“We see clearly that the oil industry is taking the challenges seriously,” says CEO Grethe Moen in connection with the presentation of Petoro’s results for the first quarter of 2015. “Costs for fields in production were cut by seven per cent in the first quarter. Real efficiency improvements to achieve a substantially lower level of costs will call for hard work over a long time to come and is a necessary correction. At the same time, it’s important that new business opportunities are brought forward. Priorities must be discussed in every licence.”
Petoro wants to protect value for society as a whole, which makes mature fields more important than ever. For this value to be realised, the investment discussions must take place now. Work on efficiency improvements and costs in the companies must not present obstacles to new projects coming up for discussion in the licences. “That’s the only way we can assess both profitability and which projects are time-critical in priority terms,” says Moen. “Our data show a further decline in the number of new projects being submitted by operators to the partnerships.”
Discussing time-critical projects and profitability is particularly important at times when investment has been reduced by capital constraints. Petoro has pointed out on numerous occasions that no less than 66 per cent of the remaining proven resources on the Norwegian continental shelf (NCS) lie in producing fields. More than 80 per cent of its total output comes from mature producers. Much still remains to be done to maximise recovery from the late-life phase of these fields. Some measures need to be decided now in order to be realised, while others can be deferred in order to benefit from efficiency improvements.
“A big potential still exists for new commercial opportunities offshore Norway if we succeed in becoming more efficient,” says Moen. “Experience indicates that the number of new projects in long-term company plans is crucial for realising these opportunities, and that means more plans must be brought forward than are reaching the partnerships at present. We naturally don’t want to lose substantial value.”
She is otherwise very satisfied that the partners have today delivered a plan for development and operation (PDO) of the Maria field in the Norwegian Sea to the Ministry of Petroleum and Energy. Petoro manages the state’s 30 per cent interest in this field.
Net cash flow from the State’s Direct Financial Interest (SDFI) on the NCS came to NOK 31 billion in the first quarter. A high sales volume as well as a high USD/NOK exchange rate mean that Petoro can still deliver a good cash flow to the government even though oil prices have halved from the same quarter of 2014.
“We are satisfied at delivering a good cash flow for the first quarter despite a decline in oil prices from the same period of last year,” says Moen. Operating revenue totalled NOK 44.7 billion for the first quarter, down by about 16 per cent from the same period of last year. A high volume of both oil and gas sales offset some effects of the price reduction. Gas revenue was on a par with the same period of 2014, and twice as high as income from oil sales.
Read more about Petoro’s results in the directors’ report for the first quarter.
Contact person in Petoro:
Head of communications
+47 95 07 55 54
+47 51 50 20 24