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Record result for first half-year

August 9, 2000, 01:00 CEST
Profit before tax for Statoil in the first half of 2000 came to NOK 16.8 billion, an increase of NOK 11.7 billion from the same period of last year and the group's best half-year result ever.

Net profit amounted to NOK 5.4 billion as against NOK 1.9 billion for the first six months of 1999.

This sharp improvement in results reflects higher oil prices, better refining margins, increased oil production and cost reductions.

"We are well satisfied with this performance," says chief executive Olav Fjell. "It has further strengthened our financial position. The improvement programme for the first six months was completed as planned. The group also had a good half-year for oil and gas exploration.

Noting that several finds were made by Statoil off Norway and in other parts of the world, he says that this shows the group has concentrated internationally on the right areas. Work on enhancing the efficiency of the business is continuing to ensure that we can also show satisfactory results at times of low prices and difficult markets," Mr. Fjell added.

Half-year accounts, Statoil Group
(amounts in NOK million)
1st half 2000
1 st half 1999
Operating revenue
97 155
55 025
Profit before financial items
18 668
4 839
- E&P Norway
15 502
4 914
- International E&P
645
-440
- Refining and marketing
2 233
584
- Petrochemicals
220
32
- Other
68
-251
Profit before tax
16 828
5 054
Net profit for the period
5 389
1 871

Business segments
Exploration and production reported a profit of NOK 16.1 billion before financial items, compared with NOK 4.5 billion in the same period of 1999. This improvement primarily reflected higher oil prices and production, but increased gas prices and lower costs also made a positive contribution to the result. Profit before financial items breaks down into NOK 15.5 billion from the Norwegian continental shelf (NCS) and NOK 645 million from international exploration and production operations. Production in the first half of 2000 averaged 621 000 barrels of oil equivalent per day, an increase of 50 000 barrels compared with the same period of last year.

Statoil achieved a number of good exploration results during the first half, including a discovery on the Svale prospect near its Norne field in the Norwegian Sea. Oil was confirmed in a well associated with the Rimfaks field and a discovery was made south of the Huldra field, both in the North Sea. Internationally, Statoil was involved in finds in several of its core areas. The second well on Shah Deniz off Azerbaijan confirmed one of the largest gas discoveries made world-wide in recent years. Strikes were also made in the Mondo prospect off Angola and the Kashagan-1 well off Kazakstan.

Norwegian authorities have approved the plan for development and operation (PDO) of Statoil's Kvitebjørn project in the North Sea. All the major construction contracts have been awarded for this field, which has been given delivery responsibility for gas from the autumn of 2004 until 2014. A PDO for the group's Glitne find – the smallest Norwegian discovery to be developed as a stand-alone project to date – has also been submitted to the authorities.
The Åsgard B gas treatment platform and the Åsgard C condensate storage ship are both in position. Statoil has concluded agreements which ensure that this Norwegian Sea field can meet its delivery commitments from 1 October.

Refining and marketing achieved a profit of NOK 2.2 billion before financial items, which represents a sharp improvement from last year's NOK 584 million. Better refining margins, good results from trading operations and an improvement in results for the Navion shipping and offshore subsidiary helped to strengthen the result.

The petrochemicals business reported a profit of NOK 220 million before financial items for the first half-year, as against NOK 32 million in the same period of 1999. This improvement reflects higher prices and improved margins in the market as well as good cost control.

Financial aspects
The good market conditions more than doubled Statoil's cash flow from operations, and the group has repaid NOK 7 billion of its long-term debt so far this year. That in turn has strengthened its financial position in that the ratio of net interest-bearing debt to book equity fell from 1.01 at 31 December 1999 to 0.74 at 30 June. Return on capital employed after tax improved from 4.7 per cent in 1999 to 14.3 per cent on an annual basis for the first half of 2000.

Net financial expenses came to NOK 1.8 billion for the first half of 2000, as against a net income of NOK 215 million for the same period of last year. This primarily reflects an unrealised foreign currency loss on the group's long-term debt because of the strength of the US dollar against the Norwegian krone. Overall, however, a high USD/NOK exchange rate is positive for Statoil's future revenues.

See also:
Report first half
Press conference presentation, 9 Aug 00 – PDF version (0.5 MB)
Presentation of first half financial results, 9 Aug 00 – PDF version (1.3 MB)

Further information from:
John Ove Lindøe, tel: +47 51 99 68 81/Wenche Skorge, tel: +47 51 99 79 17