Statoil reports unexpected loss on deepening U.S. writedowns

OSLO (Bloomberg) — Statoil ASA reported an unexpected loss in the fourth-quarter after deepening writedowns on its U.S. shale assets.

The adjusted net loss, which excludes financial and other items, was $40 million in the fourth quarter compared with a profit of $185 million a year earlier, the Stavanger-based company said in a report Tuesday. That missed the average forecast of $618 million of 16 analyst estimates collected by Bloomberg.

“Our result was impacted by the negative result from our international operations due to expensed exploration wells, high maintenance activity and impairment charges,” Eldar Sætre, president and CEO of Statoil ASA, said in a statement. “We delivered strong production and solid operational performance across all segments in the quarter.”

Statoil has slashed spending and cut costs to weather the collapse in oil prices, which started in 2014 and has led to the deepest market downturn in a generation. The company has delayed projects, reduced its workforce and increased debt as it maintained shareholder payouts. At the same time, efficiency improvements and lower rates from suppliers have drastically reduced the cost of new projects — sometimes by as much as half.

The company had an impairment charge of $2.3 billion “mainly due to reduced long-term price assumptions with the largest effect being on unconventional onshore assets in North America, and unrealized losses on derivatives and inventory hedge contracts of $765 million.”

Statoil plans to invest $11 billion this year, up from about $10.1 billion last year. It estimates production growth of 4% to 5% in 2017 and production and organic annual output growth of about 4% from 2016 to 2020. Exploration activity in 2017 will be about $1.5 billion.

Brent crude recovered to about $55/bbl at the end of last year, double the level at the beginning of 2016, after OPEC and other producers agreed to cut output to drain a global glut, providing some relief to oil companies. Still, Statoil rivals Exxon Mobil Corp. and Royal Dutch Shell Plc last week published weaker-than-expected profits, showing how the oil majors still have a way to go to a full recovery.

Statoil plans to distribute a 22 cent dividend per share for the quarter, payable in cash or shares, in line with expectations.

Source: www.worldoil.com