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Statoil Earnings Slip Over Iran Gas Project Company Warns Output May Decline MARKETPLACE By Bloomberg

Posted on: Tuesday, 14 February 2006, 09:01 CST

By Bunny Nooryani and Beate Evensen

Statoil, the largest oil company in Norway, said Monday that fourth-quarter profit fell 15 percent because of costs from writing down a natural gas project in Iran. The company also indicated it might not reach its output target for next year.

Net income dropped to 8.52 billion kroner, or $1.25 billion, from 10.04 billion kroner a year earlier, Statoil said. Analysts had on average expected net income of 8.55 billion kroner. Revenue rose to 109.3 billion kroner from 85.8 billion kroner, lifted by rising energy prices. Crude oil prices in New York averaged $60.15 a barrel in the fourth quarter, up from an average of $48.29 a barrel a year earlier.

Oil companies like Exxon Mobil and BP reported a surge in profits in the fourth quarter as fuel prices rose. But Statoil said that output this year and next might be curbed because of production agreements in countries like Iran and Libya that give it less oil as crude prices rise. Crude reached $71 a barrel last year. "Their production guidance for this year was disappointing, and I think they will struggle to reach the target for next year," said Bjorn Inge Tonnessen, an analyst at DnB NOR Markets in Oslo. Statoil shares slid 7 kroner to finish at 169.50 kroner in Oslo trading. The company pumped an average 1.169 million barrels a day of oil and natural gas last year, lower than its goal of 1.175 million barrels. For the quarter, the company pumped an average 1.232 million barrels of oil equivalent a day, compared with 1.202 million barrels a day a year earlier.

Delays in developing some fields, including Snohvit in the Barents Sea, may hamper the company's ability to reach a target of pumping 1.4 million barrels of oil and natural gas a day next year, Tonnessen said.

Under Statoil's so-called production-sharing agreements with certain countries, if crude stays above $60 a barrel this year, output will be about 25,000 barrels a day lower than planned, averaging about 1.2 million barrels a day. If prices stay at that level next year as well, output might fall as much as 60,000 barrels a day, Statoil said.

Profit was also hurt by currency losses, the company said. A Statoil spokesman, Ola Morten Aanestad, declined to quantify the losses.

Operating profit rose 48 percent to 27.8 billion kroner. Analysts had on average expected operating profit of 26.9 billion kroner.

Statoil got 38 percent more for its oil in the quarter, and the average natural-gas price gained 45 percent to 1.74 kroner per cubic meter, or 35 cubic feet.

The company's reserve-replacement rate, the amount of production replaced by new reserves, fell to 102 percent last year from 106 percent in 2004. The three-year average rate was also 102 percent, up from 101 percent the year before. Proven reserves were 4.295 billion barrels of oil and natural gas at the end of last year, up from 4.289 billion barrels a year earlier.

The company completed 20 exploration and appraisal wells last year, up from 12 the year before. Of last year's wells, 14 resulted in discoveries and one is still being evaluated, it said.

Statoil is increasing oil and natural gas output abroad, with new fields in places like Angola and Azerbaijan. The company's international output averaged 204,000 barrels of oil daily in the fourth quarter, up 43 percent from a year earlier.

Statoil booked a charge of 1.6 billion kroner after tax for writing down to zero its investment at the South Pars natural gas field in Iran, a decision the company announced last month. It also booked a gain of 1.5 billion kroner from selling its stake in the petrochemical company Borealis.

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Aker Kvaerner's net jumps

Aker Kvaerner, the Norwegian maker of oil rigs and drilling equipment, said Monday that fourth-quarter profit surged as exploration for oil and gas lifted demand. Net income rose to 797 million kroner from 147 million kroner a year earlier, the company said, helped by a one-time gain of 419 million kroner because of a change in tax accounting. Sales climbed 32 percent to 13.3 billion kroner as the company benefited from rising demand. Aker Kvaerner said new orders in the fourth quarter were 19.7 billion kroner. The company's fourth-quarter tax gain compared with tax payments of 12 million kroner a year earlier. The gain was the result of "the recognition of a 503 million-krone tax asset reflecting that uncertainties regarding the 2004 restructuring have been clarified," Aker Kvaerner said.

Source: International Herald Tribune

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