Statoil reports $4.67 billion 1Q loss following US shale write-downs

Statoil ASA reported a negative first-quarter international financial reporting standards net income of $4.67 billion due to asset impairments of $6.08 billion primarily comprising US onshore unconventional assets including the Bakken, Eagle Ford, and Marcellus shale plays.

The company says the impairments were a result of a revision of Statoil’s long-term economic planning assumptions.

“Statoil’s first quarter reported figures are significantly impacted by impairment charges,” explained Eldar Saetre, Statoil president and chief executive officer. “Our adjusted earnings and cash flows were affected by the reduced price levels.”

First-quarter adjusted earnings were $3.02 billion, down from $6.07 billion during first-quarter 2014, attributed to the decline to a significant drop in the liquids prices, lower European gas prices, and increased depreciation and operating costs.

The company says the increase in depreciation and operating cost was largely a result of starting and ramping up production, and was impacted by the strong USD-NOK exchange rate. Adjusted earnings after tax were $923 million, compared with $2.08 billion in the same period last year.

Statoil’s equity production in the first quarter was 2.06 million boe/d, up from just less than 2 million boe/d in first-quarter 2014.

“I am pleased to see reduced field and modification costs on the NCS, reduced international operating expenses per barrel measured in dollar, in addition to improved drilling and well performance,” said Saetre. “Our financial position remains robust.”

During the first 3 months the year, Statoil reported cash flows from operations of $3.84 billion, compared with $7.26 billion in first-quarter 2014, due to falling prices, partially offset by lower taxes paid in the first quarter.

Adjusted exploration expenses amounted to $356 million, down from $435 million in first-quarter 2014 as a higher portion of current exploration expenditures was capitalized in the first quarter this year.

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