NOK 1.9 billion profit for Statoil in first half-year

August 4, 1999, 01:00 CEST

Net profit for the Statoil group in the first half of 1999 came to NOK 1.9 billion as against NOK 1.5 billion for the same period of last year. Pre-tax profit was NOK 5.1 billion as against NOK 4.7 billion in the first half of 1998. This increase reflects a positive result in financial items which more than offset the loss of revenue from lower oil production off Norway compared with the first half of 1998.

Profit before financial items came to NOK 4.8 billion as against NOK 6.1 billion for the same period of last year. This decline primarily reflects lower oil production. Net financial income totalled NOK 200 million as against net expenses of NOK 1.3 billion in the first half of 1998. The improvement can be mainly attributed to strengthening of the Norwegian krone against other European currencies and good capital management results in the Statoil Forsikring insurance arm.

"Despite the progress from the first half of last year, this result is not satisfactory," says Statoil chief executive Harald Norvik. "The decline in production from fields on the Norwegian shelf operated both by us and by our partners is a matter of concern."

Cash flow from operations totalled NOK 5.8 billion during the first half, compared with NOK 6.3 billion in the first half of 1998. Net investment totalled NOK 10 billion, up from NOK 9 billion for the same period of last year.

Exploration and production
This part of the business achieved a profit of NOK 4.5 billion before financial items for the first half of 1999, as against NOK 5.7 billion in the same period of last year. Supplies of entitlement crude averaged 429000 barrels per day, compared with 471000 in the first half of 1998. The average price of Brent Blend reference crude was NOK 104 (USD 13.4) per barrel, which compares with NOK 103 (USD 13.6) in the same period of last year. Daily sales of entitlement gas averaged 24.8 million cubic metres compared with 24.5 million in the first six months of 1998. Gas prices for the first half-year were roughly 25 per cent down from the same period of last year.

Production installations and transport systems operated by Statoil worked very reliably during the period. Åsgard in the Norwegian Sea began producing oil from the Åsgard A ship on 19 May, and output is expected to reach roughly 155000 barrels per day over the next few months. Statoil has 13.55 per cent of this field.

Two gas discoveries were made by Statoil off Norway, and both are currently being assessed for possible declarations of commerciality. The group secured interests in four fields, including two operatorships, in a Norwegian offshore licensing round.

Statoil lifted its first oil cargo from the Azeri-Chirag field in the Caspian, where it has an 8.56 per cent holding. Fully developed, this field is expected to produce more than 800 000 barrels per day.

A first exploration well in the Shah Deniz licence, also in the Caspian, proved large volumes of gas and condensate. Drilling of a second well is due to be completed in mid-October. Statoil's interest in this prospect is 25.5 per cent.

Refining and marketing
Profit before financial items came to NOK 576 million as against NOK 458 million in the first half of 1998.

Statoil sold 50 per cent of the shares in Statoil Detaljhandel Skandinavia AS to ICA AB of Sweden. This joint venture will be responsible for sales of motor fuel, groceries, fast food, car maintenance and other services at more than 1500 Statoil service stations in Scandinavia.

Lower margins and a scheduled turnaround at the group's Mongstad refinery near Bergen yielded a weak result for refining operations.

Shipping operations showed results on a par with the first half of 1998, while trading with oil and products did better. The value of stocks also rose during the first six months as a result of higher oil prices

Petrochemical operations showed a profit of NOK 32 million before financial items for the first half of 1999 as against NOK 327 million for the same period of last year.

Margins for the main products from the Borealis group, which is owned 50 per cent by Statoil, were substantially lower than in the first half of 1998. Cost reductions, synergies from the acquisition of the PCD polyolefin company and higher production meant that the group nevertheless, considering the market conditions, achieved an acceptable result for the first six months this year.

Very narrow margins and low production meant that results from Statoil's methanol operation were unsatisfactory in the first half of 1999.

(Amounts in NOK mill) 1st half 99 1st half 98 Total 98
Operating revenues 55 025 52 791 105 892
Result before financial items 4 839 6 066 6 580
- E&P Norway 4 882 6 411 8 895
- International E&P (371) (749) (2 586)
- Refining and marketing 576 458 209
- Petrochemicals 32 327 371
- Other (280) (381) (309)
Profit before tax 5 054 4 738 4 301
Profit for the period 1 871 1 514 134

Further information from:
Kai Nielsen, tel (office): +47 51 99 49 72

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