2015 fourth quarter results
Statoil (OSE:STL NYSE:STO) delivered adjusted earnings of NOK 15.2 billion and adjusted earnings after tax of NOK 1.6 billion in the fourth quarter 2015.
"The result in the fourth quarter is highly impacted by the weak commodity price. However, we continue to make strong progress on costs and efficiency. We are now further stepping up our improvement programme, and tightening our capital and exploration expenditures. These are key elements in navigating the business during a period of low oil prices", says president and CEO of Statoil ASA, Eldar Sætre.
"Statoil is well positioned to capture value from an expected upturn in the market. We have substantially improved our non-sanctioned project portfolio. More than 80% of the operated projects, with start-up by 2022, have a break-even oil price below USD 50 per boe, says Sætre.
The Board of Directors will propose to the Annual general meeting (AGM) to maintain a dividend of USD 0.2201 per share fourth quarter 2015 and the introduction of a two-year scrip dividend programme starting from the fourth quarter 2015. The scrip programme will give shareholders the option to receive quarterly dividends in cash or in newly issued shares in Statoil, at a 5% discount for the fourth quarter 2015. The Norwegian Government, as majority shareholder, supports the proposal and will seek the Norwegian Parliament’s approval to vote in favour of the proposal at the Annual general meeting. The Norwegian government will match subscription of shares by minority shareholders, and thereby maintain its ownership share at 67% throughout the programme.
"We are firmly committed to maintain a competitive capital distribution, in line with our dividend policy. The proposal is to maintain the dividend, while offering shareholders an option to reinvest their dividend in newly issued shares. We are pleased to introduce the scrip programme as an additional tool, strengthening the company’s financial flexibility to invest in high-quality projects in a timely manner", says Sætre.
Adjusted earnings in the fourth quarter of 2015 were NOK 15.2 billion, down 44% compared to NOK 26.9 billion in the fourth quarter of 2014. Realised average liquids prices in the quarter were down 29% measured in NOK compared to the fourth quarter last year. Adjusted earnings after tax were NOK 1.6 billion, compared to NOK 4.3 billion in the same period last year.
Statoil’s net operating income according to IFRS for the quarter was NOK 1.7 billion, compared to NOK 9.0 billion in the same period in 2014. Net impairment charges of NOK 10.1 billion related to impairment of various assets, provisions of NOK 4.8 billion and gain on sale of assets of NOK 3.2 billion impacted the IFRS results. Earnings per share in the period were negative NOK 2.89 compared to negative NOK 2.81 in the same period last year.
Statoil delivered equity production of 2,046 mboe per day in the fourth quarter, a reduction of 3% compared to the same period in 2014. Adjusting for divestments, the underlying production was at the same level as in the fourth quarter last year.
Statoil reported cash flow from operations in 2015 of NOK 165.8 billion before taxes paid and working capital items. At year-end, Statoil’s net debt to capital employed was 26.8%. Organic capital expenditure was USD 14.7 billion in 2015.
Statoil completed 39 exploration wells during 2015, with three wells on-going at year-end. Adjusted exploration expenses in the quarter were NOK 4.2 billion, down from NOK 7.5 billion in the fourth quarter of 2014, mainly as a result of lower drilling activity and less expensive wells being drilled.
Statoil experienced three contractor fatalities related to our activities in the fourth quarter; one on the NCS and two in our US onshore operations.
"These fatalities are clear reminders that the safety and security of our people, and the integrity of our operations, must remain our top priority", says CEO Eldar Sætre.
The Serious Incident Frequency (SIF) was 0.6 in 2015.
Capital Markets Update
Today, Statoil presents its strategy to the capital market, focusing on three priorities:
- Delivering faster and deeper cost reductions: Stepping up the improvement programme by 50% to USD 2.5 billion annually in 2016
- Preparing to invest in the next generation portfolio: Investing in a radically improved project portfolio, with an average break-even of USD 41 per boe
- Capturing the upturn in oil and gas prices: Sustaining the efficiency gains and investing in attractive projects to benefit from the expected price recovery
"Resetting costs – capturing opportunities, that’s the core of our strategy. As an early mover on cost efficiency, we are now shaping our next generation portfolio. Statoil is positioned for value creation in a low price environment, and well placed to capture the gains when the oil price recovers", says Eldar Sætre
Furthermore, Statoil announces its updated outlook for 2016-2019:
- Statoil will invest around USD 13 billion in 2016
- From 2014 to 2017, Statoil estimates an annual organic production growth of around 1% from a rebased equity production level. From 2017 to 2019 Statoil expects 2–4% organic annual production growth
- The exploration spend in 2016 will be around USD 2 billion
Key events since third quarter 2015:
- The plan for development and operation (PDO) of the North Sea Oseberg Vestflanken 2 was submitted to the authorities
- Gas production started from the Corrib field off the northwest coast of Ireland
- To optimise its exploration portfolio Statoil decided to exit Alaska following recent exploration results in neighbouring leases
- Statoil was awarded interest in 24 licences on the NCS in the 2015 APA round
- Statoil entered into a transaction on the UK shelf, where Statoil acquired First Oil’s 24% share in the UK licence for the Alfa Sentral field
- The 20% interest in Trans Adriatic Pipeline AG was divested to the Italian gas infrastructure company Snam SpA for a total consideration of EUR 208 million
- Statoil and Repsol entered into transactions that saw Statoil farming down a 15% interest in the Gudrun field on the NCS to Repsol, in return for a 13% interest and operatorship in Eagle Ford and operatorship of the BM-C-33 licence in Brazil
- In November, Statoil made the final investment decision to build Hywind pilot park in Scotland, the world’s first floating wind farm
- In January Statoil acquired 11.93% of Lundin Petroleum, increasing the company’s exposure to core field development projects and growth assets on NCS, including Johan Sverdrup and Edvard Grieg
Further information from:
Peter Hutton, senior vice president Investor relations +44 7881 918 792 (mobile)
Morten Sven Johannessen, vice president Investor relations US +1 713 485 2276 (mobile)
Bård Glad Pedersen, vice president Media relations +47 9180 1791 (mobile)