Oil prices lift Hydro
Norwegian energy and metals business Norsk Hydro said its third-quarter net income rose 69 per cent on the back of rising oil and gas prices, despite rising costs in its aluminium business.
This year oil prices have risen about 45 per cent and gas prices 27 per cent, which contributed to the company’s net income rising to €532m (£360m).
The Oslo-based company said these third quarter results are the best it has ever recorded. Chief executive Eivind Reiten said: “The continued high oil price is the main reason for the improvement. We have taken important steps to strengthen the foundation for future oil and gas production through successful exploration wells in Norway and internationally.”
Analysts say the results were in line with expectations in light of spiralling energy costs. The business was also able to boost oil production by 5 per cent to 541,000 barrels of oil equivalent, compared to 514,000 barrels in the third quarter last year.
However, the company said it was finding it difficult to increase profits at its smaller metals production arm.
Reiten added: “Higher energy and raw material prices represent increasing challenges to our efforts to improve profitability in Hydro’s aluminium business.”
Hydro is in the middle of buying Houston-based rival Spinnaker Exploration for £1.4bn to gain access to its Gulf of Mexico drilling sites. The company said it expects to complete the deal by the end of the year.
The Scandinavian business expects that in the three years to 2008 the deal will boost its international production by 40 per cent.