By the OGJ Online Staff
LONDON�Norsk Hydro AS Pres. and CEO Egil Myklebust Monday reported his company had a net income of 14 billion kroner in 2000.
Myklebust credited "a combination of the rapid implementation of (a restructuring) strategy started in 1999, internal improvement programs plus market conditions" for the record profits, up from 3.4 billion in 1999.
Hydro's oil and energy business turned in an operating income of 21.8 billion kroner for 2000, roughly triple that of the previous year. The sharp improvement, said Myklebust, was due to "considerably higher" oil and gas prices, a high dollar rate, and a production volume that was 21% greater than in 1999.
Oil and gas production for the year was 413,000 boe/d, compared with 340,000 boe/d in 1999. The production level in the fourth quarter was 440,000 boe/d.
Hydro's reserves at the turn of the year were 2.04 billion boe. Factoring in the sale, purchase, and exchange of reserves over the course of the year, said Hydro, this translates in to a net reserve replacement equivalent to 111%.
The division's net income in the fourth quarter was 5.9 billion kroner, up from 2.9 billion kroner the year before.
Myklebust said the acquisition of some of Saga Petroleum AS assets last year "markedly" improved the oil company's prospects.
"Hydro's financial position has been lifted in the course of 2000 to a level which is markedly more robust than it was prior to the acquisition of Saga, as a result of the solid results and the sale of operations outside of our core areas," he said. "This provides Hydro with an extremely good platform for growth and the further development of the strategic positions of our core areas."
Tore Torvund, executive vice-pres. for oil and energy, stressed that the division's strategic goals include "doubling output within 10 years, balancing its portfolio between domestic and international operations, and developing four to five E&P core areas outside Norway."
Torvund said the company expects production of 435,000 boe/d in 2001, as five fields come on stream. The company's updated production profile, he said, forecasts gas production to rise from 5 billion cu m/year to 13 billion cu m/year by 2010, and total combined output to reach 800,000 boe/d.
"The target includes production from fields in production and under development, resources yet to be developed, and forecast recovery from future exploration activities in existing acreage, including the expected allocation of ultradeep water block 34 in Angola," he said. It does not include assets that may be acquired through the upcoming privatization of Norway's state direct financial interest.
Torvund said Hydro's exploration budget would be 2.1 billion kroner this year, compared with 1.8 billion kroner in 2000, with the company's international exploration program for the first time outpacing that in Norway.
He said 1.1 billion kroner was earmarked for foreign exploration this year to attempt to "find ways to offset Norway's declining oil reserves." He pointed to the company's exploration activities in eastern Canada, Angola, northwest Russia, and Iran�where Hydro holds the first exploration contract signed by a Western company in the Anaran area�as the key E&P regions for the company.
On Norwegian Continental Shelf, the company's chief interest, said Torvund, will be monitoring the "final stages of the political process relating to the sale of the Norwegian state's directly owned oil assets.
"We believe that there are some very good arguments why Hydro should, as a major operator, obtain a greater share than the government has initially proposed," he said.