Statoil reports profits surge to record on high oil prices

Statoil reports profits surge to record on high oil prices

Statoil, the leading Norwegian oil and gas group, has reported record profits for 2006 owing to high prices for hydrocarbons and despite a fall of production.

Net profit surged by 32.0 percent to 40.615 billion kroner (4.98 billion euros, 6.47 billion dollars) from 30.73 billion kroner in 2005.

Sales rose by 10.0 percent to 423.5 billion euros.

Chief executive Helge Lund said Monday: “Annual income for 2006 is the best ever for Statoil. We maintain strong earnings and competitive returns, despite temporarily lower production overall.”

Pre-tax profit rose by 33.0 percent to 121.695 billion kroner from 91.531 billion kroner.

Statoil, 70.9-percent controlled by the Norwegian state, said the increase had been driven mainly by “a 20-percent increase in the average oil price measured in Norwegian kroner and a 32.0 percent increase in the gas price measured in kroner”.

The increase had been offset partly by “a reduction in lifted oil volumes and an increase in cost items”.

Norway is a big producer of oil and gas from offshore fields.

Statoil is not the only oil group to have benefited from the rise in oil prices in 2006.

The world’s leading oil company ExxonMobil posted a record net profit of 39.5 billion dollars for the year, as did number two Royal Dutch Shell, whose net profit rose to 25.44 billion dollars.

Statoil’s earnings per share climbed from 14.19 kroner in 2005 to 18.79 kroner in 2006.

The group’s production was however down by three percent to 1.13 million barrels of oil equivalent per day, below its target of 1.14 million.

For 2007, Statoil maintained its production target of 1.3 million barrels per day, at a price of 60 dollars a barrel, but warned that it may not meet the target.

“We recognise that this is a challenging and stretched target and that we are more likely to undershoot than overshoot the target,” the company said.

The price of the Statoil share fell on the news, shedding 0.77 percent to 161.75 kroner in midday trading on the Oslo stock exchange.

Statoil’s production is largely in Norway, the world’s third-largest oil exporter, but the company also has assets in Nigeria, Angola, the Gulf of Mexico and the Caspian Sea.

At the end of 2006, its proved reserves were 4.185 billion barrels of oil equivalent, down by three percent from the end of 2005.

In the fourth quarter alone, net profit surged by 41 percent to 12.012 billion, up from 8.523 billion in the same period a year earlier.

Pre-tax period in the quarter rose by 10 percent to 28.87 billion, exceeding analysts’ expectations of 28.34 billion, while sales dipped by two percent to 103.591 billion.

Statoil announced in December that it would acquire the oil and gas activities of Norsk Hydro to create the world’s largest offshore production group in a deal worth an estimated 23 billion euros.

The acquisition is expected to be completed during the third quarter of the year and “the processes that lead up to the necessary approvals of the merger are well under way”.

Statoil said the total cost synergy potential for the merged company was estimated to be about 4.0 billion kroner a year before tax once the integration process was fully completed, around 2009-2010.

Source: AFP via Yahoo news

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