Ladies and gentlemen, welcome to Statoil's First Quarter Earnings Presentation. My name is Hilde Nafstad, and I am the Head Investor Relations in Statoil. This morning at 7 AM Statoil announced the results for the first quarter of 2014. The press release and the presentations for today's event have been distributed through the wires and through Oslo Stock Exchange. The quarterly report and the presentations can, as usual, be downloaded from our website, statoil.com. Please make special note of the information regarding forward-looking statements, which can be found on the last page of the presentation. Today Statoil's CFO Torgrim Reitan will go through the earnings and the outlook for the company. The presentations will be followed by a Q&A session and we will aim to end this conference at the latest at 2:30 CET. Please note that the questions can be posted by means of telephone but not directly from the web. The dial-in numbers for posing questions can be found on the website. It is now my privilege to introduce Statoil's Chief Financial Officer Torgrim Reitan. Please Torgrim.

Thank you very much, Hilde. And good afternoon and good morning to all of you in the U.S. Through the quarter, we have addressed the challenges that our industry is facing. Growing capital intensity, production growth has become increasingly difficult and profitability is under such pressure. At the Capital Markets Day in February, we outlined how we are meeting these challenges, how we are prioritizing hard, reducing our cost base and increasing efficiency to get more out of each dollar that we spend, and prioritizing returns to shareholders. So with this as a background, I am glad to present to you with a strong set of numbers today. The result represents both solid operations but also progress in deliveries on our new plan. So let’s look at the numbers. In the first quarter, Statoil delivered adjusted earnings of NOK 46 billion. This is up 9% compared to same quarter last year. The after-tax earnings are up more than 30% to around NOK 16 billion. Cash flow from underlying operations in the quarter was NOK 67 billion and we maintained good cost control and a strong capital discipline. Our net debt was reduced to 10% in the quarter and earnings per share were at NOK 7.40. That is more than NOK 5 more than last year. This was an especially strong quarter for our MPR segment. The results demonstrate the importance of a strong and flexible gas positions in Europe as well as in North America. Strong demand in North America and our access to important gas infrastructure enabled us to get high prices for our gas. Our operational performance in the first quarter was solid, especially on the Norwegian continental shelf. We are producing as expected, and we are on track to deliver the 2% production growth from the rebased…

Thank you very much, Torgrim, and thank you for the kind words. For the Q&A session, Torgrim will be joined by Svein Skeie who's the senior vice president for performance management and risk, and (indiscernible) who's the senior vice president for accounting and financial compliance. We'll take a question both from the audience here and also over the telephone. And I will first ask the operator to explain the procedure for asking questions over the telephone.

Thank you. (Operator Instructions)

Thank you operator, and we'll start with questions from the audience here in Oslo. And I'll ask you to please limit yourselves to one question each and also state your name and who you represent. And for you in Oslo, please remember to hold down the button on your microphone while you are talking. So please go ahead. Oslo, any question? Yeah, Teodor? Teodor Nilsen – Swedbank First Securities: Yeah, Swedbank. Torgrim mentioned, the DD&A per barrel that that will go down over the next few years. Historically the DD&A per barrel has increased around $1 as far as I remember, does that [indiscernible] expect a lower increase for 2014 and $1 compared to 2013?

Okay. Thank you, Teodor. Just to take away any misunderstanding, I expect the DD&A per barrel to grow, to increase from the level where we are today. But the growth will be less than the growth that we saw last year in DD&A. More specifically, I won't go into the specific numbers, but it is related to that new fields are coming on stream and new production have a higher DD&A per barrel than existing production. Usually, they are two things. Normally, they are more capital-intensive than historic projects. And secondly, you depreciate over a limited reserve base that will grow over the life time of the deal. Teodor Nilsen – Swedbank First Securities: Is it fair to assume that DD&A will increase more in our turnover?

No, that’s not a fair assumption.

