Statoil ASA (STL), Norway’s largest oil and gas company, said profit rose more than expected in the second quarter as gains in crude prices compensated for lower production.
Net income climbed to 27.1 billion kroner ($5 billion), or 8.44 kroner a share, from 3.1 billion kroner, or 1.14 kroner, a year earlier, the Stavanger-based company said today in a statement. That beat the 20.5 billion-krone average estimate of analysts surveyed by Bloomberg. Sales advanced to 159.5 billion kroner.
“Statoil delivered record net income in the second quarter,” Chief Executive Officer Helge Lund said in the statement. “We continued to make progress within exploration and project developments in the quarter, staying on track to deliver future growth.”
Earnings of energy producers have been buoyed by rising prices. Brent crude futures averaged $117 a barrel in the second quarter, compared with $79 a year earlier. Houston-based ConocoPhillips yesterday reported second-quarter net income of $3.4 billion, exceeding estimates, while Exxon Mobil Corp., the largest U.S. oil company, is due to release earnings today.
Statoil’s output fell 8.5 percent to 1.792 million barrels of oil equivalent a day from 1.957 million barrels a year earlier.
The company reduced production at the North Sea Gullfaks oil and gas field after shutting 50 wells because of safety concerns in 2010. The Njord and Visund fields were temporarily suspended in the quarter following damage to flexible risers. Cuts to permitted production at the Troll and Ormen Lange gas deposits, as well as maintenance shutdowns, also hurt output.
“The main reasons for the lower production are seasonally lower gas production in Norway, as well as planned maintenance,” Teodor Nilsen, an analyst at First Securities ASA who recommends buying Statoil stock, said in a July 13 note.
The producer last year agreed to sell a 40 percent stake in Brazil’s offshore Peregrino field to China’s Sinochem Group for $3.07 billion, a deal approved by the authorities in the second quarter. The company, which has operating rights on about 80 percent of Norway’s oil and gas output, is growing in countries including Canada and the U.S. as Norwegian reserves dwindle.
Norway’s crude production peaked in 2000 and is forecast to drop 6 percent this year to about 1.7 million barrels a day, according to the nation’s Petroleum Directorate.
In February, Statoil forecast output will grow an annual 3 percent on average over the next two years to about 2 million barrels of oil equivalent a day, below a former target of 2.06 million to 2.16 million barrels.
The latest output figures are “likely to give increased concerns around the company’s production guidance,” Pareto Securities AS said in a July 15 report. “Decline in production at existing fields seems to be in the 6-7 percent per annum range, according to our estimates. This is higher than the 5 percent stated by the company.”
Statoil said last month it expects production to grow to more than 2.5 million barrels a day in 2020 as it expands projects in the Gulf of Mexico, Brazil and Angola. The company will spend $16 billion on exploration, drilling and production in 2012, on par with this year. Statoil expects to drill 20 to 25 high-impact wells in 2011 to 2013, it said June 20.
To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
