Statoil's losses have deepened on a large impairment charge

 
Courtney Goldsmith
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An onshore North American asset was to blame for Statoil's losses
Statoil's Mariner project is located in the North Sea (Source: Statoil)

Production issues at a North American oil site dragged down third-quarter profits at Statoil despite a rise in oil prices.

The figures

The Norwegian oil major reported its net income fell 12 per cent compared with the previous year to a loss of $478m (£361m) following around a $900m impairment charge on lower than expected production at one of Statoil's shale assets in North America.

Total revenues rose 12 per cent to $13.6bn in the third quarter but fell short of consensus forecasts of $14.1bn.

Shares in the Oslo-listed firm fell 3.5 per cent in morning trading.

Read more: Low oil prices and an impairment charge drag on Statoil's earnings

Why it's interesting

Statoil, which is majority owned by the Norwegian state, said the impairment was triggered by a change in the operational plan after "lower than expected production and a significant reduction in expected reserves".

Strong operational performance and higher oil prices helped push the company's adjusted earnings up, however.

Brent crude prices averaged $52.10 per barrel in the third quarter, up 14 per cent from the previous year, and Eldar Saetre, president and chief executive of Statoil, said production grew 15 per cent in the quarter and underlying operating costs per barrel were cut by 11 per cent.

The company reduced its capital expenditure guidance for 2017 from around $11bn to around $10bn. "This is the result of hard work from the organisation, in close collaboration with our suppliers and partners, and strict capital discipline. We are getting more for less,” said Saetre.

Statoil has been working towards a goal of allocating 15 to 20 per cent of its annual investments towards new energy solutions by 2030, the year it sees oil demand peaking.

What Statoil said

Saetre said:

With an oil price below 52 dollars per barrel, we have generated 3.6 billion dollars in free cash flow so far this year, based on good contributions from all business segments. This has further strengthened our financial position.

We continue to realise efficiency improvements and deliver strong progress on project development and execution.

Read more: Statoil's major North Sea project will support 1,500 jobs

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