Statoil’s crude and gas output fell to 1.971 million barrels of oil equivalent a day from 2.102 million. Photographer: Heidi Wideroe/Bloomberg
Statoil ASA (STL), Norway’s largest oil and natural gas company, said first-quarter adjusted profit unexpectedly fell as safety issues hampered oil production.
Profit excluding a gain from selling a stake in a Canadian oil sands project and other financial items, fell to 11.9 billion kroner ($2.25 billion) from 12.1 billion kroner a year earlier, the Stavanger-based company said today. That missed analysts’ estimates of 14.1 billion kroner.
Statoil’s crude and gas output fell 6 percent to 1.971 million barrels of oil equivalent a day. Production at the North Sea Gullfaks oil and gas field was reduced after Statoil shut 50 wells out of safety concerns in the second half of 2010. Lower permitted production starting last year at the Troll and Ormen Lange gas fields also affected output.
The drop in production “was primarily caused by various operational issues both in Angola and on the Norwegian continental shelf, mainly related to the Gullfaks and Oseberg fields,” the company said in a statement. “Natural decline on mature fields, suspended production in Libya and decreased gas nominations from the Shah Deniz field in Azerbaijan also added to the reduction.”
Total production this year is expected to be “around the 2010 level, or slightly below,” Statoil said, reiterating its outlook. The company said it expects 2012 output to grow about 3 percent on a compounded annual basis from 2010.
Net income rose to 16 billion kroner, or 5.02 kroner a share, from 11.1 billion kroner, or 3.49 kroner, a year earlier. Sales and other income rose 17 percent to 152 billion kroner while adjusted earnings before tax rose 22 percent, the company said.
The company’s entitlement output fell to 1.765 million barrels of oil equivalent a day from 1.915 million barrels a year earlier. The company was estimated to produce 1.746 million barrels in a survey of four analysts by Bloomberg.
“Production is better than expected both in Norway and internationally, and the outlook is unchanged,” said Trond Omdal, an analyst at Arctic Securities in Oslo, in an e-mail. “So they are delivering in the areas where they have disappointed the markets in the past quarters.”
Energy producers were helped in the quarter in part as unrest in North Africa and the Middle East pushed benchmark Brent crude 36 percent higher, on average. Exxon Mobil Corp. last week posted its biggest first-quarter profit gain in eight years, while Royal Dutch Shell Plc’s earnings rose 30 percent.
Statoil’s average sale price for oil rose 23 percent to $100 a barrel. It got 1.97 kroner a cubic meter of gas, compared with 1.64 kroner a cubic meter a year earlier. About two-thirds of gas sold in mainland Europe is linked to the cost of crude and oil products and is sold under multiyear contracts.
“With 60 percent of Statoil’s gas production being linked to long-term oil indexed contracts combined with strong European spot gas market, we expect to see strong momentum in Statoil’s realized gas prices going forward,” Helge Andre Martinsen, an analyst at Nordea Bank AB, said in an April 28 report.
The company, which has operating rights on about 80 percent of Norway’s production, is seeking to maintain domestic output and is expanding in countries such as Angola, Brazil and the U.S. as Norwegian reserves dwindle. Norway’s output peaked in 2000 and is forecast to drop 6 percent this year to about 1.7 million barrels a day, according to the Norwegian Petroleum Directorate’s estimates.
“After several quarters with weak production growth, we expect Statoil to re-enter the growth path in the second half of 2011,” Martinsen said. “This is thanks to major projects, primarily internationally, commencing production. Statoil will fire on all engines in 2012 and we expect production growth of 6 percent.”