StatoilHydro sets lower 2012 production targets

StatoilHydro reported that it hopes to ramp up its total equity production to 2.2 million boe/d by 2012 from 1.96 million boe/d, with the majority of the increase coming from the Norwegian continental shelf.

Uchenna Izundu
International Editor

LONDON, Jan. 11 -- StatoilHydro reported that it hopes to ramp up its total equity production to 2.2 million boe/d by 2012 from 1.96 million boe/d, with the majority of the increase coming from the Norwegian continental shelf.

By 2012, production from the NCS will increase to 1.55 million boe/d from 1.4 million boe/d in 2008. StatoilHydro hopes to keep NCS production at 1.5 million boe/d for the next 10 years.

In contrast, international production will grow to 0.65 million boe/d in 2012 from the current 0.5 million boe/d. However, three quarters of its production-sharing agreements (PSA) are expected to have a major influence on its overall production, as high oil prices would reduce its entitlement and boost taxation in kind. "At an oil price of $75/bbl, PSAs are assumed to have an effect on entitlement production of about 150,000 boe/d in 2008 and 240,000 boe/d in 2012," StatoilHydro said.

Statoil, which merged with Hydro in October 2007, expects annual synergies to be 6 billion kroner before taxes, 2 billion kroner higher than previously estimated. Despite the merger, production in 2007 fell below expectations of 1.7 million b/d because of technical problems with its fields.

The company has budgeted 75 billion kroner in 2008 as capital expenditures and about 80 billion kroner in 2009. "Approximately 50% of the increase from 2007 is related to higher activity levels for sustaining existing production and supporting the group's growth ambition, while the remaining is due to cost inflation, combined with gradually increasing project complexity," StatoilHydro said.

Helge Lund, the company's chief executive, said its focus would be on short-term deliveries and improved operational performance, as it had not met those expectations.

StatoilHydro will drill 70 wells in 2008 under an 18 billion kroner program, and it has secured rigs for all of its wells. These will be split 50-50 between the NCS and internationally.

Most drilling on the NCS will be in mature areas, StatoilHydro said, "but there will also be frontier exploration in the Barents and Norwegian seas. Internationally, the most important wells will be in the US Gulf of Mexico, Brazil, Nigeria, and Azerbaijan."

Contact Uchenna Izundu at uchennai@pennwell.com.

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