Norway's Statoil ASA reported a bigger-than-expected 6% fall in fourth-quarter operating profit due to lower output and said preparations for its acquisition of Norsk Hydro's oil and gas business were well under way.
Operating profit at the Nordic region's biggest industrial company by turnover fell to 26.06 billion Norwegian crowns ($4.17 billion) in the three months to end-December from 27.80 billion in the same quarter a year earlier.
The result lagged an average forecast of 26.8 billion crowns in a Reuters poll of 17 analysts whose forecasts had ranged from 21.3 billion to 28.5 billion crowns.
The earnings report was the first from Statoil since it announced in mid-December that it would buy the oil and gas operations of smaller rival Norsk Hydro for around $30 billion in stock.
"The processes that led up to the necessary approvals of the merger are well under way," Chief Executive Helge Lund said in a statement. "By combining the strengths from both companies, we will build a strong Norwegian based energy company, well positioned to succeed even better in the global competition."
"The annual income for 2006 is the best ever for Statoil. We maintain strong earnings and competitive returns, despite temporarily lower production overall," Lund said.
Focused Aluminium Company
The merger is to be completed by October. Norsk Hydro, which will become a focused aluminium company, will issue fourth-quarter results on Feb. 20.
"The total cost synergy potential for the combined company is estimated to be about 4 billion crowns per year before tax," Statoil said.
Statoil and other oil producers on the Norwegian continental shelf are struggling to maintain output in the face of a general decline in production from ageing North Sea fields, though gas production is still growing steeply.
Statoil said it produced 1.15 million barrels of oil equivalent per day (boed) in the fourth quarter, down from 1.23 million boed a year earlier and falling short of analysts' average forecast of 1.16 million in the Reuters poll.
Statoil reiterated in presentation materials its 2007 production target of 1.3 million boed, excluding Norsk Hydro's contribution which the companies have earlier said will boost combined output to 1.9 million boed this year.
Shares in Statoil closed at 163.25 crowns on Friday, valuing the company at about $57 billion. Trade on the Oslo bourse is due to resume at 0800 GMT.