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Today’s program will start out with Statoil’s Chief Executive Officer, Helge Lund, providing a strategy update. Thereafter, Statoil CEO, Torgrim Reitan, will go through the earnings and the outlook for the company. The presentation will be followed by a joint Q&A session. Please note that the questions can be posted by means of telephone only but not directly from the web. The dial-in numbers for posting questions can be found on the website. The operator of the conference call will explain the procedure for posting questions over the phone. The event will close around 3 p.m., Norwegian time.It is now my privilege to introduce our President and CEO, Helge Lund. Helge Lund Thank you, Hilde, and there, ladies and gentlemen, welcome to our strategy update for 2012. It’s always stimulating and challenging to meet our investors and the analysts, both to present our results but also to show you how we are executing on the strategy. And I think more importantly for you that we make ourselves available to be challenged on simple and more challenging issues. I think what you expect is bare facts, clear strategic direction and also few surprises, and that is exactly what we will try to provide throughout the presentations today. Last year when we met with most of you and many other investors and analysts in New York, we presented our new strategic framework. We emphasized at that time the priority of safe and efficient operations, on the strong project portfolio and the quality of the investment program, the good and growing cash flow including a solid balance sheet and finally, that we have a strong commitment to deliver also dividend according to the policy that we have formulated and communicated to ourselves earlier. These are the topics that we will address in depth today, but before we do that, I will reflect very, very briefly on the 2011 numbers as Torgrim will go through those in much more detail later.
I mean, the summary of all is that we delivered record results, net operating income of NOK211.8 billion. Adjusted earnings were up 26% to NOK179.9 billion, record earnings delivering an EPS of NOK24.76 and also a strong underlying cash flow from our operations at NOK244 billion. This has been driven by primarily production according to our expectations and plans and also through solid prices as you all know and finally, that we have made a number of transactions recently that also gave NOK23 billion in gain on sale of assets that contributed also to the results for 2011.I think more importantly for the group, I think 2011 was a strong year in terms of industrial progress. And by that I believe – by that I mean safe and efficient operations and if you look at the safety results here measured in number of serious incidents per million work hours at 0.9, we have never been at this level. So I think we are approaching our ambition of being an industry leader. We have marked the start of – and I think that is significant industrial for Statoil of the two first own operated assets outside Norway. And we have continued what we have done over the last few years, paid more emphasis through the execution of portfolio transactions to high grade our portfolio of assets. But maybe the most important thing that happened Statoil industry last year was I think a good success in exploration. We made many new discoveries. We completed 41 exploration wells, of which 22 so far is discoveries. I think seven is now awaiting evaluations, and we made the discoveries of course in Norway but also in Brazil. This brought altogether more than 1 billion barrels to our resource base. Production, as I see it, is exactly as we planned in the sense that there are no surprises here. We have moved some gas volumes out of 2011 to follow the value of our volume strategy. You know from before that the BP-operated Skarv is delayed. And also, we have lower production than the potential from the Gullfaks field due to the well incident that we had in 2010, but the production is according to what we have said. You also know about the riser issues that have been – impacted the production throughout 2011 and partly 2010.
Since I came to Statoil back in 2004, you have constantly and I think rightly so challenged the company on the reserve replacement ratio. And this is an important measure in determining the long-term growth prospects of the company. However, to address this, this is not the short-term, a quick fix.It’s something that you have to systematically attack by building the resource base, by maturing resources and finally, to execute the projects in an efficient way. And I think it’s fair to say that as far as I see it in 2011, we turned the corner. And we saw the results of the effort that the organization has done over many, many years. Just to give you some flavor to this, we have sanctioned more than 50 projects in Statoil since 2007, 28 of these at the Norwegian continental shelf. We have 24 projects on stream, 10 of this at the Norwegian continental shelf. And also, IOR has contributed significantly to add to the reserve base this year and is an important contributor to the positive development that we see in 2011. On top of that, we have done both acquisitions and divestments. And Eagle Ford and Bakken is also contributing to the good numbers. I’m therefore pleased with the reserve replacement ratio of 117% but perhaps even more pleased with the underlying facts. And I’ll give you some more granularity in the sense that the RRR for Norway is also above 100%, for the national part is 177%. And we also have an organic reserve replacement above 100%. And we have an oil reserve replacement ratio of 145%. We believe now that we have the basis for delivering an RRR above one on average moving forward to 2020. Naturally, it could be some fluctuations from year to year because project sanctions come when they come, but I think this should give you a good guiding on how we would perform moving forward. Read the rest of this transcript for free on seekingalpha.com