SDFI - Notes 1-10

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Fourteen production licences were awarded with SDFI participation in 2014. Twelve of these were formally awarded by the Ministry of Petroleum and Energy on 7 February 2014 in connection with the awards in predefined areas for 2013. In addition, two licences were carved out of existing licences with SDFI participation. Eleven production licences were relinquished.
    
Flyndre was established in 2014, and redetermination of the Vega Unit resulted in an increased participatory interest from 1 January 2015.

 
 

All figures in NOK million	Book value at 31 Dec 13	Historical cost at 1 Jan 14	Acc. depreciation 1 Jan 14	Addition 2014	Impair-ment 2014	Disposal 2014	Trans-fers 2014	De-preciation 2014	Book value at 31 Dec 14
Fields under development	5 996	5 996	0	5 048	0	0	0	0	11 044
Fields in operation	157 620	445 731	(288 111)	49 961	(10)	(160)	213	(21 946)	185 581
Pipelines and terminals	32 411	64 778	(32 366)	4 494	0	(55)	0	(1 871)	34 979
Capitalised exploration expenses	5 757	5 757	0	1 576	0	(578)	(213)	0	6 541
Total tangible fixed assets	201 784	522 261	(320 477)	61 077	(106)	(793)	0	(23 817)	238 146
Intangible assets	610	778	(168)	0	(163)	0	0	(30)	417
Financial fixed assets	393	393	0	-293	0	0	0	0	101
Total fixed assets (NGAAP)	202 787	523 433	(320 646)	60 784	(269)	(793)	0	(23 847)	238 663
Translation to cash basis	(26 510)	(57 202)	30 693	(25 412)	(55)	793	0	2 009	(49 175)
Total fixed assets on cash basis	176 278	466 230	(289 953)	35 372	(324)	0	0	(21 838)	189 488

 

Tangible fixed assets are recorded at NOK 238 053 million in the balance sheet. The difference in the note reflects an impairment charge of NOK 93 million for Aldbrough which is recorded under tangible fixed assets in the accounts but moved to intangible assets in the note. Tangible fixed assets for the Snøhvit field include a capitalised long-term financial charter for three ships used for LNG transport from the field. These vessels will be depreciated over 20 years, which is the duration of the charter.
    
Intangible assets relate mainly to rights in the gas storage facility at Aldbrough, and are recorded at NOK 510 million in the balance sheet. This difference relates to an impairment charge in December 2014 which has been recorded against tangible fixed assets. Total capacity for the SDFI and Statoil is 100 million scm, of which the SDFI’s share is 48.3 per cent. The amount invested is depreciated on a straight-line basis over the estimated 25-year economic life. Impairment of NOK 163 million was charged for Aldbrough in 2014, primarily because of lower prices and reduced volatility as well as higher operating expenses. Investment in further development of the Etzel gas storage facility and a small amount for Åsgard Transport are included in intangible assets.
 
Financial fixed assets of NOK 101 million include the following.

• Capacity rights for regasification of LNG at the Cove Point terminal in the USA, with an associated agreement on the sale of LNG from Snøhvit to Statoil Natural Gas LLC (SNG) in the USA, reclassified with effect from 2009 as a financial fixed asset. This activity is assessed as an investment in an associate and recorded in accordance with the equity method. See also note 11. The SDFI participates in SNG under the marketing and sale instruction with regard to activities related to the marketing and sale of the government’s LNG from Snøhvit. Nothing indicates that a new impairment test is required. Cash flows from the SNG are settled on a monthly basis in connection with the purchase and sale of LNG from 2013.
• Shareholdings in Norsea Gas AS, with a book value of NOK 3.98 million, and in Norpipe Oil AS.
   
   

All figures in NOK million	2014	2013
Licence	172 007	189 201
Market	11 503	8 921
Net profit agreements	986	627
Elimination internal sales	(4 699)	(4 441)
Total operating revenue (NGAAP)	179 797	194 308
Conversion to cash basis	5 718	3 332
Total cash basis	185 514	197 640

Market primarily comprises revenue from the onward sale of gas and tariff revenues.

