Norwegian oil company Statoil is confirming it has found between 100 million and 200 million barrels of recoverable oil at its Mizzen prospect in the Newfoundland offshore.
"We have proven there is a petroleum system in the area and that the Mizzen discovery has potential to create value for Statoil," said Erik Finnstrom, senior vice-president of Statoil's Exploration North America.
"We are now assessing the discovery to determine how and when it can be economically developed."
Atle Aadland, vice-president of Statoil Canada's offshore operation, explained that Statoil has high ambitions for the Newfoundland region.
"This is good news and an important step in Statoil's journey to become a producing operator offshore Canada," Aadland said.
Statoil discovered oil in 2009 while drilling Mizzen O-16, roughly 500 kilometres east of St. John’s.
The find is in deep water — roughly 1,100 metres below the surface.
The company was awarded a significant discovery licence by the Canada-Newfoundland and Labrador Offshore Petroleum Board.
Statoil drilled an appraisal well in late 2011.
Finnstrom says the discovery demonstrates that Statoil's exploration strategy to early access of new areas, like the Flemish Pass basin, is paying off.
"Our focus is to define the resource potential of the Flemish Pass basin by continuing to test high-impact oil prospects on our land holdings and to continue to build this area as a core exploration region for the company," Finnstrom said in a statement.
Statoil plans to drill two new wildcat wells in the area by the end of next year, and potentially additional wells in 2014 and beyond.
An umbrella group for the oil industry was buoyed by the announcement.
"Obviously there is some oil and gas still remaining to be discovered offshore Newfoundland and Labrador, and that sends a positive signal for future potential investors to come here," Paul Barnes of the Canadian Association of Petroleum Producers said.
Petro-Canada drilled unsuccessfully at Mizzen roughly a decade ago. Statoil took it over in 2008.
Statoil has a 65 per cent interest in Mizzen, with partner Husky Energy holding the other 35 per cent.