Any further questions on the floor. Kjetil Bakken – Carnegie: Kjetil Bakken from Carnegie. I was wondering if you could elaborate a bit on the situation in the European gas market. The turmoil in Ukraine has created fears that there could be supply disruptions – to what extent does Statoil have capacity – bear capacity to cover any such shortfalls and how do you see the longer term perspective on the European gas market if EU would like to diversify its energy supply?

We have totally had a makeover of our gas contract portfolio. So currently we have the flexibility within Statoil to serve the various parts of Europe and also to the site where most gas is coming through the various landing points. So the flexibility lies with us currently. So that is always a strength. With the current situation in Europe, we have had a mild winter, so storage positions are quite full. So there is flexibility there in the short term to cater for any disruptions. We have some flexibility to move around gas, we will do that to optimize around prices and using the flexibility. But of course, not in the magnitude that, that you are mentioning. When that is said, we would like to see stable gas deliveries to Europe from all sources. It is important that gas is reliable and trustworthy and it is sourced to Europe. It is important for Europe, it’s important for climate and it’s important for Norway. So in the longer term, we see that Europe needs more gas, it needs more gas from Europe, it needs more gas from Russia and also from other sources. So we find Europe as an attractive market going forward. Neill Morton – Investec Securities: Neill Morton, Investec. Question regarding cost project going forward. You have review on different projects, Q1 cost excluded in 2040 and also in UK sector investor day. And what sort of approaches do you have on these reviews, is it on the total concept, is it on the phase, more phase development, or – and is it integration with other approaches in the area? And especially regarding Norway, to what extent has the exemptions from the uplift changes last year -- exemption from that helped in your projects?

Thank you, Morton. You touched upon specific projects. Point number one, we are prioritizing very hard in the portfolio. We are opportunity rich, many projects which is from a positive net present value is currently not sufficient to get allocated investment funds. When it comes to Johan Castberg, we are looking at different concepts. We are not ready to make an investment decision yet. We have – we are in the process of finalizing the drilling campaign around Johan Castberg in the Barents, it’s fair to say that the result of that is disappointing. We had hoped for larger volumes that you guys supported their original concept. So we are currently in an evaluation phase and we will see. I don’t have a specific date for when we make a concept selection. Very much also for 2014, we are not ready to make a concept selection but we are working to look at various concepts and optimizing the asset. When it comes to Bressay in the UK, that project is postponed. We have no specific date but there is some activity still in the license but that’s been actively postponed. Then on the exemption from the uplift, it has not materially changed our view on the situation. I think that’s the short answer.

Do we have any further questions in Oslo? If not, we will move on to the questions over the telephone. And our first question today comes from Oswald Clint from Sanford Bernstein. Oswald Clint – Sanford C. Bernstein: First question just on the North American gas, specifically the Marcellus. The growth has been pretty linear in terms of its upward trajectory since you started. But do you have enough pipeline capacity to keep getting that gas out to market and especially with the growth you’re expecting? And linked to that, do you, with this kind of higher Henry Hub gas prices would you contemplate having more rigs into that resource base going forward? And second question is, focusing in on your OpEx per barrel which I think has dropped a little bit if you take the first quarter this year versus the first quarter last year. Is that starting to show some of your cost cutting initiatives or it’s still too early to actually expect that to start to show up?

Thank you very much, Oswald. First on Marcellus, the capacity we have is 3BCM into Toronto and it’s 2BCM into Penn Station at Manhattan. So that is sufficiently for us, for quite a bit of period going ahead. Currently we are filling up the capacity through the gas, third party gas volumes. When it comes to the rig count and the number of rigs in Marcellus, we are currently running rigs there, let’s see here, 9 rigs in Marcellus. Our main priority there is to drill to keep land building pads and hooking up to infrastructure. The local prices in Marcellus has been significantly lower than Henry Hub in the quarter. The spread has narrowed a bit lately but we are of course monitoring it closely. This asset we take a very long term perspective on, so we’re not in it for 2014 and 2015. This is going to be plateau for decades to come. So we are optimizing around that. When it comes to the operational cost per barrel, I mean you will see from the concept there is an increase in operational cost in absolute terms. 60% of that growth is related to increased transportation costs, especially in North America, it is related to growing production and it’s related to us being able to achieve higher prices. And then it is also affected by startup costs on Valemon [indiscernible]. When you look at the underlying, for instance, field cost on the Norwegian continental shelf, that has remained stable for, I think it must be close to 10 quarters now, even if we have more fields into production. And I can promise you the NCS teams are working very hard on costs and we see it in the numbers. We see it in the way that they worked. So it is starting to feed into the numbers. But I expect to be more to come.

