The increased income in the second quarter of 2005, compared to the second quarter of 2004, was mainly related to:
• Increase in average oil price measured in NOK of 31 per cent
• Increase in natural gas prices measured in NOK of 30 per cent
• Increased oil and gas liftings of 8 per cent
• Improved results from refining operations
“This has been another strong quarter for Statoil, with our best-ever result from operations,” says chief executive Helge Lund. "The improved result is mainly due to higher oil and gas prices, increased international production and good regularity in refining.”
“International production has increased by 77 per cent compared with the same quarter last year, and I am pleased with our acquisition of the deepwater portfolio in the Gulf of Mexico in April, which will contribute to further long-term growth internationally.”
“The level of activity on the Norwegian continental shelf is high. So far this year a total of nine projects have been sanctioned, including large and important developments such as Statfjord late life and Tyrihans. The process plant for the Snøhvit field was successfully berthed in its dock at Melkøya on 13 July. And following the sale of Statoil’s holding in Borealis in June, Statoil is now able to focus even more strongly on developing as an internationally competitive oil and gas company.”
Return on average capital employed after tax (ROACE)* for the twelve months ended 30 June 2005 was 25.5 per cent, compared to 19.0 per cent for the twelve months ended 30 June 2004. This increase was mainly due to increased oil and gas prices measured in NOK. Normalised ROACE* for the twelve months ended 30 June 2005 was 12.5 per cent, compared to 12.6 per cent for the corresponding period in 2004. ROACE is defined as a non-GAAP financial measure*.
In the second quarter of 2005, earnings per share were NOK 3.12 (USD 0.48) compared to NOK 2.01 (USD 0.29) in the second quarter of 2004. For the first six months of 2005, earnings per share were NOK 6.24 (USD 0.95) compared to NOK 4.18 (USD 0.60) for the first six months of 2004.
Income before financial items, income taxes and minority interest increased from NOK 14.2 billion in the second quarter of 2004 to NOK 21.9 billion in the second quarter of 2005. This was mainly related to a 31 per cent higher average oil price measured in NOK and a 30 per cent increase in gas prices measured in NOK. Increased regularity and margins from the refineries were the main contributing factors to the NOK 1.0 billion increase in results from the downstream business. The increase in cost items was mainly related to increased activity and the consolidation of Statoil Detaljhandel Skandinavia (SDS) from 1 July 2004. However, these increases were more than offset by increased revenues from the same activities.
In the first half of 2005, income before financial items, income taxes and minority interest was NOK 43.4 billion compared to NOK 30.3 billion in the first half of 2004. The increase was mainly due to a 32 per cent increase in the average oil price measured in NOK and a 26 per cent increase in gas prices measured in NOK. The increase was partly offset by the gain of NOK 0.6 billion from the sale of the shares in Verbundnetz Gas AG (VNG), which was included in income in the first quarter of 2004.
| USGAAP income statement | |||||||||
|
Second quarter
|
First half
|
Full year
|
|||||||
|
2005
|
2004
|
2005
|
2005
|
2004
|
2005
|
2004
|
|||
| (in millions) |
NOK
|
NOK
|
change
|
USD (1)
|
NOK
|
NOK
|
change
|
USD
|
NOK
|
| Sales |
92,748
|
70,961
|
31%
|
14,186
|
176,897
|
137,041
|
29%
|
27,056
|
303,756
|
