Statoil sees lower output in 2013, but production to escalate
London (Platts)--7Feb2013/923 am EST/1423 GMT
Norway's Statoil said Thursday it remained on track to achieve rapid 25%
growth in production by 2020 to over 2.5 million b/d of oil equivalent, but
that in the current year output would fall by an unspecified amount to below
2 million boe/d.
Statoil partly blamed the loss of output from the In Amenas gas facility
in Algeria for the expected fall in production in 2013.
Statoil posted fourth-quarter production of 2.032 million boe/d, up 3%
year on year from 1.975 million boe/d in the same period a year earlier.
Full-year 2012 oil production averaged 2.004 million boe/d, an 8%
increase compared with 1.85 million boe/d in 2011.
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The group said the short-term output reduction in 2013 was also linked
deliberate decisions it made to rebalance its portfolio.
This included the $1.5 billion sale of non-core Norwegian assets to
Germany's Wintershall last year.
Proceeds from the sale will be reinvested into expanding key operations,
the company said.
"This comes from decisions we have deliberately made ourselves to create
more value," CFO Torgrim Reitan told a press conference.
He said the 2013 fall was also due to planned maintenance outages
"The Wintershall transaction will reduce production by 40,000 b/d from
closing," he said.
But other things could not be planned for, such as the January 16 attack
at Statoil's In Amenas gas plant in Algeria, which led to five staff members
being killed and output shut down.
Statoil said Thursday it had no formal date to restart output, although
it said output at the In Salah plant in Algeria was still in operation at a
rate of around 40,000 boe/d.
"The situation in In Amenas will impact production in 2013," Reitan said.
"That asset produced for us 23,000 boe/d in 2012. Work needs to be done
at the plant. It needs to be repaired before we can start it up safely but
it's too early for me to have a strong opinion on when that will happen."
Sonatrach earlier in the week said two trains at In Amenas needed
repairs, while a third could be restarted "imminently."
BP has said it is too early to predict when the plant would restart.
While the outlook for 2013 on Algeria remains uncertain, Statoil said
the increase in Q4 production was primarily due to increased gas sales from
the Norwegian Continental Shelf, the ramp-up of production at various fields
and a relatively lower effect from maintenance in Q4 compared with the same
period of 2011.
Analysts said the production volumes for Q4 were positive.
Arctic Securities analyst Trond Omdal said Q4 production was 1.4% above
consensus due to stronger-than-expected international liquids and gas
Arctic estimated 2013 production would come in at 1.98 million boe/d.
"This is a decent set of results from Statoil," Credit Suisse said in a
"We note that Statoil averaged exactly 2 million boe/d of equity
production in 2012 thanks to strong Norwegian gas sales to Europe, in line
with its target, which makes Statoil the only large-cap European major to
meet 2012 production guidance," it said.
CEO Helge Lund said in statement that 2012 was a year of "strong
strategic and operational progress for Statoil."
"We are well underway to deliver profitably on our ambition of producing
more than 2.5 million boe/d in 2020," Lund said.
Statoil also said that production growth is expected resume from new
projects in the period from 2014 to 2016, with a "second wave" of projects
expected to come on stream from 2016 to 2020.
Reitan said the massive Johan Svedrup field, coming on stream in 2018,
and the Skrugard discovery alone would add about 200,000 boe/d to group
output in 2020.
MORE M&A ACTIVITY
Reitan also indicated that Statoil was not finished with mergers and
acquisitions as it sought to improve the quality of its energy assets.
"We will continue to add and subtract from our portfolio," he told the
Statoil reported Q4 net earnings of NOK12.99 billion ($2.4 billion),
down from NOK25.5 billion in the same period the previous year, on a
decreased gain from the sale of assets.
Total Q4 revenues came in at NOK159.2 billion against NOK173.9 billion
from a year ago.
Statoil said its average selling price for oil was virtually flat at
$102.70/b in Q4 compared with $102.8/b in Q4 2011, while its average selling
price for gas fell 6% to NOK2.12/cubic meter from NOK2.25/cu m over the same
period the previous year.
The company also said capital expenditure for 2013 would be around $19
billion compared with $18 billion in 2012 and it would complete around 50
exploration wells this year, from 46 in 2012, with a total exploration
activity level of around $3.5 billion.
--Patrick McLoughlin, firstname.lastname@example.org
--Edited by Jonathan Fox, email@example.com