Statoil Profit Drops More Than Estimated as Oil Output Falls

Statoil ASA, Norway’s biggest energy company, said profit fell 29 percent in the first quarter on lower oil and gas prices and as output dropped in Norway, Brazil and Algeria, where a terrorist attack shut down a facility.

Adjusted net income declined to 12 billion kroner ($2.1 billion) from 16.8 billion kroner a year earlier, the Stavanger-based company said today. That missed the 13.7 billion kroner average of 17 analyst estimates compiled by Bloomberg. Net income fell to 6.4 billion kroner from 15.1 billion kroner and sales dropped to 162.2 billion kroner from 194.8 billion.

“We deliver financial results impacted by lower production and reduced prices,” Chief Executive Officer Helge Lund said in a statement. Earnings were also affected because “a bigger proportion of our gas production comes from the U.S.,” which is seeing lower prices at the moment than in Europe.

Statoil, of which Norway’s government owns 67 percent, is expanding abroad to boost production to more than 2.5 million barrels of oil equivalent a day in 2020 from about 2 million barrels now, with gains in U.S. output accounting for two-thirds of that growth. The company has said production will decline this year after it sold some Norwegian assets and on lower output growth from its U.S. shale gas assets.

First-quarter production declined to 1.998 million barrels of oil equivalent a day from 2.193 million barrels a year earlier, Statoil said. That beat the 1.985 million-barrel average of nine analyst estimates.

International Record

Production outside Norway reached a record 703,000 barrels of oil equivalent a day thanks to a 26 percent increase in gas output. The proportion of international gas production coming from Statoil’s North-American assets jumped to 51 percent from 42 percent in a year.

Statoil shares fell as much as 3.7 percent, the most in almost a year, and traded 3.6 percent lower as of 11 a.m. in Oslo. That extends the stock’s decline to 11 percent during the last 12 months.

“Statoil surprised with weak first-quarter results,” Irmantas Vaskela, an analyst at Norne Securities AS, said in an e-mail. “Our and the street’s estimates for Statoil may suffer somewhat following the weak first-quarter results, as the realized prices may be lowered and costs may be increased.”

Norne said it will review its buy recommendation, while Swedbank First Securities said it will lower its estimate for adjusted operating profit by as much as 5 percent.

Cove Point

Statoil’s profit was also hit by a 4.9 billion kroner write-down on an “onerous” contract at its Cove Point terminal in the U.S., it said, adding that operating expenses increased to 23.7 billion kroner from 17.8 billion a year ago.

Planned maintenance is expected to reduce production by 40,000 barrels of oil equivalent a day this quarter and 45,000 barrels a day for the full year, Statoil said. The highest level of maintenance will be in the third quarter.

Five Statoil employees were among the 38 killed in this year’s terrorist attack at In Amenas in Algeria, which is run by BP Plc, Statoil and Sonatrach. While the plant restarted in February, it won’t return to full production before the end of 2013, according to the Algerian government.

“There is still uncertainty regarding how much total production we will get from the In Amenas facilities in 2013,” Statoil’s Lund said.

Brazil’s Peregrino

Statoil also saw partial outages at fields in Norway including Oseberg and Troll due to technical issues, according to the Norwegian Petroleum Directorate.

Troll will be back at close to full capacity toward the end of the second quarter, Lund told reporters today. The company’s Snohvit gas field in the Barents Sea was shut from the end of January to the end of April while output from Brazil’s Peregrino field was also lower.

Norway’s crude production will fall for a 13th consecutive year in 2013 to less than half a 2000 peak, the NPD said in January. Gas sales are expected to decline to 106.5 billion cubic meters from a record 114.8 billion cubic meters in 2012, it said at the time.

Statoil is seeking to keep its production level in Norway at about 1.4 million barrels of oil equivalent in 2020 while increasing its production abroad to 1.1 million barrels.

Statoil got an average of $103.5 a barrel for oil in the quarter, down from $111.5 a year earlier, and 2.01 kroner a cubic meter for gas, compared with 2.26 kroner. Brent oil averaged $112.6 in the first quarter, down from $118.5 a year earlier.

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