Statoil said the oil and gas industry must work harder to increase efficiency in an era of prolonged price weakness after the Norwegian group announced a surprise net loss for the second quarter of this year.
Eldar Saetre, chief executive, said there was “a lot more to be done” to cut costs as he shaved another $1bn off ’s capital expenditure budget for this year.
Statoil has reduced its operating expenses by 18 per cent in the past year but the measures were not enough to prevent a net loss of $28m in the three months to June 30 as low oil and gas prices continued to weigh on performance.
Mr Saetre said Statoil and its peers had come a long way in built up when oil was trading at over $100 a barrel before crashing in 2014.
“Operators have started to work together but it is a very long journey and it also needs to involve our suppliers,” he said. “The industry has built in a lot of complexity over many years and we need to go back and work out what is really necessary.”
More efficient ways of working had allowed Statoil to halve the time it takes to drill a well since 2013, he said. Measures such as these were allowing capital expenditure to be reduced without cancelling or delaying exploration.
Statoil said it expected to invest $12bn in capital projects this year, down from previous guidance for $13bn. This followed a on Tuesday.
A partial recovery in oil prices from a 13-year low in February has eased some pressure on the industry but prices have fallen back below $45 in recent days as supplies of crude oil and refined products continue to outweigh demand.
Mr Saetre said the over the past two years would eventually lead to a tightening of production capacity but it was impossible to predict when the cycle would turn. In the meantime, he expected the market to remain “nervous” and volatile.
In common with other big oil and gas producers, Statoil is battling to defend its dividend as profits come under pressure. The group introduced a scheme in February that allows shareholders to receive their payouts in shares — a move that helped keep the dividend stable at 22 cents in the second quarter while reducing its drain on cash.
Shares in Statoil were down 2.67 per cent on Wednesday morning at DKr138.70 in response to the worse than expected . The net operating loss of $28m was down from a profit of $122m in the same period last year and fell well short of analysts’ consensus forecast for a profit of $313m.
Michael Alsford at Citigroup attributed the “weak” results to increased tax charges and lower earnings from refining, crude trading and gas marketing. However, he was encouraged by a 6 per cent increase in upstream production to almost 2m barrels of oil equivalent a day, as well as progress in cutting costs.
Pre-tax operating profits were up from last year at $913m but missed analysts’ expectations for $1.37bn.
