Statoil triples profits in run-up to partial privatization

Feb. 22, 2001
Statoil AS Chief Executive Olav Fjell Thursday reported that the Norwegian oil and gas company chalked up record pre-tax profit of 38.1 billion kroner ($4.3 billion) last year, nearly triple its yearend figure for 1999. Fjell called the result "very satisfactory," crediting it to higher oil prices and Statoil's improvement efforts.


By the OGJ Online Staff


LONDON, Feb. 22�Statoil AS Chief Executive Olav Fjell Thursday reported that the Norwegian state-owned oil and gas company chalked up a pre-tax profit of 38.1 billion kroner ($4.3 billion) last year, its best-ever result and nearly triple its yearend figure for 1999.

Net profit for the year was 11.3 billion kroner, some 6.6 billion higher than the year before, while its return on capital employed climbed from 5.9% in 1999 to 15.1%. Fjell called the result "very satisfactory," crediting it to higher oil prices and Statoil's improvement efforts.

"Our costs have been reduced in line with the targets we've set for ourselves, and we have improved the overall portfolio by concentrating operations on our core assets," he said.

Fjell, speaking at the Institute of Petroleum's conference earlier this week, said he expected the company would meet targets that were set in 1998 as part of Statoil's four-prong "strategic response" to profit-damaging overexpansion during the 1990s by the end of 2001 (OGJ Online, Feb. 20, 2002).

The company's 3-year plan�aimed at "concentrating and consolidating" the company's business�entailed selling down its portfolio of oil and gas assets 24%, cutting costs 20% and staffing levels 10%, "focusing" growth, and improving management systems.

"As to the restructuring of our assets, by the end of last year we had achieved a 17% reduction in capital employed. That is, we are on track," said Fjell. "Cost reduction was also seen as critical. By the end of 2000, 15% of that 20% had been accomplished."

By the end of 2000, Fjell said, Statoil had cut its operating, administrative and exploration costs by a total of 3 billion kroner, compared to the previous year. The group had also trimmed 17.6 billion kroner from its debt and raised its equity by 7.6 billion kroner.

"Our profitability and financial position are good," he stressed. "That gives us freedom of action."

Statoil's E&P business notched up a profit before financial items of 36.2 billion kroner, made up of 35.4 billion kroner from operations in Norway and just over 800 million kroner from international activities. E&P brought 12.6 billion kroner into Statoil coffers in 1999.

Workforce downsizing and operational savings aided planned cost reductions on the Norwegian Continental Shelf, said Fjell. The group's balance sheet was also slimmed through the sale of 2.1 billion kroner in assets on the NCS via its so-called Pandora disinvestment program.

Statoil's refining and marketing division turned in a profit of 4.6 billion kroner, as against a loss of 276 million kroner in 1999, thanks to "very good" refining margins and a stronger performance by Statoil's shipping and tanker subsidiary Navion AS. Fjell said, "work is continuing" on plans to restructure Navion.

The group's petrochemicals unit showed a profit of 441 million kroner before financial items in 2000, as compared to loss of 23 million kroner the year before.

Statoil closed the year with booked proven reserves of more than 1.51 billion bbl of oil and natural gas liquids, down slightly on the 1.56 billion booked the year before. Booked proven gas reserves totaled more than 1.46 billion boe, up from 1.43 billion boe in 1999. Fjell noted that the company's international holdings now account for 18% of its total booked proven reserves.

The group's oil production averaged 509,000 boe/d in 2000, of which 57,000 boe/d came from Statoil operations outside Norway. Statoil produced 465,000 boe/d in 1999. Gas production averaged 21.9 million cu m/day compared with 25.1 million cu m/day in 1999, a decline which Fjell said reflected the sale of its US subsidiary in 2000.

Fjell said that as part of ongoing government plans to partially privatize Statoil this summer, the parent company would change its name from Den norske stats oljeselskap AS to Statoil AS.

One black mark on the company 's record for 2000, Fjell acknowledged was in the area of health, safety, and the environment. Statoil's annual HSE numbers, he said "show that the improvement trend of recent years has come to a halt.

"I'm not satisfied with progress on safety. There were too many serious incidents registered last year. We have accordingly initiated a number of measures to improve safety results. The manager's role is very important in this context. In addition, a full review of technical safety has been launched at all our facilities."