Statoil ASA (OSE:STL, NYSE:STO) achieved an income before financial items, other items, income taxes and minority interests of NOK 10.3 billion for the second quarter of 2003. This compares with NOK 11.1 billion for the same period of 2002.
Financial statements and review - second quarter 2003
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Adjusted for special items1), earnings per share for the quarter came to NOK 1.71 as against NOK 2.80 in the equivalent period last year.
Income before financial items, other items, income taxes and minority interests for the first half of 2003 totalled NOK 24.1 billion as against NOK 21.1 billion in the same period of 2002.
Net income for the second quarter was NOK 4.4 billion compared with NOK 6.1 billion in the same three months last year. For the first half, the figures were NOK 8.0 billion as against NOK 9.1 billion.
Adjusted for special items, the return on capital employed after tax1) came to 17.2 per cent for the 12 months to 30 June as against 14.8 per cent for the 2002 calendar year.
Normalised for prices and margins1), the return was 11.7 per cent for the 12 months to 30 June compared with 10.8 per cent for 2002.
“We once again delivered a good result in the second quarter of 2003,” says chief executive Olav Fjell. “Production was lower than in 2002 because of planned maintenance activities and a reduction in gas sales, which was expected. Last year’s result was particularly high because of significant currency gains on group debt. Costs were reduced and the improvement programme is progressing as planned. The acquisition in Algeria marks an important step in the work of strengthening operations outside Norway.”
The decline in income for the second quarter compared with the same period of last year primarily reflects the presence of NOK 5.9 billion in unrealised currency gains in 2002, an eight per cent drop in oil prices measured in NOK and a reduction in lifted volumes as a result of planned maintenance turnarounds and lower gas offtake.
These effects were countered to some extent by higher gas prices and refining margins as well as NOK 0.7 billion in special items relating to the repeal of Norway’s Removal Grant Act and the introduction of tax deductions for installation removal.
This change in the law means that Statoil’s receivable of NOK 6.0 billion from the state has been expensed under other items. Correspondingly, a deferred tax benefit of NOK 6.7 billion has been included under income taxes.
The improvement in income before financial items, other items, income taxes and minority interests from the first half of last year primarily reflects improved downstream margins, oil and gas price rises of six and two per cent respectively in NOK, and a five per cent volume increase in gas sales.
Oil and gas production in the second quarter averaged 966,000 barrels of oil equivalent per day (boed) as against 1,075,000 boed in the same period of 2002. Corresponding figures for the first six months were 1,062,000 and 1,086,000 boed.
These reductions primarily reflect lower oil production from the Norwegian continental shelf (NCS) as a result of planned maintenance shutdowns.
Forecast average production for 2003 as a whole has been upgraded to 1,070,000 boed, principally because of an increase in expected gas sales to 20.5 billion cubic metres.
Statoil achieved a net financial income of NOK 0.4 billion for the second quarter as a result of improved earnings on securities and reduced financial expenses.
The corresponding income for the same period of last year was NOK 5.1 billion, reflecting substantial currency gains on group debt.
NOK 11 billion had been invested by Statoil up to 30 June. Its capital adequacy is good, with a ratio of net interest-bearing debt to capital employed of 23 per cent – a decline of six per cent from 31 December 2002.
Tax expense for the second quarter of 2003 came to NOK 0.3 billion as a result of special items relating to the repeal of the Removal Grant Act.
After adjusting for these items, tax expense totalled NOK 7.0 billion – corresponding to a tax rate of 65.0 per cent. The corresponding figures for the same period of 2002 were NOK 10.1 billion and 62.4 per cent.
In 2002, Statoil specified the most important improvement measures required to reach its target of a normalised 12 per cent return on capital employed in 2004. The aim is to achieve cost reductions and income improvements totalling NOK 3.5 billion in that year compared to 2001.
Measures implemented to 30 June 2003 are expected to provide annual improvements worth NOK 2.3 billion from 2004. The programme is progressing as planned in all the business areas.
Statoil expects to participate in 12 exploration wells on the NCS in 2003. Five of these were completed during the first half, with two yielding discoveries.
Internationally, Statoil is planning to drill 14 exploration and appraisal wells in 2003. Discoveries were made in six of the seven exploration wells completed internationally during the first six months.
The group has submitted its recommendations for the best development concept in the Tampen area of the Norwegian North Sea.
Calling for the region to be further developed through debottlenecking on existing installations, these proposals are now being considered by the other Tampen licensees.
Under an agreement signed on 23 June 2003, Statoil is acquiring part of BP’s interests in two Algerian gas projects – 49 per cent in In Salah and 50 per cent in In Amenas.
The purchase price is about USD 740 million plus costs relating to the transferred interests incurred from 1 January 2003. Statoil and BP will work together with Algeria’s Sonatrach state oil and gas company.
Efforts to improve safety yielded results in the second quarter, with the serious incident frequency falling from 3.8 in the same period of 2002 to 3.2. This indicator improved from 3.9 to 3.3 during the first six months.
The total recordable injury frequency declined from 5.7 to 5.1 in the second quarter, but was up from 5.5 to 5.8 for the first half.
Further information from:
Public affairs:
Wenche Skorge, +47 51 99 79 17 (office), +47 918 70 741 (mobile)
Kristin Bremer Nebben, +47 51 99 13 77 (office) +47 957 24 363 (mobile)
Investor relations:
Mari Thjømøe +47 51 99 77 90 (office), +47 907 77 824 (mobile)
Investor relations USA:
Thore E Kristiansen +1 203 978 6950 (office), +47 916 64 659 (mobile)
