Petoro - a driving force on the Norwegian continental shelf

SDFI and Petoro annual report 2012

Directors’ report 2012

Petoro AS – share capital and shareholder

The company’s share capital at 31 December 2012 was NOK 10 million, divided between 10 000 shares. All the shares are owned by the Ministry of Petroleum and Energy on behalf of the Norwegian government. Petoro’s business office is in Stavanger.

Petoro Iceland AS

The Icelandic government awarded two production licences on 4 January 2013 in the second licensing round on Iceland’s continental shelf. A 25 per cent interest in each of these licences is held by the Norwegian state, as detailed in Proposition no 42 S (2012-2013) to Norway’s Storting (parliament). Petoro AS established a Norwegian subsidiary, Petoro Iceland AS, in December 2012 with an Icelandic branch to undertake on-going management of the Norwegian state’s participatory interests. The branch serves as the licensee and participant in the two joint ventures on the Icelandic continental shelf.

Petoro AS – net income and allocations

Administration of the portfolio by Petoro is subject to the accounting regulations for the government. The company maintains separate accounts for all transactions relating to the participatory interests, so that revenue and expenses for the portfolio are kept apart from operation of the company. Cash flows from the portfolio are transferred to the central government’s own accounts with the Bank of Norway. The company prepares separate annual accounts for the SDFI,
with an overview of the participatory interests managed by Petoro and associated resource accounting. Accounts for the portfolio are presented both on the cash basis used by the government and in accordance with the Norwegian Accounting Act and Norwegian generally-accepted accounting principles (NGAAP). All amounts cited in this directors’ report are based on NGAAP.

Petoro’s operating revenue takes the form of a contribution from the government, which is directly liable for the commitments accepted by the company under contract or in other forms. The government contribution for 2012 was NOK 281.2 million, compared with NOK 264 million the year before. Since this sum includes VAT, disposable revenue was NOK 225 million as against NOK 211.2 million in 2011. Petoro received an additional appropriation of NOK 27 million exclusive of VAT in 2012 related to the Johan Sverdrup field. Recorded income related to Johan Sverdrup was NOK 19.5 million exclusive of VAT. Total recorded income, including financial income, for 2012 was NOK 249 million, compared with NOK 221.6 million the year before.

Operating expenses were NOK 256.7 million for the year, compared with NOK 228 million in 2011. These expenses related primarily to payroll and administration expenses and to the purchase of external services. The purchase of leading-edge expertise relating to supervision of joint ventures in the SDFI portfolio accounts for a
substantial proportion of the company’s operating expenses. In-depth studies of the Gullfaks, Heidrun and Snorre fields were conducted in 2012. Spending on studies and leading-edge expertise was substantially higher than in 2011 because of participation in the Johan Sverdrup field.

The board devoted attention in 2012 to the company’s overall resource position. Further use of resources directed at mature fields and critical activities will be given priority, but kept within available disposable funds.

The net loss after net financial income came to NOK 8.1 million. The board proposes that this loss be covered from other equity. Remaining other equity at 31 December was NOK 13.3 million. The company’s equity position is satisfactory, with low financial risk. Its non-restricted equity totalled NOK 5.3 million at 31 December.

Pursuant to section 3, subsections 3 and 2a, of the Norwegian Accounting Act, the board confirms that the annual accounts for the portfolio and the company provide a true and fair picture of the company’s assets and liabilities, financial position and results of the business, and that the annual accounts have been prepared under the assumption that the company is a going concern.

* Elected by the employees

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