Strict prioritisation and increased capital efficiency are the two main reasons Norway’s biggest energy provider Statoil has decided to reduce its investment budget.
Statoil announced it will invest $20bn on average per year between now and 2016. This is a reduction of 8%.
“The industry is facing demanding challenges and we address these from a position of strength. We have a competitive resource base, a robust financial position and a highly competent organisation recognised for its technological and operational experience,” explained Statoil’s president and CEO, Helge Lund.
According to Lund, the company’s strategy is still value creation and growth. “But we are making some important changes,” he said. “Stricter project prioritisation and a comprehensive efficiency programme will improve cash flow and profitability. Our strong balance sheet enables prioritisation of capital distribution to shareholders.
Between 2014 and 2016, Statoil expects to maintain return on average capital employed (ROACE) around the 2013 level based on an oil price of $100 per barrel (real 2013). Production growth is estimated at 2% this year and 3% organic CAGR from 2013 to 2016.
Statoil is also planning to drill some 50 wells this year and another 20 high-impact wells from 2014 to 2016. The company has earmarked $3.5bn for exploration spending this year.