Norway's Statoil posted weaker-than-expected first-quarter profit due to lower oil and gas prices on Wednesday, but said it was poised to grow after resolving production problems at several North Sea fields.
Shares in Statoil, the Nordic region's biggest industrial company by turnover, were down 1.1% to 164.75 crowns, while the DJ Stoxx Oil and Gas index was down 0.95%.
Operating profit fell 28% year-on-year to 23.79 billion crowns ($4 billion) in the three months to end-March, missing all 17 forecast from a Reuters poll of analysts.
Statoil said its average realized oil price fell 11% year-on-year in the quarter and the gas price by 14%.
"We are delivering strong results despite lower oil and gas prices," Chief Executive Helge Lund said.
Statoil repeated that it faced technical difficulties at its high-temperature, high-pressure North Sea fields Kvitebjoern and Kristin, delays on which had already forced the company to cut its output target for 2007 earlier this month.
"While addressing these short-term challenges, we are continuing to build positions for future growth," Lund added.
With output declining in many maturing North Sea oilfields, Statoil has sought to expand abroad. In past months it has agreed to buy a privately held Canadian oil sands venture and secured new exploration acreage in Indonesia and Tanzania.
On Track to Complete Norsk Hydro Takeover
Statoil also said it was on track to complete its nearly $30 billion takeover of Norsk Hydro's oil and gas assets by October, which will make it one of the world's biggest offshore production groups specializing in deep-water areas.
Statoil said it had increased its 2007 exploration budget by 12.5% to about 9 billion crowns while sticking to its overall capital expenditure guidance of some 120 billion over 2005-2007.
Lund said competition among oil majors for new finds has got tougher. At the same time, the supplier industry has been working at near full capacity around the world, which puts pressure on prices and extends delivery times, he said.
Statoil reiterated its 2007 output target of 1.15-1.2 million barrels of oil equivalent per day and produced 1.2 million boed in January-March, just above analysts' average forecast of 1.19 million boed and down from last year's 1.24 million boed.
Statoil produced a record 233,000 boed oversees, where average production costs are higher. This contributed to a rise in production costs to 28.4 crowns per barrel in the quarter from 27.4 crowns a year ago. Costs are expected to rise further and top 30 crowns per barrel this year, Statoil has said.
Statoil said its 12-month rolling return on average capital employed (ROACE), a key profitability ratio, amounted to 24.3% in January-March, less than U.S. giants Exxon Mobil and Chevron but more than Britain's BG, Italy's ENI and Royal Dutch Shell .