Statoil bumps up output amid profit slump

Norway's Statoil announced on Thursday it had managed to turn around its year-long production slump, but its third quarter earnings fell below analyst expectations.

For the July-September period, the Norwegian energy giant posted a net profit of 10.4 billion kroner ($1.9 billion), a drop of 24.7 percent from the 13.8 billion kroner it posted a year ago.

The result, weighed down by lower financial gains and higher taxes, was far below the 12.3 billion kroner expected by analysts polled by Dow Jones Newswires.

The result was also hit by a net impairment loss of 4.8 billion kroner linked largely to Statoil's refinery business, where the company said it expected to continue seeing lower margins.

At the same time, Statoil said it had finally reversed its downward production slide, seeing a significant hike to 1.764 million barrels of oil equivalent per day (mboe/d) from 1.552 mboe/d in the third quarter of 2010.

The increase helped boost by 39 percent the company's net operating income, which was also lifted by rising oil and gas prices.

Converted to Norwegian kroner, the average oil price during the quarter rose 30 percent year-on-year while the price of gas was up 13 percent, Statoil said.

Sales during the quarter were also up sharply at 166.4 billion kroner, a 32-percent hike over the year-ago quarter.

The three month period was marked by a number of positive surprises linked to the newly discovered "giant" North Sea oil field, which has seen its reserve estimates raised significantly.

It is now estimated to hold between 1.7 and 3.3 billion barrels of recoverable oil equivalent (boe), which could make it the third largest reserve of black gold ever found off Norway.

The find, which is the biggest oil discovery in the world so far this year, came as a huge surprise since the North Sea had been extensively explored and had been believed to be running dry.

Once in production, the field will help put Statoil on track to reaching its ambition of pumping up a massive 2.5 mboe/d in 2020.

The company, 67-percent-owned by the Norwegian state, also aims to expand its non-conventional oil and gas extraction activities.

On October 17th, it announced that it would buy US shale oil company Brigham Exploration for $4.7 billion (3.4 billion euros), giving it access to a 1,500-square-kilometre area in the Williston basin
containing the Bakken and Three Forks shale oil formations in the states of North Dakota and Montana.

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