Thank you. The next question comes from Thomas Adolff with Credit Suisse. Please go ahead, Thomas. Thomas Adolff – Credit Suisse: Hi, good afternoon. Thanks. The line was not so clear, so I hope I'm not repeating myself. My question is around portfolio management and distribution to shareholders please. I mean if I look at the past few years, you’ve monetized quite a few assets on good terms. And if I think about your portfolio right now, it is opportunity rich because you had superior exploration success and therefore there is more potential for more portfolio management, we all know that. So my question really is around what I think about one-third of portfolio management from here on, it was said to assume that the EU wins have already been done and that quite a bit of your contingent or discovered resource base is still in the early stages where the value has to be stored for the maximized through appraisal. And with that, my question really is, is it fair to assume that further material monetization even on your base portfolio should not be expected in the near term. And if that is the case, the potential for discretionary share buyback should not really be happening anytime soon. Is that a fair thinking around portfolio management and share buybacks? Thank you.

Okay. Thank you, Thomas. We have not actively communicated the divestment targets, and that is deliberately. We have, however, divested quite a bit over the last three to four years some $18 billion. So, that has generated significant capital gains. We take a very pragmatic approach to our portfolio. Each project need to stand the test from a strategic point of view, from a profitability point of view and from a capacity point of view. And as you say, we are opportunity rich and we have made significant discoveries over the last three years. So you should expect there to be more transactions coming going forward. I can't be specific on what size and when, but that is a natural part of our strategy and something that we want to continue. Then when it comes to share buyback, so as we said in February, we intend to use that more actively going forward. It will be linked to divestment proceeds, the free cash flow situation in the company, and the balance sheet situation. So to us it’s a natural tool to use when we are in the situation that we are.

Thank you. And our next question comes from Haythem Rashed with Morgan Stanley. Please go ahead Haythem. Haythem Rashed – Morgan Stanley: Thank you. Good afternoon. Thank you very much for taking the question. So if I may, one, just on start-ups in 2Q. You mentioned that -- obviously starting up most recently and on track. And I really wanted to -- can I just get an update from you on particularly Clove [ph] and some of your fast tracks whether we should be expecting sort of further contribution from some of these start-ups in 2Q in particular? Secondly, just to come back on your point around the cash generation for the quarter, very sort of good to see that being so strong in 1Q. And I do recognize that this is obviously only one quarter, but if you could just give us a bit of color or a bit of a sense of how you see that results relative to your sort of longer term expectations, the $22 billion that you've talked about on average for operating cash flow in 2014, '16, does this at all kind of either give you more confidence or change or your kind of thinking around that cash flow guidance and thinking about sort of how the free cash flow potential of that portfolio could serve it all from here on? Finally, just a quick question on Tanzania, there have been some recent press reports suggesting that a constitutional review in the country could sort of delay the process around getting approvals necessary for furthering LNG development there and sort of moving that process going forward? I just wanted to get your sense on how you felt that's progressing and whether you still see this as an event within that sort of time horizon that you stated?

