Statoil ASA (OSE: STL, NYSE: STO) delivered an income before financial items, other items, income taxes and minority interest of NOK 65.1 billion in 2004, compared with NOK 48.9 billion for the year before.
Net income after income tax and minority interest came to NOK 24.9 billion – more than 50 per cent above the 2003 result of NOK 16.6 billion.
Income before financial items, other items, income taxes and minority interest for the fourth quarter of 2004 was NOK 18.7 billion as against NOK 12.7 billion for the same period of the year before. This represents an increase of 48 per cent. Net income came to NOK 10.0 billion, compared with NOK 4.3 billion in the fourth quarter of 2003.
Return on capital employed1 came to 23.5 per cent in 2004, up from 18.7 per cent the year before. The normalised return on capital employed1 was 12.3 per cent as against 12.4 per cent for 2003.
Earnings per share came to NOK 11.50 for the full year, up from NOK 7.64 in 2003, and NOK 4.64 for the fourth quarter as against NOK 1.98 in the same period of the year before.
“Statoil experienced a record year in 2004, with a net income of NOK 24.9 billion,” says chief executive Helge Lund. “This represents an increase of more than 50 per cent from the year before and is the best result we have ever achieved.
“The profit improvement primarily reflects high oil and gas prices and substantial financial income. We can also take pleasure from a very competitive return on capital employed of 23.5 per cent for the year.
“An organisation with expertise and drive has contributed to our strong position at the beginning of 2005. A large portfolio of projects, both in Norway and internationally, and good strategic positions provide the basis for further development and growth.”
The group’s financial position is robust, and the board will propose to the annual general meeting that a total dividend of NOK 5.30 per share be paid for 2004, including NOK 2.10 as an extraordinary payment. This means that the board has increased the ordinary dividend by NOK 0.25, from NOK 2.95 per share in 2003 to NOK 3.20. The total payout for 2004 corresponds to 46.1 per cent of net income.
Operating revenues totalled NOK 306.2 billion for 2004 compared with NOK 249.4 billion the year before, and NOK 85.8 billion for the fourth quarter as against NOK 65.4 billion for the same period of 2003.
Statoil increased its income before financial items, other items, income taxes and minority interest by 33 per cent compared with 2003.
This improvement primarily reflects higher oil and gas prices measured in NOK. In addition comes NOK 1.2 billion related to changes in provisions for rigs. High refinery and petrochemical margins also increased income by NOK 1.3 billion from 2003.
Total investment for 2004 was NOK 42.8 billion, including NOK 10.6 billion relating to the acquisition of assets.
Net financial income for 2004 came to NOK 5.7 billion as against NOK 1.4 billion the year before. This high figure primarily reflects currency gains from a NOK 0.64 strengthening of the Norwegian krone against the US dollar during 2004.
For the fourth quarter, net financial income was NOK 5.2 billion compared with NOK 1.3 billion in the same period of 2003.
Total oil and gas production in 2004 averaged 1 106 000 barrels of oil equivalent (boe) per day. That compares with a daily average of 1 080 000 boe the year before. Fourth-quarter oil and gas output averaged 1 202 000 boe per day as against 1 214 000 boe per day in the same period of 2003.
Income taxes amounted to NOK 45.4 billion for the full year, corresponding to a tax rate of 64.1 per cent. Adjusted for changes to Norwegian tax legislation relating to taxation of dividends (the exemption method) and changes in the allocation of office costs against offshore revenues, the tax rate came to 66.7 per cent.
Tax in 2003 amounted to NOK 27.4 billion. After adjusting for the positive tax effect relating to the repeal of the removal grant legislation, this figure came to NOK 34.1 billion – corresponding to a tax rate of 67.9 per cent.
Income taxes for the fourth quarter came to NOK 13.7 billion, corresponding to a tax rate of 57.2 per cent. Adjusted for the exemption method and office costs, the tax rate came to 64.7 per cent. That compares with NOK 9.7 billion and 69.1 per cent respectively for the same period of 2003.
In connection with its stock market listing in 2001, Statoil developed a scorecard for 2004. One important target was a normalised return on capital employed of 12 per cent. An improvement programme was also launched.
“I’m pleased that the normalised return on capital employed of 12.3 per cent exceeded the target,” says Mr Lund. “Both the scorecard and the improvement programme have been important tools and a substantial driving force in improving our profitability.”
Production was marginally below the target for the year, mainly as a result of the rig strike on the Norwegian continental shelf (NCS), the loss of output from Snorre A and Vigdis after the well incident on Snorre A, and rather lower international production than expected.
Cost and income improvements identified at 31 December 2004 contributed NOK 3.2 billion, compared with the target of NOK 3.5 billion set for 2004.
The main reason for this difference is a slightly lower growth in output and higher unit production costs than expected in the international business since 2001.
Remaining proven reserves at 31 December amounted to 4 289 million boe as against 4 264 million boe a year earlier. This represents an increase of 25 million boe.
New reserves added in 2004 came to 455 million boe, and the reserve replacement rate was 106 per cent compared with 99 per cent in 2003.
The average reserve replacement rate for the past three years amounted to 101 per cent, while Statoil’s target for this period was 100 per cent.
Six wildcat and appraisal wells were completed on the NCS and six internationally during 2004. Eight of these wells yielded discoveries, while two are awaiting evaluation.
Three people unfortunately lost their lives in the group’s operations during 2004. All worked for contractors involved in the development of the South Pars project in Iran. Another person died after a work accident at the Aker Stord yard on 31 January 2005.
The total recordable injury frequency – total injuries for Statoil and contractor personnel per million working hours – was 5.9 in 2004 as against 6.0 in 2003. The serious incident frequency per million working hours was unchanged at 3.2.
Important events during the fourth quarter:
- Eight operatorships and interests in three other licences on the NCS were secured by Statoil from the predefined area awards for 2004.
- An oil discovery was made by Statoil in the Topas prospect between the Gullfaks and Visund fields in the North Sea.
- Statoil reached agreement with Shell over licence transactions on the NCS, which included a strengthening of the group’s interest in the Snorre field.
- A plan for development and operation of the Skinfaks/Rimfaks satellites was submitted to the Norwegian authorities on 8 December.
- During a well workover and the extraction of a length of casing, an uncontrolled well incident occurred on Statoil’s Snorre A platform in the North Sea on 28 November.
- Discoveries were made in the Rosebank/Lochnagar structure on the UK continental shelf, and by the Tiger well in the Gulf of Mexico.
- Alba Extreme South began producing on the UKCS on 14 October.
- Statoil and Total concluded an agreement which gives the latter 49 per cent of block 4 in the Plataforma Deltana area off Venezuela. The first well on this acreage was spudded on 1 January 2005.
- Statoil was awarded three operatorships and an interest in another licence during the second offshore licensing round on the Faroese continental shelf.
- Plans for the terminal to receive gas from Ireland’s Corrib field were approved by the Irish government on 22 October.
Further information from:
Press:
Wenche Skorge, +47 51 99 79 17 (office), +47 91 87 07 41 (mobile)
Kjersti T Morstøl, +47 51 99 26 71 (office), +47 91 78 28 14 (mobile)
Investor relations:
Mari Thjømøe, +47 51 99 77 90 (office), +47 90 77 78 24 (mobile)
Ragnar Bulie, + 47 51 99 42 01 (office), + 47 99 57 42 01 (mobile)
Financial statements and review - fourth quarter 2004
MD&A
Presentation set
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Webcast with president and CEO Helge Lund