Increased investments secure future revenues

[09.05.2019] - Press release – First quarter 2019
Pioneering Spirit Sverdrup - Photo: Roar Lindefjell / Espen Rønnevik / Equinor
Petoro delivered a net cash flow of NOK 32 billion in the 1st quarter of 2019. This is on par with the first quarter of last year. “We are pleased to present such a good result, but our revenues could have been higher with increased drilling efficiency,” says President and CEO in Petoro, Grethe Moen.
Investments in the SDFI portfolio were NOK 1 billion higher than in the 1st quarter of 2018 due to record-high development activity. This is positive because it secures new profitable measures for further production and revenues to the Norwegian State. “Currently, our most important development is the Johan Sverdrup field, where the first phase is now close to start up,” says Moen. “Petoro has an interest of 17.36% of Johan Sverdrup. Over the course of the development, we will invest NOK 22 billion in the largest ongoing industrial project in Norway. In this context, we are pleased to see that Norwegian suppliers have secured more than 70% of the contracts in the project.”
 
Increased production costs
In connection with annual reporting for 2018, Petoro noted a general growth in production costs for the SDFI portfolio. This growth continued in the 1st quarter of 2019. “We must not lose the advantage the Norwegian Shelf has gained through the impressive efficiency improvements made over the last four years. We must continue to target work processes, new ways of cooperation and digitalisation in order to succeed. This requires effective cooperation and sharing of information. Further progress in the improvement processes is only possible when we can learn from each other. We must also acknowledge that this takes time, while at the same time maintain focus,” says Moen.
 
Must reduce CO2 emissions
Higher energy consumption increased global CO2 emissions by 1.7% last year according to the International Energy Agency (IEA). “This is worrying and it’s urgent that we take action to reduce emissions,” says Moen. In the SDFI portfolio, emissions from production are low as a result of much of the production being electrified, such as on Troll A, including Kollsnes, and Ormen Lange. In addition, several fields under development have been decided electrified, and there are plans for possible electrification of several existing fields in our portfolio. “These are necessary measures to reduce emissions from the Norwegian shelf, not least from mature fields,” emphasises Moen.
 
Significant exploration activity
Seven exploration wells were completed in the first quarter. Three of these were discoveries, two of which are considered to be commercial; Ragnfrid Nord and Telesto. Both of these will be considered for tie-back to existing infrastructure. The exploration wells on Gjøkåsen and Oppdal/Driva, which both had considerable volume potential, were unfortunately dry.
 
Petoro received a total of 14 new licences in APA 2018, eight in the North Sea, one in the Norwegian Sea and five in the Barents Sea.
 
HSE results
The HSE results are at the same level as in 2018. Five serious incidents have been recorded so far this year, all in the “falling objects” category. This results in a serious incident frequency in the SDFI portfolio of 0.7. “The result is not satisfactory,” says Moen, and points out that Petoro will continue to be a clear licence partner that promotes learning and good leadership.
 
In April 2019, the Petroleum Safety Authority (PSA) published its annual report Trends in risk level for Norwegian petroleum activity (RNNP). The report shows a positive development for major accident risk, where the indicator has reached a historic low. Nevertheless, the PSA emphasises that there are still too many incidents and mentions, for example, falling objects and personal injuries as challenges.
 
Result for SDFI the 1st quarter
In the 1st quarter, Petoro had a cash flow of NOK 32 billion, which is the same level as in the 1st quarter of 2018. Higher oil and gas prices in NOK compensated for the effect of lower production and increased investments.
 
Total oil and gas production was 1 096 thousand barrels of oil equivalent per day (kboed), 51 kboed or 4 per cent lower than the same period last year. The reduction is mainly due to natural production decline. The effect of natural production decline was reinforced by the fact that fewer new wells were completed.
 
The company invested NOK 6 billion in the quarter, 20% higher than the same period last year. The increase can mainly be attributed to higher activity within field development, including Johan Castberg, Troll phase 3 and Johan Sverdrup. Production cost in the 1st quarter were NOK 3.5 billion, 2% higher than the same period last year.



Press contact:
Head of Communications
Christian Buch Hansen
926 24 255
 

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