Norsk Hydro is releasing the following information at Hydro Capital Markets Day 2000 on December 14, 2000:
The targeted Cash Return On Gross Investments (CROGI) level for the year 2002 is reconfirmed at 10 percent. When the CROGI target was announced for the first time on July 17, 2000, the related oil price assumption was 21 USD per barrel (forward prices). Hydro has sharpened its ambition by keeping the CROGI target at 10 percent, while reducing the oil price assumption to 18 USD. For new investment decisions in Oil and Energy, Hydro still bases the profitability hurdle rates on an oil price of USD 14 per barrel.
The targeted CROGI level for the year 2001 has been set at 9.5 per cent. The underlying price assumptions for both the 2001 and 2002 are: USD 18 per barrel oil price, NOK/USD exchange rate of 8.00, LME 3m USD/tonne 1,500 and CAN27 DEM/tonne 200. Hydro’s CROGI for 1999 was 8.4 percent based on actual 1999 prices.
Hydro forecasts an ordinary investment level of approximately 16 billion NOK in 2001.
Investments are expected to be distributed as follows: 58 percent in Oil and Energy, 26 percent in Light Metals, 12 percent in Agri and 5 percent in Other activities. The exploration level within Oil and Energy is expected to increase to approximately 2 billion NOK. The plan for year 2000 is 1.8 billion NOK. The whole of the 2001 increase is planned for international exploration activities, which will mean that, for the first time in Hydro’s history, the international exploration plan will exceed the plan for the Norwegian Continental Shelf (NCS).
Hydro expects an average total oil and gas production of around 435,000 barrels of oil equivalents (boe) per day in 2001. The updated production profile indicates that a production of approximately 800,000 boe per day by year 2010 is within reach. This figure is based on Hydro’s existing portfolio, and includes production from fields in production and under development, resources still to be developed and forecast recovery from future exploration activities in existing acreage. The basis for the updated profile is the same as for the profile presented in connection with the half year results July 17, but now also includes the expected allocation of Block 34 in Angola. It should be emphasized that no definitive agreements have been entered into with respect to this Block. The production profile does not take into consideration any assets that may be acquired through the potential privatisation of the State Direct Financial Interest (SDFI) on the NCS.
The complete version of the presentation material to be released at the Capital Markets Day conference, may be downloaded from Hydro’s website www.hydro.com.