Forecast for 2008
The company’s expected entitlement production in 2008 is anticipated at 1.75 million barrels of oil equivalents per day (boe/d) based on an oil price of USD 75 per barrel. The average equity production in 2008 is estimated at 1.9 million boe/d. The difference between entitlement and equity production is the effects of production sharing agreements (PSA effects).
Capital expenditure (Capex) for 2008 is estimated at roughly NOK 75 billion compared to NOK 65 billion in 2007.
Exploration expenditure in 2008 is estimated to be about NOK 18 billion. An extensive exploration programme with the completion of approximately 70 exploration wells is planned for the year. In 2007 exploration expenditure is expected to be in the range of NOK 15-16 billion.
Production in 2008 will be influenced, among other things, by the following elements:
PSA effects: StatoilHydro’s entitlement production from its international activities will also in 2008 be influenced by the effects of various production sharing agreements. This means that StatoilHydro’s entitlement production from the International Exploration & Production business area will be about 150 000 boe/d lower than equity production based on an oil price of USD 75 per barrel. For 2007 the difference between equity production and entitlement production is expected to amount to 105 000 boe/d.
Production at the Hammerfest LNG (Snøhvit) plant has been temporarily halted owing to a sea-water leakage in a heat exchanger. The fault is being rectified and the facility is expected to resume production during the first half of January 2008. The challenges associated with the start-up of the gas liquefaction plant will however entail a slower escalation of production than originally assumed. StatoilHydro works on the assumption that equity production from the Snøhvit field in 2008 will average 25–30 000 boe/d, but great uncertainty remains in relation to this estimate.
Drilling and completion of production wells at Kvitebjørn have now been successfully completed. External damage to the rich gas pipeline from Kvitebjørn to Kollsnes was discovered during inspection, most likely caused by a ships anchor. The pipeline has been further inspected and it has been determined that repairs are necessary. Repairing the damage will result in the pipeline being out of operation. Gas and condensate export from Kvitebjørn and gas export from Visund will be halted during the repair period. The negative effect on StatoilHydro’s production is estimated to be 30 000 boe/d in 2008, of which loss of gas accounts for approximately 18 000 boe/d.
Production from the Ormen Lange field is ramping up. However, slower than expected drilling progress is anticipated to have consequences for production in 2008.
Drilling of production wells: Continuous drilling of new production wells is of major significance to counter the natural decline in production from mature fields. Drilling efficiency has improved in 2007 (roughly 80% of planned drilling) in relation to 2006 (roughly 60% of planned drilling). But there is still an accumulated lag in the drilling programme from both 2006 and 2007 which will affect production in 2008. Measures to further improve drilling efficiency have been initiated in connection with the merger.
Turnarounds and well work-overs: Planned turnarounds and well work-overs on the NCS in 2008 are estimated to reduce production with 15-20 000 boe/d compared to 2007.
It is expected that the effects associated with Snøhvit and Kvitebjørn/Visund will lead to production for 2007 being slightly lower than the estimated 1 735 000 boe/d published in the stock exchange announcement of 12 November this year.
None of the above elements, except for PSA-effects, are assumed to have any impact on StatoilHydro’s resource base.
Further information on Capex plans and the company’s aggressive exploration programme, as well as targets for the period after 2008, will be presented at the Capital Markets Day on 9 January 2008.
Lars Troen Sørensen, senior vice president
investor relations, + 47 51 99 77 90
Geir Bjørnstad, vice president, US investor
relations, + 1 203 978 6950
Ola Morten Aanestad, vice president for media
relations, +47 48 08 02 12 (mobile) or +47 51 99 13 77