Net income amounted to NOK 4.4 billion, which is on a par with the second quarter of 2003.
Return on average capital employed after tax was 19.0 per cent, as against 18.7 per cent for 2003. This corresponds to a normalised return of 11.8 per cent for the last 12 months, as against 12.4 per cent for the year 2003.
"We have delivered another strong result from operations in the second quarter," says acting chief executive Erling Øverland. "High oil prices and good output at a continued low production cost per barrel are among the main contributors. We are also very satisfied with the awards to Statoil in the 18th licensing round in Norway, and internationally we took important steps to strengthen our gas position. Our entry into two major gas fields in Algeria was approved by the Algerian government. And in accordance with our international LNG strategy, we secured a quadrupling of Statoil's access to capacity at the Cove Point LNG terminal in the USA from 2008. Buying back Statoil Detaljhandel gives us a good basis for strengthening our leading market position in Scandinavia and the Baltic region."
The increase in income before financial items, other items, income taxes and minority interest compared to the second quarter of 2003 is primarily due to a 33 per cent increase in the oil price (measured in NOK) and a five per cent increase in liftings of oil and gas.
Average production of oil and gas during the second quarter of 2004 was 1 073 000 barrels of oil equivalent per day (boe/d), compared to 966 000 boe/d for the same period last year.
Net financial items show a cost of NOK 0.1 billion compared with an income of NOK 0.4 billion for the second quarter of 2003. The difference of NOK 0.5 billion is primarily due to a gain on shares and bonds in the second quarter of 2003. In addition, both interest income and expense are lower in 2004 due to the general reduction in market rates.
Income taxes for the second quarter of 2004 came to NOK 9.7 billion, corresponding to an effective tax rate of 68.6 per cent. In the second quarter of 2003 the tax effect of the change in the Removal Grants Act amounted to NOK 6.7 billion. Adjusted for this, the effective tax rate for the period came to 65.0 per cent.
The total recordable injury frequency - the total number of injuries sustained by Statoil employees and contractor personnel per million working hours - was 5.7 as against 5.2 for the second quarter of 2003. The serious incident frequency was 2.7 as against 3.1 for the second quarter of 2003. A fatality occurred at the South Pars construction yard in Iran, where a contractor employee was killed during a lifting operation. Investigations were carried out, and preventive measures implemented.
Important events during the period:
Statoil received four new operatorships in the 18th Norwegian licensing round. In addition, the company was awarded participation in five production licences.
In June 2004, Statoil and the American energy company Dominion concluded an agreement, which gives Statoil increased capacity for liquefied natural gas (LNG) at the Cove Point terminal in Maryland, USA, with planned start-up in 2008.
The cost estimate for the Snøhvit development is expected to increase by NOK 4-6 billion. As a result, the total development cost could reach NOK 49.3 - 51.3 billion. Statoil's share in the project is 33.53 per cent.
The acquisition of 50 per cent of BP's share in the In Amenas, and 49 per cent in the In Salah gas development projects in Algeria, was approved by the Algerian government. Production from In Salah started on 18 July, and In Amenas is scheduled to start during the second half of 2005.
Final agreement was reached with ICA AB for Statoil to acquire ICA's 50 per cent share of Statoil Detaljhandel Skandinavia AS. This took effect on 8 July.
Statoil launched preliminary plans for the construction of a power station at Mongstad based on gas from, and electricity production for, the Troll field. A preliminary plan was also presented to expand the methanol plant and build a gas-fired power station at Tjeldbergodden.
In July, the Norwegian state reduced its interest in Statoil from 81.3 per cent to 76.3 per cent. The shares were acquired by both institutional and private investors.
