UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

July 28, 2015

Commission File Number 1-15200

Statoil ASA

(Translation of registrant’s name into English)

 

FORUSBEEN 50, N-4035, STAVANGER, NORWAY

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F X        Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_____

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_____

 

This Report on Form 6-K shall be deemed to be filed and incorporated by reference in the Registration Statements on Form F-3 (File No. 333-188327) and Form S-8 (File No. 333-168426) and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

 

This document includes portions from the previously published results announcement of Statoil ASA as of, and for the first half ended, 30 June, 2015, as revised to comply with the requirements of Item 10(e) of Regulation S-K regarding non-GAAP financial information promulgated by the U.S. Securities and Exchange Commission. For more information on our use of non-GAAP financial measures in this report, see the section entitled "Use and Reconciliation of Non-GAAP Financial Measures". This document does not update or otherwise supplement the information contained in the previously published results announcement.

2015 SECOND QUARTER RESULTS

 

Statoil reported Net operating income of NOK 31.5 billion and Net income of NOK 10.1 billion in the second  quarter of 2015. The result includes gains from divestments.   

 

 

“In the second quarter, Statoil delivered encouraging operational performance with good production growth and high regularity, whilst continuing to reduce cost. Our financial results were characterised by gains from divestments and lower prices", says president and CEO of Statoil ASA, Eldar Sætre.

 

Net operating income was NOK 31.5 billion in the second quarter compared to NOK 32.0 billion in the same period in 2014. The reduction was primarily a consequence of lower oil prices in the second quarter of 2015 compared to the same period last year, largely offset by a gain from the divestment of the Shah Deniz project and the South Caucasus Pipeline of NOK 12.3 billion and lower net impairment charges. Realised average liquids prices in the quarter were down 28% measured in NOK compared to the second quarter last year.

 

Statoil’s net income according to IFRS for the second quarter was NOK 10.1 billion, compared to NOK 12.0 billion in the same period in 2014.

 

The gain from the divestment of the Shah Deniz project and the South Caucasus Pipeline was NOK 12.3 billion, impacting the IFRS results. Earnings per share were NOK 3.15, down from NOK 3.75 in the same period last year.

 

“We continue to progress our effort to improve operational and capital efficiency, and reduce cost. Reduced underlying operational expenses both on the Norwegian Continental shelf (NCS) and in our international operations, as well as reduced capital expenditures, demonstrate that our initiatives are effective. In June we announced adjustments to the company’s structure and operating model to further strengthen our competitiveness,” says Sætre.

 

Despite divestments, Statoil delivered production of 1,873 mboe per day in the second quarter, up 4% compared to the same period in 2014. The underlying production growth, after adjusting for divestments, was 7% compared to the second quarter last year. The production from the NCS grew 7% in the second quarter of 2015 compared to last year. The increase was mainly due to ramp-up of production on various fields, higher gas sales from the NCS and lower maintenance compared to the second quarter of 2014. Expected natural decline and reduced ownership shares from divestments partially offset the increase. Equity production outside of Norway was 724 mboe per day and represented almost a 4% increase, adjusted for the Shah Deniz divestment.

 

In the quarter, Statoil made two discoveries on the NCS. In July, Statoil announced a discovery in the Julius prospect in the King Lear area in the North Sea. Three wells are on-going, one on the United Kingdom Continental Shelf, one in the Gulf of Mexico and one in Canada. In addition, Statoil has secured access to frontier acreages offshore Nicaragua and Myanmar. Exploration expense in the second quarter was NOK 3.7 billion, up from NOK 2.7 billion in the second quarter of 2014.

 

Cash flow from operations amounted to NOK 48.0 billion in the first half of 2015. Statoil maintained a strong capital structure, and net debt to capital employed at the end of the quarter is reduced to 22.4%. Organic capital expenditure was USD 7.8 billion in the first half, and the guidance has been revised downwards to USD 17.5 billion for 2015 due to effects of the on-going efficiency program and the USD / NOK exchange rate.

 

With effect from first quarter of 2016, Statoil will change to USD as presentation currency. The change reflects the company’s underlying exposure to the USD as well as better alignment of its reporting to peers. As a consequence of the change in presentation currency, Statoil will also declare its quarterly dividend in USD. The change will be implemented from the second quarter of 2015 and Statoil is announcing the second quarter dividend in both USD and NOK, based on the exchange rate on 27 July 2015. The change in dividends policy implies that dividend will be announced in USD going forward.

