Norwegian oil company Statoil Wednesday reported higher quarterly earnings and reaffirmed its target of 3% annual production growth for the 2010 to 2012 period, underlining its progress after outages crimped output earlier in 2011.
The Norwegian oil giant posted adjusted earnings of NOK45.9 billion in the quarter, up 12.5% since a year earlier but below expected earnings of NOK47.6 billion. Statoil’s net profit of 25.48 billion Norwegian kroner ($4.39 billion) bested estimates NOK13.0 billion on the strength of high oil prices.
Equally important, Statoil, which reported significant outages offshore Norway last year following a gas leak and other incidents, signalled it was on track to boost output.
Chief Executive Helge Lund pointed to new projects that started producing in 2011 and said the company’s production startups in 2012 include Peregrino in Brazil, Pazflor in Angola, as well as projects in Norway.
“We have very strong projects in the pipeline,”Lund said, adding, “these are the main reason production will be strong” in 2012.
At the same time, Lund suggested the projections were subject to energy market conditions. The company held back gas volumes in 2011 due to low gas prices, Lund said, adding that this is one of the risks with the company’s 2012 guidance. “We will not produce just to produce,” he said.
Statoil said it expects production growth of “around 3%,” in 2010-2012, reaffirming prior guidance. Some analysts had considered it unlikely that Statoil would reaffirm its 2012 guidance after production dropped in 2011 compared with 2010, because the confirmation of guidance implies 2012 production would need to rise by around 8%. Statoil didn’t release projections for 2012 output.
The company said it expects to spend $17 billion this year to develop its existing resources and a similar level of exploration activity as last year as it posted a sharp rise in fourth-quarter earnings due to reduced losses on net financial items.
Statoil’s oil and gas production rose by 1.5% to 1.975 million barrels of oil equivalent a day in the fourth quarter, from 1.945 million barrels a day in the same period of 2010. Overall 2011 output was down to 1.850 million barrels a day from 1.888 million in 2010.
Statoil continues to benefit from high oil prices, averaging more than $100 a barrel in the fourth quarter, driven by demand from emerging markets. In the fourth quarter, Statoil extended its U.S. activities with a $4.4 billion deal to buy Brigham Exploration, thereby getting access to resources in the Bakken and Three Forks formations, the largest oil accumulations in the U.S.
Total revenue in the fourth quarter rose 22% to NOK182.73 billion from NOK143.35 billion in the same period in 2010.
Statoil proposed a dividend of NOK6.50 a share, compared with NOK6.25 for 2010.
