StatoilHydro

Capex

StatoilHydro estimates a capital expenditure (CAPEX) in 2008 of approximately NOK 75 billion and approximately NOK 80 billion in 2009. This is based on an assumption of 6 NOK/USD. Approximately 50% of the increase from 2007 is related to higher activity levels for sustaining existing production and supporting the group’s growth ambition, while the remaining is due to cost inflation, combined with gradually increasing project complexity.

Future Plans

Growth Plans and Production Guidance

StatoilHydro will use its combined capacity and competence to continue growth and value creation. The company expect to grow their equity oil and gas production from 1.9 million barrels of oil equivalents per day (boepd) in 2008 to 2.2 million boepd in 2012..

StatoilHydro foresees an increase both in Norwegian continental shelf (NCS) production levels and from its international upstream portfolio. NCS production is estimated at around 1.5 million boepd for the next ten years, reaching 1.55 million boepd in 2012. International equity production is estimated to grow to 0.65 million boepd in 2012.

An extensive exploration programme will be upheld as StatoilHydro’s preferred vehicle for long term growth. Technological innovation in defined areas where the company has a competitive edge will be used as a business enabler.

StatoilHydro’s position as a major supplier of natural gas and the integration between upstream and downstream to create value will be continued.

The group will approach the climate challenge with technology and industrial solutions, and develop a stronger position in the field of new energy, primarily focused on energy efficiency, carbon capture and storage, biofuels and offshore wind.

PRODUCTION: StatoilHydro will grow equity production from 1.9 million boepd in 2008 to 2.2 million boepd by 2012:

• On the NCS, equity production will increase from around 1.4 million boepd in 2008 to 1.55 million boepd in 2012.
• StatoilHydro aims at maintaining an NCS equity production level of around 1.5 million boepd for the next ten years.
• International equity production will continue to grow from the current level of around 0,5 million boepd to 0,65 million boepd in 2012.

StatoilHydro has chosen to use equity production to illustrate its growth ambition, since this is the only figure that makes production volumes comparable in physical, operational and financial terms.

In 2012, the group expects 75% of its international production to be subject to various types of production sharing agreements (PSA). High oil prices increase the profitability and speed of cost recovery, but they also increase taxation in kind and reduce the volumes entitled to StatoilHydro. At an oil price of USD 75 per barrel, PSAs are assumed to have an effect on entitlement production of around 150,000 boepd in 2008 and 240,000 boepd in 2012.

SYNERGIES: The merger between Statoil and Hydro’s oil and energy business was a forceful response to the challenges in the oil and gas industry. Through the merger, the group has enhanced financial and organisational capacity, gained access to more expertise and technology, and is developing a stronger global presence with a better global portfolio.

• The merger will deliver around NOK 6 billion in synergies annually before tax. This is related to StatoilHydro’s share. The gross benefit at StatoilHydro operated fields and facilities is estimated to be around NOK 12 billion annually.

• Annual synergies will amount to NOK 2 billion more than earlier communicated and thereby confirm the value capture potential of the merger.

• Some one-off, upfront restructuring costs will be incurred in order to realise these synergies. An after-tax estimate of these costs is 3 – 4 billion NOK.

• Full realisation of the synergies to be achieved within 3 – 4 years.

RETURN ON AVERAGE CAPITAL EMPLOYED (RoACE): This metric is useful for balancing growth and returns, especially in today’s climate with high commodity prices, tight supplies and industry cost pressure. The group is committed to delivering a competitive RoACE when compared with its industry peer group.

EXPLORATION: StatoilHydro intends to achieve long term growth from a strong resource base with significant exploration activities worldwide. This year’s exploration programme represents an all time high for the new company, amounting to around NOK 18 billion, based on around 70 wells, split approximately 50/50 between NCS and internationally.

On the NCS most of the drilling activity will take place in mature areas, but there will also be frontier exploration in the Barents and Norwegian seas. Internationally, the most important wells will be in the US Gulf of Mexico, Brazil, Nigeria and Azerbaijan.

Production

Total oil and gas entitlement production in the fourth quarter of 2007 was 1.818 mmboe per day, compared to 1.748 mmboe per day in the fourth quarter of 2006. Annual equity production was 1.839 mmboe in 2007.

StatoilHydro expect to grow their equity oil and gas production from 1.9 million barrels of oil equivalents per day (boepd) in 2008 to 2.2 million boepd in 2012.

StatoilHydro foresees an increase both in Norwegian continental shelf (NCS) production levels and from its international upstream portfolio. NCS production is estimated at around 1.5 million boepd for the next ten years, reaching 1.55 million boepd in 2012. International equity production is estimated to grow to 0.65 million boepd in 2012.

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