 

The board of directors has decided to pay dividend of USD 0.2201 per ordinary share equivalent to NOK 1.80 for the second quarter and the Statoil share will trade ex-dividend on Oslo Børs 13 November 2015.

 

The serious incident frequency (SIF) for the 12 months period ending 30 June 2015 was 0.6, compared to 0.7 the same period last year.

  

 

Key events since first quarter 2015:

 

·          The construction of the Johan Sverdrup began and so far contracts worth more than NOK 40 billion have been awarded

·          Statoil made two discoveries on the NCS in the quarter. In July, Statoil announced a discovery in the Julius prospect in the King Lear area in the North Sea. In addition, Statoil announced an oil discovery in the Yeti prospect in the Gulf of Mexico and gained access to acreage offshore Nicaragua and Myanmar

·          Statoil announced changes in corporate structure and top management team. Torgrim Reitan has been appointed EVP for Development & Production USA (DPUSA) and Hans Jakob Hegge has been appointed new EVP and CFO. Irene Rummelhoff has been appointed EVP for New Energy Solutions (NES) and Jens Økland has been appointed new EVP for Marketing, Midstream & Processing (MMP)

·          In June, Øystein Løseth was elected as the new chairman and Roy Franklin was elected as a new member and deputy chair of Statoil’s board of directors

  

SECOND QUARTER 2015 GROUP REVIEW

The second quarter results continued to be influenced by lower prices and foreign exchange rate developments. In the second quarter there was high operational quality and the cost improvement program is on track. The lower liquids and gas prices were partially offset by strong refining margins and increased production. Net operating income was impacted by gains from divestments and net impairment charges.

Total equity liquids and gas production [4]  was 1,873 mboe per day, up 4% from 1,799 mboe per day in the second  quarter of 2014. The increase was mainly due to start-up and ramp-up of production on various fields, higher gas sales from the NCS and lower maintenance compared to the second quarter of 2014. Expected natural decline and reduced ownership shares from divestments partially offset the increase.

Total entitlement liquids and gas production [3]  was 1,709 mboe per day, up 8% from 1,588 mboe per day in the second  quarter of 2014, impacted by the increase in equity production and a lower negative effect from production sharing agreements (PSA effect) mainly as a result of the decline in oil prices.

Net operating income  (IFRS) was NOK 31.5 billion in the second  quarter, compared to NOK 32.0 billion in the second  quarter of 2014, impacted by the significant drop in liquids prices, gains from sale of assets of NOK 13.8 billion mainly related to the divestment of the Shah Deniz project and net impairment charges of NOK 3.1 billion. Stronger refining margins and better trading results partially offset the decrease.

In the second  quarter of 2014, net operating income was positively impacted by gains from sale of assets of NOK 3.7 billion and negatively impacted by impairment charges of NOK 4.3 billion.

Operating and administrative expenses increased compared to the second  quarter of 2014. The positive development in underlying expenses as a result of the on-going cost initiatives was more than offset mainly by the USD/NOK exchange rate development.

Depreciation, amortisation and net impairment losses increased mainly due the USD/NOK exchange rate development and the start-up and ramp-up of several fields. In addition, previously recorded negative revisions of proved reserves for certain assets led to increased depreciation costs compared to the second  quarter of 2014. Net impairment losses were lower in the second  quarter of 2015 than in the second  quarter of 2014.

Exploration expenses increased mainly due to higher drilling costs because of the USD/NOK exchange rate development and a higher average equity share in wells drilled. A lower portion of current exploration expenditures being capitalised, added to the increase.

 

 

 

  

 

 

Net financial items amounted to a loss of NOK 7.3 billion in the second  quarter of 2015, compared to a gain of NOK 1.2 billion in the second  quarter of 2014. The most significant element in this is a loss on derivatives of NOK 6.3 billion related to our long term debt portfolio, mainly due to increase in interest yield curves.

Income taxes were NOK 14.2 billion in the second quarter, equivalent to an effective tax rate of negative 58.5%, compared to 63.9% in the second quarter of 2014.

Please refer to note 5 Income tax to the condensed interim financial statements for information related to income taxes.

Net income in the second  quarter of 2015 was NOK 10.1 billion compared to NOK 12.0 billion in the second  quarter of 2014.

