26 billion to the state – strong profit increase from Petoro

[05.05.2021] - Press release - First quarter 2020
Troll Vest. Illustration: Equinor
Petoro has delivered a cash flow of NOK 26 billion to the state as of the first quarter of 2021. This corresponds to the cash flow from the two last quarters in 2020. Oil and gas prices rebounded significantly from the end of last year and contributed to this improvement. The cash flow is now on par with the period prior to the pandemic.
"The oil and gas prices achieved for Petoro in the first quarter were 15 and 48 per cent higher, respectively, than the first quarter of 2020, and this indicates that the energy markets appear to have stabilised in this phase of the Corona pandemic," says Acting Petoro CEO Kjell Morisbak Lund.
 
Increased demand and limits on oil production over the last year have led to the oil price stabilising at a level more than USD 60 per barrel, which is about three times higher than at the same time last year. At the same time, European gas prices have gradually increased to a price level that is about four times higher than what we saw one year ago.
 
Electrification of Troll
The Troll joint venture submitted its plan for development and operation (PDO) for electrification of Troll Vest on 23 April. "As the majority licensee with a 56 per cent share in the Troll licence, Petoro is very happy to have contributed to the decision to electrify Troll Vest," says Morisbak Lund.
 
"It's been quite a journey from 2016, when Petoro proposed studying partial electrification of Troll Vest, up to today. Strategic further development will ensure that Troll remains the crown jewel in Petoro's portfolio," says Morisbak Lund. Even in a year as demanding as 2020, Troll alone provided Petoro with a net cash flow of more than NOK 20 billion, which goes directly to our owner, the state. The electrification of Troll B and Troll C will most likely be counted among the greatest measures to reduce CO2 emissions in Petoro's field portfolio and will provide a significant contribution toward the industry's overall reduction target.
"The Government's Climate White Paper describes a substantial increase in CO2 costs moving forward, and we are also seeing a significant price increase for European CO2 emission credits," says Morisbak Lund. "For Norwegian gas, this means better competitiveness in relation to coal. This indicates significant value in positioning Troll, with its very low emissions, for a low-carbon future.
 
Two commercial discoveries in the first quarter
Two commercial discoveries were made in the 1st quarter: PL 532 Isflak and PL923 Røver Nord. Preliminary calculations of the size of these discoveries indicate between 5 and 8 million standard cubic metres (scm) of recoverable oil equivalent for Isflak and between 7 and 11 million scm of recoverable oil equivalent for Røver North.
 
HSE 
The year got off to a positive start with improvements in HSE results. Two serious incidents were registered, compared with four during the same period last year. This yields a serious incident frequency of 0.8 for the last 12 months, which is a reduction from 0.9 at year-end. At the same time, the Petroleum Safety Authority Norway's annual mapping of the risk level in Norwegian petroleum activities (RNNP) indicates a negative development in certain areas. This is particularly true for onshore facilities. The scope of outstanding maintenance in the portfolio has increased because of the Corona pandemic. Petoro is particularly concerned with reducing this backlog to limit its impact on the risk scenario.
 
Financial results
Net cash flow from the State's Direct Financial Interest (SDFI) in the oil and gas activities totalled NOK 26 billion as of the 1st quarter. Total production amounted to 1,046 thousand barrels of oil equivalent per day (kboed), a reduction of 46 kboed compared with the same period last year.
 
Gas production amounted to 104 million standard cubic metres (mill. scm) per day, a decline of 6 per cent compared with the same period last year. The decline is primarily caused by production from Snøhvit shutting down following the fire on Melkøya. The average realised gas price was NOK 2.16 per scm, compared with NOK 1.46 in the same period last year. The reason for the increased gas prices is chiefly the higher demand due to a relatively cold winter, in addition to significantly lower LNG deliveries in Europe compared with the previous year.
 
Liquid's production amounted to 393 kboed, 5 kboed lower than the same period last year. This reduction was caused by natural production decline on multiple fields but is offset by increased production capacity and accelerated production from Johan Sverdrup as a consequence, as well as production from Snorre SEP, which came on stream in December 2020. The average realised oil price was USD 61, compared with USD 50 per bbl in the same period last year. However, the price increase in USD was somewhat offset by a bullish NOK, meaning that the achieved oil price measured in NOK was 518, compared with NOK 450 per barrel in the same period last year.

Press contact
Head of communications
Christian Buch Hansen
926 24 255
 
 

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