Norwegian Oil Firm Det Norske Cuts 2015 Spending Plans

Reuters

OSLO, Nov 4 (Reuters) – Norwegian oil firm Det norske has cut spending this year after an impairment charge related to lower oil prices pushed it into a loss in the third quarter.

The company, controlled by billionaire Kjell Inge Roekke, forecast production costs of $6.5 per barrel of oil equivalent (boe) this year from an earlier view of $8-10. Adjusting to lower oil prices, it said it had achieved savings this year of more than $100 million, in line with guidance.

"The costs have come down while production has remained strong and we are therefore revising our full-year guidance accordingly," Chief Executive Karl Johnny Hersvik told investors on a conference call.

The exploration and production company, which is focused on its native Norwegian fields, cut capital expenditure this year to around $925 million from a previous guidance of between $950 million and $1 billion.

It projected 2015 exploration expenses at around $95 million from an earlier view of $115-125 million.

Shares in the firm rose 3.2 percent by 1035 GMT, outperforming a 2.0 percent increase in the European oil and gas index.

Det norske, which employs more than 240 people, said it was tendering for a new rig for its Alvheim field in the North Sea.

"We are taking advantage of a very favourable market and expect to be able to lock in extremely favourable rates and very flexible contract structures for the new rig," Hersvik said

The firm posted a net loss of $166 million in the third quarter against expectations for a profit of $10 million due to a non-cash impairment of $186 million related to goodwill from its acquisition of Marathon Oil's Norwegian business.

A comparison with figures a year earlier is skewed because Det norske has since acquired Marathon Oil's Norwegian business, significantly increasing its production and revenue.

(Reporting by Stine Jacobsen; Editing by Alister Doyle and Keith Weir)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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