Readers of my articles know I am big on energy. That is, I’m big on fossil fuels because I believe they will continue to be an intrinsic part of the global economy for decades to come. So I’m always on the lookout for interesting plays in the energy sector.

Statoil ASA (NYSE:STO) was nowhere on my radar. This Norwegian oil company was so beset with problems that it pretty much had abandoned its home country as a source of oil. I can’t blame the company. It’s a lot warmer in Brazil — and probably more fun, too.

Then one day … black gold. Texas Tea. Oil, that is. And right in its own backyard of the North Sea. This particular oil field was 40% owned by Statoil, and it could yield as much as a billion barrels. It’s also in comparatively shallow water, so the company won’t be drilling miles underwater for its bounty.

Then one day … more black gold. Texas Tea. Oil, that is. This time in the chilly Arctic. This field might hold 500 million barrels. The good times are back for Statoil, and they will be for a very long time.

So is STO worth buying into?

Statoil is going to have to load up on capital expenditures to start pulling that oil out of the water. That’s not a bad thing as long as the company can turn those expenses and oil into hard dollars.

While I am bullish on energy in the long term, there are short-term demand fluctuations that could impact just how much oil the company can sell. In this case, looking at the company’s past results won’t help much. It’s great that even in crappy times, Statoil turned a multibillion-dollar profit. The problem was that its capital expenditures were so large that Statoil basically had no free cash flow. So STO is going to have to use its $8 billion in cash to start moving that oil, and hope demand is such that it can turn around and sell it.

My guess is this will happen. I don’t think analysts have factored these discoveries into their earnings estimates, either. So to a certain extent, trying to place a value on Statoil is difficult. Earnings are going to rise 20% this year, but analysts only have 4% growth next year, and I think that’s low. At the very least, the stock deserves a P/E of 10 for the long-term, which means it is just about fairly priced right now — and it pays a 5% dividend. I think that puts it solidly in the buy category, although retirement investors might want to wait and see how these oil fields pay off first.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned stocks.