Third quarter 2016 results
Statoil (OSE:STL NYSE:STO) reports net operating income of USD 737 million and adjusted earnings of USD 636 million in the third quarter of 2016.
The third quarter was characterised by
- Continued weak markets, planned maintenance and expensed exploration wells
- Strong operational performance and improvement programme on track
- Positive net cash flow and reduced net debt ratio
- Lowering 2016 capex and exploration guidance
“The financial results were affected by low oil and gas prices, extensive planned maintenance and expensed exploration wells from previous periods. We delivered solid operational performance with strong cost improvements and progress on project execution”, says Eldar Sætre, President and CEO of Statoil ASA.
“Strict prioritisation and continued good results from our improvement programme allow us to further lower our 2016 capex and exploration guidance”, says Sætre.
“Our financial position remains robust with a positive net cash flow in the quarter. We continue with the scrip dividend programme and have reduced the net debt ratio”, says Sætre.
Net operating income was USD 737 million in the third quarter compared to USD 883 million in the same period of 2015. The reduction was primarily due to lower oil and gas prices, expensed exploration wells and lower refinery margins. Continued progress on the improvement programme with reduced costs and strong operational performance contributing positively to the results.
Adjusted earnings were USD 636 million in the third quarter compared to USD 2.027 billion in the same period in 2015. In addition to the continued low prices, the result reflects reduced overall operating costs mainly as a result of the on-going cost improvement initiatives.
Adjusted earnings after tax were negative USD 261 million in the third quarter, down from positive USD 445 million in the same period last year. In the quarter we have expensed exploration wells capitalised in previous periods in the amount of USD 324 million. This is mainly related to two exploration wells in the Gulf of Mexico.
Statoil delivered equity production of 1,805 mboe per day in the third quarter compared to 1,909 mboe per day same period in 2015. The reduction was primarily due to planned maintenance and deferral of gas sales. Excluding these elements and divestments, the underlying production growth was 5% compared to the third quarter last year.
As of 30 September 2016, Statoil had completed 21 exploration wells. Adjusted exploration expenses in the quarter were USD 581 million, up from USD 412 million in the third quarter of 2015.
Cash flow from operations amounted to USD 7.0 billion after tax in the first nine months of 2016 compared to USD 11.4 billion in the same period last year. Organic capital expenditure was USD 7.8 billion in the first nine months of 2016, and net debt to capital employed was 30.3% at the end of the quarter.
Statoil is lowering its capex guidance for 2016 from USD 12 billion to around USD 11 billion and its exploration guidance for 2016 from USD 1.8 billion to around USD 1.5 billion. Production guidance remains unchanged, and expected annual organic production growth is 1% from 2014 to 2017.
The board of directors has decided to pay a dividend of USD 0.2201 per ordinary share for the third quarter. Shareholders will have the option to receive the dividend for the third quarter 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 September 2016, compared to 0.5 in the same period last year.