It's Gonna Get Ugly; Statoil -- Rigzone -- December 1, 2014

I don't believe I posted this link to an article on Norway / oil for a couple of reasons. One reason: it didn't seem to mirror what I had been reading about Statoil recently, and the article seemed to have been written before the current slump in the price of oil.

I thought maybe I had been missing something, or misreading something about Statoil over the past year, but obviously not. Reuters via Rigzone is reporting, in a fairly long article:

After the failure of its risky exploration strategy this year, Norwegian oil firm Statoil is cutting costs as fast and deep as it can to preserve cash for dividends – and may be jeopardising future production in doing so, industry insiders say.

Statoil took a big gamble by committing major resources to what it hoped would be new discoveries in Angola, the Norwegian Arctic and the U.S. Gulf of Mexico.

They all failed, leaving two Tanzanian gas fields its only major finds in 2014. With no new prospects to drill, and a 35 percent drop in the price of oil since June, the company is now paying hundreds of millions of dollars to cancel or suspend a third of its exploration fleet in order to find the cash it needs to pay its dividend, which so far this year equalled nearly all of its 30.9 billion crown ($4.46 bln) net profit.

"They have gambled and...bet on the wrong horses," says Hilde-Marit Rysst, the head of labour union SAFE, which has thousands of employees with Statoil and its contractors. "They have spent too much and made too many commitments."

Statoil's problems are several but the root of them can be simply put: it spent too much money on long drilling contracts in exploration areas before ensuring there would be enough work. Additionally, it took out those contracts at the top of the market, paying record day rates to secure capacity. 

Much more at the linked article.

For more on Statoil (wiki).