Production reduced and uncertainty about investments in mature fields

Press release, SDFI results, 1. quarter of 2013
Operating problems and lower output from Troll and Snøhvit contributed to some decline in net cash flow from the State’s Direct Financial Interest (SDFI) in the first quarter compared with the same period of 2012. Petoro chief executive Kjell Pedersen views this as a reminder of the importance of Norway’s mature fields. He is unsure whether the licensees can manage to take major investment decisions in such fields at a time of great activity.
Cash flow to the government came to NOK 37.3 billion, down by NOK 5.6 billion from the first quarter of 2012. Income after financial items was NOK 36.2 billion, compared with NOK 43 billion for the first three months of last year. Operating income came to NOK 36.2 billion, as against NOK 44.1 billion for the same period of 2012.
 
      Total oil and gas production for the first quarter declined by 15 per cent to an average of 1 121 000 barrels of oil equivalent per day (boe/d), compared with 1 319 000 for the same period of 2012. Gas production was down by 19 per cent from the first quarter of last year. The most important reason for this change was operating problems on the Troll and Snøhvit gas fields. Production of oil and natural gas liquids (NGL) fell by 10 per cent, primarily because of delayed completion of wells on Troll and reduced output from mature fields.
 
      “The fact that we still delivered NOK 37.3 billion to the government for the first quarter, even after a decline of almost 20 per cent in output and lower prices, demonstrates substantial robustness in the portfolio,” says Pedersen in his last comment on the SDFI’s results before retiring on 11 June.
 
      “I’m nevertheless disappointed that we have yet again witnessed a lengthy shutdown of the Snøhvit facility at Melkøya outside Hammerfest. The operating problems on Snøhvit and Troll remind us of the importance of measures aimed precisely at maintaining and extending profitable production from reservoirs and facilities on the large mature fields.”
 
      Pedersen notes that the issue of securing value in the mature fields has climbed higher up the industry’s agenda in recent years.
 
      “I’m proud to be able to say that Petoro has contributed to this development. At the same time, I see substantial challenges in the combination of a high level of activity, increased capital discipline and efficiency, and competition to be the best project in the large portfolios held by the companies. I’m therefore unsure whether bigger investment in a mature field – even if it is time-critical – will come high enough up licensees’ ranking lists in a period with many other opportunities.”
 
      He highlights the choice of concept this summer for further development of Snorre as the first big test. “As licensees, we face a crossroads here where the size of investments determines how big additional profitable reserves we can get out of the field."
 

Contact:
Sveinung Sletten, head of communications
Petoro AS
+47 51 50 20 24/+47 95 07 55 54
sveinung.sletten@petoro.no
 

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