High activity level in new organisation
Net income in the fourth quarter of 2007 amounted to NOK 6.2 billion, compared to NOK 15.0 billion in the fourth quarter of 2006. For the year 2007, net income was NOK 44.6 billion compared to NOK 51.8 billion in 2006.
The decrease in net income from the fourth quarter of 2006 to the fourth quarter of 2007 was mainly due to an increase in operating and administrative expenses, primarily related to the previously announced restructuring costs and other costs arising from the merger, amounting to NOK 10.7 billion before tax. Following the closing of the merger, restructuring costs were booked in the fourth quarter. In addition, the decrease in net income is explained by negative impact from derivatives, loss on financial items and a high tax rate.
«The merger has strengthened our financial capacity, our competence and resources base and thereby our competitiveness. The restructuring costs represent an investment to achieve significant synergy gains from the merger in the coming years,» says Helge Lund, StatoilHydro’s chief executive.
Total oil and gas entitlement production in the fourth quarter of 2007 was 1.818 million barrels of oil equivalents (mmboe) per day. The annual production for 2007 was 629 mmboe compared to 623 mmboe in 2006.
«2007 was a historical year for StatoilHydro with a high activity level. We completed one of the biggest mergers in our industry and already have the new organisation up and running. 15 new projects came on stream, our exploration activity level was high both on the Norwegian Continental Shelf and internationally, and we have gained access to world class exploration acreage and resources underpinning our future growth», says Lund.
The chief executive points to the group’s acquisition of oil sands assets in Canada and the agreement to join as a partner in the Shtokman Development Company as two important building blocks for international growth.
The fourth quarter of 2007 is the first quarter for which financial statements of the merged StatoilHydro organisation are being presented.
Historical data have been restated as if the merged company had existed for all periods.
StatoilHydro’s Board of Directors proposes to the annual general meeting an ordinary dividend of NOK 4.20 per share for 2007, as well as NOK 4.30 per share in special dividend. In 2006 the ordinary dividend paid by Statoil ASA was NOK 4.00 per share, while the special dividend amounted to NOK 5.12 per share.
Net operating income in the fourth quarter of 2007 was NOK 30.8 billion compared to NOK 35.2 billion in the fourth quarter of 2006. The decrease was mainly due to restructuring and other costs arising from the merger amounting to NOK 10.7 billion and losses on derivatives of NOK 3.6 billion.
The decrease in net operating income was partly offset by lower impairment of property plant and equipment charges and a 37% increase in lifted volumes of oil and gas in International E&P, which contributed NOK 2.0 billion and NOK 2.7 billion, respectively.
In 2007, net operating income was NOK 137.2 billion compared to NOK 166.2 billion in 2006. The decrease was mainly due to an increase in operating, selling and administrative expenses stemming in part from restructuring and other costs arising from the merger described above, losses on derivatives of NOK 10 billion, new fields coming on stream and increased activity levels.
Total oil and gas entitlement production in the fourth quarter of 2007 was 1.818 mmboe per day, compared to 1.748 mmboe per day in the fourth quarter of 2006. Annual equity production was 1.839 mmboe in 2007.
Total oil and gas liftings in the fourth quarter of 2007 were 1.786 mmboe per day, compared to 1.705 mmboe per day in the same period of 2006. This is equivalent to an underlift of 32 mboe per day in the fourth quarter of 2007. In 2007, total oil and gas liftings were 1.735 mmboe per day compared to 1.698 mmboe per day 2006.
Exploration expenditure in the fourth quarter of 2007 was NOK 5.2 billion, compared to NOK 5.0 billion in the fourth quarter of 2006. In 2007 the exploration expenditure was NOK 14.2 billion, compared to NOK 13.4 billion in 2006. The increase in exploration expenditure was mainly due to higher drilling activity and increased expenditures on seismics internationally. Exploration expenditure reflects the period’s exploration ,activities.
Exploration expenses for the period consist of exploration expenditure adjusted for the period’s change in capitalised exploration expenditure. Exploration expenses in the fourth quarter of 2007 amounted to NOK 4.5 billion compared to NOK 4.0 billion in the fourth quarter of 2006. Annual exploration expenses amounted to NOK 11.3 billion and NOK 10.7 billion in 2007 and 2006, respectively.
A total of 18 exploration and appraisal wells were completed in the fourth quarter of 2007, four on the NCS and 14 internationally. Five wells were confirmed discoveries. The number of exploration wells completed in the fourth quarter of 2006 was 17.
In addition, one exploration extension well was completed. Drilling in 16 appraisal and exploration wells and two exploration extension wells was ongoing at the end of 2007.
In 2007, a total of 71 exploration and appraisal wells were completed, 24 on the NCS and 47 internationally. Two exploration extension wells were completed in the same period. Thirty-four of the exploration and appraisal wells were confirmed discoveries, 16 on the NCS and 18 internationally.
Both exploration extension wells were discoveries. The number of exploration and appraisal wells completed in 2006 were 73. Five exploration extension wells were completed in 2006.
Proved reserves at the end of 2007 were 6,010 mmboe, compared to 6,101 mmboe at the end of 2006, a decrease of 91 mmboe. In 2007, 542 mmboe were added through revisions, extensions and discoveries, compared to additions of 383 mmboe in 2006, also through revisions, extensions and discoveries.
The reserve replacement ratio was 86% in 2007, compared to 61% in 2006, while the average three-year replacement ratio, including the effects of sales and purchases, was 81% at the end of 2007, compared to 76% at the end of 2006.
Adjusted for restructuring costs and other costs arising from the merger, the production cost per boe for the 12 months ended 31 December 2007 was NOK 35.7. This amount includes NOK 2.5 related to purchase of gas for reinjection.
Net financial items amounted to a loss of NOK 0.7 billion in the fourth quarter of 2007, compared to an income of NOK 3.1 billion in the fourth quarter of 2006. Net financial items in 2007 amounted to an income of NOK 9.6 billion, compared to an income of NOK 5.1 billion in 2006.
- Press release
- Financial statement and review
Further information from:
Lars Troen Sørensen, senior vice president investor relations, + 47 90 64 91 44 (mobile), +47 51 99 77 90 ( office)
Geir Bjørnstad, vice president, US investor relations, + 1 203 978 6950
Ola Morten Aanestad, vice president media relations, +47 48 08 02 12 (mobile), + 47 22 97 22 88 (office)
Kai Nielsen, public affairs manager, + 44 78 24 32 68 93