Solid production, good results
The increase in net income from the first quarter of 2007 to the first quarter of 2008 was mainly due to a 42% increase in realised oil prices measured in NOK. In addition, the increase in net income is explained by higher natural gas prices, lower write-down of inventories, gains from sales of assets and currency gains. The increase was partly offset by increased exploration expenses.
"We deliver a good first quarter result characterised by solid production in a market with high oil and gas prices", says Helge Lund, StatoilHydro's chief executive.
"Several new fields have been added to the StatoilHydro upstream production portfolio since the turn of the year, for example Volve and Gulltopp on the Norwegian Continental Shelf (NCS) and the deepwater Gunashli field in Azerbaijan."
"We continue to build long term growth through an extensive exploration programme and active business development. We have signed an agreement to take over the Peregrino project in Brazil. This has strengthened our position in an exciting upstream region", says Lund.
"Our exploration activity has yielded encouraging results. So far in 2008 we have confirmed 15 new discoveries, 12 in Norway and three internationally", says Lund.
"I am content with our employees' ability to deliver results through a demanding period", Lund adds.
Return on average capital employed after tax (ROACE) (*)for the 12 months ended 31 March 2008 was 22.5%, compared to 23.8% for the 12 months ended 31 March 2007. The decrease was due to higher average capital employed, partly offset by higher net income. ROACE is defined as a non-GAAP financial measure. (*)
In the first quarter of 2008, earnings per share were NOK 5.01, compared to NOK 3.05 in the first quarter of 2007.
Net operating income in the first quarter of 2008 was NOK 51.4 billion, compared to NOK 34.5 billion in the first quarter of 2007. The increase was mainly due to higher oil and gas prices, lower write-downs of inventories to cost, gains from sales of assets and a slightly lower tax rate. The increase in net operating income was partly offset by higher realised cost of goods sold and higher exploration expenses.
Total oil and gas liftings in the first quarter of 2008 were 1,836 mboe per day, compared to 1,890 mboe per day in the first quarter of 2007. There was an underlift in the first quarter of 2008 of 40 mboe per day  compared to an overlift in the first quarter of 2007 of 79 mboe per day.
Total oil and gas entitlement production in the first quarter of 2008 was 1,889 mboe per day, compared to 1,811 mboe per day in the first quarter of 2007. Average equity  production was 2,048 mboe per day in the first quarter of 2008 compared to 1,889 mboe per day in the first quarter of 2007.
Exploration expenditure was NOK 3.9 billion in the first quarter of 2008, compared to NOK 2.7 billion in the first quarter of 2007. The increase was mainly due to higher drilling activity and increased expenditures on seismic. 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 increased from NOK 2.0 billion in the first quarter of 2007 to NOK 4.2 billion in the first quarter of 2008, mainly due to increased exploration activity and increased expense of previously capitalised exploration expenditures.
In the first quarter of 2008, a total of 21 exploration and appraisal wells and one exploration extension well were completed, six on the NCS and 15 internationally. Seven exploration and appraisal wells and the exploration extension well were confirmed discoveries.
In the first quarter of 2007, a total of 19 exploration and appraisal wells were completed, seven on the NCS and 12 internationally. Nine exploration and appraisal wells were confirmed discoveries in the first quarter of 2007.
Drilling of 19 exploration and appraisal wells and two exploration extension wells was ongoing at the end of first quarter 2008. Nine wells have been completed after 31 March 2008 with seven discoveries and two dry wells.
Production cost per boe was NOK 45.1 for the 12 months ended 31 March 2008, compared to NOK 30.6 for the 12 months ended 31 March 2007.  Based on equity volumes,  the production cost per boe was NOK 41.9 and NOK 29.3, respectively, for the two periods.
Normalised at a USDNOK exchange rate of 6.00, the production cost for the 12 months ended 31 March 2008 was NOK 45.5 per boe, compared to NOK 30.3 per boe for the 12 months ended 31 March 2007.  Normalised production cost is defined as a non-GAAP financial measure. 
The production cost per boe, both actual and normalised, has increased significantly, mainly due to restructuring costs, start-up of new fields, increased maintenance cost and general industry cost pressure.
Adjusted for restructuring costs and other costs arising from the merger recorded in the fourth quarter of 2007 and gas injection costs, the production cost per boe of equity production for the 12 months ended 31 March 2008 was NOK 31.6. The comparable figure for 2007 is NOK 26.4.
Net financial items amounted to an income of NOK 3.9 billion in the first quarter of 2008, compared to an income of NOK 1.2 billion in the first quarter of 2007.
The increase was mainly due to currency gains related to external funding and liquidity and currency risk management. The gains were caused by weakening US dollar versus NOK and amounted to NOK 3.7 billion.
* See end notes in the complete quarterly report.
- Press release
- Financial statement and review
Further information from:
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Geir Bjørnstad, vice president, US investor relations, + 1 203 978 6950
Ola Morten Aanestad, vice president media relations, +47 48 08 02 12 (mobile)
Kai Nielsen, public affairs manager, + 44 78 24 32 68 93