Statoil Targets Cost Savings of $1B in 2017
Statoil ASA is targeting cost savings of $1 billion in 2017, which comes in addition to the $3.2 billion it has already cut as part of its improvement program.
The Norwegian energy firm expects its capital expenditure to total around $11 billion this year, with exploration activity set to account for $1.5 billion in 2017.
Although scheduled maintenance activity is estimated to reduce quarterly production by approximately 10,000 barrels of oil equivalent per day in the first quarter of 2017, Statoil’s equity production this year is estimated to be around 4-5 percent above the 2016 level.
Statoil’s capital expenditure was reduced to $10.1 billion in 2016 due to the improvement program and “strict capital discipline,” the company said in its latest financial results.
Statoil delivered equity production of 2.095 million barrels of oil equivalent per day in the fourth quarter of 2016, compared to 2.046 mmboe per day in the same period in 2015. The increase was primarily due to the ramp-up of new fields and strong operational performance, Statoil said.
Statoil posted an operating loss of $1.897 million in the fourth quarter of 2016. Net operating income was $80 million for the full year of 2016 compared to $1.366 billion for the full year of 2015.
The “significant decrease” was primarily driven by the drop in liquids and gas prices, lower refinery margins and lower gains on sale of assets, according to Statoil’s latest financial report. This decrease was partially offset by lower net impairment charges in 2016 compared to 2015 and a reduction in operating, depreciation and exploration costs, Statoil said.
“2016 was a challenging year for the industry. A fact that is also reflected in our fourth quarter and full year results for 2016,” Statoil’s President and CEO Eldar Saetre said in the company’s 2017 capital markets update.
“Statoil is emerging from this downturn as a stronger and much more competitive company,” he added.
Saetre outlined that the company has reset its cost base, transformed its opportunity set and is continuing to chase improvements.
“We have the financial capacity and are ready to invest in our next generation portfolio with radically improved break evens. With a sharpened high value, low carbon strategy, Statoil is well positioned for the long term and even more value driven in everything we do,” he said.
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