Statoil CEO Discuses Q3 2010 Results - Earnings Call Transcript
Statoil ASA (
)
Q3 2010 Earnings Call
November 03, 2010 08:30 am ET
Executives
Hilde Nafstad - SVP, IR
Helge Lund - President and CEO
Eldar Sætre - CFO
Analysts
Trond Omdal - Arctic Securities
Hootan Yazhari - Bank of America
James Hubbard - Morgan Stanley
John Olaisen - Carnegie
Oswald Clint - Sanford Bernstein
Dominique Patry - Cheuvreux
Kim Fustier - Credit Suisse
Presentation
Hilde Nafstad
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Good afternoon ladies and gentlemen and welcome to Statoil's Third Quarter Earnings Presentation and Conference Call. My name is Hilde Nafstad, and I am the Head of Investor Relations in Statoil.
Before we start, let me say that there are no fire drills plan today so, in case the fire alarm goes off you will need to exit through the emergency exits on each of the room and continue on towards the same side.
This morning at 7.30 AM Central European Time we announced our results for the third quarter of 2010. A press release regarding the results were sent through wires and through the Oslo Stock Exchange. The quarterly report and today's presentation can, as usual, be downloaded from our website statoil.com. There is a link directly to presentation on the front page of statoil.com.
I will ask you to kindly take a special note of the information regarding forward-looking statements, which can be found on the last page of the presentation set. Please note that the question can be posed by means of telephone. Questions cannot be posed directly from the web. The dial-in numbers for posing questions can be found on the website. The operator of the conference call will explain the procedure for posing questions over the phone immediately before the Q&A session starts.
We have our CEO and President, Helge Lund with us here today and he will give a brief introduction before Statoil's, Chief Financial Officer, Mr. Eldar Sætre, will take us through the second quarter earnings presentation. Welcome Helge.
Helge Lund
Thank you, Hilde. Good afternoon, ladies and gentlemen, and thank you for participating at this conference. Let me make a few remarks before I leave the floor to Eldar to take you through the results in more detail.
In Statoil, we have behind us an extraordinary quarter characterized by extensive but also planned maintenance activities, which have led to low oil and gas production as you see throughout the quarter. At the same time, we have strong cash generation. We have financial flexibility and the cost is under firm control in all business areas and you have also seen that the HSE results are moving on a positive trend.
Based on our financial flexibility and operational flexibility, we have also had a very active quarter in terms of strengthening and high-grading our portfolio. Our field development projects show good progress across the board. New field development decisions have been taken and we have been quite active in terms of high-grading the portfolio and there the listing of the SFR and the acquisition of joint venture at Eagle Ford are the most important step forward this quarter.
New field developments will along with the ramp up of fields generate an additional 350,000 to 400,000 barrels per day in 2012, compared to what you see in 2010. However, this will lead to very limited expected production growth in 2011 due to the phasing of the start up and ramp up of these fields.
Earlier in the year, two well known factors have taken our production downwards in the guided range, namely the reduction of the production permit of Ormen Lange and well incident and drilling challenges at Gullfaks.
As you have seen from our announcement this morning, we have now decided to take our 2010 production guiding to 1.9 million barrels per day and I can understand that some questions are raised regarding why we changed our guiding so late in the year. However, very recently two additional factors triggered the adjustment on the production guiding for 2010. After very, very careful considerations, the license groups for two of our big fields, Gullfaks South and Kvitebjørn, very recently decided to perform [IOR] activities that will increase the short-term production but increase the longer term production and value creation.
In addition, it has become clear that the operational problems that have been known for the while related to a faulty compressor at Kollsnes would have a longer duration and higher impact than previously known. These factors combined with the usual certainty regarding gas off take led us to conclude that the 2010 production forecast should be reduced to around 1.9 million barrels per day.
With those words, please Eldar, I leave it to you to take the audience to a more detailed explanation of the numbers. Thank you.
Eldar Sætre
Thank you, Helge. Good afternoon, Ladies and gentlemen. As Helge said, this quarter has been characterized by an extensive and very well planned maintenance activities, which have led to a significant reduction in the quarterly volumes both on the oil and gas side, compared to the same quarter last year.
Our cash generation and the financial robustness remained solid throughout the quarter. I’ll come back to that. All business areas also demonstrate very good cost control and the HSE results are strong and improving.
This illustration compares our third quarter key earnings figures compared with the same quarter last year which we can see at the bottom. Our net income is more than doubled from NOK6.6 billion in 2009 to NOK13.8 billion which has grown this quarter. While the net operating income of NOK32.2 billion is approximately at the same level as we saw last year.
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