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By Paul Tracy

Even in the middle of summer, the high temperature in Svalbard, Norway, rarely climbs above 45 degrees Fahrenheit. At night, temperatures often dip below freezing. In the heart of winter, temperatures can dip to as low as -30 degrees Fahrenheit -- at that temperature water freezes almost instantaneously.

Given that Norway's northernmost island archipelago is located deep inside the Arctic Circle on the edge of the Barents Sea, its less-than-hospitable climate should come as little surprise.

But despite its harsh climate, the Barents Sea region of Norway is currently in the early stages of an economic boom for a simple reason... Beneath the surface of the Barents Sea, in frigid waters ranging from 700 to 1,500 feet deep, lie some of the largest oil and gas fields discovered in Europe in decades.

Norway's national oil company, Statoil (NYSE: STO), is the stock best positioned to benefit from these exciting oil discoveries.

The two main discoveries in this region are the Skrugard and Havis fields.

Statoil announced the discovery of Skrugard in April of last year in an exploration block located far to the north of any existing fields and in waters 1,000 feet deep.

The company owns a 50% stake and acts as operator, while Italian oil giant Eni (NYSE: E) owns 30%, and Petoro, Norway's state-owned company that manages its portfolio of exploration and production, owns the final 20%.

Early in 2012, Statoil announced another successful exploration well located roughly five miles from the Skrugard find, called the Havis field. The company's initial estimates are that these two combined fields contain some 400 to 600 million barrels of recoverable reserves, but exploration remains in its early stages. The company still plans additional exploratory drilling in the region that could well result in further upgrades to these estimates.

All told, Statoil's new finds in this area, coupled with continued work on enhanced recovery techniques in the North Sea, will allow the firm to maintain or slightly grow its output from the region during the next eight years.

Big potential abroad

The company also has considerable production upside from its projects outside Norway. In particular, Statoil has developed significant experience into two types of promising plays: unconventional oil & gas fields and deepwater drilling.

Statoil is investing in deepwater projects in Africa, the U.S. Gulf of Mexico and Brazil. One of the most exiting prospects is Angola, a country where Statoil has been operating for more than two decades, and currently produces 170,000 barrels per day. The company has recently been awarded interests in five new offshore blocks located in the deepwater Kwanza Basin of the country.

So far, operators in this region have announced two large oil discoveries in a so-called "pre-salt" reservoir -- a field located deep beneath the seafloor below a tough-to-drill layer of salt. Pre-salt fields in Brazil, such as the giant Tupi field, rank among the largest oil discoveries made anywhere in the world for the past 30 years. Many believe the pre-salt plays in Angola may ultimately prove equally large.

Statoil has also aggressively invested in unconventional shale oil and gas basins in the United States. In 2008, Statoil partnered with Chesapeake Energy (NYSE: CHK) on a project in the giant Marcellus Shale gas field in the eastern United States, and one year later, the company entered a joint venture agreement with Talisman Energy (NYSE: TLM) to develop a project in the Eagle Ford Shale field of southern Texas.

Perhaps the most exciting move of all is Statoil's 2011 acquisition of Brigham Exploration, a mid-sized producer with significant acreage in the Bakken Shale oil play of North Dakota and Montana. Production from the Bakken oilfield is growing by leaps and bounds, thanks to the development of horizontal drilling and hydraulic fracturing technologies. Some, such as StreetAuthority's Nathan Slaughter, editor of our Scarcity & Real Wealth newsletter, believe it could ultimately become the largest producing region in the United States.

Squeezing every last drop from the North Sea

Weather conditions in the North Sea of the United Kingdom and Norway are hardly the stuff of which beach vacations are made, either. But compared with the Barents region, conditions are downright benign. It's no mistake that the vast oil and gas fields of the North Sea, discovered in the late 1970s and early 1980s, were discovered years before the Barents Sea. The technologies needed to drill wells in the complex fields of the Arctic are relatively new, and the industry was in its infancy back then.

But now the giant fields of the North Sea are mature and declining in production. And as these aging giants decline, the newly discovered fields of the Barents Sea hold the promise to fill the production gap.

Since the North Sea region accounts for about three-quarters of Statoil's total current production, it has been tough for the company to offset declining production -- the firm's total production has fallen in recent years to less than 1.9 million barrels per day. The company plans to use enhanced recovery techniques to try to stem the losses, and this should boost its recovery factor to as high as 55%-65%, up from about a third.

In June 2011, however, management set an ambitious long-term plan to increase total oil output to 2.5 million barrels per day by 2020.

In light of recent discoveries and acquisitions, that goal looks achievable.

A great dividend to boot

Statoil pays dividends once a year in May. Last year, the company paid a total of $1.104 to ADR (American Depository Receipt) holders, equivalent to a yield of about 4.3% at current prices. But given solid production results and sky-high oil prices last year, I'd expect the firm to boost its payout this year by around 8%.

Risks to Consider: The biggest risks facing Statoil are a prolonged dip in energy prices or disappointing production from its new projects. If the company's new, still-untested fields in Norway and Angola fail to pan out, then it may not be able to produce enough oil to offset declining output from the North Sea.

With a dividend payout rate of just 34% of earnings and very little debt, Statoil is one of the world's best-capitalized energy companies. It's a solid buy for even the most conservative investors.

Disclosure: Paul Tracy does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC owns shares of CHK, E in one or more if its “real money” portfolios.

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Source: Statoil Is The Safe Way To Invest In Some Of The Most Exciting Oil Finds