Boosted by continued high oil, gas and aluminum prices, Norway's Hydro has posted strong Q3 2006 figures, with net income for the quarter rising by almost 15% compared to the same period last year.
Hydro’s net income for Q3 2006 reached NOK4.8 billion, or NOK3.90 per share, up from NOK4.2 billion, or NOK3.30 per share, in Q3 2005. This means that net income for the first nine months of 2006 amounted to NOK16.1 billion, compared with NOK11.5 billion for the first nine months of 2005.
Operating income for Q3 2006, meanwhile, was NOK15.3 billion, up from NOK13 billion in Q3 2005.
The improved earnings were mainly driven by continued high oil and gas prices together with higher aluminum prices. The completion of the Langeled gas pipeline, which was opened in October, also proved an important milestone in the third quarter. Not only has Hydro already begun selling its first Norwegian gas though Langeled, but the new pipeline will allow for increased gas exports to the UK in the future.
Operating income for Hydro’s oil & energy division amounted to NOK13.3 billion for the quarter. Hydro realized an average oil price of $66.6 per barrel in Q3 2006, an increase of 10% compared with the same period in 2005, and a decrease of 2% compared with Q2 2006.
Realized gas prices increased 27% to NOK1.73 per standard cubic meter in Q3 2006, compared with Q3 2005, but decreased 3% compared with Q2 2006.
Oil and gas production averaged 548,000 barrels of oil equivalents (boe) per day during Q3 2006, an increase of 7,000 boe per day compared with Q3 2005, and an increase of 11,000 boe per day compared with Q2 2006.
Operating income for Hydro’s total aluminum activities amounted to NOK1.7 billion for Q3 2006, compared with NOK842 million in Q3 2005. The improved result primarily reflected continued high aluminum prices.
Looking forward, Hydro said that it expects oil prices to remain at a high level for the remainder of 2006. The company has further revised its production estimate for 2006 from 585,000 boe per day to 570,000 boe per day.