(STO) Statoil Cuts Yield on Storm Alert

Statoil ASA (STO) has reduced its output at three platforms off central Norway as a precautionary measure against a severe winter storm forecast for the weekend.

The non-critical personnel have been removed from three of its platforms namely ––Njord, Heidrun and Aasgard, at the same time stressing there has been no evacuation. Apart from these, the other platforms of Statoil, off Norway, will maintain production at normal levels and the company’s overall output would not be drastically affected.

A gale warning has been given by the UK Meteorological Office for all its shipping areas around Scotland and has also cautioned against hurricane force winds at sea, off Scotland’s Western Isles.

As per the BBC weather service, the intense low pressure following the North Sea storm is considered to have an enormous intensity with winds predicted to blow up to 100 miles per hour over land and even higher at sea, with the possibility of waves going up to 18 meters.

The UK North Sea operators are also keeping an eye on the weather movements though they are yet to make any production cuts. A spokesperson for BP Plc (BP) also said that the prediction of rough weather for the UK Continental Shelf is not likely to disrupt its output from the offshore UK oil and gas fields. Thus, BP has not made any change in its production schedule.

The storm with its main force was anticipated to pass through the north of the bulk of Norway’s oil and gas offshore installations. Haltenbanken, to the north of the North Sea and in the Norwegian Sea, is estimated to suffer the most. Statoil’s floating Heidrun platform is one of the major installations in the Haltenbanken, with a production capacity of about 52,000 barrels of oil per day in 2011.

The production schedule is only a short-term adjustment and is not expected to have any long-term impacts. With its diversified portfolio of operations, geographic adversity in specific regions will not have any lasting effect on Statoil’s revenue and profitability.

Thus, we maintain a Neutral rating on the company for the long term. Statoil holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months.

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