 
 

All figures in NOK million	2014	2013
Crude oil, NGL and condensate	85 642	92 614
Gas	81 477	90 441
Transport and processing revenue	11 137	10 421
Other revenue	554	205
Net profit agreements	986	627
Total operating revenue (NGAAP)	179 797	194 308
Conversion to cash basis	5 718	3 332
Total cash basis	185 514	197 640

 

All crude oil, NGL and condensate from the SDFI are sold to Statoil, and all gas is sold by Statoil at the SDFI’s expense and risk. Virtually all the gas is sold to customers in Europe, and the four largest customers purchase about 30 per cent of the annual volumes under long-term contracts.
 

All figures in NOK million	2014	2013
Production expenses
Licence	17 375	16 663
Other infrastructure	1 904	1 599
Total production expenses	19 280	18 262
Other operating expenses
Licence	13 419	13 441
Market	5 804	8 534
Elimination internal purchases	(4 699)	(4 441)
Total other operating expenses	14 524	17 534
Total operating expenses	33 804	35 796
Conversion to cash basis	862	764
Total cash basis	34 666	36 560

Market primarily comprises the cost of purchasing gas for onward sale and tariff expenses.

 

 

All figures in NOK million	2014	2013
Petroleum products	2 548	2 223
Spare parts	2 490	2 243
Total inventories	5 038	4 466

Petroleum products comprise LNG and natural gas. The SDFI does not hold inventories of crude oil, which is sold in its entirety to Statoil.
    
Not relevant to the accounts on a cash basis.
 

Interest on the state’s fixed capital is incorporated in the accounts on a cash basis. Interest amounts are calculated in accordance with the requirements in the 2014 letter of assignment to Petoro from the Ministry of Petroleum and Energy.
    
Interest on the state’s fixed capital is charged to operations in order to take account of capital costs and to provide a more accurate picture of the use of resources. This is a calculated expense without cash effect.
    
The accounts on a cash basis included an open account with the government which represents the difference between charging to type/category in the appropriation accounts and liquidity movements.

Interest on the open account with the government is calculated in accordance with the 2014 letter of assignment to Petoro from the Ministry of Petroleum and Energy. The interest rate applied is related to the interest rate on short-term government securities and corresponds to the interest rate applied to short-term loans to the Treasury, calculated on the basis of the average monthly balance in the open account with the government.

Not relevant to the accounts based on the Accounting Act (NGAAP).
 

 

Net financial items	2014	2013
Interest	1	50
Other financial revenue	42	41
Currency gain	9 055	5 474
Currency loss	(7 251)	(3 514)
Interest costs	(397)	(123)
Interest on decommissioning liability	(1 910)	(1 566)
Net financial items	(462)	362

 

The government, represented by the Ministry of Petroleum and Energy, owns 67 per cent of Statoil and 100 per cent of Gassco. These companies are classified as close associates of the SDFI.
    
Statoil is the buyer of the government’s oil, condensate and NGL. Sales of oil, condensate and NGL to Statoil totalled NOK 86.4 billion (corresponding to 150 million boe) for 2014 and NOK 92.5 billion (153 million boe) for 2013. 

Statoil markets and sells the government’s natural gas at the government’s expense and risk, but in Statoil’s name and together with its own production. The government receives the market value for these sales. The government sold dry gas directly to Statoil to a value of NOK 461 million in 2014, compared with NOK 484 million in 2013. Statoil is reimbursed by the government for its relative share of costs associated with the transport, storage and processing of dry gas, the purchase of dry gas for onward sale and administrative expenses relating to gas sales. These reimbursements amounted to NOK 15.4 billion in 2014, compared with NOK 17.4 billion in 2013. Open accounts with Statoil totalled NOK 5.7 billion in favour of the SDFI, converted at the exchange rate prevailing at 31 December, compared with NOK 10.2 billion in 2013.

Pursuant to the marketing and sale instruction, the SDFI also participates with a financial interest in Statoil Natural Gas LLC (SNG) in the USA. Cash flows from SNG are settled continuously on a monthly basis in connection with the purchase and sale of LNG. The investment is recorded in accordance with the equity method, and is covered in more detail in note 11.

Open accounts and transactions relating to activities in the production licences are not included in the above-mentioned amounts. Hence, no information has been included with regard to open accounts and transactions relating to licence activities with Statoil and Gassco. The SDFI participates as a partner in production licences on the NCS. These are accounted for in accordance with the proportionate consolidation method.

 

No bad debts were recorded in 2014. Trade debtors and other debtors are otherwise recorded at face value pursuant to the NGAAP.