Statoil Results Show The Price Of Value
Stephen Simpson, CFA
Stephen Simpson, CFA
Statoil: Shares To Remain Weak Short Term, May Interest Long-Term Buyers
Power Hedge • 35 Comments
Power Hedge • 35 Comments
Wed, Jul. 27, 7:58 AM
- Statoil (NYSE:STO) -3.9% premarket after reporting an unexpected Q2 loss of $28M vs. a $929M profit in the year-ago quarter, its first adjusted loss since 2008.
- STO’s adjusted net loss at its international unit tripled to $549M from a year ago, while profit at its Norwegian unit fell to $436M from $705M.
- STO says it will cut full-year capex by 8% to $12B compared with previous guidance, partly due to successful cost cuts, notably a reduction in the average time required to drill an offshore exploration well to 22 days from 46 days three years ago.
- STO's net debt to capital employed rose to 31.2% from 28.1% at the end of Q1 and 22.4% a year ago; the company previously had found unacceptable a reading above 30%, but CEO Eldar Saetre now says he is “comfortable” with it.
Fri, Jul. 22, 11:59 AM
- Statoil (STO -2.5%) is downgraded to Equal Weight from Overweight at Morgan Stanley, as shares have sharply outperformed peers YTD; the firm prefers Royal Dutch Shell (RDS.A, RDS.B) within the space.
- STO's strong showing has left shares trading at a ~5% forward yield, the lowest among the European majors; STO shares historically have traded at a 4%-6% dividend yield with few exceptions, "hence valuation now appears less compelling in both absolute and relative terms," the firm says.
- The pace of project delivery moving forward likely will slow before another wave of startups in H2 2017 into 2018, Stanley says, believing this will limit further upside to consensus free cash flow expectations in the near term; meanwhile, the firm predicts Shell will enjoy a period of strong FCF growth over the next 12 months.
Tue, Jun. 28, 2:29 PM
- Statoil (STO +3.3%) must not attempt to scale back existing labor agreements if it wants to prevent a strike by Norwegian oil and gas workers beginning July 2, says the Industri Energi union, which represents two-thirds of the workers that would strike.
- Three unions said yesterday that 755 Norwegian workers on seven oil and gas fields operated by STO, Exxon Mobil (XOM +1.2%) and Engie (OTCPK:ENGIY) will strike unless a deal on wages and other working conditions is agreed; Reuters says the fields account for ~18% of Norway's combined output of crude oil, natural gas and natural gas liquids.
- XOM and Engie have said a conflict would cut output at the fields they operate, while STO has declined to comment on all aspects of the negotiations.
- Crude oil prices today are ~3% higher, bouncing off their Brexit-fueled selloff, and the threat of the Norway strike is said to be one of the causes.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Thu, Jun. 23, 7:47 AM
- Statoil (NYSE:STO) says 43% of shareholders chose to take their Q4 dividend in shares instead of cash, reducing its cash dividend payout by $292M.
- To free up cash, STO had offered shareholders the chance to take shares instead of a cash dividend in Q4 at a 5% discount to market; some analysts had predicted that a majority of shareholders would choose the scrip dividend, given the discount.
- STO says nearly 18.3M new shares would be issued and delivered to shareholders on June 24.
- STO +4.4% premarket.
Fri, Jun. 10, 8:05 AM
- Statoil (NYSE:STO) -1.9% premarket after saying that a 19-month drilling campaign had found that the size of the Bay du Nord discovery off Newfoundland could be at the lower end of a previous estimate.
- STO says its nine-well drilling campaign confirmed that Bay du Nord's volumes likely are within the 2013 estimate of 300M-600M boe; the company kept the range, but says the recoverable volumes potentially are at the lower end and that it is assessing whether the field is commercial
- STO has a 65% stake in Bay du Nord, while partner Husky Energy (OTCPK:HUSKF) owns 35%.
Thu, Jun. 2, 5:35 PM
Tue, May 31, 11:24 AM
- Statoil (STO -2%) is downgraded to Underperform from Sector Perform at RBC, which believes the company's cash generation will be weaker than its peers and that its significant exposure to European natural gas will prove to be a further headwind.
- RBC says STO continues to drive down its costs in the upstream while also consistently surprising the market with multiple capex reductions, but that the stock's upside potential appears limited given strong YTD gains.
- The firm notes that STO's financial positioning requires crude oil prices near $70/bbl for its current plan to work out in the near term, which remains near the top of its peer group.
Wed, May 25, 10:51 AM
- Norway’s government, seeking enhanced competition in the country’s oil industry, says it wants Statoil (STO +2.1%) and Lundin Petroleum (OTCPK:LNDNF) to remain rivals after the two companies deepened ties earlier this month.
- Norway's state-controlled STO increased its interest in Sweden’s Lundin to 20.1% from 11.9% on May 3, after saying previously it had no plans to do so.
- STO's move has prompted some analysts to suggest the company could be considering a complete takeover of Lundin, although STO CFO Hans Jakob Hegge has reiterated that the company has no plans to further increase its stake.
- Norway's crude output has been chopped in half since 2000 and seeks to attract more companies to compete with STO, which operates more than 70% of the country’s petroleum output.
Mon, May 23, 7:51 AM
- Seadrill (NYSE:SDRL) -3.7% premarket on news that Statoil (NYSE:STO) cancelled its contract for SDRL's semi-submersible West Hercules because of the deferred start-up of a development off Norway.
- The rig had been operating offshore Newfoundland in Canada for the past 18 months, and was to relocate to the Aasta Hansteen field in the Norwegian Sea, but STO is postponing the field start-up by a year until H2 2018.
