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- Shares of Statoil are down 24% YTD and 40% from the June highs.
- Yet the Q3 loss was an impairment driven event. The Euro gas market may be more of a long-term concern.
- Meantime, US shale operations are showing improving productivity yet equate to ~12% of total production.
- In the Gulf of Mexico, first-oil was announced from Jack/St. Malo, but overshadowed by lower oil prices.
- STO is a HOLD for the dividend with little reason to get excited about it in the near term.
Update: As I Said Statoil's Near-Term Headwinds Make The Story Less Compelling
- There was nothing surprising in the company’s quarterly results.
- Replacing Helge Lund will be difficult for Statoil.
- Statoil’s high leverage to European gas prices and oil prices also present downside risk to the share price.
Statoil's New Gas Discovery Strengthens Company's Position To Be A Major Supplier To Growing Asian Markets
- Statoil recently made its seventh major discovery in the gas-rich block 2 region offshore Tanzania.
- Tanzania is ideally positioned to ship natural gas to Southeast Asia.
- Several countries in Southeast Asia are likely to greatly increase their imports of natural gas over the next two to three decades.
- Statoil has sufficient gas reserves in the country to become a major supplier to these countries.
- The company is currently constructing the needed infrastructure to take advantage of this trend.
What Does The Agreement With Naftogaz Mean For Statoil?
- Russia, Ukraine’s main gas supplier, had signed a deal to supply gas at $480 per 1,000 cubic meters of gas, via Gazprom.
- Ukraine resorts to importing gas from other European countries such as Hungary, Slovakia and Poland. It was learnt that these countries divert their gas supplies received from Russia, to Ukraine.
- Naftogaz has signed a deal with Statoil for low volume of gas supplies at $385 per 1000 cubic meters of gas.
- It is believed that this deal will have no long term ramifications mainly because it is short term and low volume.
- Statoil has corrected by 24% from its 2014 peak and the correction is a buy opportunity.
- The company's primary focus is the NCS where Statoil has some excellent long-term assets.
- Cash flow from US onshore and through divestment of non-core assets will help fund the big Johan Sverdrup development.
- Statoil should deliver strong organic FCF growth in the next two years;
- However, the company faces several headwinds in the near-term;
- Weak European gas prices, higher exploration expense and higher DD&A from recent startups are likely to weigh on results.
- Statoil’s fields Fram H North and Svalin C’s have commenced production. According to estimates Fram H-North has 10 million barrels of recoverable oil. Svalin C has 30 million barrels.
- Statoil and partners announced the commencement of oil and gas production from their Gudrun field in the North Sea as well.
- Statoil has also signed a deal with Xcite Energy Ltd and EnQuest Heather Ltd to share information regarding their field specific technical activities and operations.
- The company needed this considering that the financial results for the second quarter were weak.
Statoil, The Cheapest Oil Major, Is Looking Super Attractive
- Statoil has just sold another asset for $1.3 billion.
- Statoil has built significant positions in three major U.S. shale plays.
- Statoil’s real strength, however, lies somewhere else.
Statoil Has Capitalized On Russian Sanctions With Lithuanian LNG Deal
- Sanctions on Russia have pressed Vilnius into action as STO has entered the Lithuanian natural gas arena.
- STO would be delivering 540 million cubic meters worth of gas to the LNG terminal in Klaipėda every year.
- The current oil and gas production of STO is comparable with the 80s.
- The oil and gas giant missed earnings estimates for 2Q by over 5%.
- We are still bullish on Statoil’s long-term prospects given its technology and solid dividend.
- We didn’t anticipate the slight earnings miss, but believe the market has overreacted.
- STO is the dominant producer on the lucrative Norwegian Continental Shelf.
- STO's international production is overwhelmingly in stable nations like Angola and the United States.
- FY2013 earnings were unusually low, but new wells are coming on line in 2014 that will increase production.
- Statoil missed analyst profit expectations as management chose to curtail production in the face of lower prices.
- A goodwill impairment charge for the U.S. unconventional assets doesn't help the asset quality argument, but high-impact exploration results later this year could change the tone.
- Statoil continues to trade at a low relative multiple, but even a 3.0x multiple to 12-month EBITDA supports a $32 stock and execution should lead to a multiple re-rating.
Statoil: Excellent Q1 Trounces Estimates; Here Come The Dividends
- First quarter earnings blowout due in part to a doubling in US gas prices this winter.
- 2013 annual dividend coming; quarterly dividends begin.
- Raising my 12-month price target (again) to $33.
- Statoil is a major oil company offering good growth prospects over the next few years due to its successful exploration history.
- It has a better risk profile than other oil & gas companies, due to low exposure to refining margins in Europe and low geo-political risk exposure.
- A dividend yield above 4% and a cheap valuation compared to peers makes Statoil a compelling investment opportunity.
Statoil: Attractive Valuations Coupled With Reduced Government Stake To Provide Shareholder Value
- Reassessing their assets to increase margins due to limited commodity upside.
- Government looking to reduce stake to ~51%.