 

Cash flows provided by operating activities were NOK 18.9 billion in the second quarter of 2015 compared to NOK 18.1 billion in the second quarter of 2014. Excluding working capital movements and taxes paid, cash flows provided by operating activities were NOK 42.0 billion in the second quarter of 2015 compared to NOK 50.5 billion in the second quarter of 2014. The decrease of NOK 8.5 billion was mainly due to falling liquid prices.

Cash flows used in investing activities were NOK 16.7 billion in the second quarter of 2015 compared to NOK 50.5 billion in the second quarter of 2014. The decrease of NOK 33.8 billion was mainly due to lower investments in deposits with more than three months to maturity of NOK 19.6 billion and increased proceeds from sale of assets of NOK 14.0 billion.

Cash flows used in financing activities were NOK 17.1 billion in the second quarter of 2015 compared to NOK 24.1 billion in the second quarter of 2014, a decrease of NOK 7.0 billion, mainly due to payment of the annual dividend in 2014 compared to the quarterly dividend in 2015, offset by repayment of collateral liabilities.

 

  

First half 2015

Net operating income (IFRS) was NOK 5.9 billion compared to NOK 83.4 billion in the first half of 2014 negatively impacted by net impairment losses of NOK 49.1 billion and lower fair values of derivatives of NOK 3.0 billion. Gain from sale of assets of NOK 14.3 billion mainly related to the divestment of the Shah Deniz project impacted net operating income positively.

In the first half of 2014, net operating income was positively impacted by gains from sale of assets of NOK 5.5 billion and an award payment related to a commercial dispute of NOK 2.8 billion. Net impairment losses of NOK 4.5 billion impacted net operating income negatively.

Total revenue and other income decreased, impacted by lower prices measured in NOK partly offset by higher volumes of both liquids and gas sold and improved refinery margins in addition to gain from divestment of the Shah Deniz project.  

Purchases decreases mainly due to lower prices.

Operating and administrative expenses increased mainly as a result the USD / NOK exchange rate development offset by the result of the on-going cost initiatives.

Depreciation, amortisation and net impairment losses increased mainly due to increased impairment charges in the first half of 2015 in addition to the start- and ramp-up’s of production of several fields. Negative revisions of proved reserves for certain assets also led to increased depreciation compared to the first half of 2014.

Exploration expenses increased mainly due to impairment of exploration assets in first half of 2015 and the USD / NOK exchange rate development. Increased drilling costs due to higher well equity share and lower capitalisation rate contributed to the increase. Reduced exploration expenditures capitalised in previous periods being expensed in the first half of 2015 partially offset the increase.

Net financial items had a loss of NOK 5.9 billion in first half of 2015 compared to a gain of NOK 1.9 in the first half of 2014. The loss In first half of 2015 is mainly a loss on derivatives related to our long term debt portfolio, mainly due to increase in interest yield curves.

Income taxes was down 49 % compared to the first half of 2014. The income tax in the first half of 2015 is NOK 25.4 billion and the Income before tax is NOK 0.0 billion.

Please refer to note 5 Income tax to the condensed interim financial statements for information related to income taxes.

Net income in the first half of 2015 was negative NOK 25.4 billion  compared to positive NOK 35.7 billion in the first half of 2014.

 

  

Cash flows provided by operating activities were NOK 48.0 billion in the first half of 2015 compared to NOK 73.1 billion in the first half of 2014. Excluding working capital movements and taxes paid, cash flows provided by operating activities were NOK 87.9 billion in the first half of 2015 compared to NOK 118.0 billion in the first half of 2014. The decrease of NOK 30.1 billion was mainly due to reduced liquid prices.

 

Cash flows used in investing activities were NOK 81.4 billion in the first half of 2015 compared to NOK 58.3 billion in the first half of 2014. The increase of NOK 23.1 billion was mainly due to increased investments in deposits with more than three months maturity of NOK 36.2 billion, partly offset by increased proceeds from sale of assets of NOK 15.0 billion.

 

Cash flows provided by financing activities were NOK 3.3 billion the first half of 2015 compared to negative NOK 22.9 billion in the first half of 2014, an increase of NOK 26.2 billion mainly due to issuance of new debt of NOK 32.1 billion in the first quarter of 2015.

