Var Energi ASA, Norway’s third-biggest oil and gas company, sees oil’s supply and demand outlook stabilizing next year, with prices not dropping significantly below $60 a barrel.
“We may see a short period of oversupply, but I think when you look into next year, you see that supply-demand balance coming back into line,” Chief Executive Officer Nick Walker told reporters on Tuesday. “Oil is going to be required for a long time, and the industry has not been investing enough.”
Industry watchers, including the Paris-based International Energy Agency, have been predicting a flood of supplies for more than a year. Additional barrels from the Organization of the Petroleum Exporting Countries and its allies, as well as nations outside the group, are seen overwhelming cooling demand growth. Futures are heading for a third monthly loss and top traders are braced for a further slide.
Lower oil prices will reduce investments and eventually slow output, Walker said, adding that “there seems to be a floor of about $60, it doesn’t go below that regardless of the volumes coming in.”
Var Energi has seen several fields come online this year, including Johan Castberg in the Barents Sea and the startup of Balder X in June. Output from both fields will contribute to production rising to about 430,000 barrels of oil equivalent a day in the fourth quarter. To maintain barrels through the end of the decade, the company will sanction a total of ten new projects by year’s end, Walker said, with four already approved at break-evens of below $35 a barrel.
The oil and gas company’s earnings before interest and tax climbed to $1.07 billion in the third quarter, beating analyst estimates. Var Energi plans to pay out $1.2 billion in dividends this year and in 2026.
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