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Norwegian Oil Giant Hits Paydirt in Iceberg Alley

The Flemish Pass – or Iceberg Alley – is home to what’s turning out to be one of the most prolific offshore oil finds of the decade.

And, as I promised on Tuesday, today I’m revealing the biggest beneficiary – Norway’s oil giant, Statoil (STO).

Statoil boasts the biggest foothold in the region. It partnered up with Husky Energy (HSE) to explore and develop the underwater fields. And the latest results indicate that the company has hit paydirt on a massive scale.

You see, its first well has the potential to pump out 300 million to 600 million recoverable barrels.

And considering that the company’s leaseholds measure some 8,500 square kilometers, this implies that when all is said and done, we’re looking at a billion barrels of recoverable oil… maybe much more.

An Airtight Energy Investment

Check out the chart below. It shows that Statoil has a few more wells working – and the results should be released within a few months.

The Mizzen field showed 100 million to 200 million barrels of recoverable oil. And the results from Harpoon will be announced next.

Statoil Hits the Motherlode

Now, what I love about Statoil is its massive scope of diversified oil properties that range from the North Sea to West Africa, China, Australia and even the mainland United States and Canada.

It’s also a major player in natural gas – operating, managing and maintaining more than 8,000 kilometers of pipelines.

Yet few people outside Europe or the oil community have heard of the company.

Better yet, right now it trades at probably the most attractive valuation of the major global oil companies. So you should consider it for a position as a core holding.

Statoil is not only massively profitable, but trades at a market multiple of around 10 times trailing earnings. And it pays a dividend of over 5%.

From an investment perspective, where it trades is more important. Yes, it trades on the NYSE. But Statoil is based out of Norway, which means there’s a currency play here, as well…

A Safe Haven Currency

The Norwegian krone is one of the world’s strongest currencies, albeit not a very large or liquid one.

Still, fundamentals bear out in this case.

Norway has been pumping its oil profits into an investment fund that’s close to $800 billion and growing. And the country has a population of just five million people.

What’s important about this “rainy day fund” is that it contains more money than Norway’s debt. That’s why the currency has a strong safe haven status.

Bottom line: Thanks to a weak European market, the correction in U.S. shares and lack of investor interest in non-shale oil plays, Statoil is trading on the cheap. And by providing an energy, currency and dividend play all in one, Statoil represents the perfect investment trifecta.

And “the chase” continues,

Karim Rahemtulla