Norway's energy major Statoil cuts spending

STAVANGER, Norway, Oct. 27 (UPI) -- Norwegian oil and gas major Statoil said it was cutting its spending plans in response to a weaker market, but keeping its production outlook stable.

The first major energy company out of the gate with earnings from a quarter that saw oil prices recover to the $50 mark, Statoil said its expenses tied to exploration increased by $170 million to $581 million, while adjusted earnings declined 69 percent year-on-year to $636 million.

"The financial results were affected by low oil and gas prices, extensive planned maintenance and expensed exploration wells from previous periods," President and CEO Eldar Saetre said in a statement.

Statoil this week said it canceled a contract for a rig deployed at its Troll field about five months early because of the lack of work. Companies have been shedding rig contracts, which typically have day rates of hundreds of thousands of dollars, as they work to trim operating expenses.

In its earnings release, the company said it was cutting its spending program by 8 percent to $11 billion. Production for the third quarter, meanwhile, was about 5 percent lower than for the same period last year, which the company attributed to regular maintenance and a deferral of some of its gas sales. Norway is a lead exporter of oil and gas to Europe.

Production through the end of next year is expected to grow by about 1 percent.

Statoil and its partners at the Johan Sverdrup, one of the largest ever discovered in Norwegian waters, outlined the development plan for the field in 2014. The field will be developed using four fixed facilities and some production is slated to begin in late 2019.

By its latest estimate, Statoil said the project will be competitive so long as crude oil prices hold above the $30 per barrel mark. Brent crude oil sold for around $50 per barrel in early Thursday trading.