Statoil Profit Rises More Than Expected on Higher Oil Prices
Statoil ASA (STL), Norway’s largest oil and gas company, said second-quarter profit rose more than expected as gains in crude prices compensated for lower production.
Net income attributable to shareholders climbed to 27 billion kroner ($5 billion), or 8.44 kroner a share, from 3.6 billion kroner, or 1.14 kroner, a year earlier, the Stavanger- based company said today in a statement. That beat the 20.5 billion-krone average estimate of analysts surveyed by Bloomberg. Sales advanced to 159.5 billion kroner.
“Statoil delivered record net income in the second quarter,” Chief Executive Officer Helge Lund said in the statement. “We continued to make progress within exploration and project developments in the quarter, staying on track to deliver future growth.”
Earnings of energy producers have been buoyed by rising prices. Brent crude futures averaged $117 a barrel in the second quarter, compared with $79 a year earlier. Houston-based ConocoPhillips yesterday reported second-quarter net income of $3.4 billion, exceeding estimates, while Royal Dutch Shell Plc, Europe’s biggest oil company, posted a doubling of profit today.
Statoil got $112.1 per barrel in the second-quarter, compared with $74.1 a year prior, while its average gas price rose to 2.05 kroner per standard cubic meter, up from 1.61 kroner.
Statoil’s output fell 13 percent to 1.692 million barrels of oil equivalent a day from 1.957 million barrels a year earlier. Entitlement production dropped to 1,486 million barrels a day, from 1,765 million a year prior.
The company reduced production at the North Sea Gullfaks oil and gas field after shutting 50 wells because of safety concerns in 2010. The Njord and Visund fields were temporarily suspended in the quarter following damage to flexible risers. Cuts to permitted production at the Troll and Ormen Lange gas deposits, as well as maintenance shutdowns, also hurt output.
“The main reasons for the lower production are seasonally lower gas production in Norway, as well as planned maintenance,” Teodor Nilsen, an analyst at First Securities ASA who recommends buying Statoil stock, said in a July 13 note.
Statoil’s gas output fell 24 percent to 593,000 barrels of oil equivalent a day in the second quarter from a year earlier, it reported today. “Commercial considerations related to gas sales activities” may impact the company’s output guidance for 2011, which is forecast to be slightly below last year’s production level of 1.888 million barrels a day, it said.
The company is delaying gas sales amid the slump in prices, Lund said at a press conference in Oslo today.
“Overall a miss for Statoil today,” Oswald Clint, an analyst at Sanford C. Bernstein & Co. with an “underperform” rating on the stock, said in a report today. “While it is due to weakness in the downstream business, the continued trend of weak production numbers remains a key focus for us. Reduced production permits, reduced water injections, continual maintenance, production sharing contract effects, and natural declines are all recurring effects and are not going away.”
Statoil’s shares were little changed, gaining 0.5 percent to 134.9 kroner as of 3:08 p.m. in Oslo, capping this year’s decline at 2.7 percent. The benchmark OBX Index fell 0.3 percent to 385.630.
The producer last year agreed to sell a 40 percent stake in Brazil’s offshore Peregrino field to China’s Sinochem Group for $3.07 billion, a deal approved by the authorities in the second quarter. Lund declined to specify what the returns from the Peregrino sale would go toward.
“In our business it’s sensible to have a certain financial flexibility to act on good opportunities,” Lund said in an Oslo interview. “If you look at the industry on the whole, the large companies are more concerned with their balance sheet because there’s considerable uncertainty and volatility that speaks in favor of having strong balances.”
The company, which has operating rights on about 80 percent of Norway’s oil and gas output, is growing in countries including Canada and the U.S. as Norwegian reserves dwindle. Norway’s crude production peaked in 2000 and is forecast to drop 6 percent this year to about 1.7 million barrels a day, according to the nation’s Petroleum Directorate.
In February, Statoil forecast output will grow an annual 3 percent on average over the next two years to about 2 million barrels of oil equivalent a day, below a former target of 2.06 million to 2.16 million barrels.
Statoil said last month it expects production to grow to more than 2.5 million barrels a day in 2020 as it expands projects in the Gulf of Mexico, Brazil and Angola. The company will spend $16 billion on exploration, drilling and production in 2012, on par with this year. Statoil expects to drill 20 to 25 high-impact wells in 2011 to 2013, it said June 20.
To contact the reporter on this story: Marianne Stigset in Oslo at email@example.com