For Statoil (STO in New York and STL.NO in Oslo) one plus one equaled way more than two yesterday.

The company has announced that its Aldous and Avaldsnes oil finds are probably part of a single combined oil structure that contains 500 million to 1.2 billion barrels of recoverable oil.

On August 8 Statoil reported that a well drilling at the Aldous Major South prospect had established a common oil and water contact between the Aldous and Avaldsnes oil structures.

This is the Statoil’s third high impact discovery this year. (A high impact discovery is one that holds more than 250 million barrels of oil equivalent.)

Shares of Statoil weren’t up much in Oslo on the discovery, but they’ve climbed 3.7% today in New York as of 3:00 p.m. New York time.

That’s not terribly surprising. European markets took a beating yesterday on news that economic growth in Germany just about vanished in the second quarter. And very few investors like oil stocks right now what with fears of a global economic slowdown running so high.

But if you can look past the short-term, you’ll note that in the last year Statoil has changed itself from a company presiding over the decline of the North Sea oil fields to one with big new finds in the North Sea and in waters further north. The company has also been expanding into unconventional oil deposits and deep-water drilling outside it home base. Statoil also is one of the few oil companies in the world with experience drilling in the extreme conditions in Arctic seas, an area of expertise that will only become more valuable as diminishing ice makes drilling for oil in the Arctic more and more feasible.

The shares in Oslo trade at just 5.9 times trailing 12-month earnings per share and pay a 5.1% dividend. The shares are trading at $24.06 in New York as I post this on Wednesday, August 17.  They’ve traded as high as $29.67 in the last 52 weeks. I’d buy them below $25 but frankly in this volatile market I think I can get them cheaper.

As of August 17 I’m adding them to my watch list http://jubakpicks.com/watch-list/ .

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , may or may not now own positions in any stock mentioned in this post. The fund did own shares of Statoil as of the end of June.  For a full list of the stocks in the fund as of the end of June see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/

I guess this is as close as management at a Norwegian company gets to giddy.

On Monday, April 4, Statoil (STO) announced that it had proven a gas and oil well on the Norwegian continental shelf in the Barents Sea. “This opens a new oil province that can provide additional resource growth,” said Tim Dodson, executive vice president for exploration. “The Barents Sea is large, and we can not say that we have cracked the code for the entire area yet. But we have confirmed that our exploration model is correct.”

If I may interpret.

First, Statoil has identified a field with a potential total of 500 million recoverable barrels of oil equivalent. (The company

Second, the significance of this find goes beyond this single well or reservoir. It indicates that Statoil has a pretty good idea of where the oil is in this section of the Arctic continental shelf and how to find it. That’s important because a string of dry holes before this find had significantly reduced enthusiasm for exploring this offshore geology.

Third, that the find is probably big enough to keep production on the Norwegian continental shelf from falling—a goal the company has called “ambitious”—and is likely to be big enough to make building a second hub operation to supply natural gas to the company’s onshore liquefied natural gas facility profitable.

And, fourth, that this field and future drilling in the area will keep Statoil at the cutting edge of exploration and production in the Arctic, one of the most promising of the world’s relatively few unexplored oil geologies. Read more

And the winners among oil stocks from the Egyptian crisis are…

Interesting pattern in today’s big winners on the New York Stock Exchange: the list is dominated by the names of relatively small, predominantly domestic energy producers.

As of the end of trading in New York today you would have found these stocks among the big percentage winners: Oasis Petroleum (OAS) up 5.9%, Brigham Exploration (BEXP) up 3.4%, Ultra Petroleum (UPL) 4.6%, Swift Energy (SFY) up 3.22%, Chesapeake Energy (CHK) 8.1%, and Berry Petroleum (BRY) up 4.9%.

These energy companies don’t have a whole lot in common—some natural gas producers (Ultra Petroleum and Chesapeake Energy); some produce oil from oil shales (Oasis and Brigham); some work in traditional fields in California (Berry).

But they do have in common a lack of exposure not just to Egypt but also to the Middle East. They’re up as a bet that we’re seeing the beginning of a wave of instability in the region that will make oil from “safe” sources increasingly valuable.

I don’t think I’d chase these here—although I don’t think this trend is over or a flash-in-the-pan, I just don’t want to buy after 10% gains in just two days.

If you like the logic of these stocks, however, I’d suggest that you take a look at oil producers from Canada’s oil sands. Read more

Oil drilling failure rate surges at the Western majors

It’s not a factor now in the climbing price of oil but the trend certainly doesn’t portend cheaper oil down the road. Or a rosy future for the Western oil giants.

In 2009 Chevron’s (CVX) drilling failure rate climbed to 35%. More than one-third of exploratory wells came up dry. That compares to a 10% failure rate in 2008.

And that’s by no means an isolated increase in the drilling failure rate. ConocoPhillips (COP) saw its failure rate climb to 43% in 2009 from 32% in 2008.

Higher failure rates mean that it gets more and more expensive to find new oil to replace what’s been pumped out of the ground. Chevron’s target is a modest 1% increase in oil and gas production this year. ConocoPhillips is forecasting a 2.7% drop in production in 2010.

The reasons for the climbing failure rate are pretty simple. Read more

Up/down, buy/sell, gloom/boom: It’s not easy to be a long-term investor

Take the long view

The stock market is fixated on the short-term, we all know that. It’s an unusual occasion when stock analysts and investors look more than a few quarters ahead. That means stock prices often tend to respond to short-term news as if it were the only news.

And that means investors with a long-term view of companies and economic trends can often buy likely long-term winners while they are temporarily depressed by short-term news. This kind of long-term thinking in a short-term market is one of the best ways I know of for the average investor to beat the stock market indexes.

In pursuing that kind of strategy, however, too much caution is actually a bad thing. Let me explain—and give you some examples of stocks and sectors where taking the long view will pay off. Read more