) fourth-quarter 2012 adjusted earnings of 84 cents per ADR
comfortably surpassed the Zacks Consensus Estimate of 68 cents.
The quarterly results also improved from the year-earlier
adjusted earnings of 79 cents per ADR, attributable to higher gas
sales volumes and margins as well as lower operating costs.
For full-year 2012, the company registered a profit of $2.98 per
ADR, missing the Zacks Consensus Estimate by a penny but
increasing from the year-earlier earnings of $2.84 per ADR.
Adjusted net income after tax came in at NOK15.1 billion (US$2.7
billion) in the fourth quarter, higher than the year-earlier
level of NOK14.5 billion (US$2.5 billion). In 2012, adjusted
earnings after tax were NOK 55.1 billion (US$9.5 billion)
compared with NOK 50.7 billion (US$9.0 billion) in 2011.
In the fourth quarter, total revenue dropped 12.1% year over year
to NOK 160.6 billion ($28.2 billion), mainly due to lower
realized oil prices as well as lower volumes of liquids. In 2012,
total revenue surged nearly 8% year over year to NOK 723.4
billion (US$124.3 billion).
In the reported quarter, equity and entitlement production
increased 3% and 4% annually, respectively, based on production
ramp up at existing fields and higher gas sales from NCS. The
relatively lower effect from maintenance in the reported quarter
compared to the year-ago quarter also contributed to the growth.
Total oil and gas equity production averaged 2.032 million
barrels of oil equivalent per day (MMBOE/d) in the fourth quarter
compared with 1.975 MMBOE/d in the year-earlier period. Of the
total quarterly output, 55% was oil and 45% was natural gas.
Total oil and gas entitlement production averaged 1.841 MMBOE/d
during the quarter (52% oil and 48% natural gas) compared with
1.778 MMBOE/d in the year-earlier period.
In 2012, equity production increased 8% annually to 2.004
MMBOE/d. Entitlement production increased 9% annually to 1.805
Total oil and gas liftings were 1.828 MMBOE/d compared with 1.761
MMBOE/d in the prior-year quarter.
The company's realized oil prices averaged $102.7 per barrel,
down 0.1% year over year, while natural gas price realization
averaged NOK 2.12 per standard cubic meter, down 5.8% from the
During the quarter, total capital investment was NOK 29.1
billion. For 2012, operating cash flow was NOK 128.0 billion. Net
debt-to-capitalization ratio was 12.4% in the reported quarter
versus 12.6% in the preceding quarter.
Management reaffirmed its production guidance for 2013. Statoil
aims to achieve an equity production of above 2.5 million barrels
of oil equivalent in 2020. The growth is expected to come from
new projects between 2014 and 2016, resulting in a CAGR of 2% to
3% for the period 2012 to 2016.
The second stream of projects is expected within 2016−2020 that
would likely lead to a CAGR of 3% to 4%. 2013 production is
expected to be lower on a year-over-year basis, due to the recent
transaction with Wintershall as well as a cut in gas output by 25
Mboe/d in U.S. onshore.
The company has projected organic capital expenditures of around
$19 billion and exploration activity of about $3.5 billion for
2013. Statoil plans to complete around 50 wells during the year.
In 2012, Statoil delivered strong exploration results, adding
significantly to its resource base by making several high impact
discoveries, since the last 2 years. The company commissioned 46
exploration wells, of which 19 were on the NCS and 27 overseas.
Discoveries of around 23 wells were announced during the period.
The company also confirmed the prospects at Lavani-2 exploration
well, offshore Tanzania, by finding natural gas during the
) and Production Tanzania Limited are the other partners of the
Statoil also made additional strategic progress on the agreement
with Russian state-owned oil company OAO Rosneft. The companies
have entered into an agreement wherein the Norwegian oil giant
will jointly explore and develop Russian offshore deposits in the
Barents Sea and Sea of Okhotsk. The venture is expected to
involve an investment of approximately $100 billion over decades.
Following a surge in global oil demand, we see the Norwegian oil
major as likely to benefit from its cooperation alliance with
Russia-based Rosneft - the world's largest hydrocarbon-producing
Although we have a favorable stance on Statoil's long-term
production growth based on its growing upstream presence in the
emerging basins of the Caspian Sea, West Africa and the deepwater
U.S. Gulf of Mexico, we remain cautious about its operating risk
in Algeria. The deadly hostage attack last month when Islamist
gunmen (believed to be from Libya) performed a hostage-taking
attack on In Amenas, one of the country's largest wet gas fields,
leaving 37 foreigners dead.
Statoil holds a Zacks #3 Rank (short-term Hold rating). However,
there are other stocks in the oil and gas sector -
Penn Virginia Corporation
Memorial Production Partners LP
) - which hold a Zacks Rank #1 (Strong Buy) and are
expected to perform better.
MEMORIAL PRODUC (MEMP): Free Stock Analysis
PENN VIRGINIA (PVA): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
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