StatoilHydro Net Income Declines 56% as Krone Weakens

By Marianne Stigset and Vibeke Laroi

Nov. 3 (Bloomberg) -- StatoilHydro ASA, Norway's largest oil and gas company, said third-quarter profit fell 56 percent as the weakening krone pushed up debt costs.

Net income fell to 6.5 billion kroner ($984 million), or 2.04 kroner a share, from 14.5 billion kroner, or 4.52 kroner, a year earlier, the Stavanger-based company said today. That missed the 14.6 billion-kroner average estimate of seven analysts surveyed by Bloomberg. The net financial loss was 9.7 billion kroner as the krone slumped 15 percent against the dollar.

``StatoilHydro's net result was significantly impacted by currency changes,'' Chief Executive Officer Helge Lund said at a press conference in Oslo. ``But we're in a very good financial position, with a very positive cash flow.''

Crude surged to a record $147.27 in New York on July 11, propelling earnings at oil companies. Prices have since slid more than 50 percent. The company has this year started production at nine fields, helping it offset halts in the quarter at its North Sea Kvitebjoern gas field and closures in Azerbaijan because of a pipeline fire.

Sales rose 34 percent to 174 billion kroner, while equity output climbed to 1.733 million barrels of oil equivalent a day from 1.722 million barrels a year earlier, beating the 1.61 million-barrel estimate in a survey of analysts by SME Direkt. The company kept its forecast for capital spending of about 65 billion in 2008 and its forecast for equity production of 1.9 million barrels a day in 2008 and 2.2 million barrels in 2012.

The shares fell 4 kroner, or 3.1 percent, to 127 kroner as of 9:05 a.m. in Oslo.

Positive

Net operating income for international exploration and production fell 81 percent to 583 million kroner in the quarter, while net operating income for exploration and production in Norway rose 27 percent to 40.4 billion kroner.

``International exploration and production was especially weak because of some write offs and lower production,'' said analyst Trond Omdal at Arctic Securities in Oslo, who has a ``buy'' on the shares. ``We knew that Kvitebjoern and Azerbaijan would affect production negatively, but the fact that they maintained their production guidance for 2008 is positive.''

StatoilHydro's stock fell 26 percent in the third quarter on concern that a slowing world economy will crimp demand for fuel. That compared with a 22 percent drop for Royal Dutch Shell Plc, Europe's largest oil company, and 20 percent for BP Plc. Shell last week posted a 22 percent profit increase to $8.45 billion, while BP's profit climbed 83 percent to $8.05 billion.

``We're capable of meeting our committed capital expenditures and a competitive dividend pay-out, even with lower oil prices,'' Lund said in the statement.

The company will hold an analyst conference call at 1:30 p.m. in Oslo, which can be heard by dialing +44 (0)20-7806-1967.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net