Statoil Planning Asset Sales

Norwegian oil and gas firm Statoil (STO) is working on several potential deals to sell assets to reduce capital commitments and realise investment profits, business daily Dagens Naeringsliv reported on Wednesday, quoting an internal memo.

State-controlled Statoil this year slashed growth plans to save cash after years of sharp spending increases, and said it may sell some assets as it reduces capital commitments by $5 billion over three years.

"The company must be able to demonstrate by the end of the year that it's on its way to deliver on those targets," Dagens Naeringsliv reported, quoting a memo written by strategy chief John Knight.

"That only gives us five months ... The task is urgent."

"As I write, the GSB (Global Strategy and Business Development) teams are working hard on a string of promising divestment opportunities," Knight said.

"If successful, this will improve the financial flexibility of the company considerably by reducing investments while at the same time realising considerable income from the sales."

Last week, Statoil said asset sales were a key plank in its plans to return cash to shareholders.

"When it comes to share buybacks we intend to use that more actively going forward," Chief Financial Officer Torgrim Reitan told an analyst meeting. "It will be linked to divestments. It will be linked to the free cash flow situation and financial situation of the company."

When asked about the internal memo, Statoil said its plans to sell assets are known.

"We are continuously assessing opportunities. This has been part of our business strategy for quite some and will remain so. We said this at our capital markets day presentation earlier this year and last week at our second-quarter presentation," Statoil spokesman Knut Rostad said.

Statoil has been selling assets steadily over the past few years, raising over $18 billion in proceeds between 2009 and 2013.

The deals included the sale of its retail chain to Canada's Alimentation Couche-Tard and the sale of producing assets to Britain's Centrica (CPYYY) and Austria's OMV .

One of the world's most successful offshore explorers in recent years, Statoil has made a string of big discoveries in places such as Brazil, Canada, Norway and Tanzania, which will require heavy spending for years to come.

Reporting by Terje Solsvik and Balazs Koranyi