Both the UK and Norway are beginning to see some tangible benefits from the step-up in North Sea exploration and development spending. Shares in Premier Oil (PMO) rose earlier this week, and a number of analysts reiterated buy recommendations, after the company announced that initial exploration work at a well in the Norwegian sector of the North Sea points to a "potentially significant" oil discovery. Premier has a 30 per cent stake in the licence that contains the Luno II prospect. Drilling at the well turned up a gross oil column in excess of 40 metres, which appears to be part of a separate geological system to the nearby Edvard Grieg and Johan Sverdrup fields. The operator of the well, Norway's Lundin Petroleum, will now run drill stems tests that will give an indication of the productive capacity of the well.
Aberdeen-based Xcite Energy (XEL) also attracted the attentions of investors after announcing that its Bentley field in the North Sea contained proven and probable (2P) reserves of 250m barrels, more than double the 116m barrel estimate produced in February 2012. The dramatic surge in the 2P estimate will enhance Xcite's ability to increase its borrowing capacity (at presumably more favourable rates) and the company is now on the look-out for farm-in partners to help develop the field. In addition, Cairn Energy's (CNE) 20 per cent interest in the Skarfjell oil discovery in Norway is also now looking decidedly more lucrative following news that the operator, Wintershall Norge, has raised in-situ oil median oil estimate by 40 per cent to 155m barrels.
But its not all good news - a week after announcing a gas/condensate discovery in the North Uist exploration well located west of Shetlands, Faroe Petroleum (FPM) announced that the Darwin exploration well in the Norwegian Barents Sea had been plugged and abandoned. The drill result, though providing some useful geological detail, would have disappointed Faroe and its Norwegian partners in the venture, but shareholders can at least look forward to a fully-funded drilling programme later this year at three exploration and two appraisal wells, including Solberg (Norway) for the recent Rodriguez discovery.
