Statoil’s new US boss will focus on “bottom line” targets rather than production figures as he aims to steer the Norwegian energy giant through the US shale gas maelstrom.
Torgrim Reitan, formerly CFO at Statoil in Stavanger took over the company’s North American operations last year.
Since replacing American Bill Maloney he has cut 20% of US staff and installed a new management team as he sought to reset the needle.
Reitan told Forbes magazine: “There was a lot not working anymore,” he says. “This is a great opportunity to get it right.”
“I don’t run my business with production targets. It is bottom line targets. Production is a vehicle, not a target.”
In the Eagle Ford Statoil has reduced drilling times by 70%, and 50% in the Bakken.
Statoil’s North American region is responsible for 240,000 bpd, split 200,000 bpd from onshore fields and 40,000 bpd out of the Gulf of Mexico, marking it out as a significant player in the US.
He said: “The way we were operating was not sustainable. In the decade to 2013 oil prices quadrupled, yet profit margins halved. When prices pick up again we must be very disciplined.”
He added: “Our breakeven for new developments has gone from $70 a barrel three years ago, to $41.”
Reitan said: “Per well economics have improved significantly, but there’s not enough of the good stuff to last very long.
Statoil has been forced to write down an estimated $6billion on its US shale portfolio after investing heavily since 2008.
Reitan will also focus on Statoil’s offshore projects, in the Gulf of Mexico and will use its North Sea experience to good effect.
He told Forbes: “We see the offshore part as where we have significant DNA and can add value.”
Statoil is on course to double its production from the Gulf of Mexico in the next three years.
The company has 50% in the deepwater Julia development (Exxon is operating), and 25% each in Bigfoot (with Chevron CVX +1.11%) and the $6 billion Stampede (with Hess HES +2.38% and Chevron).