Delivering growth and results

December 16, 2004, 09:00 CET

The Capital Markets Day being staged by Statoil in Stavanger today, 16 December, is characterised by ambitious goals and positive future prospects.

“We’ve delivered very good results since our stock market listing in 2001,” observes chief executive Helge Lund. “And we will be continuing along the same path.

“That is to be accomplished first by delivering our new 2007 targets and then by creating a robust foundation for long-term growth.”

The group’s production target for 2007 has been raised from 1.35 to 1.4 million barrels of oil equivalent (boe) per day, which corresponds to an annual growth of eight per cent.

While the output target for the Norwegian continental shelf (NCS)has been raised from one million boe per day to 1.1 million, international output will contribute about 300,000 daily barrels.

While the goal for production costs has been tightened to NOK 22 per boe in 2007, an average return of 13 per cent will be sought on capital employed – an increase from the present level.

“Our new goals for both production and return are ambitious,” Mr Lund acknowledges. “I’m particularly gratified that we can raise important targets in today’s market conditions, with high prices and pressure on costs.

“This reflects a stronger culture of delivering results in the group, which augurs well for our future profitability.”

He says that Statoil faces two principal challenges for the future – to deliver short-term results and projects by 2007, and to create a foundation for long-term growth.

The latter will be achieved by maximising the value of producing fields combined with an aggressive exploration strategy.

Statoil plans to drill 18-20 exploration wells on the NCS next year, and 15-20 internationally.

The expansion in international output during the 2007-10 period will help to support an annual growth of two-four per cent in the group’s production.

According to Mr Lund, this confirms that the international strategy has been correct and that it is now yielding results.

Statoil has an ambitious investment programme for 2005-07, in the order of NOK 100-105 billion. A large project portfolio includes at least 17 developments due to be on stream by 2007, and another 14 scheduled for start-up in 2008-10.

Statoil’s management is also introducing an improvement programme comprising a number of corporate initiatives which will embrace the whole business.

The aim is to strengthen profitability, operations and growth over the next few years, as well as to mobilise energy and commitment and to help develop expertise and management resources.

The initiatives will be organised as deliveries for the short term and growth opportunities in a longer perspective.

In the first case, an extra commitment will seek to improve safety results even further, increase drilling efficiency and introduce integrated operations.

Other targets for the immediate future are a world-class project performance and the adoption of best practice for procurement.

Higher exploration ambitions are among the longer-term objectives, along with growing the gas business and continued improvement in oil recovery.

Exploiting the opportunities offered by Statoil’s position at the Cove Point liquefied natural gas terminal in Maryland, USA, and a stronger position in the Barents Sea are other goals.

Restructuring and improvement efforts will continue in the Manufacturing & Marketing business area in order to bring its profitability up to the average for the rest of the group.

"We have a robust strategy and are well-positioned to develop Statoil further into an international, competitive and unique group," Mr Lund notes.

It has also been announced at the Capital Markets Day that the Statoil board intends to propose an extraordinary dividend for 2004, reflecting market conditions and a sound financial position.

This will bring the group’s total pay-out for the year to shareholders to 45-50 per cent of profit after tax and minority interest.