Statoil maintains its production targets

STATOIL, the Norwegian oil company being investigated on suspicion of paying bribes in Iran, said third-quarter profit rose a more-than-expected 32% because of higher oil prices and falling production costs.

Net income advanced to 4.28 billion kroner ($608 million), or 1.98 kroner a share, from 3.25 billion kroner, or 1.50 kroner, a year earlier, said Inge Hansen, interim chief executive of Statoil, Norway’s largest company, at a presentation in Oslo.

Oil companies are benefiting from crude prices that averaged $28.17 a barrel in the quarter, 5% higher than in the year-earlier period. Mr Hansen is seeking to rebuild investors’ trust as police probe allegations it used a $15 million consulting contract to pay bribes and win business in Iran.

“Inge Hansen needs to ensure the company delivers on its targets and that Statoil’s strategy remains firm,” said Knut Erik Lovstad, an analyst at CAI Cheuvreux in London. “So far, he’s done this. The company’s shown good cost control and maintained its production targets.”

Shares of Statoil, which is 82%-owned by the Norwegian state, rose as much as 2.7% to 67.50 kroner as of 12:45pm in Oslo.

The company maintained its target of pumping 1.07 million barrels a day this year and 1.12 million barrels in 2004. Statoil and its domestic competitor Norsk Hydro ASA are boosting output outside Norway, where oil reserves are expected to start declining.