10 February 2014, News Wires – Norwegian giant Statoil has posted a fall in profits for 2013 as lower output drove down revenues and higher expenses hit the company’s bottom line, while it also revealed plans to cut investment over the next few years.
The company saw profits slide 44% during the year to Nkr39.2 billion ($6.3 billion), down from 2012’s net profit of Nkr69.5 billion.
Statoil blamed the decline in profits on a fall in production and prices, for both liquids and gas, while a rise in expenses also hit the company’s bottom line.
Operating expenses rose nearly 23%, to Nkr75 billion, while depreciation, amortisation and net impairment losses increased almost 20% to Nkr72.4 billion.
Revenue for the year dropped to Nkr619.4 billion, down from the Nkr704.3 billion generated the previous year, as output and prices fell.
Output fell from an average of 2 million barrels of oil equivalent per day in 2012 to about 1.9 million boepd last year,
Statoil blamed the decline largely on a drop in gas deliveries from the Norwegian continental shelf, natural decline at its mature fields and divestments and redeterminations.
Over the past year, Statoil divested a number of assets on the UK and Norwegian continental shelves and reduced its ownership in the Shah Deniz project in Azerbaijan and the South Caucasus pipeline, with the divestments netting the company $4 billion.
While overall output fell, Statoil said equity production outside Norway reached a record high of about 723,000 boepd in 2013, driven by the start-up and ramp-up of new fields.
The company also pointed out that it added 1.25 billion barrels of oil equivalent from exploration last year, with 59 of the exploration wells it drilled resulting in 26 discoveries, including the Bay du Nord discovery which it claims was the largest conventional oil discovery by volume last year.
This helped the company achieve a reserve replacement ratio of 128% for the year.
Statoil’s proved reserves stood at 5.6 billion boe as of 31 December, up from just over 5.2 billion boe at the end of 2012.
Despite the decline in the company’s results, Statoil chief executive Helge Lund focused on the positives for the company.
“Our operational performance was good, with safety improvements, production as expected and strong project execution,” he said.
“We delivered leading exploration results and strengthened our resource base.”
Statoil also revealed on Friday that it would invest roughly $20 billion a year over 2014 to 2016, down 8%, or roughly $5 billion per year, on previously announced plans.
The company said the reduction in its capex estimate was due to strict prioritisation and increased capital efficiency.
“Our strategy for value creation and growth remains firm, but we are making some important changes,” Lund said.
“Stricter project prioritisation and a comprehensive efficiency program will improve cash flow and profitability .”
Looking at the year ahead, Statoil plans to complete about 50 wells with a total exploration expenditure of roughly $3.5 billion, excluding signature bonuses.
The company also warned that scheduled maintenance was expected to have a negative affect of about 10,000 boepd during the first quarter, while it added maintenance, in total, was expected to have a negative affect of 55,000 boepd for the full year.