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Brief overview

Statoil ASA engages in the exploration, production, transportation, refining, and marketing of petroleum and petroleum-derived products. The company involves in the exploration, development, and production of crude oil and natural gas in Norway and internationally, as well as extraction of natural gas liquids. It also transports and markets natural gas and natural gas products; and engages in petroleum refining operations, as well as marketing crude oil and refined petroleum products. In addition, the company involves in the retail sale of stationary energy primarily heating oil, kerosene, liquefied petroleum gas, and heavy fuel for industrial purposes; marine fuel comprising marine gasoil and heavy fuel; and aviation fuel, lubricants, and chemicals. As of December 31, 2010, it had proved reserves of 2,124 million barrels of oil, as well as 509 billion cubic meters of natural gas, corresponding to aggregate proved reserves of 5,325 million barrels-of-oil equivalent; and operated a network of 2,283 fuel stations, including a combination of full-service stations, which has integrated convenience stores, and automated fuel stations and truck stops located in Scandinavia, Poland, Latvia, Lithuania, Estonia, and Russia. The company was formerly known as StatoilHydro ASA and changed its name to Statoil ASA in November 2009. Statoil ASA was founded in 1972 and is headquartered in Stavanger, Norway. (Yahoo Finance profile)

Reasons to be bullish on Statoil ASA

  • A massive levered free cash flow of $11.68 billion.
  • Net income that has surged from $2.8 billion in 2009 to $14.02 billion in 2011, an increase of 400%
  • Cash flow from operating activities that has generally been trending up for the past three years.
  • A great total debt to equity ratio of 0.39.
  • A good long-term debt to equity ratio of 0.4
  • An acceptable quick and current ratio of 1.00 and 1.16 respectively
  • A very strong quarterly earning's growth rate of 167%
  • A strong quarterly revenue growth rate of 22%
  • A good ROE of 35.6%
  • A very low payout ratio of 22.6%
  • A very strong interest coverage ratio of 263
  • A good 3 year total return of 90.4%
  • Free cash flow yield of roughly 4%

In 2011 net operating income soared to NOK 212 billion compared to NOK 137.3 billion in 2010. Statoil drilled 41 exploration wells, 22 of which were discoveries. It added more than 1 billion barrels to its reserves. It achieved a reserve replacement ratio (NYSE:RRR) of 1.17 in 2011. The RRR for oil was 1.45.

Management has stated that organic capital expenditures for 2012 are going to be in the neighborhood of $17 billion; this includes expenditures related to assets acquired from the Brigham acquisition. It expects to complete more than 40 wells in 2012.

Management wants Statoil to be in the top quartile of its peer group for unit production cost. It has set a target of trying to reach equity production above 2.5MMboe in 2020. The growth is expected to come from new projects in the 2014 to 2016 time frames that should result in a compound annual growth rate (CAGR) of 3% for the period 2012 to 2016. A second group of projects is expected to begin in the 2016 2020 time periods that should lead to CAGR of almost 4%.

100K invested in Statoil 10 years ago would have grown to 545K.

Stock

Dividend Yield (%)

Enterprise Value

Forward PE

EBITDA

Quarterly Revenue Growth

Beta

Revenue

Operating Cash flow

EVEP

4.30

3.64B

38.13

218.90M

38.10%

0.88

261.84M

167.21M

MPC

2.40

15.02B

7.45

4.57B

12.50%

0.00

73.58B

3.31B

TOT

2.40

145.90B

7.9

43.18B

20.10%

1.01

218.48B

25.63B

STO

3.40

100.88B

10.13

41.82B

21.60%

1.18

113.19B

19.54B

PZE

2.50

1.84B

9.41

532.98M

3.20%

1.08

3.29B

475.78M

Statoil ASA (NYSE: STO

  • Industry: Refining & Marketing
  • Levered Free Cash Flow: 11.68B

  • Net income for the past three years
  • Net Income ($mil) 2009 = $2834
  • Net Income ($mil) 2010 = $6242
  • Net Income ($mil) 2011 = $14026
  • Total cash flow from operating activities
  • 2008 = $14.59 billion
  • 2009 = $12.64 billion
  • 2010 = $13.91 billion