| Equity in net income of affiliates |
318
|
284
|
12%
|
49
|
754
|
504
|
50%
|
115
|
1,209
|
| Other income |
29
|
60
|
(52%)
|
4
|
67
|
790
|
(92%)
|
10
|
1,253
|
| Total revenues |
93,095
|
71,305
|
31%
|
14,239
|
177,718
|
138,335
|
28%
|
27,182
|
306,218
|
| Cost of goods sold |
56,864
|
44,945
|
27%
|
8,697
|
106,183
|
83,612
|
27%
|
16,241
|
188,179
|
| Operating expenses |
7,113
|
6,632
|
7%
|
1,088
|
14,330
|
13,587
|
5%
|
2,192
|
27,350
|
| Selling, general and administrative expenses |
1,802
|
1,165
|
55%
|
276
|
3,358
|
2,085
|
61%
|
514
|
6,298
|
| Depreciation, depletion and amortisation |
4,535
|
3,908
|
16%
|
694
|
9,041
|
8,061
|
12%
|
1,383
|
17,456
|
| Exploration expenses |
861
|
430
|
100%
|
132
|
1,385
|
720
|
92%
|
212
|
1,828
|
| Total expenses before financial items |
71,175
|
57,080
|
25%
|
10,886
|
134,297
|
108,065
|
24%
|
20,541
|
241,111
|
| Income before financial items, income taxes and minority interest |
21,920
|
14,225
|
54%
|
3,353
|
43,421
|
30,270
|
43%
|
6,641
|
65,107
|
| Net financial items |
(860)
|
(144)
|
(497%)
|
(132)
|
(2,607)
|
(1,159)
|
(125%)
|
(399)
|
5,739
|
| Income before income taxes and minority interest |
21,060
|
14,081
|
50%
|
3,221
|
40,814
|
29,111
|
40%
|
6,242
|
70,846
|
| Income taxes |
(14,106)
|
(9,665)
|
(46%)
|
(2,158)
|
(26,937)
|
(19,892)
|
(35%)
|
(4,120)
|
(45,425)
|
| Minority interest |
(204)
|
(61)
|
(234%)
|
(31)
|
(354)
|
(164)
|
(116%)
|
(54)
|
(505)
|
| Net income |
6,750
|
4,355
|
55%
|
1,032
|
13,523
|
9,055
|
49%
|
2,068
|
24,916
|
| Income before financial items, income taxes and minority interest for the segments |
2005
|
Second quarter
2004 |
2005
|
2005
|
First half
2004 |
2005
|
Full year
2004 |
||
| (in millions) |
NOK
|
NOK
|
change
|
USD (1)
|
NOK
|
NOK
|
change
|
USD
|
NOK
|
| E&P Norway |
17,106
|
11,668
|
47%
|
2,616
|
33,578
|
23,273
|
44%
|
5,136
|
51,029
|
| International E&P |
2,236
|
906
|
147%
|
342
|
3,863
|
1,620
|
138%
|
591
|
4,188
|
| Natural Gas |
1,117
|
1,193
|
(6%)
|
171
|
2,672
|
4,098
|
(35%)
|
409
|
6,784
|
| Manufacturing & Marketing |
1,610
|
633
|
154%
|
246
|
3,560
|
1,492
|
139%
|
545
|
3,921
|
| Other |
(149)
|
(175)
|
15%
|
(23)
|
(252)
|
(213)
|
(18%)
|
(39)
|
(815)
|
| Income before financial items, income taxes and minority interest |
21,920
|
14,225
|
54%
|
3,353
|
43,421
|
30,270
|
43%
|
6,641
|
65,107
|
| Financial data | |||||||||
|
Second quarter
|
First half
|
Full year
|
|||||||
|
2005
|
2004
|
2005
|
2005
|
2004
|
2005
|
2004
|
|||
|
NOK
|
NOK
|
change
|
USD (1)
|
NOK
|
NOK
|
change
|
USD
|
NOK
|
|
| Weighted average number of ordinary shares outstanding |
2,165,
828,391 |
2,166,
143,715 |
2,165,
929,863 |
2,166,
143,715 |
2,166,
142,636 |
||||
| Earnings per share |
3.12
|
2.01
|
55%
|
0.48
|
6.24
|
4.18
|
49%
|
0.95
|
11.50
|
| ROACE (last 12 months) |
25.5%
|
19.0%
|
25.5%
|
19.0%
|
23.5%
|
||||
| ROACE (last 12 months normalised) |
12.5%
|
12.6%
|
12.5%
|
12.6%
|
12.4%
|
||||
| Cash flows provided by operating activities (billion) |
20.6
|
6.0
|
245%
|
3.2
|
39.1
|
26.4
|
48%
|
6.0
|
38.8
|
| Gross investments (billion) |
21.9
|
16.4
|
33%
|
3.3
|
28.6
|
23.1
|
24%
|
4.4
|
42.8
|
| Net Debt to Capital employed ratio |
27.7%
|
23.7%
|
27.7%
|
23.7%
|
19.0%
|
||||
| Operational data | |||||||||
|
Second quarter
|
First half
|
Full year
|
|||||||
|
2005
|
2004
|
change
|
2005
|
2004
|
change
|
2004
|
|||
| Average oil price (USD/bbl) [*] |
50.3
|
35.6
|
41%
|
48.4
|
33.8
|
43%
|
38.1
|
||
| NOK/USD average daily exchange rate |
6.39
|
6.86
|
(7%)
|
6.34
|
6.88
|
(8%)
|
6.74
|
||
| Average oil price (NOK/bbl) [*] |
321
|
244
|
31%
|
307
|
233
|
32%
|
257
|
||