Okay. Thank you Haythem. First question, start-ups, fast track, we have two more fast tracks coming during the year. As far as I recall, it is in the second of the year. When it comes to Clove [ph], you have more specifics on that in Angola, you can take that afterwards. When it comes to cash generation, you’re right, strong cash generation in the quarter, it is related to our guiding at the capital markets day. I mean we’re confident at that point in time and we are still confident related to that guiding. I think it's important to note that the cash generation this quarter is affected by that the day after 1st of April, we paid taxes for NOK 15.5 billion and also there are – all the elements in there, we have the arbitration case that we have described in MD&A, it’s also contributing with cash in the quarter. But going forward to 2016, I think it’s important to recall that the growth that comes on especially from the US is without taxes, we are not paying taxes in the US. So improving result and improving cash flows in the US are right to the bottom line. It will impact the average tax rate for the company and will be an important contributor to the growth in cash flow from operations. Tanzania, progressing well, we are drilling another well in the licensed site location happening. So I think all the work is progressing well. So but as I said earlier, we are not in a rush, we want to make this right more than as soon as possible. So Svein, on the Clove.

The Askja [ph] arrived in field in January, it is now being in the process of the integration towards the field. We expect the start up around midyear and going into further details, you should go to the operator on it but around midyear.

The next question comes from Guy Baber from Simmons. Guy Baber – Simmons: I was hoping you could talk a little bit more about the fast track portfolio, I was just hoping you could share what level of production in those projects are contributing right now and when you expect to hit a peak level of contribution? Also it’s my understand that the volume should begin to decline by 2016. Is that accurate and then are you evaluating additional potential fast track projects that could either extend that plateau there or even increase production beyond 2016? I am just trying to get a better sense of what medium term production upside there might be based on more contribution from fast track projects?

So we take a lot of inspiration from the fast track concept and we want to extend that way of thinking into the other portfolio and that is very much about what the capital efficient project is about. When it comes to the specific projects, two more have been put into production in the quarter, so now I think we have eight producing. We are expecting two more in the quarter and then we have a long list of projects that are candidates for being fast track. And this is a popular concept, so with the project manager can qualify for being a fast track project, they know that a project more likely to happen. So there is a string of projects that we have to choose from. So for us it is a long term initiative and we expect that to be more project to come. So, but you’re right, I mean with the current existing projects that we are working on it, will start to decline sometime in the future. So to me this is assets that have generated very strong net present value and returns to the company and we are encouraged someone to use that concept going forward as well. So production, the fast track production level this year is still growing but – any detail Svein?

It’s growing and towards year end, as Torgrim said, we have two more fast track in production, we expect another one to come in the third quarter and fourth one into the fourth quarter. And then we are also expecting more then to come in 2015, earlier that one. So it’s in the phase of big ramp up. Guy Baber – Simmons: I have one quick follow up. You stated that overall production was in line with the internal plan and the full year guidance. But my question was specifically related to the Norway liquids production which was pretty strong this quarter. Is it fair to say that Norway liquids production was better than you expected 1Q and any color around that?

So production in Norway was strong, particularly related to the regularity in the business. So they actually delivered more than the target on the regularity in the quarter. So it was a good liquid production in the quarter. But it’s sort of very much in line with the guidance for the full year 2% growth from a rebased level.

The next question comes from Alejandro Demichelis from Exane. Alejandro Demichelis – Exane BNP Paribas: Just coming back to Tanzania, could you please update us, Torgrim, in terms of the discussions around the tax situation over there?

Can be more specifically -- Alejandro Demichelis – Exane BNP Paribas: The proposal to potentially impose some extra taxes and royalties on the development of cash production, how the discussions are going there?

I don’t have any specifics to discuss with you in the quarter but of course, everything around framework and taxes and governance and all of that is very important before we take any decisions in this respect. So it is important things that we are discussing with the authorities.

The next question comes from John Olaisen at ABG Sundal Collier. John Olaisen – ABG Sundal Collier: Just question on tax rate internationally, a few years back you said that your guidance was 40% to 45% internationally and in 2011, you upped that to 55%, and you also said that in a couple of years, when the North American production is becoming more important, the tax rate should come down. And as I said, your recent guidance you said is 50% to 55% and in Q1 it was only 43%, 43.5%. Wanted to kind of fill in, maybe this is starting to happening now, is the tax rate internationally coming down?

