) second-quarter 2013 adjusted earnings of 60 cents per ADR
missed the Zacks Consensus Estimate of 65 cents. The quarterly
results were however above the year-earlier adjusted earnings of
59 cents per ADR, attributable to lower prices for both liquids
and gas as well as weak trading results.
Adjusted net income after tax came in at NOK 11.3 billion (US$1.9
billion) in the second quarter versus the year-earlier level of
NOK 11.5 billion (US$1.9 billion).
In the second quarter, total revenue dropped 26% year over year
to NOK 148.3 billion ($25.0 billion), mainly due to decreased
volumes and lower prices for both liquids and gas.
In the reported quarter, both equity and entitlement production
decreased 1% annually owing to production decline at existing
fields. Ramp-up of production on various fields and production
start-up on new fields, partly offset the decrease.
Total oil and gas equity production averaged 1.967 million
barrels of oil equivalent per day (MMBOE/d) in the second quarter
compared with 1.980 MMBOE/d in the year-earlier period. Of the
total quarterly output, 59% was oil and 41% was natural gas.
Total oil and gas entitlement production averaged 1.768 MMBOE/d
during the quarter (56.4% oil and 43.6% natural gas) compared
with 1.786 MMBOE/d in the year-earlier quarter.
The company's realized oil prices averaged $93.9 per barrel, down
5% year over year, while natural gas price realization averaged
NOK 1.98 per standard cubic meter, down 11% from the year-earlier
During the quarter, Exploration expenditure (including
capitalised exploration expenditure) was NOK 5.1 billion,
unchanged from the second quarter of 2012. For the reported
quarter, operating cash flow was NOK 46.5 billion. Net debt to
capital employed ratio increased from 10.7% to 19.7%, mainly due
to an increase in net interest-bearing debt.
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, expected within 2016−2020, would
likely lead to a CAGR of 3% to 4%. For 2013, production is
expected to be lower on a year-over-year basis.
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.
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
MEMORIAL PRODUC (MEMP): Free Stock Analysis
NISKA GAS STRG (NKA): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
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Statoil holds a Zacks Rank #5 (short-term Strong Sell rating).
However, there are other stocks in the oil and gas sector -
VOC Energy Trust
Niska Gas Storage Partners LLC
Memorial Production Partners LP
) - which hold a Zacks Rank #1 (Strong Buy) and are
expected to perform better.