A Review of the Nigerian Energy Industry

Statoil profit dives

Statoil logo25 July 2013, News Wires – Norwegian player Statoil has attributed its 84% plunge in quarterly profit to lower liquids and gas prices and weak trading results.

The company posted on Thursday a net income of Nkr4.3 billion ($725.7 million), a significant reduction from Nkr26.6 billion in the second quarter of 2012.

Net operating income also fell by nearly half from Nkr62 billion to Nkr34.3 billion for the three-month period.

“Measured in (Norwegian kroner), the 7% lower average liquids price and the 11% lower average invoiced gas price negatively affected net operating income in the second quarter,” Statoil said in a statement.

“Gain from (the) sale of assets and the reversal of a provision related to the early retirement pension, both recorded in the second quarter of 2012, significantly contributed to the decrease,” it added.

Adjusted earnings were down 17% to Nkr38 billion, while revenues and other income totalled Nkr148.3 billion reflecting a 26% decline on the same quarter last year.

In addition to lower prices, Statoil said the drop in revenues was partly due to the divestment of the Fuel and Retail segment in the 2012 second quarter.

Statoil said adjusted exploration expenditure was reduced by 24% to Nkr4.1 billion, mainly as a result of a high portion of current spending being capitalised during the quarter because of commercial wells.

“Also, a lower portion of exploration expenditures capitalised in previous periods was expensed in the first half of 2013,” it said.

Operationally, Statoil continued to have exploration success, making five discoveries in the quarter. The company also ramped up several fields and is continuing with major ongoing field developments including Gudrun, Asgard subsea compression and Valemon on the Norwegian continental shelf.

In the quarter, Statoil ramped up several fields. The company continues to have a high activity level in projects on the Norwegian continental shelf, with major field developments ongoing such as Gudrun, Asgard subsea compression and Valemon.

“The activity level on new field developments is high. We are executing our projects according to plan,” Statoil chief executive Helge Lund said in a statement.

Exploration spending was Nkr5.1 billion, in line with the 2012 second quarter.

Reduced drilling activity in the international business and more expensive wells being drilled in the second quarter last year were offset by higher drilling activity on the Norwegian continental shelf in the second quarter of this year, Statoil said.

Total equity and total entitlement liquids and gas output dropped 1% from 2012 to 1.97 billion barrels of oil equivalent and 1.77 bboe, respectively.

Statoil attributed the drop in equity production to the expected natural decline on mature fields, as well as operation disruption at some fields and decreased gas deliveries from the Norwegian continental shelf. Total entitlement output was also impacted by the fall in equity production.

– Upstream

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