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(Adds oil price, background)

By Kjetil Malkenes Hovland

OSLO--Norway's Statoil said Friday that it was moving forward with another North Sea oil and gas field after a 70% reduction in project costs, a sign that the oil and gas producer is adapting to weak prices.

The company said it had submitted a plan to the Norwegian government for the NOK1 billion ($121.84 million) Byrding oil and gas project in the North Sea, its second such plan this month.

"Byrding shows that successful improvement efforts in Statoil, and in this case particularly within drilling and well, allow new development projects to be realized," said Torger Rod, Statoil's head of project development.

Statoil said the cost of the project, set to hold 11 million barrels of oil equivalent, had been reduced from NOK3.5 billion to NOK1 billion. Byrding is set to produce 8,000 barrels a day at its peak, and will connect to the existing Troll C platform, helping to boost its activity and production.

The company said Byrding, which was formerly known as Astero, would be profitable even at today's oil prices.

Brent crude trades at $50 a barrel, roughly 70% higher from January when it dropped below $30 a barrel. Since the summer of 2014, global oil companies have struggled to cope with an oil-price rout that followed three years of stable prices mostly above $100 a barrel.

Statoil started cutting costs in early 2014, even before prices started dropping, and has reduced capital spending and delayed projects in a bid to maintain shareholder dividends.

The 67% state-owned oil and gas producer said earlier this year that it had cut the oil price required for upcoming projects to be profitable--the break-even price--to $41 a barrel on average from $70 a barrel three years ago.

Statoil is picking up more debt to finance its operations, but has said it expects to generate enough cash to cover its dividend and capital spending at an oil price of $60 a barrel next year and $50 a barrel in 2018.

Statoil expects Byrding to start producing in the third quarter of 2017 and to keep producing for up to 10 years.

Statoil last week handed in the plan to Norwegian and U.K. authorities to develop the Utgard field, a NOK3.5 billion project straddling the U.K.-Norway median line in the North Sea.

Write to Kjetil Malkenes Hovland at kjetilmalkenes.hovland@wsj.com

(END) Dow Jones Newswires

August 19, 2016 06:44 ET (10:44 GMT)

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