Statoil Revises Oil & Gas Production Targets

Statoil is modifying its target for oil and gas production in 2007 by about 3%.

Output in 2006 is expected to be about 3% lower than the earlier prognosis. However, the company forecasts a growth in production of 14% from 2006 to 2007.

The revised forecasts do not represent any change in Statoil's oil and gas reserves but entails postponed production.

Output in 2006 is expected to be 1,140,000 barrels of oil equivalent per day (boe/d) based on an oil price of US $60 per barrel.

The production target for 2007 is being reduced to 1,300,000 boe/d, split between approximately 1,060,000 boe/d from the Norwegian continental shelf and approximately 240,000 boe/d internationally. The target is based on an oil price of USD 60 per barrel for the period 2005-07, and is a reduction of about 3%.

As a direct consequence of reduced production, production costs per boe will increase for both 2006 and 2007.

In July, Statoil gave an account of the challenges which are of significance to production and the assumptions for the company's production targets. Complex technical challenges in projects with demanding reservoirs lead to postponements which have a negative effect on production estimates.

On the Kristin field, stepping up production will be further deferred. Running up the wells has to be done cautiously to ensure stability in the reservoir. Plateau production is expected to be reached in the first quarter of 2007, assuming that completion during the winter season goes as planned.

Technical and capacity related challenges within the drilling and well area at some of the established oil fields will lead to deferred production both in 2006 and 2007. This applies mainly to parts of the Tampen area. In order to complete the highly complex Gulltopp well, it is necessary to strengthen the drilling facility on Gullfaks A. Production start on Gulltopp is estimated to take place in the second quarter of 2007. Measures have been implemented with the aim of increasing drilling efficiency.

Gas sales this year are expected to be lower due to reduced gas offtake. For 2006 and 2007, a somewhat lower utilization has been assumed for the Troll, Kvitebjorn and Visund axis.

Capacity restraints in the industry mean that start-ups of some small Statoil- and partner operated fields are expected to be somewhat delayed.

Internationally, production will be affected by delays and challenges relating to start-up of fields such as In Amenas, Dalia and South Pars. Further, a decision has been taken to move forward the maintenance turnaround at the Sincor heavy oil plant in Venezuela from 2008 to 2007.

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