Key Ratios

  • P/E Ratio = 6.7
  • P/E High - Last 5 Yrs = 26.4
  • P/E Low - Last 5 Yrs = 4.8
  • Price to Sales = 0.76
  • Price to Book = 1.74
  • Price to Tangible Book = 2.59
  • Price to Cash Flow = 2.19
  • Price to Free Cash Flow = -56.5

  • Quick Ratio = 1.00
  • Current Ratio = 1.16
  • LT Debt to Equity = 0.4
  • Total Debt to Equity = 0.39
  • Interest Coverage = 263.00
  • Inventory Turnover = 11.74
  • Asset Turnover = 0.85
  • ROE = 35.65%
  • Return on Assets = 13.01%
  • Quarterly Earnings Growth = 167.4%

  • Dividend yield 5 year average = 3.4%
  • Payout ratio = 22.61%
  • Dividend growth rate 3 year avg = -8.47%
  • Consecutive dividend increases = 1 years
  • Paying dividends since = 2002
  • Total return last 3 years = 90.49%
  • Total return last 5 years = 36.74%

Related companies (Peer group analysis)

For investors looking for additional ideas, we have provided information on 4 other companies that could make for interesting long term plays. For example, EV Energy Partners LP. Net income and operating cash flow have been increasing for the past 3 years. It has a positive levered free cash flow rate of $56.7 million, an excellent quick ratio of 4.33, a great current ratio of 4.00, a decent interest coverage ratio of 4.30 and an excellent 3 year total return of 547%.

EV Energy Partners LP (NASDAQ:EVEP)

Industry : Production & Extraction

Levered Free Cash Flow : 56.72M

Net income for the past three years

  • Net Income ($mil) 2009 = $1
  • Net Income ($mil) 2010 = $106
  • Net Income ($mil) 2011 = $103

Total cash flow from operating activities

  • 2009 = $109.53 million
  • 2010 = $122.36 million
  • 2011 = $167.22 million

Key Ratios

  • P/E Ratio = 26.7
  • Price to Sales = 10.49
  • Price to Book = 2.65
  • Price to Tangible Book = 2.99
  • Price to Cash Flow = 14.1
  • Price to Free Cash Flow = 52.7

  • Quick Ratio = 4.33
  • Current Ratio = 4.00
  • LT Debt to Equity = 1.04
  • Total Debt to Equity = 1.04
  • Asset Turnover = 0.13
  • Interest coverage= 4.40
  • ROE = 10.13%
  • Return on Assets = 5.63%
  • Dividend yield 5 year average = N/A%
  • Payout ratio = 193%
  • Dividend growth rate 3 year avg = 2.63%
  • Consecutive dividend increases = 4 years
  • Paying dividends since = 2007
  • Total return last 3 years = 543.73%
  • Total return last 5 years = 206.46%

Marathon Petroleum Corp. (NYSE:MPC)

Industry : Refining & Marketing

Levered Free Cash Flow: 2.23B

Net income for the past three years

  • Net Income ($mil) 2009 = $449
  • Net Income ($mil) 2010 = $623
  • Net Income ($mil) 2011 = $2389

Total cash flow from operating activities

  • 2010 = $2.22 billion
  • 2011 = $3.31 billion

Key Ratios

  • P/E Ratio = 6.4
  • Price to Sales = 0.19
  • Price to Book = 1.6
  • Price to Tangible Book = 1.71
  • Price to Cash Flow = 4.6
  • Price to Free Cash Flow = 4.8

