Statoil Canada and Husky Energy confirmed Thursday that the first Bay du Nord exploration well, located about 500 kilometres northeast of St. John's, could produce as much as 600 million barrels of oil.
The two energy companies are calling it "a high impact discovery."
Statoil is the operator of Mizzen, Harpoon and Bay du Nord, and has a 65 per cent interest. Husky Energy holds the other 35 per cent.
The discovery reported today was first announced in late August. Officials estimate there are between 300 million and 600 million barrels of recoverable oil.
Bay du Nord is Statoil's third discovery in the Flemish Pass Basin.
The Mizzen discovery is estimated to hold a total of 100 million to 200 million barrels of recoverable oil, while the Harpoon discovery, announced in June, is still being evaluated.
"It is exciting that Statoil is opening a new basin offshore Newfoundland," said Tim Dodson, the company's executive vice-president, in a news release.
"This brings us one step closer to becoming a producing operator in the area. With only a few wells drilled in a large licensed area — totalling about 8,500 square kilometres — more work is required. This will involve new seismic as well as additional exploration and appraisal drilling to confirm these estimates before the partnership can decide on an optimal development solution in this frontier basin."
Geir Richardsen, vice-president of exploration with Statoil Canada, said more work needs to be done before the company makes a decision to develop the oil.
"We now say this meets the commercial threshold, it does ... but, keeping in mind that this is an area which is 500 kilometres from land, it's deep water," said Richardsen.
"We would like to do more work before we enter into a development discussion," he said.
Richardsen added this is the biggest discovery Statoil has made outside of Norway.
Meanwhile, Natural Resources Minister Tom Marshall called the discovery a "game changer."
Marshall said it proves there is oil in deepwater basins and that will encourage more exploration activity.
All three discoveries are in approximately 1,100 metres of water. Mizzen was drilled by the semi-submersible rig Henry Goodrich, while the Bay du Nord and Harpoon wells were drilled by the semi-submersible rig West Aquarius.