The tax rate in the international segment this quarter was 43%, so it’s obviously lower than the guiding. We have said 50% to 55% tax rate internationally is still valid. Over time we expect that to come down as you know both US production over the next three years will grow with sales tax and in due time also Canadian production growing with a lower tax rate than the average. So you are right, it is – that’s the expectation going forward. When that is said, guiding is still there and it is still valid for the year. John Olaisen – ABG Sundal Collier: But should you expect a rebound, the tax rate investment come up again in Q2?

On a yearly basis, around 70% tax rate is the guidance and that remains firm. So implicitly it means that the tax rate for the last three quarters needs to be a bit higher than in the first quarter, yes. John Olaisen – ABG Sundal Collier: And in the US, you have a tax – big tax carryforwards, so you don’t have any cash tax but your US operations carry an P&L tax companywide?

So we are not paying taxes in the US and we are not carrying P&L taxes either for the time being.

The next question comes from Michael Alsford with Citi. Michael Alsford – Citigroup: I’ve got a question on pre-sale Angola farm-out, just given the size of Statoil and I guess your strong recent tirade [ph] on exploration and particularly how positively you talk about the area, I was a bit surprised that you decided to farm out ahead of drilling. Did this decision relate to a change in view on the potential exploration in terms of the risk of drilling in the region or is it just simply risk management more broadly across the business? And then just a quick question to follow up on is the arbitration payment that will be made in the second quarter, could you give us a sense of what the value of that is, because there is a number floating around in the market and I just wanted to confirm it.

Our view of the presale concern, Delulu [ph] has not changed at all. So this is risk management, the exploration cost is very high related to those things and we have a very high equity share. So that is risk management. When it comes to ENI, so that case is settled. So it is exactly what we have provided for in our accounts over the last quarters. So there are no accounting effects in our accounts. So this is as expected. When it comes to the cash impact, I can’t go into the specific details. There will be a payment from us to ENI in the next quarter but it will be insignificant.

Then our next question comes from Peter Hutton at RBC. Peter Hutton – RBC Capital Markets: The good news is that on the published numbers, Statoil generated more cash from its operations in the last quarter than the BP, we thought it was a good news. But against that background, can I just sort of ask about the update on the discussions with the government about the development of the marginal projects and also Johan Sverdrup? I mean one of the issues where you were generating significant cash, is that a lot of people tend to be lining up to get a share of that cash, can you just give us an update on where we stand in terms of those discussions and also the reaction to not going ahead with Ormen Lange and where we stand on the electrification from the onshore?

So there is in reality no specific news on the development of the marginal feeds. I mean we really need to make these fields as profitable as we can. It is our responsibility both toward our shareholders and also towards the society. When it comes to Johan Sverdrup, as you know great field, great development, will produce for maybe 50 years, plateau production 550 to 650,000 barrels per day, so it is significant. When it comes to electrification, there are no specific news there. We have made the concept selection with electrification for the phase 1 of Johan Sverdrup with the sufficient flexibility also for the future. So that is decision made in across the license partners as the most appropriate solution. So this is moving ahead and we are really looking forward to get started on the development.

Next in line is Michele Della Vigna from Goldman Sachs. Michele Della Vigna – Goldman Sachs: I really wanted to look into the gas realizations which in both Europe and the US have substantially outperformed the benchmark for a variety of reasons, the cold weather in the US, possibly some forward selling in Europe. I was wondering if from here for the coming quarters, we could still use the benchmark as a good indication of your realizations there or whether something has structural improved there so that we should factor in higher realizations?