  • Quick Ratio = 0.91
  • Current Ratio = 1.30
  • LT Debt to Equity = 0.35
  • Total Debt to Equity = 0.35
  • Interest Coverage = 62.00
  • Inventory Turnover = 18.58
  • Asset Turnover = 3.06
  • ROE = 25.11%
  • Return on Assets = 9.56%
  • Payout ratio = 6.75
  • Consecutive dividend increases = 0 years
  • Paying dividends since = 2011
  • Total return last 3 years = N/A
  • Total return last 5 years = N/A

Total S.A. (NYSE: TOT

Industry : Production & Extraction

Levered Free Cash Flow : 6.05B

Net income for the past three years

  • Net Income ($mil) 2009 = $12034
  • Net Income ($mil) 2010 = $14351
  • Net Income ($mil) 2011 = $17523

Total cash flow from operating activities

  • 2008 = $26.32 billion
  • 2009 = $17.74 billion
  • 2010 = $24.81 billion

Key Ratios

  • P/E Ratio = 7.7
  • P/E High - Last 5 Yrs = 13.9
  • P/E Low - Last 5 Yrs = 5.7
  • Price to Sales = 0.5
  • Price to Book = 1.33
  • Price to Tangible Book = 1.66
  • Price to Cash Flow = 4.74
  • Price to Free Cash Flow = -23.2

  • Quick Ratio = 0.98
  • Current Ratio = 1.40
  • LT Debt to Equity = 0.34
  • Total Debt to Equity = 0.33
  • Interest Coverage = 40.20
  • Inventory Turnover = 6.89
  • Asset Turnover = 1.14
  • ROE = 17.56%
  • Return on Assets = 7.4%
  • Quarterly Earnings Growth = 12.8%
  • Dividend yield 5 year average = 4.8
  • Payout ratio = 37.00
  • Dividend growth rate 3 year avg = 0.43%
  • Dividend growth rate 5 year avg = N/A%
  • Consecutive dividend increases = 0 years
  • Paying dividends since = 1992
  • Total return last 3 years = 42.91%
  • Total return last 5 years = 7.88%

Petrobras Argentina SA (NYSE : PZE)

Industry : Production & Extraction

Levered Free Cash Flow : 87.64M

Net income for the past three years

  • Net Income ($mil) 2009 = $249
  • Net Income ($mil) 2010 = $156
  • Net Income ($mil) 2011 = $N/A

Total cash flow from operating activities

  • 1900 = $0 million
  • 2009 = $621 million
  • 2010 = $766 million

Key Ratios

  • P/E Ratio = 8.7
  • Price to Sales = 0.38
  • Price to Book = 0.53
  • Price to Tangible Book = 0.51
  • Price to Cash Flow = 2.77
  • Price to Free Cash Flow = 13.4

  • Quick Ratio = 1.31
  • Current Ratio = 1.40
  • LT Debt to Equity = 0.3
  • Total Debt to Equity = 0.29
  • Interest Coverage = N/A
  • Inventory Turnover = 5.24
  • Asset Turnover = 0.68
  • ROE = 8.09%
  • Return on Assets = 3.9%
  • Quarterly Earnings Growth = 247%
  • EPS 5 year growth rate= 7%
  • Dividend yield 5 year average = N/A%
  • Payout ratio = 38%
  • Dividend growth rate 3 year avg = 0%
  • Consecutive dividend increases = 0 years
  • Paying dividends since = 2009

Conclusion

The markets are extremely overbought and have started to trend higher on lower volume; this usually signals that a top is near at hand. Long term investors would do well to wait for a strong pullback before committing new funds to this market.

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware.

EPS, EPS surprise, broker recommendations, and price and consensus charts sourced from zacks.com. Earnings estimates and growth rate charts for sourced from dailyfinance.com. Free cash flow yield, income from cont operations, and revenue growth sourced from Ycharts.com. Financial highlights for 2012 and trailing 12 month revenue tables sourced from acaciaresearch.com

Source: Statoil ASA: A Great Integrated Oil And Gas Growth Play

Additional disclosure: