Oslo- Norwegian energy giant Statoil Hydro's net income fell by 75 per cent during first-quarter 2009, the group said Monday, citing lower oil prices.

A higher effective tax rate and currency effects also contributed to the drop, the state-controlled group said, reporting net income for the quarter of 4.0 billion kroner (632 million dollars) compared to 16 billion kroner for the corresponding quarter 2008.

Net operating income declined 31 per cent to 35.5 billion kroner, while turnover fell 29 per cent to 112 billion kroner.

"Recession and uncertainty in the world economy is continuing to impact energy demand and energy prices," Statoil Hydro chief executive Helge Lund said in a statement.

Lund said that Statoil Hydro was "continuing to pursue further cost reductions."

The Statoil Hydro head described first-quarter results as satisfactory citing that production was high and stable.

Statoil Hydro was created in October 2007 with the merger of Norwegian oil and gas groups Statoil and Norsk Hydro.

In its outlook, the group expected crude oil and gas liquids prices to remain at "relatively low levels" and prices to remain volatile.

The average first-quarter oil price measured in kroner was down 41 per cent year-on-year, while the average natural gas price was up 23 per cent measured in the Norwegian currency, the group said.

Statoil Hydro said its average daily oil and gas output was some 2 million barrels of oil equivalent per day during the first-quarter, up 1 per cent year-on-year.

The group reported a rise in exploration spending from 3.9 billion kroner to 5.2 billion kroner, reflecting higher exploration activity and drilling costs.

The group drilled 21 exploration wells during first-quarter 2009, including nine outside the Norwegian continental shelf.(dpa)