StatoilHydro faces 'cost tsunami'

StatoilHydro's results have disappointed and high costs and lower oil prices will be painful. But strong cash flow offers attractive growth possibilities through M&A

It has been a mixed year for Norway's state-controlled StatoilHydro in its first full year of existence. Financial results have fallen short of expectations on several occasions. But the company's strong underlying financial position means that, despite the falling oil price and global financial crisis, it will not have to delay any of its investments for next year and has enough cash to take advantage of lower equity prices to buy assets on the cheap. The firm's first set of results after the $30bn merger of Statoil and Hydro, completed on 1 October 2007, was for the fourth quarter of 2007, which showed net profit for the period falling by 59%, compared with the year-earlier quarter, to NKr