kronor as of 11:24 a.m. in Stockholm.
The Alta find, located 13 miles northeast of Lundin’s Gohta oil discovery, contains the equivalent of 125 million to 400 million barrels of oil and natural gas, of which 85 million to 310 million barrels is crude, the Stockholm-based company said in a statement.
The discovery “could be a game changer,” Teodor Sveen Nilsen, an analyst at Swedbank AB, said in an e-mailed note to clients. It “could probably increase the commercial potential and impact the overall development of the Barents Sea positively.”
Alta could revive the industry’s optimism about the Barents Sea, which has been checked after Norway’s state-controlled Statoil ASA earlier this year again delayed its Johan Castberg development following a disappointing exploration campaign that was meant to boost oil volumes and make the project more profitable.
While the little-explored Barents Sea is seen as key to helping Norway replace falling crude output from aging fields in the North Sea, no oil field in the area has yet been brought to production. Eni SpA’s Goliat field, discovered in 2000, has been delayed several times and is headed for a 50 percent cost overrun when it starts producing in the middle of 2015. The only producing field in the Barents Sea is Statoil’s Snohvit gas deposit.
Alta could be the largest oil discovery in the Norwegian Barents Sea since Statoil ASA’s Skrugard and Havis twin discoveries in 2011 and 2012, which hold 200 million barrels to 300 million barrels of crude each and together make up the Castberg project. Alta could even eclipse those finds should the resources prove to match the upper end of the estimate range.
“This discovery is another positive step in relation to proving up sufficient resources in the Loppa High area of the Barents Sea to enable the development of oil-production infrastructure,” Lundin Chief Executive Officer Ashley Heppenstall said in the statement. “In license PL609, we have identified several multihundred-million barrel prospects on trend with Alta and Gohta.”
Lundin has been contacted by Statoil to discuss linking Gohta to Castberg to reduce the cost of both developments, the Swedish company said in August. Gohta holds as much as 140 million barrels of oil.
Lundin’s latest discovery raises the commercial potential for Gohta, which is also owned by Det Norske Oljeselskap ASA and Norwegian Energy Co. ASA, Swedbank’s Sveen Nilsen said. Det Norske rose as much as 2.9% and Noreco climbed as much as 44 percent, paring losses in the past weeks due to an insolvency risk.
Lundin will probably drill three or four appraisal or exploration wells in the Loppa High area in 2015, Heppenstall said.
“The remaining prospectivity on PL609 has been further de- risked,” he said. “The Neiden and Boerselv prospects further north in PL609 are drill-ready and both of these prospects have the potential to contain material prospective resources.”
Lundin is the operator of license 609 with a 40% interest. Its partners are RWE Dea AG and Idemitsu Kosan Co. Ltd., with 30% each.