Statoil ASA (OSE: STL, NYSE:STO) had a net income of NOK 7.8 billion in the first quarter of 2007, compared to NOK 10.8 billion in the first quarter of 2006.
The 27% decrease in net income from the first quarter of 2006 to the first quarter of 2007 was mainly due to an 11% decrease in the average realised oil price and a 14% decrease in gas prices, both measured in NOK.
"We are delivering strong results despite lower oil- and gas prices," says Statoil's chief executive officer Helge Lund.
"We are facing some technical challenges, mainly related to the pioneering high temperature and high pressure fields Kvitebjørn and Kristin. While addressing these short term challenges, we are continuing to build positions for future growth."
"Statoil has made an important strategic move internationally with an offer to acquire all shares of North American Oil Sands Corporation in Canada. This transaction will strengthen the group's North America position with a substantial operatorship and a large, long-term resource base. In addition, Statoil has secured new exploration acreage in Indonesia and Tanzania," says Mr Lund.
The CEO also expresses satisfaction with the progress achieved in the planned merger between Statoil and Norsk Hydro's oil and gas activities.
"The merger process is on track. In May the merger was cleared by the European Commission. Recently, the merger was also decleared effective by the US Securities and Exchange Commission." Mr Lund notes.
Return on average capital employed after tax (ROACE) (*) for the 12 months ended 31 March 2007 was 24.3%, compared to 26.4% for the 12 months ended 31 December 2006. The decrease was mainly due to lower oil and gas prices. ROACE is defined as a non-GAAP financial measure (*).
In the first quarter of 2007, earnings per share were NOK 3.58 (USD 0.59) compared to NOK 4.92 (USD 0.75) in the first quarter of 2006.
Net operating income in the first quarter of 2007 was NOK 23.8 billion compared to NOK 33.0 billion in the first quarter of 2006. The decrease was mainly due to an 11% decrease in the average oil price measured in NOK, negative changes in fair value of derivatives amounting to NOK 2.7 billion, higher operating expenses of NOK 1.4 billion, mainly due to increased operating facility cost and higher activity in International E&P, and reduced results from Manufacturing & Marketing mainly due to deferred gains on inventories amounting to NOK 0.8 billion. The decrease in net operating income was partly offset by an increase in lifted volumes, contributing positively with NOK 0.9 billion and a decrease in selling, general and administrative expenses of NOK 0.8 billion. The first quarter of 2006 included infrequent insurance premiums and accruals related to liabilities in the two mutual insurance companies in which Statoil Forsikring participates.
Total oil and gas production in the first quarter of 2007 was 1,199,000 barrels of oil equivalents (boe) per day, compared to 1,237,000 boe per day in the first quarter of 2006, a decrease of 3%. The decrease in oil and gas production was mainly related to lower production at the Kvitebjørn and Gullfaks fields. This was partly offset by increased production on the Visund and Kristin fields. The decrease in oil and gas production from the Norwegian continental shelf (NCS) was partly offset by increased production from International E&P.
Exploration expenditure in the first quarter of 2007 was NOK 1.9 billion, compared to NOK 1.7 billion in the first quarter of 2006. The increase in exploration expenditure was mainly due to an increase in the number of wells drilled. Exploration expenditure reflects the period's total exploration activities.
Exploration expenses for the period consist of exploration expenditure adjusted for the period's change in capitalised exploration expenditure. Exploration expenses in the first quarter of 2007 amounted to NOK 1.2 billion, compared to NOK 1.1 billion in the first quarter of 2006. The increase in exploration expenses of NOK 0.1 billion was mainly due to increased exploration expenditure in the first quarter of 2007, partly offset by an increase in capitalised share of the current period's exploration activity.
A total of 13 exploration and appraisal wells were completed in the first quarter of 2007, six on the NCS and seven internationally. Six wells resulted in discoveries, while four wells await final evaluation. Six exploration wells were completed in the first quarter of 2006.
Production cost per boe was NOK 28.4 for the 12 months ended 31 March 2007, compared to NOK 27.4 for the 12 months ended 31 December 2006 (*).
Normalised at a USDNOK exchange rate of 6.00 and adjusted for the estimated volume reduction due to production sharing agreement (PSA) effects, the production cost for the 12 months ended 31 March 2007 was NOK 27.9 per boe, compared to NOK 26.2 per boe for the 12 months ended 31 December 2006 (*). Based on realised oil and gas prices, the estimated PSA effect on the production unit cost for the twelve months ended 31 March 2007 was NOK 0.1 per boe. Normalised production cost is defined as a non-GAAP financial measure (*).
Net financial items amounted to an income of NOK 1.0 billion in the first quarter of 2007 compared to an income of NOK 1.4 billion in the first quarter of 2006. The decrease was mainly caused by reduced gains on securities in the first quarter of 2007, compared to the first quarter of 2006.
Income taxes in the first quarter of 2007 were NOK 17.0 billion, with a corresponding tax rate of 68.4%. Income taxes in the first quarter of 2006 were NOK 23.6 billion, equivalent to a tax rate of 68.6%.
Statoil has adopted International Financial Reporting Standards (IFRS) as its primary accounting principles as from 1 January 2007. Statoil's first quarter 2007 interim consolidated financial statements have been prepared in accordance with IFRS. Comparative financial statements for previous periods presented have also been prepared in accordance with IFRS.
Statoil ASA provided at 10 May 2007 a forecast for oil and gas production in 2007 at 1,150,000-1,200,000 boe per day based on an oil price of USD 60 per barrel. Previously, the target was 1,300,000 boe per day.
The shortfall is largely due to delayed ramp up of new fields and delays in projects and activities. As a direct consequence of reduced production, production cost per boe is expected to increase to above NOK 30 per boe for 2007.
* See end notes in the complete quarterly report.
Attachments:
- Press release
- Financial statement and review
Further information from:
Investor relations
Lars Troen Sørensen, senior vice president investor relations,
+ 47 90 64 91 44 (mobile), +47 51 99 77 90 ( office)
Geir Bjørnstad, vice president,US investor relations,
+ 1 203 978 6950
Press
Ola Morten Aanestad, vice president media relations,
+47 48 08 02 12 (mobile), +47 51 99 13 77 (office)
+47 48 08 02 12 (mobile), +47 51 99 13 77 (office)
This document does not constitute an offer to exchange or sell or an offer to exchange or buy any securities.
An offer of securities in the United States pursuant to a business combination transaction will only be made through a prospectus which is part of an effective registration statement filed with the US Securities and Exchange Commission. Norsk Hydro shareholders who are US persons or are located in the United States are advised to read the registration statement when and if it is declared effective by the US Securities and Exchange Commission because it will contain important information relating to the proposed transaction. You will be able to inspect and copy the registration statement relating to the proposed transaction and documents incorporated by reference at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Statoil's SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. In addition, Statoil will make the effective registration statement available for free to Norsk Hydro's shareholders in the United States.