| Gas prices (NOK/scm) |
1.32
|
1.02
|
30%
|
1.32
|
1.05
|
26%
|
1.10
|
||
| Refining margin, FCC (USD/boe) [*] |
8.2
|
7.8
|
5%
|
6.6
|
6.4
|
3%
|
6.4
|
||
| Total oil and gas production (1,000 boe/day) [*] |
1,128
|
1,073
|
5%
|
1,158
|
1,128
|
3%
|
1,106
|
||
| Total oil and gas liftings (1,000 boe/day) [*] |
1,142
|
1,058
|
8%
|
1,165
|
1,112
|
5%
|
1,093
|
||
| Production (lifting) cost (NOK/boe, last 12 months) |
22.5
|
22.2
|
1%
|
22.5
|
22.2 |
1%
|
23.3
|
||
| Production (lifting) cost normalised (NOK/boe, last 12 months) [*] |
22.6
|
22.2
|
2%
|
22.6
|
22.2
|
2%
|
23.3
|
||
| (1) Solely for the convenience of the reader, the second quarter of 2005 has been translated into US dollars at the rate of NOK 6.5381 to USD 1.00, the Federal Reserve noon buying rate in the City of New York on 30 June 2005. | |||||||||
Total oil and gas production in the second quarter of 2005 amounted to 1,128,000 barrels of oil equivalent (boe) per day compared to 1,073,000 boe per day in the second quarter of 2004. In the first half of 2005 total oil and gas production was 1,158,000 boe per day, compared to 1,128,000 boe per day in the first half of 2004.
Total oil and gas liftings in the second quarter of 2005 were 1,142,000 boe per day compared to 1,058,000 boe per day in the second quarter of 2004. In the first half of 2005, total oil and gas liftings were 1,165,000 boe per day compared to 1,112,000 boe per day in the corresponding period of 2004.
Exploration expenditure in the second quarter of 2005 was NOK 1.3 billion, compared to NOK 0.7 billion in the second quarter of 2004. Exploration expenses in the second quarter of 2005 amounted to NOK 0.9 billion, compared to NOK 0.4 billion in the second quarter of 2004. The increase in exploration expenses of NOK 0.4 billion was mainly due to an increase in the period’s exploration activity.
| Exploration |
Second quarter
|
First half
|
Full year
|
||||||
|
2005
|
2004
|
2005
|
2005
|
2004
|
2005
|
2004
|
|||
| (in millions) |
NOK
|
NOK
|
change
|
USD (1)
|
NOK
|
NOK
|
change
|
USD
|
NOK
|
| Exploration expenditure (activity) |
1,284
|
652
|
97%
|
196
|
2,014
|
1,132
|
78%
|
308
|
2,466
|
| Expensed, previously capitalised | |||||||||
| exploration expenditure |
105
|
26
|
304%
|
16
|
131
|
28
|
368%
|
20
|
110
|
| Capitalised share of current | |||||||||
| period's exploration activity |
(528)
|
(248)
|
(113%)
|
(81)
|
(760)
|
(440)
|
(73%)
|
(116)
|
(748)
|
| Exploration expenses |
861
|
430
|
100%
|
132
|
1,385
|
720
|
92%
|
212
|
1,828
|
A total of four exploration wells were completed in the second quarter of 2005, three on the Norwegian continental shelf (NCS) and one internationally. Three wells resulted in discoveries. The number of exploration wells completed was in line with the second quarter of 2004.
In the first half of 2005 a total of nine exploration and appraisal wells were completed, five on the NCS and four internationally. Four of these wells resulted in discoveries, and one well awaits final evaluation.
Production cost per boe was NOK 22.5 for the 12 months ended 30 June 2005, compared to NOK 22.2 for the 12 months ended 30 June 2004*.
Normalised at a NOK/USD exchange rate of 6.75, the production cost for the 12 months ended 30 June 2005 was NOK 22.6 per boe, compared to NOK 22.2 per boe for the 12 months ended 30 June 2004*.
Net financial items amounted to a cost of NOK 0.9 billion in the second quarter of 2005, compared to a cost of NOK 0.1 billion in the second quarter of 2004. Net financial items in the first half of 2005 were a cost of NOK 2.6 billion, compared to a cost of NOK 1.2 billion in the first half of 2004.