- The contract for West Hercules was originally due to expire on Jan. 31, 2017.
- Just last week, Exxon Mobil terminated its contract for SDRL's West Capella drillship.
- Now read Another termination for Seadrill and the semisubmersible West Hercules
Mon, May 9, 3:19 PM
- Crude oil prices erased all of Friday's gains and more, as June futures ended the pit session 2.7% lower to $43.55/barrel even as the massive wildfires in the heart of Canada's oil sands continue to spread, albeit more slowly.
- But positioning in the oil market is very stretched, and analysts say speculators already hold the largest number of wagers for a rise in WTI futures since last summer and near-record high bullish bets on Brent, so the scope for further gains was limited without more clarity on the extent of damage to oil facilities or supply outages.
- The sacking of Ali al-Naimi as head of Saudi Arabia’s oil ministry also may be a reason why oil prices failed to maintain early gains, as successor Khalid al-Falih, the former head of Aramco, is expected to follow the strategy of protecting the country’s market share.
- Yesterday, Cnooc’s Nexen (NYSE:CEO) operations to the south of Fort McMurray reportedly suffered minor damage, while Suncor (NYSE:SU) says its facilities have not been damaged and is beginning to implement a plan for a return to operations.
- Other relevant tickers: RDS.A, RDS.B, XOM, IMO, COP, OTCPK:HUSKF, OTCPK:ATHOF, CNQ, CVE, OTCPK:MEGEF, ENB, OTCPK:IPPLF, OTC:KEYUF, TRP, PSX, STO
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, UGA, USL, DNO, OLO, UHN, SZO, OLEM
- Now read Fort McMurray situation getting better - oil markets daily
Tue, May 3, 9:55 AM
- Statoil (STO -2.9%) agrees to pay $68M plus its 15% stake in the Edvard Grieg oil field in the North Sea to Lundin Petroleum (OTCPK:LNDNF) in exchange for an increased stake in the company.
- The deal increases STO's share of the North Sea's Johan Sverdrup oil field, a $13B project estimated to hold up to 3B barrels of crude which has a breakeven of less than $30/bbl for the first phase of the project.
- Following completion of the deal, STO will own ~68.4M shares of Lundin, or 20.1% of the shares and votes.
Mon, May 2, 4:33 PM
- EQT Corp. (NYSE:EQT) -1.7% AH after agreeing to acquire 62.5K net acres and current natural gas production of 50M cfe/day from Statoil (NYSE:STO) for $407M.
- EQT says the deal increases its core undeveloped acreage in the Marcellus Shale by 29%, much of it contiguous with its existing development in the area.
- To fund the deal, EQT says it is launching a public offering of 9.5M common shares, with an underwriters option to purchase up to an additional 1.425M shares.
Mon, Mar. 21, 12:48 PM
- Statoil (STO -1.5%) says it will install a lithium battery based storage system at its Hywind floating wind turbine project off Scotland, which if successful could transform the long-term profitability of offshore wind power.
- The battery package would have a capacity to store 1 MW-hour of electricity, equal to the capacity of ~2M smartphone batteries, but STO says it aims to build larger storage systems in the future.
- Because renewable sources of energy such as sun and wind do not promise a constant stream of power, STO sees storage as vital in a transition to a low-carbon, renewable future; a recent report from the Carbon Trust found that energy storage has the potential to save £2.4B/year ($3.46B) by 2030.
Thu, Mar. 17, 10:55 AM
- Statoil (STO +2.6%) expects to bring the average cost of new fields in its portfolio to a level below $40/bbl, CFO Hans Jacob Hegge tells Reuters.
- STO said last month that extensive cost cuts had brought the breakeven cost of projects set to start production by 2022 down to $41/bbl from $70 in 2013, and "if you look at the pace of our cost reductions, I think one could be very clear that we have not reached the final station yet... there is more to go," the CFO says.
- In addition to cutting its capital spending plan to $13B this year from $14.7B in 2015, STO also has set a cost cutting target of $2.5B on an annual basis.
Mon, Mar. 7, 8:58 AM
- Statoil (NYSE:STO) says it will end its contract with a drilling rig operated by China Oilfield Services, three months after a worker died when the rig was hit by a wave during a storm in the North Sea.
- STO says contract was not ended due to the fatality, but because the rig did not satisfy conditions stipulated in the contract, but the company does not specify which conditions.
- STO says the decisions to terminate one rig contract and suspend another may have short-term consequences for planned drilling activities at the giant Troll field, but will not impact the field's long-term production; Troll is the cornerstone of Norwegian natural gas production, and contains ~40% of the country's total gas reserves.
- COSL says it “strongly disagrees" with STO’s decision and may take legal action.
- STO -2.5% premarket.
Wed, Feb. 17, 11:58 AM
- Statoil (STO +6.1%) says it will invest as much as $200M in renewable energy over the next 4-7 years as part of CEO Eldar Saetre’s plan to diversify the company’s portfolio.
- A new fund, Energy Ventures, will take a minority stake in startups developing technologies including wind power, energy storage and smart grids, STO says.
- Saetre set up a renewable energy unit in May, three months after becoming CEO, saying he wanted to expand into renewable sources beyond wind power.
Statoil ASA explores, produces, transports, refines and markets petroleum and petroleum-derived products. The company operates through four segments: Development & Production Norway, Development & Production International, Marketing Processing & Renewable Energy and Other. The Development &... More
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Industry: Major Integrated Oil & Gas
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