Norway's Loss-making Statoil Promises Improvements
Norwegian Statoil reported a net loss for 2015 of Nkr37.3bn ($4.38bn) but said cost-cutting and improved investments would bring about improvements.
The loss was mainly the result of lower short term price assumptions that led to impairment charges and provisions. The previous year it made a profit of Nkr22bn. Production was up by 2% to almost 2mn barrels of oil equivalent/d, but the average price/boe was down by 34%.
Net operating income (IFRS) was Nkr14.9bn for the year compared with Nkr109.5bn for 2014. Net operating income was negatively impacted by net impairment charges of Nkr63.3bn and provisions of Nkr5.4bn. On the credit side were asset sales of Nkr17.6bn, most of which came from the sale of its stake in Shah Deniz.
“The result in the fourth quarter is highly impacted by the weak commodity price. However, we continue to make strong progress on costs and efficiency. We are now further stepping up our improvement programme, and tightening our capital and exploration expenditures. These are key elements in navigating the business during a period of low oil prices,” said CEO Eldar Saetre.
This year’s capex will be down on last year’s $14.7bn, at $13bn, $2bn of which will go on exploration and the company warned of faster and deeper cost reductions.
Among its investment goals is to achieve a “radically improved” portfolio with an average break-even price of non-sanctioned projects of $41/boe, down from $70/boe in 2013.
Saetre said Statoil was “positioned for value creation in a low price environment, and well placed to capture the gains when the oil price recovers.”
From 2014 to 2017, Statoil estimates an annual organic production growth of around 1% from a rebased equity production level. From 2017 to 2019 Statoil expects organic annual production growth of between 2% and 4%.
The reserves replacement ratio weakened last year owing mainly to high production on existing fields, reduced commodity prices and completion of the farm out on Shah Deniz. Partly offsetting it was the “sanctioning of Johan Sverdrup phase 1 and positive revisions on several producing fields thanks to good production performance and increased efficiency.”
| (Nkr bn) | 2015 | 2014 | Change |
| IFRS Net operating income | 14.9 | 109.5 | (86%) |
| Adjusted earnings | 77.0 | 136.1 | (43%) |
| IFRS Net income | (37.3) | 22.0 | N/A |
| Adjusted earnings after tax | 19.5 | 39.1 | (50%) |
| Total equity liquids and gas production (‘000 boe/d) | 1,971 | 1,927 | 2% |
| Avge liquids price (Nkr/b) | 370.7 | 558.4 | (34%) |
Source: Statoil