OSLO: Statoil reported its highest quarterly profit in more than three years on Wednesday but its domestic unit and refining business missed expectations, knocking shares in Norway’s biggest company.
Higher oil prices and output helped power a 33 percent rise in adjusted operating profit (EBIT) to $4.4 billion, its highest since the third quarter of 2014, but below the $4.6 billion forecast by analysts polled by Reuters.
Statoil shares were down 2.2 percent at 0729 GMT, lagging a European oil and gas index down 1 percent.
“The cash flow from operating activities was very strong and above 7 billion dollars in the quarter. We have reduced our net debt ratio from 29.0 percent (in Q4 2017) to 25.1 percent,” Chief Executive Eldar Saetre said in a statement.
Statoil’s adjusted net interest-bearing debt fell by $2 billion to $14.3 billion at end of March from end-2017.
The company said in February its near-term priority was to use cash flow to strengthen its balance sheet, aiming to have a net debt ratio of between 15 and 30 percent, before starting to buy back shares to return more money to shareholders.
Saetre told a news conference on Wednesday that he saw “emerging scope for share buybacks”, but he declined to say when the company could might start buying.
However, analysts at Bernstein brokerage said in a note that the fall in gearing “suggests their earlier teaser of ‘scope for buybacks is emerging’ is firmly on the cards.”
Statoil said first-quarter equity production rose to 2.18 million barrels of oil equivalents per day (boepd) from 2.15 million boepd a year earlier, with international production hitting a record high of 800,000 boepd, mainly due to new US wells.
The increase was partly offset by lower output from the Norwegian continental shelf, with Statoil’s domestic division posting $3.4 billion in adjusted earnings, below forecasts of $3.5 billion.
The average gross margins at Statoil’s two refineries were down 30 percent, also weighing on the operating results.
The company, however, repeated its 2018 guidance, including for annual production growth of 1-2 percent and capital expenditure of $11 billion versus $9.4 billion in 2017.
Biraj Borkhataria, an analyst at RBC, said Statoil’s capital expenditure guidance “might yet again be a little conservative” after lower than expected spending in the first quarter.
For full 2017, the company had initially guided capital spending at $11 billion.
Saetre reiterated that he expected “slightly increasing” oil price ahead.
Source: Brecorder
