Norwegian giant Statoil ASA (STO - Analyst Report) proposes to advance with its plan to develop a huge oil field worth $29 billion. The offshore energy project will be the most expensive in  Europe.

Moreover, the field is expected to produce the world’s cheapest oil. The yield will, therefore, be profitable even after the recent price crash. The Johan Sverdrup field in the North Sea is likely to commence operations by 2019 and produce about 3 billion barrels of oil equivalents (Boe) over 5 decades. Norway’s declining oil industry is expected to be revived with the startup of Johan Sverdrup.

The project is likely to break even at price levels of below $40 per barrel. Despite Brent crude’s decline to about $60 from over $100 last June, this level is anticipated to give Statoil a vast margin. The operating costs are estimated below $5 per barrel, once the project comes online.

The first phase of Sverdrup is projected to develop about 2.4 billion Boe at a cost of about $15.4 billion. Lundin Petroleum and Statoil accidentally discovered Sverdrup in 2010 in a mature area that had already been largely explored. This new find has instilled confidence in smaller oil firms regarding more oil discoveries in prospects discarded by the majors.

Norway had announced a 78% rebate on exploration costs 10 years ago in view of the deteriorating output. This gave the smaller explorers the financial strength to drill, as drilling wells is an expensive affair which, might cost as much as $100 million.

Given the availability of plenty of pipelines and platforms in the North Sea, along with the rebate and Sverdrup’s success, there has been a burst of activity and several discoveries have been made.

There is a controversy with respect to the holding in the field. Pending government decision, Statoil holds 40.03%, Lundin owns 22.12% while Petoro, Detnorske and Denmark’s Maersk hold 17.84%, 11.89% and 8.12%, respectively. The small shareholders traded up 1–2.5%

Statoil currently carries a Zacks Rank #5 (Strong Sell). Better-ranked players from the energy sector include InterOil Corporation (IOC - Snapshot Report), Golar Energy Partners LP (GMLP - Snapshot Report) and Hallador Energy Company (HNRG- Snapshot Report). Each of these stocks sports a Zacks Rank #1 (Strong Buy).