 

 

  

OUTLOOK

 

·       Organic capital expenditures for 2015 (i.e. excluding acquisitions, capital leases and other investments with significant different cash flow pattern), are estimated at around USD 17.5 billion

·       Statoil intends to continue to mature the large portfolio of exploration assets and estimates a total exploration activity level at around USD 3.2 billion for 2015, excluding signature bonuses

·       Statoil expects to deliver efficiency improvements with pre-tax cash flow effects of around USD 1.7 billion from 2016

·       Statoil’s ambition is to maintain RoACE  (Return on Average Capital Employed) at the 2013 level adjusted for price and foreign exchange level, and to keep our unit of production cost in the top quartile of our peer group

·       For the period 2014 – 2016, organic production growth [7] is expected to come from new projects resulting in around 2% CAGR (Compound Annual Growth Rate) from a 2014 level rebased for divestments

·       The equity production development for 2015 is estimated to be around 2% CAGR from a 2014 level rebased for divestments [7]

·       Scheduled maintenance activity  is estimated to reduce quarterly production by approximately 45 mboe per day in the third quarter of 2015, of which the majority is liquids. In total, the maintenance is estimated to reduce equity production by around 45 mboe per day for the full fiscal year 2015, of which the majority is liquids

·       Indicative effects from Production Sharing Agreement (PSA-effect)  and US royalties are estimated to be around 170 mboe per day in 2015 based on an oil price of USD 60 per barrel and 200 mboe per day based on an oil price of USD 100 per barrel [4]

·       Deferral of gas production to create future value, gas off-take, timing of new capacity coming on stream and operational regularity represent the most significant risks related to the production guidance

·        With effect from first quarter of 2016, Statoil will change to USD as presentation currency. As a consequence, Statoil will also declare its quarterly dividend in USD. The change will be implemented from the second quarter of 2015

 

These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. For further information, see section Forward-Looking Statements.

  

 

DEVELOPMENT AND PRODUCTION NORWAY

 

Second quarter 2015 review

 

Average daily production of liquids and gas increased by 7% to 1,148 mboe per day in the second quarter of 2015 compared to the second quarter of 2014. The increase was mainly due to ramp-up of new fields and increased production from several fields. Expected natural decline on mature fields partially offset the increase.

Net operating income for Development and Production Norway (DPN) was NOK 13.3 billion compared to NOK 23.6 billion in the second quarter of 2014. Impairment of assets of NOK 2.8 billion negatively impacted net operating income. The decrease by 43% in net operating income in the second quarter of 2015 compared to the second quarter of 2014 was mainly due to drop in liquids prices, partially offset by a positive USD/NOK exchange rate development and increased production.

Operating and administrative expenses  decreased mainly due to cost improvements and reduced turnaround activity levels, partially offset by Valemon coming on stream.

Depreciation, amortisation and net impairment losses increased mainly due to impairments, new fields coming on stream and effect of lower proved reserves for certain assets.

Exploration expenses increased compared to 2014 mainly due to higher drilling activity as a result of higher well equity share.

  

 

First half 2015

Net operating income for DPN was NOK 29.2 billion in the first half of 2015 compared to NOK 57.6 billion in the first half of 2014, mainly negatively impacted by the reduction in liquids prices as well as impairment of assets of NOK 3.9 billion and lower fair value of derivatives of NOK 2.2 billion.

Total revenues and other income decreased driven by drop in liquids prices. Positive USD/NOK exchange rate development and increased volumes partially offset the decrease.

Operating and administrative expenses  increased primarily driven by new fields on stream, partially offset by cost improvements and reduced turnaround activity level.

Depreciation, amortisation and net impairment losses increased primarily driven by impairments, new fields on stream, reductions in proved reserves for some assets and increased organic investments and impairments.

Exploration expenses were not materially impacted by lower activity.

  

 

DEVELOPMENT AND PRODUCTION INTERNATIONAL

Second quarter 2015 review

Average equity production of liquids and gas in the second quarter of 2015 was largely flat at 724 mboe per day compared to the second quarter of 2014. Ramp-up on several fields, including CLOV (Angola) and Jack/ St. Malo (US), was offset by the divestment of Shah Deniz project, expected natural decline on various fields and higher negative impact of planned turnarounds.

Average daily entitlement production of liquids and gas increased by 9% to 561 mboe per day compared to the second quarter of 2014. The increase was due to lower negative effect of production sharing agreements (PSA effect), mainly driven by the decline in prices. The PSA effect was 122 mboe per day in the second quarter of 2015 compared to 169 mboe per day in the second quarter of 2014. 

Net operating income for Development and Production International (DPI) was NOK 13.1 billion compared to NOK 5.7 billion the second quarter of 2014. A gain of NOK 12.2 billion related to the divestment of the Shah Deniz project positively impacted net operating income. Decreased oil and gas prices negatively impacted net operating income.

