We reaffirmed our Neutral recommendation on
) on Jun 3, 2013. The company's progress in various projects and
intended additions to its resource base in the coming years are
evident from the estimated compound annual growth rate (CAGR) of
3% to 4% during 2016-2020.
Statoil, a major international integrated oil and gas company has
operations in all major hydrocarbon-producing regions of the
world, with an emphasis on the Norwegian Continental Shelf (NCS).
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 2013 to 2016.
In 2013, Statoil targets to bring five fast-track projects online
in 2013, with Hyme, Visund South and Vigdis North East fields
already commissioned. This goes to show the company's focus on
high impact prospects and expanding its operations worldwide.
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.
Earlier 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 were overseas. Discoveries of around 23 wells were
announced during the year.
Further, Statoil's strategic progress in the agreement with
Russian state-owned oil company OAO Rosneft, entitles it to
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
and the company is likely to benefit from its cooperation
alliance with Rosneft - the world's largest hydrocarbon-producing
However, management remains cautious about uncertainties in gas
value over volume, start-up and ramp-up, and operational
This was reflected in the company's first quarter
underperformance. Earnings came in below both the Zacks Consensus
Estimate and year-ago result due to decreased volumes and lower
prices for both liquids and gas.
The Zacks Consensus Estimate for 2013 also went down by 3.9% to
$2.74 in the last 30 days. Also, for 2014, the Zacks Consensus
Estimate went down 2.7% to $2.89 per share over the same time
frame. The company currently has a Zacks Rank #5 (Strong Sell).
Other Stocks to Consider
While we prefer to remain on the sidelines for Statoil, there are
other stocks among the international integrated players in the
oil & gas sector that appear rewarding. Among these,
PetroChina Co. Ltd.
), which are expected to perform impressively over the next few
months, carry a Zacks Rank #2 (Buy).
BRASKEM SA (BAK): Free Stock Analysis Report
PETROCHINA ADR (PTR): Free Stock Analysis
SASOL LTD -ADR (SSL): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
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