- Solid 3.2% yield with very attractive valuations.
Wed, Oct. 15, 4:37 AM
- Statoil(NYSE:STO) Chief Executive Helge Lund has left the Norwegian energy company after ten years in the post to take the top position at U.K. peer BG Group (OTCPK:BRGXF), which has been without a CEO since March.
- BG Chairman Andrew Gould hailed Lund's track record. "He has built a world-class exploration and production portfolio at Statoil," Gould said. During his tenure, Statoil's market capitalization increased to over over 500B Norwegian kroner ($85B) from 189B kroner.
- Lund will start his new position in March.
- Statoil has appointed company veteran Eldar Sætre as acting CEO with immediate effect.
- Statoil's shares are -2.6% in Oslo, while BG Group is +1.2% in London.
- Statoil PR, BG Group PR
Tue, Oct. 14, 7:42 AM
- Statoil (NYSE:STO) says it has discovered 1.2T cf of natural gas, or 216M boe, in the Giligiliani-1 well of the Block 2 area offshore Tanzania.
- STO is the operator of the license, on behalf of the Tanzania Petroleum Development Corp., with a 65% working interest, while partner Exxon Mobil (NYSE:XOM) holds 35%.
- It is the joint venture's seventh discovery in the Block 2 area.
Mon, Oct. 13, 3:50 AM
- Norway's Statoil (NYSE:STO) has sold its remaining 15.5% holding in the Shah Deniz gas project in Azerbaijan and other assets to Malaysia's Petronas (OTC:PNADF) for $2.25B.
- The transaction also includes stakes in a South Caucasus pipeline company and two other firms.
- The deal is the latest in a series of sales by Statoil and other major oil companies, and since 2010, the Norwegian firm has offloaded $20B worth of assets.
- "(The) Shah Deniz divestment is yet another sign of credible strategy, (and is) positive," says Swedbank analyst Teodor Sveen Nilsen.
- The Shah Deniz field is operated by BP (NYSE:BP), with other partners including Lukoil. (PR)
Fri, Oct. 10, 9:53 AM
- Statoil (STO -1.3%) is preparing to drill a final exploration well in the Barents Sea this year after disappointing results in its efforts to unlock Arctic resources.
- STO will move the Transocean Spitsbergen rig to the Saturn prospect after its Isfjell well resulted in a relatively small gas discovery; Isfjell is estimated to hold 1B-2B cubic meters of natural gas.
- Most Barents Sea gas finds are considered uncommercial as the area lacks infrastructure to bring the fuel to market.
Thu, Oct. 9, 3:25 PM
- Crushed by relentless anxiety about oversupply and weakening global demand, Nymex crude oil futures closed down $1.54 at $85.76/bbl, their lowest close since Dec. 2012, while Brent crude fell below $90/bbl for the first time in more than two years.
- Including today's losses, WTI crude is down 6.2% since the start of the month and Brent has surrendered ~5%.
- In the face of surging output, a move in WTI below its 10-year average at $82 is not out of the realm of possibility, Brown Brothers Harriman says, adding that "a break of $73/barrel could send WTI toward $64, which corresponds with the 2010 low."
- Among big oil names so far today: APC -6.3%, LINE -4.6%, EPD -3.8%, DVN -3.8%, MRO -3.6%, HES -3.8%, KMI -3.7%, TOT -3.5%, STO -3.3%, RDS.A -3.1%, OXY -3%, KMP -3%, XOM -2.6%, COP -2.6%, MUR -2.6%, CVX -2.5%, BP -2.4%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, ERY, XOP, DIG, BNO, DTO, DBO, DUG, IYE, XES, IEO, CRUD, IEZ, PXE, USL, UWTI, PXJ, FENY, DNO, DWTI, RYE, FXN, SZO, OLO, DDG, OLEM, TWTI
Thu, Oct. 9, 9:56 AM
- Global oil producers open broadly lower as oil prices continue to slide on concerns about high supplies and weak global economic growth (also): RDS.A -2.7%, STO -2.7%, TOT -2.5%, HES -2%, APC -1.7%, BP -1.6%, CVX -1.5%, COP -1%, XOM -0.8%.
- Brent prices slump to $91/bbl, approaching two-year intraday lows, and Nymex crude tumbles to $86.67/bbl to an 18-month intraday low.
- The EIA said yesterday that U.S. crude supplies rose by a more than expected 5% last week, while gasoline and distillate inventories unexpectedly grew as well.
- Barclays is cutting its oil price forecasts: It now sees U.S. crude averaging $85/bbl in Q4 and $89 in 2015, down from previous estimates of $98 in Q4 and $100 next year, and Brent crude averaging $93/bbl in Q4 and $96 in 2015, down from a respective $106 and $107 previously.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, ERY, XOP, DIG, BNO, DTO, DBO, DUG, IYE, IEO, CRUD, PXE, USL, UWTI, PXJ, FENY, DNO, DWTI, RYE, FXN, SZO, OLO, DDG, OLEM, TWTI
Tue, Sep. 30, 3:07 PM
- Royal Dutch Shell (RDS.A, RDS.B) and Statoil (NYSE:STO) say they won blocks in an Algerian oil and gas bidding round, the first since a deadly terrorist attack at a gas plant in Jan. 2013.
- A consortium between Shell, Algeria's state-owned Sonatrach and Spain's Repsol (OTCQX:REPYY, OTCPK:REPYF) - the operator - won an oil and gas exploration license, while STO was awarded another block, also in partnership with Shell and Sonatrach.
- Algeria has struggled to attract foreign investment to its oil sector in recent years amid security fears; a French hostage was killed in the country just last week.
Mon, Sep. 29, 11:19 AM
- West Virginia is ready to let companies drill for oil and natural gas deep beneath 14 miles of the Ohio River, as state officials opened bids Friday as it seeks a substantial revenue stream at a time of tight budgets.
- Environmentalists re alarmed at the proposal, since it would allow drilling a mile beneath a river that provides drinking water to millions of people.
- Magnum Hunter (NYSE:MHR), Noble Energy (NYSE:NBL), Gastar Exploration (NYSEMKT:GST) and Statoil (NYSE:STO) submitted bids with 20% royalty rates; state officials plan to pick winners in the next week or two.
Fri, Sep. 26, 8:53 AM| 2 Comments
Thu, Sep. 25, 5:38 PM
- Statoil (NYSE:STO) says it is postponing work on its Corner field project in the Canadian oil sands by at least three years, citing rising costs.
- STO says the decision does not affect its Leismer operations, with capacity of 20K bbl/day.
- Alberta oil sands producers have struggled with rising costs because of labor shortages and difficulties in getting equipment.
Wed, Sep. 24, 8:55 AM
- Masdar Abu Dhabi Future Energy agrees to buy half of Statoil’s (NYSE:STO) stake in the 402 MW Dudgeon wind project off the coast of eastern England.
- The purchase will leave Masdar with a 35% stake in the project valued at £525M ($860M); STO, which will operate the plant, retains a 35% stake.
- Britain is the biggest offshore wind market, with more installed turbines at sea than the rest of the world put together.
Mon, Sep. 22, 6:12 PM
- Six global energy companies - including Southwestern Energy (NYSE:SWN), Statoil (NYSE:STO), Eni (NYSE:E) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY) - reportedly have agreed to work to reduce emissions of methane in partnership with more than a dozen national governments through a new United Nations framework.
- Officials from the UN and governments that back curbing emissions are increasingly looking to push companies and emerging economies to take voluntary steps to reduce emissions, since the international community has failed to adopt strict binding regulations.
Mon, Sep. 22, 5:42 PM
- Norway's government says it will outline plans next spring regarding the electrification of the $20B Johan Sverdrup oil field in the North Sea.
- But it does not say what it would propose about the timetable for providing power from land to the field, after the Norwegian oil directorate agreed with joint operator Statoil (NYSE:STO) in saying it would not be possible to provide power from land to the giant field before it starts producing oil in 2019 without significantly delaying its development.
- The project was thrown in doubt earlier this year when opposition political parties called for the use of electricity from shore rather than generating it on the platforms with natural gas or diesel.
Wed, Sep. 17, 9:49 AM
- Statoil (STO -0.4%) says overcapacity in its rig portfolio will cause it to temporarily suspend the COSL Pioneer rig in Q4.
- The rig is currently carrying out an assignment on the Visund field, where it is scheduled to complete work at the end of this month.
- STO says the move will have no impact on its production targets or planned exploration activity on the Norwegian shelf, where STO still expects to drill 20-25 exploration wells in 2014.
Fri, Sep. 12, 4:54 AM
- Statoil (NYSE:STO) is selling stakes in a number of oil and gas fields and a pipeline project to Germany's Wintershall (OTCQX:BASFY) for $1.25B in cash, plus another $50M if certain goals are met.
- "This transaction focuses our Norwegian continental shelf portfolio and further improves our capacity to invest in core areas," says Statoil President Arne Sigve Nylund.
- Statoil has divested more than $18B in assets since 2010, and plans to invest $20B annually between 2014 and 2016.
Wed, Sep. 10, 5:56 PM
- Statoil (NYSE:STO) says it will expand the use of technology that allows it to power equipment with natural gas that it otherwise would burn off, in an effort to address an ongoing challenge facing producers in the Bakken.
- When Bakken producers extract crude oil from the ground, they also get natural gas, but they often flare the gas instead of trying to ship it or sell it because gas prices are low and transportation infrastructure in the area is lacking.
- STO says the expanded program will enable it to capture 3M-5M cf/day of natural gas.
- STo is working with GE and others in developing the technology, which has been tested in North Dakota for eight months; the companies say the expansion marks the first step toward wider commercial adoption across the energy industry.
STO vs. ETF Alternatives
Statoil ASA is an integrated oil and gas company. It explores, produces, transports, refines, and markets petroleum and petroleum-derived products. It has operations in Norway, rest of Europe, and North America.
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