UPDATE 2-Statoil lifts exploration target as earnings, output up
* Adjusted EBIT NOK 40.4 bln vs NOK 39.5 bln forecast
* Equity production 1.852 mln barrels per day vs 1.84 mln forecast (Adds CEO, analyst, shares, US market)
By Balazs Koranyi and Henrik Stolen
OSLO, Oct 30 (Reuters) - Energy major Statoil emphasized a focus on profits over volumes, even while managing to beat forecasts for both earnings and output in the third quarter and raising its target for spending on exploration.
Statoil, which has expanded aggressively out of its traditional Norwegian base over the past several years, said on Wednesday it was on course to raise output by more than a quarter by 2020 but that the figure was not carved in stone.
"We are value and not volume driven," Chief Executive Helge Lund said, adding that Statoil had already discovered enough oil and gas and that reaching this year's output target was only a matter of the costs of developing finds.
"The entire industry is characterized by rising costs and declining profitability," Lund said. "It is imperative that we as an industry are able to constantly improve operations and control costs ... there is a need for further action."
With investments set at $19 billion this year, Statoil has been forced to sell some assets to finance growth and cover its cash needs after paying out dividends.
Those sales as well as a redistribution of shares in the major Ormen Lange gas field will hit production by up to 120,000 boepd next year, the company warned, a decline that it may be able to offset by production increases elsewhere.
Rather than a slowdown in spending, Statoil raised its 2013 exploration target to $3.75 billion from $3.5 billion and said it would drill 60 wells instead of a planned 50.
In the third quarter, the state-controlled company lifted output to 1.852 million barrels of oil equivalents per day (boepd), beating forecasts for 1.84 million.
Its adjusted operating profit rose 1 percent to 40.4 billion crowns ($6.9 billion), ahead of forecasts for 39.5 billion.
"The third quarter has proved to be the inflection point for Statoil that we had been anticipating," Barclays said in a note.
"Looking forward, we expect 2014 to see a return to both underlying production and cash-flow growth, which we expect to be critical in driving an improvement in investor sentiment.
"Given its other strengths ... the current 15 percent discount versus the sector on 2014F EV/EBIDA (forecast for the ratio of enterprise value to earnings before interest, depreciation and amortisation) multiples appears excessive," it added.
With big finds in Canada, East Africa and Norway, Statoil has been the most successful offshore explorer so far this year, and the firm has a big portfolio of projects that will come online towards the end of the decade.
In the United States, where the firm has expanded rapidly in the shale gas segment, it said it would limit growth and focus on value after falling gas prices have hurt its profitability.
On Wednesday, Statoil stock rose 0.5 percent, trailing a 1.2 percent rise by the European oil and gas index.
Statoil was among the top performers in Europe's oil sector in the last quarter, when its shares rose nearly 10 percent, outperforming the sector's 2.5 percent rise. ($1 = 5.8871 Norwegian krones) (Reporting by Balazs Koranyi; Editing by David Cowell and Jane Baird)
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