It is then my privilege to welcome Statiol's Chief Financial Officer, Eldar Sætre, who will now take us through the second quarter earnings presentation.Eldar Sætre Thank you, Lars. Good afternoon ladies and gentleman and welcome to this second quarter earnings and presentation for Statiol. After a promising start of 2010 we have now seen yet another challenging quarter regarding both the global economy and financial markets and we have been reminded that great uncertainty still remains when it comes to the pace of the world economic recovery. However Statiol has delivered another set of good results this quarter. Operationally, we have had a strong quarter with high production despite the shutdown of the production on the Gullfaks C platform, which by the way came back on stream on July 14. We are also getting closer to production start on a number of new fields. Amongst them is the Gjoa field, which you can see, being towed out to the field on the front page of this presentation? We continued our exploration efforts and have made several new discoveries also in this quarter. Our flexible gas strategy has created significant values by moving volumes from last summer and mainly placing them on the forward curve at considerably higher prices. Finally, we have had higher than usual impact from non-cash provisions this quarter, which is seen as infrequent and outside of our underlying operations. We have made a cost provision in connection with an onerous contract related to the Cove Point LNG regasification terminal in the US of NOK3.8 billion this quarter. In addition, the market outlooks for our Mongstad refinery have worsened and we have decided to take an impairment of NOK2.9 billion in the quarter. And now some words about our second quarter earnings. Here we see an overview of our key earnings dealers compared with the same quarter last year which is illustrated at the bottom here.
Our reported net income amounted to NOK3.1 billion compared to zero in the second quarter of last year. And I should then remind you that the reported second quarter results last year was quite exceptional due to a 99% tax rate deriving from the change that we made to use all our functional currency while the tax basis is still being calculated in Norwegian kroner.The reported net operating income is NOK26.6 billion against NOK24.3 billion last year, which is a 10% increase year-on-year. When focusing on the underlying business performance, we derive at the net adjusted result of NOK36.4 billion in the quarter and this is a 25% increase over last year's NOK29.2 billion. The main contributors were the 32% higher liquids price in Norwegian kroner combined with a 2% increase in entitlement production and this was partly offset by a 12% decrease in average natural gas prices. The adjustments of NOK9.8 billion were mainly caused by natural gas derivative losses by the provision related to the Cove Point and both of these were in natural gas and the impairment of the Mongstad refinery which I mentioned within manufacturing and marketing. Reported tax rate this quarter was 88% after adjustments for the effects of tax are in frequent items and net financial items. Our effective tax rate on adjusted earnings amounts to 71% which is in line with our guidance. Now let's turn to the production numbers for the quarter. Total equity production was 1,957,000 barrels per day this quarter. And this implies 6% growth over last year. The growth primarily came from increase in gas production, which was up 14%, while the overall liquids production was up 1%. Volumes from the Norwegian continental shelf increased by 6% while equity volumes from outside of Norway grew by 5% this quarter. Entitlement volumes increased by 2% to 1,765,000 barrels per day and this means that PSA effects, so-called PSA effects were 192,000 barrels per day in the second quarter and this is compared to 116,000 barrels per day, the year before, and the increase were mainly due to changes in profit tranches for some Angolan fees and also some one-off positive PSA adjustments that we made in the second quarter of last year. Read the rest of this transcript for free on seekingalpha.com