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Statoil announced lower-than-expected earnings in the fourth quarter, hit by a $2.3bn impairment charge due to reduced long-term expectations for oil prices.

Exploration expenses and lower European gas prices also contributed to a 6 per cent fall in adjusted earnings to $1.66bn, compared with $1.78bn in the same period a year prior. Analysts had expected $2.07bn, according to a consensus estimate provided by Statoil.

After the deduction of the $2.3bn impairment — reflecting the reduced value of assets in light of lower long-term price assumptions — Statoil lost $1.9bn on a net operating basis, compared with a profit of $152m in the same period of 2015.

There were some signs of improvement in underlying performance from higher oil prices, which averaged $44 per barrel during the quarter, up 14 per cent from the same period last year. However, the impairment charge highlighted the continued pressures facing the industry after the 2014 crash from over $100 per barrel.

Eldar Sætre, chief executive, highlighted the progress Statoil was making in cutting costs with an extra $700m of annual savings achieved above a target for $2.5bn. He said these efficiency gains were lasting and set a new target for additional $1bn of savings in 2017.

Mr Sætre added: “In the current price environment, we delivered solid financial results from our Norwegian operations and from our marketing and trading activity. Our result was impacted by the negative result from our international operations due to expensed exploration wells, high maintenance activity and impairment charges.”

Production was slightly up from last year and ahead of expectations at 2.1m barrels of oil and oil equivalent per day.

Pre-tax earnings from Norwegian upstream exploration and production were $1.97bn, beating analysts’ expectations for $1.87bn. However, international upstream operations reported a worse-than-expected loss of $681m, due to exploration expenses, compared with analysts’ consensus forecast for a loss of $172m. Downstream earnings from activities such as marketing and trading were $514m, slightly ahead of analysts’ expectations for $438m.

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