) third-quarter 2013 adjusted earnings of 63 cents per ADR beat
the Zacks Consensus Estimate of 59 cents. The results were flat
year over year. The earnings beat was mainly due to higher oil
Adjusted net income after tax came in at NOK 12.1 billion (US$2.0
billion) in the third quarter versus the year-earlier level of
NOK 11.9 billion (US$2.0 billion).
In the third quarter, total revenue increased 2% year over year
to NOK 169.8 billion ($28.3 billion), mainly attributable to
higher liquids volumes.
In the reported quarter, both equity and entitlement production
increased by 2% and 4% annually, respectively, owing to the
ramp-up of production on various fields and production start-up
on new fields along with lower maintenance effects.
Total oil and gas equity production averaged 1.852 million
barrels of oil equivalent per day (MMBOE/d) in the third quarter
compared with 1.811 MMBOE/d a year ago. Of the total quarterly
output, 60% was oil and 40% was natural gas.
Total oil and gas entitlement production averaged 1.687 MMBOE/d
during the quarter (58.2% oil and 41.8% natural gas) compared
with 1.624 MMBOE/d in the year-earlier quarter.
The company's realized oil prices averaged $102.9 per barrel, up
3% year over year, while natural gas price realization averaged
NOK 1.97 per standard cubic meter, down 9% from the year-earlier
During the quarter, exploration expenditure (including
capitalized exploration expenditure) was NOK 5.9 billion, up from
NOK 4.9 billion in the third quarter of 2012. For the first three
quarters, operating cash flow was NOK 86.7 billion. Net debt to
capital employed ratio increased from 8.3% to 14.3%, mainly due
to an increase in net interest-bearing debt.
Management reaffirmed its production guidance for 2013. Statoil
aims 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, expected within 2016−2020, would
likely lead to a CAGR of 3% to 4%. For 2013, production is
expected to shrink on a year-over-year basis.
The company has projected organic capital expenditures of around
$19 billion and exploration activity of about $3.75 billion for
2013. Around 60 wells are slated for completion by this year end.
Though 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
Statoil holds a Zacks Rank #3 (short-term Hold). However, there
are other stocks in the oil and gas sector -
TransAtlantic Petroleum Ltd
Matador Resources Company
Northern Oil and Gas, Inc.
) - which hold a Zacks Rank #1 (Strong Buy) and are
expected to perform better.
MATADOR RESOURC (MTDR): Free Stock Analysis
NORTHRN OIL&GAS (NOG): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
TRANSATL PETROL (TAT): Free Stock Analysis
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