In the second quarter of 2014 net operating income was negatively impacted by net impairment losses of NOK 4.3 billion. A gain on sale of assets of NOK 3.6 billion partially offset the decrease.

Operating and administrative expenses increased primarily due to the USD/NOK exchange rate development in addition to the portfolio changes and start-up of the Jack/ St. Malo and CLOV fields. Lower royalties, caused by reduced prices, and lower transportation, operation and maintenance costs partially offset the increase.

 

Depreciation, amortisation and net impairment losses decreased primarily due to lower net impairment loss in the second quarter of 2015 compared to second quarter of 2014, and reduced depreciation from increased reserves . The USD/NOK exchange rate development in addition to higher production from start-up and ramp-up on various fields partially offset the decrease.

 

Exploration expenses increased, primarily driven by higher drilling activity and lower portion of current exploration expenditures being capitalised this period, partially offset by less capitalised exploration expenditures from earlier years being expensed this quarter.

 

 

  

 

First half 2015

Net operating income for DPI was negative NOK 34.5 billion in the first half of 2015 compared to positive NOK 14.0 billion in the first half of 2014. Net impairment losses of NOK 44.9 billion negatively impacted net operating income partially offset by a gain related to sale of assets of NOK 12.2 billion.

Net operating income in the first half of 2014 was positively impacted by gains related to sale of assets of NOK 5.3 billion. The positive impact was partially offset by impairment of assets of NOK 4.7 billion.

Total revenues and other income decreased due to lower realized oil and gas prices, partly offset by gain related to sale of assets of NOK 12.2 billion.  

Operating and administrative expenses  increased primarily driven by the USD/NOK exchange rate development, in addition to portfolio changes. Production ramp-up in onshore North America and the start-up of the offshore fields CLOV and Jack/St. Malo added to the increase. Lower royalties, caused by lower prices, and lower transportation costs partially offset the increase.

Depreciation, amortisation and net impairment losses increased primarily driven by significant impairments in first half of 2015 in addition to the USD/NOK development, and higher production from start-up and ramp-up of fields. The increase was partially offset by reduced depreciation from increased reserves. 

Exploration expenses increased primarily driven by increased drilling expenses, partially offset by higher capitalized exploration and less earlier years capitalized cost being expensed.

  

 

MARKETING, PROCESSING AND RENEWABLE ENERGY

 

Second quarter 2015 review

Natural gas sales volumes amounted to 11.3 billion standard cubic meters (bcm) in the second quarter of 2015, down 2% compared to the second quarter of 2014. The decrease was mainly due to lower Statoil entitlement production related to the divestment of the Shah Deniz project, partially offset by higher third party volumes sold. Of the total gas sales in the second quarter of 2015, entitlement gas was 9.6 bcm compared to 9.9 bcm in the second quarter of 2014.

Average invoiced European natural gas sales price increased by 1%. Lower European gas prices and weakened LNG market were offset by the USD/NOK exchange rate development. Average invoiced North American piped gas sales price decreased by 32%. The prices have continued to be weak in the US during the quarter.

Net operating income for Marketing, Processing and Renewable Energy (MPR) was NOK 5.1 billion compared to NOK 2.6 billion in the second quarter of 2014. The increase was mainly due to significantly higher refinery margins due to an oversupplied crude market with low spot prices combined with strong gasoline markets. In addition, trading results were solid and the USD/NOK foreign exchange rate development added positively to the increase.

Operating and administrative expenses  increased mainly due to negative USD/NOK foreign exchange rate development, partially offset by the on-going cost initiatives.

 

First half 2015

Net operating income for MPR was NOK 11.5 billion in the first half of 2015 compared to NOK 11.6 billion in the first half of 2014, mainly negatively impacted by change in fair value of derivatives of NOK 0.8 billion, periodisation of inventory and contract hedging effects of NOK 0.6 billion and impairment of assets of NOK 0.4 billion. The decrease was partially offset by significantly higher refinery margins due to an oversupplied crude market with low spot prices and solid trading results, and gain on operational storage of NOK 0.9 billion. Net operating income in the first half of 2014 was positively impacted by a gain due to an award payment related to a commercial dispute of NOK 2.8 billion..

Total revenues and other income decreased driven by significant decrease in US crude oil prices partially offset by the USD/NOK foreign exchange rate development.

Purchases [net of inventory variation] decreased driven the same factors as described above.  

