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Name | Symbol | Market | Type |
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Equinor ASA | NYSE:EQNR | NYSE | Depository Receipt |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.085 | -0.32% | 26.505 | 26.69 | 26.315 | 26.64 | 2,035,853 | 19:29:09 |
By Kjetil Malkenes Hovland
OSLO-- Statoil ASA's ambitious expansion in oil production beyond Norwegian shores is increasingly yielding an unwanted byproduct: losses.
The state-run oil and gas company posted a 16% drop in second-quarter profit on Tuesday, hit by the continuous slide in oil prices as well as further losses from overseas operations.
Net profit, boosted by gains from disposals, stood at 10 billion Norwegian kroner ($1.22bn) in the three months to June 30, compared with 11.9 billion kroner in the same period a year earlier. Revenue fell 13% to 124 billion kroner, beating expectations of 122 billion kroner.
Statoil said that while its Norwegian business generated diminished operating profit of 17.9 billion kroner, foreign businesses had an operating loss of 0.1 billion kroner, its third consecutive quarter of red ink.
"A marginally negative result isn't satisfactory," Chief Executive Eldar Saetre said in an interview. "We are working quite actively on this now."
The steady erosion in oil prices could jeopardize Statoil's 15-year drive to offset declining output in Norway by investing in foreign fields.
Statoil's foreign output reached 744,000 barrels a day last year, from under 100,000 barrels a day at the turn of the Millennium. The company now pumps oil in 11 foreign countries, including Angola, Canada, the U.S. and Brazil.
But much of that expansion was conducted when oil prices exceeded $80 or even $100 per barrel. As a result, many of Statoil's foreign fields require higher prices than the current $53 per barrel for Brent crude to be profitable.
In contrast, many of Statoil's Norwegian fields were developed decades ago in a $20-per-barrel environment, and can produce cheaper oil.
Statoil said it booked a one-off gain of 12.3 billion kroner in the second quarter on the sale of its interest in Azerbaijan's Shah Deniz gas field.
Pareto Securities analyst Trond Omdal said he expected Statoil to continue selling or slimming down assets, notably in Algeria and Norway, to fund future dividends and capital expenditure, and avoid taking on too much debt.
"At current prices, Statoil's international operations aren't profitable, especially in North America," Mr. Omdal said.
Formed in 1972, Statoil is the second-biggest exporter of natural gas to Europe after Russia's Gazprom. The company grew significantly during the 1980s on the back of vast field developments off Norway, including Statfjord, Gullfaks and Troll, and was listed in 2001.
Write to Kjetil Malkenes Hovland at kjetilmalkenes.hovland@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
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