Net income came to NOK 4.7 billion compared with NOK 3.6 billion for the same period of last year.
Return on capital employed after tax1 was 19.2 per cent, as against 18.7 per cent in 2003. The normalised return on capital employed1 over the past 12 months was 12.4 per cent, which is on a par with the 2003 figure.
"We have delivered a strong result for the first quarter, with our best-ever result from operations", says acting chief executive Erling Øverland. We have had high and stable production, high gas sales and reduced unit costs. Combined with robust oil and gas prices, this yielded a solid result. A successful sale of our holding in Germany's Verbundnetz Gas (VNG) also made a positive contribution. We strengthened our financial position during the first quarter, and took important strategic steps both in Norway and internationally".
The improvement in income primarily reflects a six per cent rise in oil and gas sales and a 10 per cent increase in average gas prices compared with the first quarter of 2003. In addition comes NOK 0.35 billion in partial reversal of an earlier provision relating to rig contracts. A provision of NOK 0.7 billion was made in the same period of last year. The sale of VNG also contributed NOK 0.6 billion before tax in the first quarter of 2004.
The income improvement was partly offset by increased depreciation on the Norwegian continental shelf (NCS) relating to higher sales of oil and gas. Oil prices denominated in Norwegian kroner also declined by two per cent during the period. And the contribution from downstream operations fell by NOK 0.6 billion, primarily because the Navion shipping business is no longer included following its sale last year.
Average production of oil and gas rose to 1 184 000 barrels of oil equivalent per day (boe/d) for the first quarter, compared with 1 159 000 boe/d in the same period of last year.
Net financial expenses totalled NOK 1.0 billion, down by NOK 0.2 billion from the first quarter of 2003. That primarily reflects a slight increase in the NOK/USD exchange rate during the first quarter of this year, which yielded some reduction in the unrealised loss of the group's long-term debt.
Tax expense amounted to NOK 10.2 billion, compared with NOK 8.9 billion for the same period of 2003. The effective tax rate was 68.0 per cent as against 70.4 per cent in the first quarter of last year.
The total recordable injury frequency - the total number of injuries sustained by Statoil employees and contractor personnel per million working hours - declined from 6.5 in the first quarter of 2003 to 6.1. The serious injury frequency per million working hours came to 3.8 as against 3.6 in the first quarter of 2003.
Important events during the period
Helge Lund was appointed as the new president and CEO of Statoil on 7 March 2004. He will take up this position on 15 August, with Mr Øverland acting as chief executive until that date.
Statoil submitted an application for new production licenses in the 18th licensing round on the NCS to the Ministry of Petroleum and Energy on 15 March. This broad and extensive application covered both Norwegian Sea and North Sea acreage.
Three wildcat and appraisal wells were completed during the first quarter, of which two were drilled on the NCS and one internationally. In addition, the Alve well in the Norwegian Sea is under evaluation and a well in the Gulf of Mexico was also completed, but is still under evaluation. Statoil plans to spud a total of 14 wildcat and appraisal wells on the NCS and eight internationally during 2004.
The Kristin reservoir in the Norwegian Sea has proved more complex than originally thought, and greater use of horizontal wells to optimise drainage is being planned. As previously indicated, total investment in this project will increase by about NOK 1.7 billion and the estimated cost of the whole development is now NOK 18.9 billion. Statoil has 46.6 per cent of Kristin.
The group's shares in VNG were sold in January to EWE AG, with an accounting gain of NOK 0.6 billion before tax. An agreement was also concluded with Essent in the Netherlands on the sale of 6.5 billion cubic metres of gas from Statoil and the state's direct financial interest (SDFI). Running for five years, the contract starts this October.
Statoil signed a letter of intent with American energy company Dominion to secure increased capacity for liquefied natural gas at the Cove Point terminal in the USA. The two sides aim to complete negotiations in the second quarter on a final agreement, which will run for 20 years from 2008.
Production from the Lufeng oil field operated by Statoil in the South China Sea has been extended by four years, until 2008. Daily output is expected to average more than 10 000 boe/d after sidetracks have been drilled.
"Operations are going well, and the first quarter marked a good start to 2004," says Mr Øverland.
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