Statoil reports profit fall, delays target

Oslo - State-backed Norwegian oil giant Statoil reported an annual profit plunge on Friday, postponed its long-term production target and cut investment.

Dragged back by declining production and lower prices, annual net profit fell by 42% to 39.9 billion kroner ($6.4bn).

That compared with 68.9 billion kroner in 2012.

And revenue dropped by 12% to 619.4 billion kroner.

Energy is a mainstay of the Norwegian economy, of high living standards and of a huge sovereign wealth fund.

The goal to increase oil production to more than 2.5 million barrels of oil equivalent per day (boed) in 2020 from the current figure of about two million boed was implicitly delayed in the report.

The revision is explained by portfolio adjustments made in recent years by the company.

As most of its competitors, Statoil is keen on accumulating cash in a sector with soaring costs, and has sold assets in the immense Shah Deniz gas well in Azerbaijan and in the North Sea, cashing in more than $4bn in net capital gain.

The group, in another effort to increase its cash flow, reduced its investment spending forecast for 2014-2016 to $20bn per year from $21.7bn.

"Stricter project prioritisation and a comprehensive efficiency program will improve cash flow and profitability," chief executive Helge Lund said.

After producing 1.945 million boed last year - a three-percent decrease from 2012 - Statoil said it expected a two-percent rise for 2014.

During 2013, oil and natural gas prices fell by 2% and 8% respectively.

In the fourth quarter, net profit grew to 14.8 billion kroner from 13 billion kroner a year earlier, exceeding expectations, but the performance at the operating level disappointed.

Quarterly adjusted earnings fell to 42.3 billion kroner from 48.3 billion kroner a year earlier, and fell short of the 45 billion kroner expected by analysts polled by Dow Jones Newswires.

A heavyweight of the Oslo stock exchange, Statoil's shares were 2.48% higher in midday trading, in an overall market up by 1.05%.

Despite the disappointing results, Statoil proposed to increase the dividend to seven kroner per share from 6.75 kroner last year.