4 Oil Companies That May Benefit From Cobalt's Angola Gusher

NEW YORK ( TheStreet) -- The huge spike in shares of Cobalt International Energy ( CIE) on Friday is your classic frontier oil exploration story.

The Angolan offshore pre-salt region compares to the Brazilian pre-salt as one of the most hoped-for offshore oil gushers of the next century. Cobalt hit the proverbial pay dirt, but given Angola's profile as one of the best places to speculate for future production growth, the Goldman Sachs-backed wildcat company may not be alone in benefiting from positive drilling results in Angola.

Cobalt's CEO Joseph Bryant, said in a release on Thursday night of the Angola results: "Cameia is an extraordinary success. The results have exceeded our pre-drill expectations and have increased our confidence in our entire West Africa Pre-salt exploration inventory. We will immediately commence our Cameia appraisal program."

The Cobalt drilling results weren't a complete surprise. The stock had started running up late last year when another major player in the Angolan offshore, Scandinavian conglomerate Maersk, said it expected positive results from adjoining Angolan pre-salt blocs. Year-to-date Cobalt shares are up more than 100%.

Here are four other oil companies to watch based on the evolving Angola story.

When it comes to West African offshore exploration, Kosmos Energy ( KOS) often trades on similar sentiment to Cobalt. On Friday, Kosmos was up by 4% on three times its average trading volume. Year-to-date, Kosmos shares are up 20%.

It's not just the true wildcat companies backed by big banks that stand to benefit from the Angolan pre-salt story -- Goldman Sachs is the biggest investor in Cobalt and Warburg Pincus is the largest shareholder in Kosmos. The European oil majors BP ( BP) and Statoil ( STO) are also major players in the Angolan offshore region.

Early success in a frontier oil play may contribute to production but isn't likely to be a needle mover for an oil major based on initial positive results. However, discoveries like the one made by Cobalt can be a read for the entire basin, said Macquarie Securities analyst Jason Gammel. Statoil shares were up more than 1% on Friday, even as the energy sector sold off and crude oil dipped.

The Macquarie analyst cautioned against reading too much into the Cobalt results, though.

"It's certainly not negative news for Statoil, but you never know what you will get in a true frontier basin," Gammel said. "Generally speaking, oil basins tend to be distributed normally so when you have discoveries likes this it does bode well for the basin, but the hard work of exploring can result in lots of winners and losers."

For BP, Angola is one of its major upstream exploration areas. Aside from BP's huge Russian TNK-BP natural gas project and its Gulf of Mexico deepwater portfolio -- where it is the largest player -- the company ranks Angola as its fourth-most important growth region. BP is investing billions of dollars in seven Angolan deepwater oil projects, five of which are slated for start-up between 2012 and 2016.

As BP has been forced to divest assets to cover its Macondo oil spill liabilities, its production growth and profit profile relative to other oil major peers has weakened. While other oil majors like Royal Dutch Shell ( RDS.A) have ridden recent high crude oil prices to 50% year-over-year profit growth, BP has seen its profitability erode after asset divestitures.

An improving outlook for its key Angolan production story can't alone move the needle for BP, but could be an incrementally positive story amid its larger production and profitability challenges.

Statoil and BP are already major producers in developed Angolan offshore fields. Angola is already Statoil's largest producer of oil outside of Norway, though a recent Statoil strategy presentation plays up the evolving Angolan pre-salt and its leading position in the frontier opportunity, where it plans to drill several "high impact prospects" in the next two years.

There could also be oil mergers and acquisition valuation implicit in the evolving Angolan story.

Marathon Oil ( MRO), which also holds Angolan bloc as part of its growth portfolio, is reportedly interested in selling between $1 billion and $3 billion in non-core assets.

A report from late last year on Bloomberg said the Angolan assets are among the plays that Marathon might consider selling. BP, Statoil and Total ( TOT) are already partners with Marathon in Angola, where it holds a 10% stake in two major offshore blocs.

Raymond James analyst Pavel Molchanov said that Marathon has not been that active in Angola recently in comparison to the rest of its portfolio.

Marathon Oil has been focusing on its North American shale production growth. Of the $3 billion it forecast for spending in 2012, $2.7 billion is slated for North American shale, led by the Eagle Ford, which has been one of the most successful shale oil production stories in the U.S.

In addition, Marathon is targeting the North Dakota Bakken shale, the Anadarko Woodford shale in Oklahoma and the emerging Niobrara shale formation in southeast Wyoming and northern Colorado.

Marathon Oil was also up by 1% on Friday as the energy sector declined.

-- Written by Eric Rosenbaum from New York.

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