Statoil ASA, Norway’s biggest energy company, reported its first quarterly loss since listing in 2001 after writing down the value of an oil-sands project in Canada and struggling with plunging crude prices.
The net loss was 4.7 billion kroner ($727 million) compared with a profit of 14.3 billion kroner a year earlier, the Stavanger-based company said today. Adjusted net income, which excludes financial items, fell to 9.1 billion kroner from 12.1 billion kroner, missing the 9.3 billion-kroner average of 17 analyst estimates compiled by Bloomberg.
Statoil’s first quarterly loss was reported just two weeks after its chief executive officer of 10 years, Helge Lund, unexpectedly resigned to join smaller U.K. rival BG Group Plc. Impairments of 13.5 billion kroner in the quarter came after the postponement of the Corner project in Alberta last month amid mounting costs and after exploration failures in the Gulf of Mexico and Angola. The oil-sands writedown was about 8.1 billion kroner, according to acting CEO Eldar Saetre.
“Although a negative IFRS result is close to sensational, we think substantial impairments on particularly the oil sand assets have been expected by the market,” Teodor Sveen Nilsen, an analyst at Swedbank AB, said in an e-mailed note to clients.
Statoil fell as much as 2.5 percent in Oslo trading and was down 0.6 percent at 154.4 kroner as of 10:17 a.m.
Industry Trend
Lower profits at Statoil reflect an industrywide trend as France’s Total SA and the U.K.’s BP Plc and BG reported a decline in earnings this week. Oil prices have plunged about $30 from a $115 a barrel high in June as global supply, boosted by U.S. shale production, outpaces demand. Benchmark Brent crude averaged $103.6 a barrel in the third quarter, 7 percent lower than a year earlier.
“The results were of course impacted by the weak oil and gas markets we’ve seen lately,” Statoil’s Saetre said in his presentation in Oslo. “Our negative net income in accordance with IFRS relates to quarter-specific items. We delivered strong operational performance and cash generation in the quarter.”
Statoil got an average of $91.2 a barrel for oil in the third quarter, down from $102.9 a barrel year ago. Its internal gas price fell to 1.20 krone a cubic meter from 1.78 krone, it said earlier on its website.
Cutting Costs
The company, 67 percent owned by the state, has vowed to maintain a strategy of cutting costs to raise shareholder returns under Lund’s successor. Statoil this year scrapped earlier production-growth targets, cut planned spending and started implementing an efficiency program in a bid to cover investments and dividends with cash from operations by 2016.
“Today’s oil price is yet another reminder of the importance of driving our improvement agenda indefatigably,” Saetre said.
Investments in 2015 and 2016 could be lower than a planned average of $20 billion after asset sales reduced spending commitments, Saetre said in an interview. Statoil still plans to invest $20 billion this year, it said.
Statoil will pay a dividend of 1.8 krone a share for the quarter, as indicated earlier, and its policy of rising dividends stands firm, Saetre said.
Statoil’s production of oil and gas fell to 1.829 million barrels of oil equivalent a day in the third quarter from 1.852 million barrels a year earlier as capacity was reduced through asset sales, including a $2.65 billion deal with OMV AG and a $1.45 billion divestment in Azerbaijan’s Shah Deniz project last year. Production beat the average estimate of 1.796 million barrels in a survey of 26 analysts conducted by the company itself and released last week.
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