Statoil ASA deepened cost cuts and halted dividend growth as Norway’s biggest energy company struggles to withstand a plunge in oil prices.
The company will raise spending cuts by 30% to $1.7 billion from 2016 and lower capital expenditure to $18 billion this year from earlier targeting $20 billion, the Stavanger-based company said.
Statoil reported fourth-quarter net operating income of $1.2 billion, down from 43.9 billion kroner a year earlier. That missed an estimate of 26.3 billion kroner in a survey of analysts.
Statoil followed competitors including Royal Dutch Shell Plc and Chevron Corp. in cutting billions of dollars in investments. They are seeking to protect profits after oil prices slumped by more than 50% in the second half of last year, in the biggest drop since 2008.
“Our financial position is robust, and we maintain a stable dividend,” Eldar Saetre, Statoil’s chief executive officer, said in a statement.
“Through our significant flexibility in our investment program we are well prepared for continuous market weakness and uncertainty.”
The company scrapped a policy of raising dividends year after year. It proposed to pay 1.8 kroner a share for the fourth quarter and a
“flat dividend” in the first three quarters of 2015. In total today’s measures provide a cash improvement of $5 billion, the company said.
The company sees “organic” production growth of 2% to 2016 and 3% from 2016 to 2018.
Adjusted net income fell to 4.3 billion kroner from 11 billion kroner a year earlier.
Statoil a year ago already abandoned production-growth targets and reduced spending plans for the three years through 2016. It also started a sweeping program to lower costs, cutting employees and causing job losses across Norway’s oil industry.
Prime Minister Erna Solberg said earlier this year that the government is “on alert” to provide stimulus should it be needed to support the economy of western Europe’s biggest oil producer. More than 10,000 job cuts have been announced as the oil industry prepares for the biggest investment cut since 2000.
Statoil’s production rose to 2.103 million barrels of oil equivalent a day from 1.945 million barrels a year earlier.
“The increase was mainly due to start-up and ramp-up of production on various fields and higher production regularity compared to the same period last year,” the company said.
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