StatoilHydro's Q4, 2007 Losses Result from 2007 Merger
StatoilHydro ASA fourth quarter result is as previously announced heavily influenced by restructuring costs and other costs arising from the merger. Net income in the fourth quarter of 2007 amounted to U.S. $1.2 billion, compared to U.S. $2.8 billion in the fourth quarter of 2006. For the year 2007, net income was U.S. $8.4 billion compared to U.S. $9.8 billion in 2006.
The decrease in net income from the fourth quarter of 2006 to the fourth quarter of 2007 was mainly due to an increase in operating and administrative expenses, primarily related to the previously announced restructuring costs and other costs arising from the merger, amounting to $2.02 billion before tax. Following the closing of the merger, restructuring costs were booked in the fourth quarter. In addition, the decrease in net income is explained by negative impact from derivatives, loss on financial items and a high tax rate.
"The merger has strengthened our financial capacity, our competence and resources base and thereby our competitiveness. The restructuring costs represent an investment to achieve significant synergy gains from the merger in the coming years, " says Helge Lund, StatoilHydro's chief executive.
Total oil and gas entitlement production in the fourth quarter of 2007 was 1.818 million barrels of oil equivalents (mmboe) per day. The annual production for 2007 was 629 mmboe compared to 623 mmboe in 2006.
"2007 was a historical year for StatoilHydro with a high activity level. We completed one of the biggest mergers in our industry and already have the new organisation up and running. 15 new projects came on stream, our exploration activity level was high both on the Norwegian Continental Shelf and internationally, and we have gained access to world class exploration acreage and resources underpinning our future growth", says Lund.
The fourth quarter of 2007 is the first quarter for which financial statements of the merged StatoilHydro organization are being presented. Historical data have been restated as if the merged company had existed for all periods.
Net operating income in the fourth quarter of 2007 was $5.8 billion compared to $6.6 billion in the fourth quarter of 2006. The decrease was mainly due to restructuring and other costs arising from the merger amounting to $2.02 billion and losses on derivatives of $679 million.
In 2007, net operating income was $25.9 billion compared to $31.4 billion in 2006. The decrease was mainly due to an increase in operating, selling and administrative expenses stemming in part from restructuring and other costs arising from the merger described above, losses on derivatives of $1.9 billion, new fields coming on stream and increased activity levels.
Net financial items amounted to a loss of $132 million in the fourth quarter of 2007, compared to an income of $585 million in the fourth quarter of 2006. Net financial items in 2007 amounted to an income of $1.81 billion, compared to an income of $962.1 million in 2006.
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