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Statoil ASA: 2017 second quarter and first half results

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Oilfield Technology,

Statoil reports adjusted earnings of US$3.0 billion and adjusted earnings after tax of US$1.3 billion in the second quarter of 2017. IFRS net operating income was US$3.2 billion and the IFRS net income was US$1.4 billion.

The second quarter was characterised by:

  • Solid earnings and strong cash flow. Net debt ratio [5] reduced to 27.5%
  • Good operational performance and high regularity. Around 5% production growth expected in 2017.
  • Project deliveries and efficiency improvements on track.

"Our solid financial results and strong cash flow are driven by good operational performance with high production efficiency and continued cost improvements. At oil prices around US$50/bbl, we have generated 4 billion dollars in free cash flow, and reduced our net debt ratio by 8.1% points since the start of the year. We expect to deliver around 5% production growth this year, and at the same time realise an additional one billion dollars in efficiencies," says Eldar Sætre, President and CEO of Statoil ASA.

"Together with the supplier industry, we continue to make strong progress on project development and execution. Gina Krog has started production, and we are progressing Johan Sverdrup and other important projects like Aasta Hansteen, Mariner, Oseberg Vestflanken, Peregrino II, Dudgeon and Hywind. On the NCS, we have received approval for three new projects and submitted one additional plan for development," says Sætre.

"So far this year, we have drilled 14 exploration wells and made nine discoveries. Several of these can quickly be put into profitable production. Our exploration programme in the Barents Sea started with the Kayak discovery and gives us the opportunity to test several new prospects. We expect to drill around 30 exploration wells in 2017. Based on strict prioritisation and efficient drilling operations we are able to reduce our guidance for exploration spending this year to around US$1.3 billion," says Sætre.

Adjusted earnings were US$3.023 billion in the second quarter, up from US$0.913 billion in the same period in 2016. Adjusted earnings after tax were US$1.289 billion in the second quarter, up from negative US$0.028 billion in the same period last year. Higher prices for both oil and gas, solid operational performance with high production, a reversal of provisions in Angola of US$0.754 billion and continued progress on improvement work contributed to the increase.

IFRS net operating income was US$3.244 billion in the second quarter compared to US$0.180 billion in the same period of 2016. IFRS net income was US$1.436 billion, up from negative US$0.302 billion in the same period last year.

Statoil delivered equity production of 1 996 000 boe per day in the second quarter, an increase from 1 959 000 boe per day in the same period in 2016. The increase was primarily due to strong operational performance, increased gas offtake and ramp-up of new fields. Excluding portfolio changes, the underlying production growth was 3% compared to the second quarter last year.

Adjusted exploration expenses in the quarter were US$0.224 billion, down from US$0.423 billion in the second quarter of 2016.

Cash flows provided by operating activities in the first half of 2017 amounted to USD 9.931 billion compared to US$3.349 billion for the same period last year. Organic capital expenditure was US$4.5 billion in the first half of 2017. At the end of second quarter, net debt to capital employed [5] was reduced to 27.5%.

The board of directors has decided to maintain a dividend of US$0.2201 per ordinary share for the second 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 0.8 for the twelve months ended 30 June 2017, compared to 0.7 in the same period a year ago.

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