Statoil Shares Surge After Quarterly Profit Jumps Almost Tenfold

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Statoil ASA, Norway’s biggest oil and gas producer, rose the most in five months after first-quarter profit climbed on higher output amid recovering crude prices and as it deepened cost cuts to emerge from a downturn that has battered the industry for more than two years.

The shares rose as much as 3.7 percent, the most since Dec. 12, and were up 2.9 percent as of 9:29 a.m. in Oslo, making it the biggest gainer on the Stoxx Europe 600 Oil & Gas Index. The stock has dropped 8.1 percent so far this year.

Adjusted earnings after tax, a measure that excludes financial and other items, rose to $1.1 billion from $122 million a year earlier, the Stavanger-based company said in a statement Thursday. That beat the average forecast of $736 million in a Bloomberg survey of analysts.

Statoil broke a streak of three consecutive quarters of adjusted losses that took the market by surprise, benefiting from an almost 60 percent jump in the price of benchmark Brent crude. The company joins larger competitors such as Total SA and BP Plc to enjoy a resurgence as cost cuts over the past years started having an effect.

“We’re heading to a rebalancing of the market,” Eldar Saetre, Statoil’s chief executive officer, said in an interview in Oslo. “Our best estimate is that during the second half of this year we will enter a period of rebalancing and of stock adjustments.”

Saetre has enacted some of the deepest investment cuts among the big international oil companies to make it through the downturn without having to lower dividends. After slashing spending by half since 2014 to $10 billion last year, Statoil repeated it expects to invest about $11 billion in 2017 as it keeps looking for savings in operations and development projects.

The company signaled earlier this year it’s now ready to start investing again, with spending seen between $12 billion and $14 billion annually in the 2018 to 2020 period. Statoil has reduced the break-even price for new projects to $27 a barrel it said in February. In the shorter term, it’s now able to fund investments and dividends with cash from operations with oil trading at $50 a barrel.

Prices Rise

Statoil said it achieved a an average liquids price of $49 in the first quarter, up 70 percent from a year earlier. Its net debt ratio was reduced to 30 percent from 35.6 percent.

Statoil said Thursday it would hand shareholders a 22 cents dividend a share, as expected, payable in cash or discounted shares.

The company produced 2.146 million barrels of oil equivalent in the first quarter, up from 2.054 million a year ago. That compared to a forecast of 2.096 million in a poll of 28 analysts published by the company itself ahead of the results.

Equity production is anticipated to rise about 4 percent to 5 percent this year from a year earlier, the company said. It also sees a compound annual growth rate of about 3 percent in organic production growth in 2016 to 2020.

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