The Statoil group made a net profit of NOK 3.3 billion in the third quarter of 1999, compared with NOK 1.2 billion for the preceding three-month period. Net profit for the first nine months of the year came to NOK 5.2 billion, an increase of NOK 3.9 billion from the same period of 1998.
This improvement primarily reflects higher oil prices and gain on divestments related to the restructuring and focusing of the group's business. In addition come the positive effects of Statoil's reorganisation and cost-cutting programmes, which are progressing as planned.
The group has booked divestment gains totalling NOK 2.5 billion so far this year, and made write-downs and provisions amounting to NOK 2 billion before tax. Divestment gains include NOK 1.5 billion from realising the shareholding in Saga Petroleum, which is classified as financial income. The strengthening of the Norwegian krone against European currencies also contributed to a net financial income of NOK 1.4 billion. That compares with net financial expenses of NOK 1.3 billion for the same period of last year.
Statoil's goal is to reduce its annual operating and administrative costs by NOK 1 billion from 1998 to 2000. A reduction of NOK 450 million had been achieved at 30 September, which is in line with established plans.
"These results are positive," says chief executive Olav Fjell. "We are still not making a satisfactory return when compared with our competitors, but we are on the right track."
Cash flow from operations for the first nine months came to NOK 14.4 billion as against NOK 8.5 billion for the same period of 1998. Net investment to 30 September totalled NOK 14.6 billion compared with NOK 15.1 billion.
| Income statement, Statoil group | |
|
| (amounts in NOK mill.) |
1.1 - 30.9 1999
|
1.1 - 30.9 1998
|
| |
|
|
| Operating revenue |
93 322
|
78 260
|
| |
|
|
| Profit before financial items |
9 556
|
6 979
|
| |
|
|
| E&P Norway |
8 417
|
8 053
|
| International E&P |
( -607)
|
(-1 699)
|
| Refining and marketing |
1 948
|
400
|
| Petrochemicals |
193
|
435
|
| Other |
(-395)
|
( -210)
|
| |
|
|
| Profit before tax |
10 963
|
5 651
|
| |
|
|
| Net profit for the period |
5 168
|
1 304
|
Exploration and production operations off Norway yielded a profit before financial items of NOK 8 417 million compared with NOK 8 053 million for the first nine months of 1998.
Supplies of entitlement crude averaged 391 000 barrels per day as against 408 000 barrels for the same period of last year. Increased production from field interests acquired from Saga Petroleum compensated to a great extent for the decline in output from mature fields.
Sales of entitlement gas from Norwegian fields averaged 19.7 billion cubic metres per day, compared with 16.5 million cubic metres in the same period of 1998.
Operational reliability for production installations and transport systems operated by Statoil was very good during the period.
The price of Brent Blend reference crude during the first nine months averaged NOK 123 (USD 15.9) per barrel, compared with NOK 100 (USD 13.3) for the same period of last year. Gas prices were about 25 per cent lower.
Exploration and production international showed a clear improvement in results, reflecting increased oil production, higher crude prices and reduced exploration costs. Lower gas production drew in the other direction. Statoil's international production for the first nine months averaged 86 000 barrels of oil equivalent per day as against 91 000 barrels for the corresponding period of last year.
Refining and marketing reported substantially better results, which primarily reflects a sales gain of NOK 1 billion from the formation of Statoil Detaljhandel AS in partnership with ICA. The service station network achieved satisfactory results, but the outcome for other marketing operations was affected by reduced volumes and tighter margins. Trading with crude oil and products also showed a significantly better result than in the first nine months of 1998. In addition, the rise in the value of stocks made a positive contribution. Refining operations continued to yield weak results because margins remained narrow through the third quarter.
The Navion shipping and offshore company reported a stronger result, primarily as a result of increased activity in offshore loading and floating production.
Petrochemical operations showed a profit before financial items of NOK 193 million for the first nine months as against NOK 435 million for the same period of 1998. Methanol production was lower than planed. Cost reductions and high output have partly offset considerably lower margins for the Borealis group compared with last year.
The Statoil board has submitted a report to the government on the future development of the group and the state's direct financial interest (SDFI) in Norwegian petroleum operations. This document proposed solutions which aim to maximise the overall value of the state's assets, and which help to reduce risk for the state. In its report, the board recommended that Statoil should be reinforced with all or a substantial share of the SDFI, combined with a partial privatisation and listing of the group.
Read the complete Directors' report.