OilVoice - Statoil Reports 2010 Second Quarter Results

Statoil Reports 2010 Second Quarter Results

Friday, July 30, 2010

Statoil's second quarter 2010 net operating income was NOK 26.6 billion, compared to NOK 24.3 billion in the second quarter of 2009.

The quarterly result was affected by a 32% increase in liquids prices measured in NOK, a 6% increase in equity production and a 12% decrease in gas prices measured in NOK. Also impairments, loss on derivatives and a provision for an onerous contract influenced net operating income.

Adjusted earnings in the second quarter 2010 were NOK 36.4 billion, up 25% from second quarter 2009 when adjusted earnings were NOK 29.2 billion.

Net income in the second quarter of 2010 was NOK 3.1 billion. This result reflects higher oil prices and increased liftings, lower net financial losses and lower tax rates partly offset by lower gas prices, impairments, losses on derivatives and an onerous contract compared to the second quarter of 2009, when net income was zero and the tax rate unusually high.

Adjusted earnings after tax were NOK 10.6 billion in the second quarter of 2010, up 21% from second quarter 2009 when adjusted earnings after tax were NOK 8.8 billion. Adjusted earnings after tax excludes the effect of financial items and the tax on net financial items, and represents an effective adjusted tax rate of 71% in the second quarter of 2010 and 70% in the second quarter of 2009.

"Statoil's second quarter is characterised by strong operational performance and a high activity level," says Statoil's Chief Executive Officer Helge Lund.

"We are making good progress on important projects. The Gjøa production platform is now anchored at the field in the North Sea. The Gudrun development was approved by the Norwegian Parliament in June, and key contracts have now been awarded. In Brazil, the Peregrino field development is moving forward and we have agreed to bring in Sinochem as a 40% partner in the project," says Lund.

"Statoil's production is on track. Equity production is up 6% compared to second quarter last year. However, planned maintenance turnarounds will heavily impact production in the third quarter," says Statoil's CEO Helge Lund.

Highlights since first quarter 2010:
• Equity production is up 6% from second quarter 2009 to 1,957 mboe per day. For the first six months of the year, equity production is 2,029 mboe per day.
• Entitlement production is up 2% from second quarter last year to 1,765 mboe per day.
• Average prices measured in NOK are up 32% for liquids and down 12% for gas compared to second quarter last year. Gas prices continue to be low in a historical perspective.
• On 19 May pressure change and loss of drilling fluid occurred in the C-06 well at Gullfaks C, causing production on Gullfaks C, Gimle and Tordis to be shut down. Production on Gullfaks and Gimle was resumed 14 July, and Tordis will be back on stream after a planned pipeline operation, which started on 20 July.
• On 21 May Statoil announced its agreement with the Sinochem Group to sell 40% of the Peregrino field offshore Brazil.
• On 27 May a six months drilling moratorium was imposed in the Gulf of Mexico.
• On 16 June the Norwegian Parliament (Stortinget) approved the plan for development and operation (PDO) for Gudrun.
• On 1 July the Agbami equity determination process was completed increasing Statoil's share in the Nigerian field from 18.85% to 20.21%.

Production

Second quarter
Total liquids and gas entitlement production in the second quarter of 2010 was 1,765 mboe per day, compared to 1,729 mboe per day in the second quarter of 2009. Total equity [9] production was 1,957 mboe per day in the second quarter of 2010 compared to 1,845 mboe per day in the second quarter of 2009.

The 6% increase in total equity production was primarily related to the start-up of new fields and ramp-up of production from existing fields, and was partly offset by declining production from mature fields, maintenance activities and various operational issues.

Entitlement production increased by 2% impacted by the changes in equity production described above as well as the relatively higher adverse effect from Production Sharing Agreements (PSA-effects) in the second quarter of 2010. The average negative PSA effect was 192 mboe per day in the second quarter of 2010 compared to 116 mboe per day in the second quarter of 2009. The increase was a result of changes in profit tranches regarding fields in Angola, some positive PSA adjustments in second quarter 2009 related to previous periods and higher prices in second quarter of 2010 leading to reduced entitlement shares.

First half 2010
Total liquids and gas entitlement production in the first half of 2010 was 1,839 mboe per day, largely unchanged from 1,831 mboe per day in the first half of 2009. Total equity production was 2,029 mboe per day in the first half of 2010 compared to 1,959 mboe per day in the first half of 2009.

The 4% increase in total equity production in the first six months of 2010 compared to the same period in 2009 was primarily due to increased production from start up of new fields and ramp up on existing fields, partly offset by declining production from mature fields, shut down of the Lufeng field in 2009, various operational issues and maintenance activities.