OREANDA-NEWS. Norway's state-controlled Statoil has cut its capital expenditure (capex) guidance for 2016 after swinging to a loss in the second quarter.

The company expects organic capex to be $12bn this year, compared with previous guidance of $13bn. And it has cut its exploration budget to $1.8bn from $2bn. "Strict prioritisation, good results from our improvement programme and more effective drilling operations allow us to lower our 2016 capex and exploration guidance," chief executive Eidar Seatre said.

Statoil benefited from a drop in operating costs and a 6pc year-on-year rise in upstream production in the second quarter. But this was not enough to offset the impact of lower oil and gas prices and weaker refining margins. Net impairment charges of $275mn also weighed on the firm's bottom line. The charges mainly relate to a US Gulf of Mexico field and were triggered by a revision of production forecasts.

Statoil produced 1.81mn b/d of oil equivalent (boe/d) in April-June, up from 1.71mn boe/d a year earlier. Liquids output rose by 1pc on the year to 1.03mn b/d, while gas production increased by 13pc to 789,000 boe/d. The firm's production outside Norway was boosted by the start-up of the Corrib gas field offshore Ireland late last year, "positive operational effects" on the company's Marcellus shale holdings in the US and a positive impact from lower oil and gas prices on production-sharing contracts (PSCs). The company's Norwegian output increased by 5pc on the year to 1.21mn boe/d, helped by rising production from new fields and a higher share of output from the Ormen Lange field than last year as a result of a redetermination process.

Statoil expects maintenance to cut around 115,000 boe/d from production in the third quarter. The full-year impact from maintenance is forecast to be around 60,000 boe/d, higher than last year. The firm expects full-year production, excluding PSC effects, to be "somewhat lower than 2015" because of its "value over volume approach".

Statoil posted a $302mn loss in the second quarter, compared with a profit of $866mn a year earlier. Last year's result was boosted by asset sale gains.