Statoil ASA (STO) posted its lowest quarterly net profit in three years, partly due to lower earnings from its trading arm amid operational problems at key gas fields, the Norwegian oil company said Thursday.
Statoil ASA (STO) posted its lowest quarterly net profit in three years,
partly due to lower earnings from its trading arm amid operational problems at
key gas fields, the Norwegian oil company said Thursday.
"That's a significant part of the explanation," said the company's
Chief Financial Officer Torgrim Reitan in an interview, referring to the impact
operational problems at the Troll gas field and the Snohvit LNG plant had on
trading.
"We could also have made more money if we had done a better job in trading
and marketing," he added, without elaborating.
Second-quarter earnings were also hit by lower prices and slightly lower
volumes on the year.
Statoil's net profit for the April-June period notched 4.3 billion Norwegian
kroner ($725.3 million), down from NOK26.4 billion a year earlier, and was the
lowest since the second quarter of 2010. Net profit differs as reported by
U.S.
oil
companies because it includes changes in the value of inventories.
Fewer ship loads from the Snohvit liquefied natural gas plant in northern
Norway
led
to weaker earnings for the company's trading arm--marketing, processing and
renewable energy operations, or MPR--Mr. Reitan said, because the company lost
the opportunity to take the gas to higher-paying markets.
This was due to two closures at the plant during the quarter, one for planned
repairs and another due to a short-circuit problem. Overall more than 40 days
were lost in the quarter.
The Troll gas field off
Norway
has
also been running below capacity after a compressor failure that reduced the
company's ability to adjust the field's output higher or lower. A new motor
will be installed in the second half of 2014, Statoil said.
"Troll has also had less flexibility in the quarter," Mr. Reitan
said. "Troll is an amazingly flexible gas machine, and the gas [trading]
business creates value from that flexibility."
The smaller contribution from the MPR operations was a major reason why
Statoil's second-quarter adjusted earnings before interest and taxes were down
17% at NOK38 billion, Mr. Reitan said. The adjusted EBIT excludes inventory
effects and is regarded as a key performance metric.
The MPR segment contributed about NOK3 billion less to adjusted EBIT than it
did a year ago, he said, and lower oil and gas prices also contributed about
NOK3 billion less on the year.
Swedbank First Securities analyst Teodor Sveen Nilsen said he expected to lower
his adjusted EBIT estimate for 2013 by 2% to 4% due to the disappointing MPR
earnings.
"We may have to expect volatility" in the MPR segment, Mr. Nilsen
said, adding that it was hard to fully explain the lower MPR earnings because
the company didn't provide details about its trading.
Mr. Reitan said Statoil had lost money on some of its trading positions, but
declined to elaborate.
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