Statoil Upgraded to Buy - Analyst Blog


On Apr 2, Zacks Investment Research upgraded oil and gas company Statoil ASA ( STO ) to a Zacks Rank #2 (Buy).

Why the Upgrade?

Statoil has been witnessing rising earnings estimates owing to better-than-expected fourth-quarter 2012 results on the back of higher gas sales volumes and margins as well as lower operating costs. The company declared impressive results on Feb 7, 2013, with adjusted earnings of 86 cents per ADR that comfortably surpassed the Zacks Consensus Estimate of 68 cents. The results also improved from the year-earlier adjusted earnings of 79 cents per ADR.

Norway-based Statoil outperformed the Zacks Consensus Estimate in three of the last four quarters by an average of 7.84%. The company also has an impressive long-term expected earnings and sales growth rate of 3.70% and 4.36%, respectively.

Based on its track record of sustaining volume growth, Statoil reaffirmed its long-term production guidance. 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.

Recently, Statoil claimed 15 leases in the central region of the U.S. Gulf of Mexico (GoM) in an auction under the U.S. Bureau of Ocean Energy Management. The addition will fortify its already significant foothold in the region. Additionally, Statoil also started production on the Stjerne field in the North Sea. This marks the company's fifth fast-track project that came online following the recent commencement of the Skuld field at Norne.

Based on Statoil's consistency in earnings, attractive fundamentals and a positive outlook, the Zacks Consensus Estimate for first quarter of 2013 went up 5.33% to 79 cents per ADR over the last 60 days.

Other Stocks to Consider

Other stocks worth considering in the energy sector include EPL Oil & Gas Inc. ( EPL ), Range Resources Corp. ( RRC ) and PBF Energy Inc. ( PBF ). All these firms - sporting a Zacks Rank #1 (Strong Buy) - offer value and are worth accumulating at current levels.

EPL OIL&GAS INC (EPL): Free Stock Analysis Report

PBF ENERGY INC (PBF): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

STATOIL ASA-ADR (STO): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: EPL , PBF , RRC , STO

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