I think it’s a great opportunity for me to clear up higher bit on the expectations on the MPR segment. I think it’s fair to say that the first quarter result is a very strong one, it is linked to a very cold winter in the US together with the positions there that we have made. I think it’s fair to say that I just want to remind you what my colleague Eldar Saetre said earlier that a normal quarter for that segment is typically between the lowest and the highest for 2013, $2.5 billion to $3.5 billion a quarter maybe. So that everybody [indiscernible] quarter to quarter. When that is said, having flexibility, having control over bottlenecks gives opportunities to take super profits when situations occurs like it is – in the first quarter where there was -- sort of bottlenecks became very vivid and we were able to arbitrage the various pricing points. So the portfolio has skill, so if similar circumstances occurs there will be – still the opportunities to take very strong profit…

Just a clarification, 2.5 and 3.5 was kronor.

Then we have Lydia Rainforth from Barclays next. Lydia Rainforth – Barclays Capital: On the cost base, if I could come back to – I realize it was only three months ago that you said – to control operating costs and improve the capital discipline. But I was wondering what sort of reaction you have seen both internally and from the service providers, and are you finding ways, or more ways than you expected to be able to look at the cost base? And then secondly if I could just clarify on the decrease in the trade payables for the quarter, what that related to, I think you mentioned it, I just missed it.

So when it comes to the improvement agenda that we are currently running, we see that our suppliers, many of them are very enthusiastic about this agenda, it makes sense, also they will get more out of each engineers in their business, and this makes future project more profitable and that means more business in the long run. So I would say in general strong support for the agenda that we are running. When it comes to the last question, I mean we had a reduction in the working capital over the quarter.

Yes, in the trade and other receivable, we had an effect of NOK 7.2 billion, so it’s related to tax receivable and trade receivable and other prepayments.

Then we have Nitin Sharma from JP Morgan. Nitin Sharma – JP Morgan: Torgrim, I had a clarification on the MPR results in the quarter, internal gas transfer price which for Q1 was amongst the lowest in the last 8 to 10 quarters whereas I note that average invoice price for the quarter was quite robust. In my mind this therefore means that the bigger than average proportional gas sales margin was reflected in MPR segment results, is it a fair conclusion and could we allocate some of this stronger MPR result to the low internal transfer price, please clarify?

So the internal transfer price is linked to the various market indicators like liquid prices in the various hubs and various baskets. So it should be a fair representation of the market that MPR is facing at any point in time. So whatever MPR can generate on value on top of that belongs in that segment. I think it’s fair to say that this quarter they have performed very well, particularly in the US but also in Europe. So you are right, the larger that difference is the better the result for MPR, but there is nothing strange with internal transfer price in the quarter.

And we are ready for our last question today from Theepan Jothilingam from Nomura. Theepan Jothilingam – Nomura Securities: Actually just two quick ones, one just a point of clarification on your exploration spend for this year, you’re reiterating your previous guidance or do you expect sort of greater risk management and more farm downs potentially of any blocks or prospects you intend to drill? And then just, if you could talk about how you see performance for the rest of the year and that would be very helpful?

So exploration spend, $3.5 billion I mean we are prioritizing our portfolio strongly. We have more drilling opportunities than what we are willing to spend on each year but I think that’s fair $3.5 billion. So I can’t comment on whether there will be further farm downs – pretty pragmatic approach to all of the portfolio. On Snøhvit thank you very much for that question. I think it’s important to remind you that, that will go off in maintenance in the second quarter, which is that coming quarter and the LNG arbitrage profit lies in the MPR segment. So in the next quarter, there will be fewer carve-off from Snøhvit to generate value for the MPR segment. The regularity on Snøhvit has been very good over the last year, it has contributed strongly both the production and to returns. And the maintenance period is meant to make some further adjustment to the plant as well. So we do hope and we will work as hard as we can to run that smooth as it has run over the last year.

Thank you and that will conclude the session today. And today’s conference call with the Q&A can be replayed on from our website in a few days, and there will also be transcript available in a few days. If you have any further questions, please as always don’t hesitate to contact investor relations department. Thank you all for participating and have a good afternoon.