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Statoil ASA: 2017 Third Quarter & First Nine Months Results


Statoil (OSE:STL, NYSE:STO) reports adjusted earnings of USD 2.3 billion and USD 0.8 billion after tax in the third quarter of 2017. IFRS net operating income was USD 1.1 billion and the IFRS net income was negative USD 0.5 billion.

The third quarter was characterised by:

  • Solid earnings and underlying cash flow. Stable net debt ratio [5] at 27.8%
  • Good operational performance. Expected production growth [7] in 2017 increased to around 6%
  • Project deliveries and efficiency improvements on track. Capex guidance reduced to around USD 10 billion for 2017

"Our solid earnings and underlying cash flow from operations are driven by good operational performance with high production and continued efficiency improvements. In the quarter, we delivered 15% production growth and 11% reduction in underlying operating cost per barrel. In addition, we see strong contribution from our liquids trading and refining business," says Eldar Sætre, President and CEO of Statoil ASA.

"With an oil price below 52 dollars per barrel, we have generated 3.6 billion dollars in free cash flow so far this year, based on good contributions from all business segments. This has further strengthened our financial position," says Eldar Sætre.

"We continue to realise efficiency improvements and deliver strong progress on project development and execution. We reduce our organic capex guidance for 2017 by 1 billion dollars, to around 10 billion dollars. This is the result of hard work from the organisation, in close collaboration with our suppliers and partners, and strict capital discipline. We are getting more for less," says Eldar Sætre.

Adjusted earnings [5] were USD 2.3 billion in the third quarter, up from USD 0.6 billion in the same period in 2016. Adjusted earnings after tax [5] were USD 0.8 billion in the third quarter, up from negative USD 0.3 billion in the same period last year. Higher prices for both oil and gas, solid operational performance with high production, strong liquids trading and refinery margins contributed to the increase.

IFRS net operating income was USD 1.1 billion in the third quarter compared to USD 0.7 billion in the same period of 2016. Net operating income was impacted by net impairments charges of USD 0.8 billion, mainly related to an unconventional onshore asset in North America of USD 0.9 billion, triggered by lower than expected production. IFRS net income was negative USD 0.5 billion, down from negative USD 0.4 billion in the same period last year.

Statoil delivered equity production of 2,045 mboe per day in the third quarter, an increase from 1,805 mboe per day in the same period in 2016. The increase was primarily due to increased flexible gas production due to higher prices, lower turnaround activity, ramp-up of new fields, additional well capacity, and continued strong operational performance. Adjusted for portfolio changes, the underlying production growth was 15% compared to the third quarter last year.

Adjusted exploration expenses in the quarter were USD 0.4 billion, down from USD 0.6 billion in the third quarter of 2016.

Cash flows provided by operating activities before tax amounted to USD 14.9 billion in the first nine months of 2017 compared to USD 9.9 billion for the same period last year. Organic capital expenditure was USD 6.7 billion in the first nine months of 2017. At the end of third quarter, net debt to capital employed [5] was 27.8%.

The board of directors has decided to maintain a dividend of USD 0.2201 per ordinary share for the third quarter and continue the scrip programme this quarter giving shareholders the option to receive the dividend in cash or newly issued shares in Statoil at a 5% discount.

The twelve-month average Serious Incident Frequency (SIF) was 0.7 for the twelve months ended 30 September 2017, compared to 0.8 in the same period a year ago.

With effect as of the third quarter 2017, segment names have been changed for the reporting segments DPN and DPI. New names are Exploration and Production Norway (E&P Norway) and Exploration and Production International (E&P International), respectively. There are no changes to other reporting segments, and operating segments' names remain unchanged.


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