Statoil Delays Production Start-up at the Mariner Oilfield to 2018

Statoil ASA announced Wednesday that it and its partners have decided to delay the production start-up date for its $7-billion Mariner oilfield, which is located in the UK North Sea, from 2017 to the second half of 2018. The news follows Royal Dutch Shell’s decision to halt the construction of the 80,000 barrel per day Carmon Creek project located in Alberta, Canada, announced late Tuesday.

The Statoil and Shell project delays mark the latest in a line of reduced upstream investment from energy companies. In its financial results for 3Q 2015, released Tuesday, BP stated that it intends to agree between $3 billion and $5 billion in divestments next year and $2 billion and $3 billion a year thereafter. Earlier this month, Repsol also revealed that it will significantly scale back its upstream investment over the next five years.

In its third-quarter results, Statoil said the delay will result in a cost increase for the project of "slightly above" 10 percent, compared to its original plan.

The company's adjusted earnings during 3Q 2015 almost halved to NOK 16.7 billion ($2 billion), from NOK 30.9 billion ($3.7 billion) during the same period last year. Net operating income for the quarter was NOK 7.3 billion ($870 million), compared to NOK 17.0 billion ($2 billion) in 3Q 2014.

Capital spending by Statoil for 2015 is now expected to be $1 billion at $16.5 billion. Meanwhile 2015 production guidance has been increased by three percent; the company delivered production of 1.9 million barrels of oil equivalent per day during the third quarter, which was up four percent on 3Q 2014.

Statoil CEO Eldar Sætre commented in a company statement:

"We are progressing our efficiency programs according to the plan we communicated in February, and continue to reduce the underlying operational cost. I am pleased with the way we are taking costs down, but the continued low prices in the third quarter demonstrates that we must continue to chase further cost efficiencies."

Oil sector analysts at investment bank Jefferies described the results as "weak due to a higher-than-expected tax rate of 78 percent… due to exploration losses in the international portfolio with no offsetting tax deductions as well as the earnings skew to the Norwegian Continental Shelf".

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