Just when you thought we were done reporting on the oil majors' lackluster first-quarter results, we've got another for you. As with beleaguered BP
As with Petrobras
What the merger means for the strategic direction of the company is perhaps even more important. Statoil operates in the North Sea, which has demonstrated classic signs of a maturing reserve basin. In order to have any hope of increasing production, the company needs to augment its reserve life at a significant clip, and that entails going off the beaten path. The merger with Norsk Hydro will enable this Nordic giant to more effectively compete on a global scale for reserves that are getting ever more costly to find and develop.
The merged company will possess a very strong advantage in this regard, in that it will be the largest offshore operator in the world. The deepwater and ultra-deepwater are increasingly looking like the only game in town when it comes to discovering new giant fields, a term for oil and gas fields with more than 500 million BOE recoverable.
A final point would be that Statoil, as opposed to many other leading Western integrated oil companies, is positioned to benefit from relationships with nations that, for various geopolitical reasons, are not as open to American business. The increasing concentration of the world's reserves into the hands of national oil companies means that more doors will open to the Norwegian company. After all, it hails from the country that ranks No. 1 on the Global Peace Index. It's a lot more difficult to view such a country as an imperial aggressor.
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• Statoil and the State of Oil
Fool contributor Toby Shute hopes to visit this peaceful Nordic land some day. He doesn't own shares in any company mentioned. Total and Norsk Hydro are both Income Investor recommendations. There's nothing imperialistic about the Motley Fool's disclosure policy.