“We not only celebrated our 10th anniversary in 2011, but this was also a year to celebrate for the oil and gas portfolio we manage,” says Petoro president Kjell Pedersen in a comment.
“The most gratifying aspect is that we suffered no serious incidents or events with a major accident potential in 2011. After a number of years with a very low reserve replacement rate, it’s encouraging to be able to add 601 million boe to our holdings. That’s almost equivalent to the Norne field, and represents a replacement rate of 160 per cent. We were also involved in Johan Sverdrup, a discovery on a par with the very biggest fields on the NCS, and in the Skrugard/Havis finds, which confirm the Barents Sea as an oil province. That makes 2011 one of our very best years, although we’ve earlier had much higher net cash flows to the government.”
Mr Pedersen notes that last year in many ways involved a breakthrough for the kind of thinking about Norway’s large mature fields which is reflected in Petoro’s strategy. He has found that Statoil, the dominant operator of such fields on the NCS, is also expressing itself more clearly and aggressively in its work with and comments on increased recovery and mature fields. The government’s petroleum White Paper also provided a strong and clear pointer in that respect.
“We must nevertheless be careful not to think that we’ve cracked the code for the mature fields, and that everything is running smoothly,” he says. He points out that roughly threequarters of the increase in SDFI reserves in 2011 reflected the decision to invest in gas compression on Troll and Åsgard. “These are also gratifying and sensible decisions, and will boost gas sales over time. But they don’t represent a breakthrough for the substantially bigger challenge of increasing oil recovery from the mature fields. Less than 20 per cent of our reserve addition in 2011 was attributable to the latter.
"Our figures unfortunately show that we’re rather heading in the wrong direction with regard to drilling production wells – one of the most important measures for improved oil recovery. So our proposal to build wellhead platforms in order to drill more wells faster is therefore just as relevant. If the reserves in the mature fields are recovered and the new discoveries developed, we will for a long time to come remain the biggest contributor through the SDFI to the government pension fund – global, apart from after tax revenues from the NCS.”
Net income for the SDFI was NOK 133.7 billion, up by 27 per cent from 2010. This substantial rise reflected higher oil and gas prices, but that effect was offset to some extent by lower production and higher costs. Further maturation of the portfolio meant that oil production in 2011 fell by 6.5 per cent from the year before. The reduction was nevertheless not as sharp as in many previous years, and could indicate a flattening out of the decline in oil production. Gas output fell by five per cent from 2010.
Revenue for the year from dry gas sales totalled NOK 81.7 billion as against NOK 68 billion in 2010. Total gas sold fell by five per cent from 2010 to 37.4 billion standard cubic metres (scm), including sales of third-party volumes. That corresponds to 645 000 boe/d. The average gas price for the year was NOK 2.15 per scm, up 22 per cent from 2010.
Total revenue for the year from oil and natural gas liquids (NGL) was NOK 95.4 billion, compared with NOK 81 billion the year before. The sales volume totalled 160 million boe, or a daily average of 438 000 boe. The average oil price obtained for the year was NOK 632 per barrel, up by 31 per cent from 2010. In US dollars, the oil price averaged USD 114 per barrel, compared with USD 79 the year before.
Net income for the SDFI in the fourth quarter was NOK 39.2 billion, up by 27 per cent from the same period of 2010. Cash flow to the government was almost NOK 31 billion. Oil and gas prices obtained by the SDFI were up by 24 and 23 per cent respectively from the fourth quarter of 2010.
More information is provided in the directors’ report.
Head of communications Petoro AS
Phone: +47 51 50 20 24
Mobile: +47 950 75 554