Norwegian oil giant Statoil returned to profit in the first quarter of 2016 as it managed to partly offset the effects of the low oil price environment with cost cuts and impairment reversals.
Statoil’s net profit for the quarter was $607 million, compared to a $4,578 million loss in the same quarter the year before.
The oil company on Wednesday reported adjusted earnings of $857 million in the first quarter of 2016, compared to $2,945 million in the same period last year. According to Statoil, the reduction was primarily a consequence of significantly lower liquids and gas prices, partially offset by good operational performance and reduced underlying operating costs.
The company’s revenues for the quarter dropped to $10,087 million, compared to $15,404 million in the first quarter of 2015.
In the first quarter of 2016, Statoil recognized net impairment reversals of $308 million, consisting of impairment reversals of $633 million and impairment charges of $325 million, compared to net impairment charges of $5,935 million before tax in the same period last year.
“Our financial results were affected by low oil and gas prices in the quarter. We delivered strong operational performance across all business areas, high production efficiency and results in line with expectations from liquids trading and refining. The guidance for 2016 is maintained,” says Eldar Sætre, President and CEO of Statoil ASA.
“The industry is facing challenges. However, I am pleased to see progress consistent with the priorities we presented in February. We have a firm plan to improve efficiency and make faster and deeper cost reductions. We are radically improving our project break evens and we are on track to re-set costs and thereby impact the parameters that we can control,” says Sætre.
Production grows 2 pct
Statoil delivered equity production of 2,054 mboe per day in the first quarter. The underlying production growth in the quarter, after adjusting for divestments, was 2% compared to the first quarter last year. Production from the Norwegian continental shelf (NCS) grew 2% in the first quarter of 2016 compared to last year, adjusted for divestments. Equity production outside of Norway was 734 mboe per day, in line with the first quarter last year, adjusted for transactions.
Adjusted exploration expenses in the quarter were $280 million, down from $351 million in the first quarter of 2015.
Cash flow from operations amounted to $2,205 million in the first quarter compared to $3,740 million in the same period last year. Statoil’s net debt to capital employed at the end of the quarter was 28.1%. Organic capital expenditure was $2.4 billion in the first three months of 2016.
The board of directors has decided to pay a dividend of $0.2201 per ordinary share for the first quarter.
Statoil estimated that its organic capital expenditures for 2016 will be around $13 billion. Statoil said it intends to continue to mature its large portfolio of exploration assets and estimates a total exploration activity level of around $2 billion for 2016, excluding signature bonuses.
Offshore Energy Today Staff