Operating and administrative expenses  increased primarily driven by the USD/NOK foreign exchange rate development which more than offset the effect of reductions in underlying expenses as a result of the on-going cost initiatives.

 

CONDENSED INTERIM FINANCIAL STATEMENTS

Second quarter 2015

CONSOLIDATED STATEMENT OF INCOME

 

 

  

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

¹⁾ Foreign currency translation differences adjustment of NOK 7.0 billion is net of accumulated currency translation gains of NOK 3.2 billion reclassified to the Consolidated statement of income related to the sale of interests in the Shah Deniz project and the South Caucasus Pipeline. See note 3 Disposals. 

  

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

¹⁾ Currency translation adjustments amount of NOK 7.0 billion is net of accumulated currency translation gains of NOK 3.2 billion reclassified to the Consolidated statement of income related to the sale of interests in the Shah Deniz project and the South Caucasus Pipeline. See note 3 Disposals. 

  

CONSOLIDATED STATEMENT OF CASH FLOWS

 

At 30 June 2015 Cash and cash equivalents included a net bank overdraft of NOK 0.1 billion. At 30 June 2014 the net bank overdraft was rounded to zero. At 31 December 2014 Cash and cash equivalents included a net bank overdraft of NOK 0.7 billion.

 

Notes to the condensed interim financial statements

 

1 Organisation and basis of preparation

General information and organisation

Statoil ASA, originally Den Norske Stats Oljeselskap AS, was founded in 1972 and is incorporated and domiciled in Norway. The address of its registered office is Forusbeen 50, N-4035 Stavanger, Norway.

The Statoil group’s (Statoil's) business consists principally of the exploration, production, transportation, refining and marketing of petroleum and petroleum-derived products. Statoil ASA is listed on the Oslo Børs (Norway) and the New York Stock Exchange (US).

All Statoil's oil and gas activities and net assets on the Norwegian continental shelf (NCS) are owned by Statoil Petroleum AS, a 100% owned operating subsidiary of Statoil ASA. Statoil Petroleum AS is co-obligor or guarantor of certain debt obligations of Statoil ASA.

Statoil's condensed interim financial statements for the second quarter of 2015 were authorised for issue by the board of directors on 27 July 2015.

Basis of preparation

These condensed interim financial statements are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The condensed interim financial statements do not include all of the information and disclosures required by International Financial Reporting Standards (IFRSs) for a complete set of financial statements, and these condensed interim financial statements should be read in conjunction with the annual financial statements. IFRSs as adopted by the EU differ in certain respects from IFRSs as issued by the IASB, but the differences do not impact Statoil's financial statements for the periods presented. A description of the significant accounting policies applied is included in the Statoil annual financial statements for 2014 and applies to these condensed interim financial statements. There have been no changes to significant accounting policies in the first half of 2015 compared to the annual financial statements for 2014.

The condensed interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the dates and interim periods presented. Interim period results are not necessarily indicative of results of operations or cash flows for an annual period.

The condensed interim financial statements are unaudited.

Use of estimates

The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis, considering the current and expected future market conditions. A change in an accounting estimate is recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

2 Segments

Statoil's operations have in the most recent years been managed through the following operating segments: Development and Production Norway (DPN), Development and Production North America (DPNA), Development and Production International (DPI), Marketing, Processing and Renewable Energy (MPR) and Other.

From the third quarter of 2015, Statoil’s operations will be managed through the following operating segments: Development and Production Norway (DPN), Development and Production USA (DPUSA), Development and Production International (DPI), Marketing, Midstream and Processing (MMP), New Energy Solutions (NES) and Other.

Statoil reports its business through reporting segments which correspond to the operating segments, except for the operating segments DPI and DPNA (DPUSA effective from the third quarter of 2015) which have been aggregated into one reporting segment, Development and Production International. This aggregation has its basis in similar economic characteristics, the nature of products, services and production processes, the type and class of customers and the methods of distribution. Also effective from the third quarter of 2015, the NES operating segment will be presented in Other.

The Eliminations section includes the elimination of inter-segment sales and related unrealised profits, mainly from the sale of crude oil and products. Inter-segment revenues are based upon estimated market prices.

Segment data for the second quarter and first half of 2015 and 2014 is presented below. The reported measure of segment profit is Net operating income. Deferred tax assets, pension assets and non-current financial assets are not allocated to the segments. The line item Additions to PP&E, intangibles and equity accounted investments excludes movements related to changes in asset retirement obligations.