Statoil posts bigger loss, slashes capex

Norwegian oil major Statoil on Thursday posted a wider loss for the third quarter of 2016 compared to the same period last year due to low oil and gas prices. The oil company is lowering its capex guidance by $1 billion.

Net operating income was $737 million in the third quarter, a 16% drop compared to $883 million in the same period of 2015. The reduction was primarily due to lower oil and gas prices, expensed exploration wells and lower refinery margins.

Adjusted earnings were $636 million in the third quarter compared to $2.027 billion in the same period in 2015. In addition to the continued low prices, the result reflects reduced overall operating costs mainly as a result of the on-going cost improvement initiatives.

The company’s net loss widened by 24% during the quarter totaling $427 million, compared to the same period last year and the net loss of $343 million.

Adjusted earnings after tax were negative $261 million in the third quarter, down from positive $445 million in the same period last year. In the quarter Statoil has expensed exploration wells capitalized in previous periods in the amount of $324 million. This is mainly related to two exploration wells in the Gulf of Mexico.

“The financial results were affected by low oil and gas prices, extensive planned maintenance and expensed exploration wells from previous periods,” says Eldar Sætre, President and CEO of Statoil ASA

Statoil delivered equity production of 1,805 mboe per day in the third quarter compared to 1,909 mboe per day same period in 2015. The reduction was primarily due to planned maintenance and deferral of gas sales. Excluding these elements and divestments, the underlying production growth was 5% compared to the third quarter last year.

Statoil said it is lowering its capex guidance for 2016 from $12 billion to around $11 billion and its exploration guidance for 2016 from $1.8 billion to around $1.5 billion. Production guidance remains unchanged, and expected annual organic production growth is 1% from 2014 to 2017.

Regarding the company’s decision to reduce the capex, Sætre said: “Strict prioritization and continued good results from our improvement program allow us to further lower our 2016 capex and exploration guidance.”

Offshore Energy Today Staff

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