Statoil deepens spending cuts as declining oil price saps profits

Statoil deepened cost cuts and halted dividend growth as Norway’s biggest energy company struggles to withstand a plunge in oil prices. The company will raise spending cuts by 30 percent to $1.7 billion from 2016 and lower capital expenditure to $18 billion this year from an earlier target of $20 billion, the company said.

The company scrapped a policy of raising dividends for the time being. It proposed to pay 1.8 kroner a share for the fourth quarter and a “flat dividend” in the first three quarters of 2015. Eldar Saetre, Statoil’s CEO, said “The flat dividend is reflective of the current environment.”

Statoil reported fourth-quarter net operating income of $1.2 billion, down from $5.8 billion a year earlier.

Statoil followed competitors including Royal Dutch Shell and Chevron in cutting billions of dollars in investments. They are seeking to protect profits after oil prices slumped by more than 50 percent in the second half of last year, in the biggest drop since 2008.

Statoil, a year ago, already abandoned production-growth targets and reduced spending plans for the three years through 2016. It also started a sweeping program to lower costs, cutting employees and causing job losses across Norway’s oil industry.

Statoil is working closely with unions to carry out further job cuts. Statoil’s production rose to 2.103 MMboed from 1.945 MMboed a year earlier. “The increase was mainly due to start-up and ramp-up of production on various fields and higher production regularity compared to the same period last year,” the company said.