Statoil Sees Record Earnings from Operations

Statoil achieved an income before financial items, other items, income taxes and minority interest of NOK 16.1 billion for the third quarter of 2004. That represents a rise of 32 per cent from the same period of last year. Earnings per share were NOK 2.69 as against NOK 1.98 for the third quarter of 2003.

Income after income taxes and minority interest was NOK 5.8 billion, an increase of 36 per cent from NOK 4.3 billion for the same period of 2003.

Return on capital employed after tax (1) came to 19.5 per cent for the 12 months to 30 September, compared with 18.7 per cent for 2003 as a whole. The normalized return on capital employed (1) for the 12 months to 30 September was 11.1 per cent.

"This is one of the best quarterly results we've ever presented, with the strong development in oil prices making a special contribution," says chief executive Helge Lund.

"Production during the period was affected by planned maintenance shutdowns and upgrading work on Norwegian fields and at plants in Norway. All in all, however, these results confirm together with events in the third quarter that we are well positioned in both strategic and financial terms. Good execution meant that the Kvitebjørn development and the Alpha North project on Sleipner West both began production on time and within budget. They reinforce our strong gas position on the NCS. In addition, our international production expanded substantially. Both In Salah in Algeria and Kizomba A off Angola came on stream during the period."

The improvement in results from the third quarter of 2003 to this year primarily reflected price rises, measured in Norwegian kroner, of 37 per cent for oil and five per cent on average for gas. These rises were offset to some extent by higher depreciation relating to new fields and future removal costs.

Oil and gas production for the group averaged 965 000 barrels of oil equivalent per day (boe/d) during the third quarter, compared with 983 000 boe/d for the same period of last year. Statoil overlifted by 12 000 boe/d during the quarter.

Net financial income came to NOK 1.7 billion as against NOK 0.8 billion in the third quarter of 2003. This change primarily reflects currency gains.

Income taxes amounted to NOK 11.8 billion, compared with NOK 8.7 billion for the same period of 2003. That reflects a tax rate of 66.6 per cent in both years.

Statoil suffered two fatal accidents during the third quarter at a coating yard which is readying line pipe on behalf of the group for the South Pars field off Iran. Both fatalities have been investigated to clarify their causes, with improvement measures initiated in cooperation with the yard's owners.

The total recordable injury frequency (injuries at Statoil and its contractors per million working hours) was 5.1 as against 5.9 for the third quarter of 2003. The serious incident frequency came to 3.1 compared with 3.2 in June-September 2003.

Important events during the period

  • Helge Lund took over as the new president and CEO of Statoil on 16 August.
  • A new organizational structure was announced, and a new corporate executive committee appointed with effect from 1 September 2004.
  • The Kvitebjørn field in the North Sea began producing natural gas on 26 September. This project was completed on schedule and within budget.
  • li>The Alpha North development on Sleipner West in the North Sea started production on 11 October. The development was completed on schedule and 26 per cent below the original cost estimate.
  • Statoil submitted a broad application on 1 October 2004 for new Norwegian exploration acreage in the North, Norwegian and Barents Seas under the awards in predefined areas for 2004.
  • Kizomba A in block 15 off Angola started producing oil on 7 August, while gas began flowing from Algeria's In Salah field on 18 July.
  • Statoil signed a letter of intent in October with Russian partners relating to liquefied natural gas in the Barents Sea.
  • The labor dispute affecting rigs on the NCS, for which notification of compulsory arbitration was issued on 25 October, reduced Statoil's production from these waters by 6,000 barrels per day in the third quarter.
  • Successful maintenance turnarounds were implemented at the Karstø processing complex north of Stavanger and on several installations on the NCS.
  • Statoil reached agreement on the sale of its 50 per cent interest in the West Navigator drill ship to Smedvig of Stavanger.
  • Statoil resolved on 14 October to accept the penalty imposed by the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (Økokrim) relating to the consultancy agreement with Horton Investments Ltd. This case is still under investigation by the Securities & Exchange Commission and the legal authorities in the USA.

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    Brent Crude Oil : $49.71/BBL 1.50%
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