Equinor Launches First of Five Wells Offshore Norway

Equinor ASA EQNR, a Norwegian energy giant, has achieved a milestone with the commencement of production from the first well in its ambitious five-well tie-back project on the Norwegian Continental Shelf. This initiative is a tie-back to an existing offshore platform in the Norwegian Sea, highlighting Equinor's strategic focus on leveraging the existing infrastructure.

Project Background and Milestones

The journey began in 2021 when Equinor and its partners submitted the Plan for Development and Operation ("PDO") for the Lavrans and Kristin Q discoveries as satellite extensions to the Kristin field. The PDO for the first phase of the Kristin South project received approval in 2022, and production from the first Lavrans well commenced on Jul 7, 2024.

Trond Bokn, Equinor's senior vice president for Project Development, emphasized that the Kristin South project illustrates the company's strategy to enhance value through the utilization of existing infrastructure on the Norwegian Continental Shelf. EQNR, in collaboration with partners and suppliers, has successfully initiated production from Lavrans.

Operational Details

The project saw the installation of a new subsea template tied into the Kristin platform, now processing oil and gas from the first Lavrans well. The produced gas is exported through the pipeline system to the European market, while the oil is transferred by ship via the Asgard C storage vessel.

The Kristin South project's first phase includes four additional wells — three at the Lavrans field and one in the Q-segment at the Kristin field. The expected output from this phase is 6.2 GSm³ of gas and 1.9 MSm³ of oil, totaling 58.2 million barrels of oil equivalent.

Grete B. Haaland, Equinor's senior vice president for Exploration & Production North, underscored the broader significance of this project. She highlighted that it represents a milestone in the company's strategy to develop new resources in a mature area of the Norwegian Sea. Integrating additional resources into existing hubs is seen as a cost-effective method to increase production and prolong the operational lifespan of EQNR's fields, thereby contributing to energy security and employment opportunities in Norway.

Environmental and Economic Impact

Notably, the CO2 intensity of Kristin South Phase 1's extraction and production is remarkably low, at less than 1 kg of CO2 per barrel of oil equivalent. Emissions are primarily generated from drilling activities. The project has also bolstered the Norwegian economy, with more than 60% of the contract values in the development phase awarded to Norwegian suppliers. The project is expected to have created approximately 4,000 person-years of employment across Norway, with 800 in the Mid-Norway region, during 2020-2025.

Key Contractors and Prospects

The project has engaged several prominent contractors, including Aker Solutions/OneSubsea for subsea production facilities, TechnipFMC for pipeline fabrication and subsea installation, Aibel for platform modification and Transocean as the rig provider, with the Transocean Spitsbergen semi-submersible designated for the task.

Discovered in 1995, the Lavrans and the Kristin fields, operational since 2005, have a technical lifetime of upto 2043, with potential for further extensions. The Kristin South project partners include Equinor Energy (54.82%, operator), Petoro (22.52%), Var Energi (16.66%) and TotalEnergies EP Norge (6%).

Torger Rod, Var Energi's chief operating officer, commended Equinor for the successful and safe initiation of production from the first Lavrans well in the Kristin South project. He highlighted this achievement as a notable example of effectively developing challenging discoveries to achieve profitable, low-emission production. This is in sync with Var Energi's goal of reaching approximately 400 thousand barrels of oil equivalent per day by the end of 2025.

Zacks Rank & Key Picks

Equinor currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like Hess Corporation HES, Sunoco LP SUN and SM Energy Company SM, each sporting a Zacks Rank #1 (Strong Buy) at present.

Hess is a leading oil and natural gas exploration and production company that made several world-class oil discoveries in the Stabroek Block, located off the coast of Guyana. The company is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. The merger will likely result in the creation of an energy behemoth with a massive portfolio of producing assets. 

The Zacks Consensus Estimate for HES' 2024 EPS is pegged at $10.28. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.

SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company's attractive oil and gas investments should create long-term value for shareholders.

The Zacks Consensus Estimate for SM's 2024 EPS is pegged at $6.95. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past seven days.

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