OSLO, Dec 5 (Reuters) - Norwegian energy firm Statoil extended the suspension of three drilling rigs on Friday as it battles to cut costs in the face of shrinking margins, squeezed by a 35 percent drop in crude oil prices since June.
Statoil, which had suspended more than a third of its exploration fleet this year, is upping its efforts to preserve cash having already been selling assets to pay for investments and dividends even when oil was over $100 per barrel.
The group signed contracts for many of its rigs at the top of the market for near record prices, but is suspending the rigs just as market rates tumble, making it impossible to sublet the vessels.
"When the rig contracts were signed it was challenging to ensure sufficient rig capacity," Statoil procurement chief Jon Arnt Jacobsen said in a statement. "Today the activity is facing lower margins, a generally high cost level and subsequent lower profitability."
Statoil has also struggled with poor exploration results this year, as key wells in Angola, the Gulf of Mexico and the Norwegian Arctic disappointed.
Among individual rigs, Statoil said it would suspend COSL's Pioneer for another seven moths, Saipem's Scarabeo 5 by another month and a half and Songa's Trym for another month.
All three were earlier suspended until the end of the year.
Statoil will continue to operate 10 exploration rigs with five in Norway and five abroad.
Statoil gave no financial details of the impact of the suspensions but Songa earlier said it would pay 75 percent of the day rate for its rig during the suspension. Statoil added that the Songa rig could be brought back into service sooner.
(Editing by Terje Solsvik and David Holmes)
Copyright 2016 Thomson Reuters. Click for Restrictions.
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