Statoil profits fall 40 percent
November 4, 2009
Norway’s biggest company, which re-emerged as simply “Statoil” over the weekend, reported major declines in revenues and profits on Wednesday. The company is using its new corporate identity, though, to try to reassure the country’s important offshore industry, which worries that it’s facing a crisis.
Statoil’s net operating profits fell to NOK 28.3 million in the third quarter, down from NOK 47 million in the same quarter last year. Revenues were down by 30 percent, to NOK 122.4 billion from NOK 173.8 billion in the third quarter of 2008.
Operating expenses were much lower, however, than in last year’s period, down to just under NOK 95 billion from NOK 127.5 billion. That reflects Statoil’s cost-cutting efforts, and a sharp drop in money spent on oil and gas exploration.
CEO Helge Lund characterized the company’s results as “good, in a demanding market.”
The bottom line was up slightly, to NOK 6.6 billion in net after-tax profits, compared to NOK 6.3 billion in last year’s third quarter, because of lower taxes and gains on financial items.
Statoil blamed the lower revenues and profits on lower oil and gas prices, down more than 30 percent from last year. Statoil’s stellar results last year can be considered windfall profits, unusually high because of record high oil prices at the time.
Now they’ve come down and the world, in the meantime, fell into the global finance crisis. Lund said that while “we see signs of improvement in the global economy, there is no firm evidence that industry investment, employment and private consumption have recovered in a sustainable way. This calls for cautiousness.”He claimed, though that Statoil will “maintain a high activity level both in Norway and internationally” and had the flexibility “to adjust” it in response to a “volatile business environment.”
Lund noted that Statoil started operations on several new oil and gas fields during the third quarter, including Tyrihans in the Norwegian Sea, Tune South in the North Sea and Thunder Hawk in the Gulf of Mexico. Statoil now has operations in 40 countries.
The head of Norway’s trade union federation recently called upon Statoil to concentrate more on its Norwegian operations than on “speculative” operations overseas like the Alberta oil sands project in Canada. Statoil has been keen in recent years to geographically diversify its operations beyond Norwegian territory, to prepare for the day when oil and gas may run out in the North Sea.
Norwegian offshore firms already fear a crisis in 2011 because orderbooks at local offshore yards and suppliers are running dry. Statoil is a huge player in the local market, and the business it can give to Norwegian firms can determine their fate.
Statoil claims its level of activity in the Norwegian remains high, and even stressed the point during its introduction of its new corporate logo earlier this week. A pink star, “inspired by the starry skies of the north, symbolizes our highest aspirations, continued focus on the Norwegian continental shelf, international growth and active and targeted work to develop offensive new energy solutions,” claims Statoil’s boss for corporate communications, Reidar Gjærum.
One oil worker commented during the logo’s unveiling that “there’s been some discussion about the color.” Statoil calls it “magenta,” not pink.