Statoil books improved profit

Helge Lund: Net profit jumps year-on-year

Norway’s Statoil has managed to post a 35% increase in second-quarter profit, as the company looks to slash costs to help cash flow.

The company posted a net profit of Nkr12 billion ($1.9 billion) for the second quarter, an increase of Nkr4.3 billion from the same period in 2013.

Operating profit for the quarter dropped 15%, with the company taking in Nkr32.3 billion during the second quarter.

Statoil chief executive Helge Lund said quarterly earnings were impacted by divestments, seasonal effects and lower gas prices.

“For the first half of the year, earnings were around the same level as in the same period last year,” Lund said.

The company booked an Nkr4.3 billion impairment against its onshore US business, which was partially offset by a gain of Nkr3.6 billion from a farm-down of Shah Deniz and the South Caucasus pipeline.

Statoil delivered strong production, but did not make the cut when compared to the second quarter of last year.

Production totalled 1.7 billion barrels of oil equivalent per day, down 9% when compared to the second quarter of 2013.

The company is starting the ramp-up of new fields such as Skarv in Norway, Marcellus and Eagle Ford in the US and PSVM and CLOV in Angola.

This increase was offset by the divestments and redeterminations, expected natural decline, seasonal effects and optimisation of gas production.

During the quarter, Statoil made a high-impact discovery in Tanzania, which brings the total of gas-in-place in Block 2 up to about 20 trillion cubic feet.

Lund said as part of its cost-cutting initiatives it was set to slash between 1100 and 1400 jobs. The company has already axed about 1000 jobs.

“We have also established six specific high-impact projects addressing technical efficiency across the company, and we are now executing the first wave,” he said.

“We are on track, and will provide an updated status when we report our results for the full year.”

Statoil is reported to be preparing to make further cuts in capital investment, operating expenses and manpower to generate an additional $5 billion in annual cash flow by 2020.

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