Statoil with strong financial result for third quarter
Net income for the quarter amounted to NOK 4.3 billion as against NOK 3.3 billion the year before. Net income for the first nine months came to NOK 12.3 billion, on a par with last year.
Adjusted for special items1, return on capital employed after tax for the 12 months to 30 September 2003 came to 18.8 per cent, as against 14.8 per cent for the same period of 2002. The normalised return on capital employed is reported for the first time to be above Statoil’s target for 2004, reaching 13.0 per cent for the 12 months to 30 September 2003. In 2002, the corresponding figure was 10.8 per cent.
“We have delivered a strong financial result for the third quarter, characterised by a high level of profitability. We’ve been through a difficult period this autumn over the consultancy contract with Horton Investment. This affair and the changes made to top management will not affect our focus on delivering results and achieving targets. At the same time, I would emphasise that our established strategies and goals remain unchanged. The third quarter was characterised by higher production and good progress with a number of our projects. We are also very satisfied that the basic principles for a new treaty between Norway and the UK have been defined, so that a new pipeline between these two countries can be realised,” says acting chief executive Inge K Hansen.
The improvement in results is primarily attributable to increased sales, lower costs and higher oil and gas prices measured in Norwegian kroner. Compared with the same period of last year, prices were up by three per cent for oil and 14 per cent for gas. Refining and methanol margins were also higher.
Total oil and gas production in the third quarter of 2003 averaged 983,000 barrels of oil equivalent (boe) per day as against 957,000 boe per day in the same period of 2002. The corresponding daily averages for the first nine months were 1,035,000 boe in 2003 as against 1,042,000 boe last year.
Statoil achieved a net financial income of NOK 0.8 billion for the third quarter of 2003, an improvement of NOK 1.2 billion from the same period of 2002. The positive result in the third quarter of 2003 is primarily due to a strengthening of NOK 0.24 in the exchange rate with the USD during the third quarter. Interest charges on the group’s long-term debt also declined, while results from managing the portfolio of securities improved.
Income taxes in the third quarter of 2003 came to NOK 8.7 billion, equivalent to a rate of 66.6 per cent. This compares with NOK 7.2 billion and a rate of 68.6 per cent for the same period of 2002. Adjusted for special items1, the tax rate came to 72.6 per cent in the third quarter of 2002.
Eight exploration and appraisal wells were completed with Statoil participation on the Norwegian continental shelf (NCS) during the first nine months, of which five yielded discoveries. The group plans to participate in a total of 10 exploration wells on the NCS during 2003 as a whole. Internationally, Statoil was involved in 13 completed wildcat and appraisal wells during the first nine months. Eleven of these have been capitalised. Plans for 2003 call for participation in 15 exploration wells internationally.
Deliveries from the Mikkel gas and condensate field in the Norwegian Sea began as scheduled on 1 October 2003. Costs for this development are estimated to lie more than 20 per cent below the figure in the plan for development and operation (PDO), which represents a reduction of roughly NOK 0.5 billion. In the North Sea, the Vigdis extension project began production on 18 October 2003, almost two months earlier than specified in the PDO, at an estimated cost of NOK 2.6 billion – 14 per cent below the original budget. The new extraction train (NET1) project at the Kårstø processing complex north of Stavanger became operational on 1 October 2003, as scheduled, and 32 per cent below the estimated cost.
Statoil passed an important milestone during the third quarter with the reception of its first liquefied natural gas (LNG) consignments at the Cove Point terminal in the USA. The LNG is regasified at this facility and marketed via the pipeline systems on the US east coast.
Agreement has been reached by the British and Norwegian authorities on the most important principles for a new treaty governing gas transport between the two countries. This accord will specify the frame conditions for new pipelines from the NCS to the UK.
A three-year gas sales agreement was concluded during the third quarter with British Gas Trading, a wholly-owned subsidiary of Centrica. This deal covers two billion cubic metres per year from 1 October 2003, delivered to Britain’s national balancing point (NBP). Just under 50 per cent of the volume falls to Statoil. Three small gas sales agreements were also concluded by the group during the period, with EdF Trading, Essent and Statoil Gazelle respectively.
The total recordable injury frequency (total injuries per million working hours) for Statoil employees and contractor personnel declined from 6.6 in the third quarter of 2002 to 5.9 in the third quarter of 2003. Compared with the same period of last year, the serious incident frequency (serious incidents per million working hours) improved from 3.6 to 3.0. A contractor employee died in September following a work accident at the Iranian yard building the jackets for gas platforms due to be installed on South Pars off Iran. The incident is being investigated to establish its causes and identify improvement measures.
The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim) has issued a preliminary charge alleging violations of the Norwegian General Civil Penal Code provision concerning illegal influencing of foreign government officials and is conducting an investigation concerning a consulting agreement which Statoil entered into in 2002 with Horton Investment Ltd. Statoil has also been notified by the US Securities and Exchange Commission that the commission is conducting an inquiry into the consultancy arrangement to determine if there have been any violations of US federal securities laws.
Further information from:
Kristin Bremer Nebben, +47 51 99 13 77 (office), +47 95 72 43 63 (mobile)
Mari Thjømøe, +47 51 99 77 90 (office), +47 90 77 78 24 (mobile)
Thore E Kristiansen, +1 203 978 6950 (office), +47 91 66 46 59 (mobile)
Financial statements and review - third quarter 2003
Webcast with acting chief executive Inge K Hansen