Statoil Deepens Spending Cuts
Published in Oil Industry News on Friday, 6 February 2015
Statoil
ASA deepened cost cuts and halted dividend growth as Norway’s biggest
energy company struggles to withstand a plunge in oil prices.The company will raise spending cuts by 30 percent to $1.7 billion from 2016 and lower capital expenditure to $18 billion this year from an earlier target of $20 billion, the Stavanger-based company said.
The company scrapped a policy of raising dividends for the time being. It proposed to pay 1.8 kroner a share for the fourth quarter and a “flat dividend” in the first three quarters of 2015. In total today’s measures provide a cash improvement of $5 billion, the company said.
“It is a very competitive dividend,” Eldar Saetre, Statoil’s chief executive officer, said in an interview on Bloomberg TV. “The flat dividend is reflective of the current environment.”
Statoil reported fourth-quarter net operating income of 9 billion kroner ($1.2 billion), down from 43.9 billion kroner a year earlier. That missed an estimate of 26.3 billion kroner in a Bloomberg survey of analysts because of writedowns in the value of assets, Statoil followed competitors including Royal Dutch Shell Plc and Chevron Corp. in cutting billions of dollars in investments. They are seeking to protect profits after oil prices slumped by more than 50 percent in the second half of last year, in the biggest drop since 2008.
Capital Expenditure
“The miss to earnings was mainly driven by higher exploration expenses in the international segment,” Biraj Borkhataria, an analyst at RBC Capital Markets, said in a note to clients. The cuts to capital expenditure were slightly deeper than expected, he said.
Statoil shares rose as much as 2.9 percent to 143.7 kroner in Olso and traded at 141.7 kroner at 10:35 a.m. local time.
The company sees “organic” production growth of 2 percent to 2016 and 3 percent from 2016 to 2018.
Adjusted net income fell to 4.3 billion kroner from 11 billion kroner a year earlier.
Statoil a year ago already abandoned production-growth targets and reduced spending plans for the three years through 2016. It also started a sweeping program to lower costs, cutting employees and causing job losses across Norway’s oil industry.
Statoil is working closely with unions to carry out further job cuts, Saetre said in London today.
Prime Minister Erna Solberg said earlier this year that the government is “on alert” to provide stimulus should it be needed to support the economy of western Europe’s biggest oil producer.
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Statoil’s production rose to 2.103 million barrels of oil equivalent a day from 1.945 million barrels a year earlier.
“The increase was mainly due to start-up and ramp-up of production on various fields and higher production regularity compared to the same period last year,” the company said.
Source: www.bloomberg.com