The increased cost was caused by increased currency losses, most of which related to realised losses on short balances in USD created by liquidity management and unrealised losses on long-term debt. The increased cost was partly offset by increased dividends received. Additionally, the second quarter financial cost was reduced by NOK 0.3 billion in increased income from investments in securities, whereas for the first half financial expenses were reduced by NOK 0.2 billion.
| Exchange rates |
31.03.2004
|
30.06.2004
|
31.03.2005
|
30.06.2005
|
| NOK/USD |
6.90
|
6.94
|
6.33
|
6.55
|
Income taxes in the second quarter of 2005 were NOK 14.1 billion, equivalent to a tax rate of 67.0 per cent. Income taxes in the second quarter of 2004 were NOK 9.7 billion, equivalent to a tax rate of 68.6 per cent.
For the first half of 2005 income taxes were NOK 26.9 billion, with a corresponding tax rate of 66.0 per cent. In comparison, income taxes in the first half of 2004 were NOK 19.9 billion with a corresponding tax rate of 68.3 per cent.
The tax rate was reduced in both periods, compared to the same periods last year, mainly due to a relative higher increase in income outside the NCS, including financial income.
| Health, safety and the environment (HSE) | |||||
|
Second quarter
|
First half
|
Year
|
|||
|
2005
|
2004
|
2005
|
2004
|
2004
|
|
| Total recordable injury frequency |
5.1
|
6.1
|
5.2
|
6.3
|
5.9
|
| Serious incident frequency |
2.1
|
2.8
|
2.6
|
3.2
|
3.2
|
| Unintentional oil spills (number) |
139
|
130
|
236
|
265
|
487
|
| Unintentional oil spills (volume, scm) |
33
|
76
|
55
|
147
|
186
|
In general, there has been positive development within the HSE indicators this quarter as well as for the first half year compared with the same periods last year. Our objective for health, safety and the environment is zero harm, and this will not be compromised in any of our activities. Through maintained top management involvement and cooperation with our contractors to ensure safe work practices, efforts to improve HSE results will continue with undiminished strength.
* See end notes in the complete quarterly report.
Important events since the beginning of the second quarter of 2005 are summarised below.
- The process plant for the Snøhvit LNG project was berthed in its dock at Melkøya on 13 July. The pipeline from the field to the process plant and the carbon dioxide reinjection pipeline have also been successfully laid.
- Statoil submitted a plan for development and operation (PDO) of Tyrihans on behalf of the licensees in this Norwegian Sea field to the Ministry of Petroleum and Energy on 11 July.
- The plans for Statoil’s Statfjord late life and Tampen Link pipeline projects in the North Sea were approved by the Norwegian Storting (parliament) on 8 June.
- The first exploration well on Statoil’s Tulipan prospect in the Norwegian Sea was spudded on 30 May.
- The Kristin platform was installed on the field in early April and is being prepared for production start-up.
- Statoil acquired EnCana's deepwater assets in the Gulf of Mexico for USD 2.0 billion on 26 May.
- A general collaboration agreement to identify oil and gas resources in the far north and develop technology for petroleum activities in the region was agreed by Gazprom, Hydro and Statoil on 20 June.
- A memorandum of understanding was signed on 30 June, by Kazakhstan state oil company KazMunayGas and Statoil, creating a framework for negotiating Caspian exploration and development projects.
- The Kizomba B development in block 15 off Angola came on stream in July 2005, approximately five months ahead of schedule.
- Production resumed in mid-June from the Lufeng field operated by Statoil in the South China Sea. The field was originally due to be shut down permanently in February 2004.
- In June 2005 Statoil agreed to sell its 50 per cent holding in Borealis A/S to IOB Holding A/S, a company jointly owned by International Petroleum Investment Company, UAE and OMV Aktiengesellschaft, Austria. The transaction is expected to be closed in the second half of 2005.
Further information from:
Investor relations
Mari Thjømøe, senior vice president investor relations,
tel: +47 90 77 78 24 (mobile), +47 51 99 77 90 (office)
Geir Bjørnstad, vice president investor relations North America,
tel: +1 (203) 97 86 950 (office), +1 (203) 570 57 57
Press
Ola Morten Aanestad, acting vice president public affairs,
tel: +47 48 08 02 12 (mobile), +47 51 99 13 77 (office)
Kjersti T Morstøl, public affairs manager,
tel: +47 91 78 28 14 (mobile), +47 51 99 26 71 (office)
Financial statements and review - second quarter 2005
MD&A
Presentation set
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