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IF you have a very long-term view, then the current pullback could provide you with the chance to get in at a good price. Management wants Statoil to be in the top quartile of its peer group for unit production cost, and it has 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 (OTCPK: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 a CAGR of almost 4%.

Additional Reasons to be bullish on Statoil ASA (NYSE:STO):

  • It sports a massive levered free cash flow of $14.82 billion.
  • 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 ("RRR") of 1.17 in 2011. The RRR for oil was 1.45.
  • Net income has surged from $2.8 billion in 2009 to $14.02 billion in 2011, an increase of 400%
  • A very strong retention rate of 78%
  • A decent yield of 3.9%
  • A very strong interest coverage ratio of 85
  • An excellent long-term debt to equity ratio of 0.37
  • A very strong quarterly revenue growth rate of 33.7%
  • A good 5 year ROE average of 27%
  • A very low payout ratio of 22%
  • Cash flow per share increased from $3.64 in 2009 to $12.70 in 2011
  • Sales increased from $73.9 billion in 2009 to $116 billion in 2011
  • Annual EPS before NRI increased from $2.36 in 2007 to $9.83 in 2011
  • It has a free cash flow yield of roughly 7.08%
  • $100K invested in Statoil would have grown to $404K.
  • 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.

Suggested strategy

Oil prices are pulling back, and the overall market still appears to be in a corrective phase. Consider waiting for a test of the 22.00 ranges. If it tests the 22.00-23.00 ranges on low volume and ends the week on a positive note, then long-term investors can start to commit new capital into this play. In other words, after testing the stated ranges it should close higher or at the worst remain unchanged (not below 22.00) on a weekly basis. One other option would be to sell puts at a price you would not mind owning the stock. If the shares are not assigned to your account, you at least get to keep the premium which can be applied towards future purchases.

Statoil ASA

Levered Free Cash Flow: 10.78B

Growth

  1. Net income for the past three years
  2. Net Income ($mil) 2009 = $2834
  3. Net Income ($mil) 2010 = $6242
  4. Net Income ($mil) 2011 = $14026
  5. EBITDA ($mil) 12/2011 = 47416
  6. EBITDA ($mil) 12/2010 = 31365
  7. EBITDA ($mil) 12/2009 = 29024
  8. Cash Flow ($/share) 12/2011 = 12.70
  9. Cash Flow ($/share) 12/2010 = 4.61
  10. Cash Flow ($/share) 12/2009 = 3.64
  11. Sales ($mil) 12/2011 = 116612
  12. Sales ($mil) 12/2010 = 87435
  13. Sales ($mil) 12/2009 = 73967
  14. Anl EPS before NRI 12/2007 = 2.36
  15. Anl EPS before NRI 12/2008 = 2.44
  16. Anl EPS before NRI 12/2009 = 0.92
  17. Anl EPS before NRI 12/2010 = 1.98
  18. Anl EPS before NRI 12/2011 = 9.83

Performance

  1. Quick Ratio = 1.00
  2. Current Ratio = 1.10
  3. LT Debt to Equity = 0.37
  4. Interest Coverage = 85
  5. ROE 5 year average= 27%
  6. Quarterly revenue Growth = 33%
  7. Retention rate= 78%

Dividend history and sustainability

  1. Dividend Yield= 3.9%
  2. Payout ratio = 22%
  3. Dividend yield 5 year average 3.4%
  4. Dividend growth rate 5 year average = -3.89
  5. Dividend yield 5 year average = 3.4%

Interesting companies

For investors looking for other ideas detailed data has been provided on one additional company. Our latest article could also prove to be a source of some new ideas Linn Energy: Potentially Earn An Extra 7.7% In 7 Months with this idea.

Company: Energy Tran partners (NYSE:ETP)

Levered Free Cash Flow = -543.81M

Brief Overview

  1. Relative Strength 52 weeks = 53
  2. Cash Flow 5-year Average = 4.97
  3. Profit Margin = 23.75%
  4. Operating Margin = 17.56%
  5. Quarterly Revenue Growth = -22.6%
  6. Quarterly Earnings Growth = 350.9%
  7. Operating Cash Flow = 1.31B
  8. Beta = 0.96
  9. Percentage Held by Institutions = 21.8%
  10. Short Percentage of Float = 3.1%

Growth

  1. Net Income ($mil) 12/2011 = 669
  2. Net Income ($mil) 12/2010 = 617
  3. Net Income ($mil) 12/2009 = 792
  4. Net Income Reported Quarterly ($mil) = 1115
  5. EBITDA ($mil) 12/2011 = 1631
  6. EBITDA ($mil) 12/2010 = 1398
  7. EBITDA ($mil) 12/2009 = 1520
  8. Cash Flow ($/share) 12/2011 = 5.67
  9. Cash Flow ($/share) 12/2010 = 5.34
  10. Cash Flow ($/share) 12/2009 = 6.32
  11. Sales ($mil) 12/2011 = 6850
  12. Sales ($mil) 12/2010 = 5885
  13. Sales ($mil) 12/2009 = 5417
  14. Annual EPS before NRI 12/2007 = 3.31
  15. Annual EPS before NRI 12/2008 = 4.09
  16. Annual EPS before NRI 12/2009 = 2.51
  17. Annual EPS before NRI 12/2010 = 1.47
  18. Annual EPS before NRI 12/2011 = 1.48

Dividend history

  1. Dividend Yield = 8.10
  2. Dividend Yield 5 Year Average = 7.9
  3. Dividend 5 year Growth = 1.56

Dividend sustainability

  1. Payout Ratio = 0.75
  2. Payout Ratio 5 Year Average 12/2011 = 1.68

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 12.05
  2. ROE 5 Year Average 12/2011 = 19.14
  3. Current Ratio = 1.10
  4. Current Ratio 5 Year Average = 1.15
  5. Quick Ratio = 0.61
  6. Cash Ratio = 0.19
  7. Interest Coverage Quarterly = 9.33

Conclusion

In general, a great way to get into a stock at a price of your choosing is to sell puts at strikes you would not mind owning the stock at. Investors looking for other ideas might find this article to be of interest Arch Coal: Lock In 30% In Extra Gains Or A Lower Entry price.

Disclaimer

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

Source: Statoil: 1 Of 2 Interesting Long-Term Prospects To Consider

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com.