Statoil 'Gets More for Less': CEO
Norway's Statoil announced October 26 that it would cut capex for this year by $1bn. It had planned to spend $11bn but CEO Eldar Saetre said that as a "result of hard work from the organisation, in close collaboration with our suppliers and partners, and strict capital discipline," it would now spend $10bn. "We are getting more for less,” he said.
Despite the cut it reported an increase in output to 2.045mn barrels of oil equivalent/day and expects output for the year to be up 6% on 2016. “Our solid earnings and underlying cash flow from operations are driven by good operational performance with high production and continued efficiency improvements. In the quarter, we delivered 15% production growth [after allowing for portfolio changes] and 11% reduction in underlying operating cost per barrel. In addition, we see strong contribution from our liquids trading and refining business,” he said.
Flexible gas production responded to higher prices; there was also less maintenance time and new field ramp-ups. But the company is still cautious about the future: it cut exploration expenses over the quarter by a third, from last year's $0.6bn.
“With an oil price below $52/barrel, we have generated $3.6bn dollars in free cash flow so far this year, based on good contributions from all business segments. This has further strengthened our financial position," he said.
Adjusted earnings were $2.3bn in Q3, up from $0.6bn in the same period in 2016. Adjusted earnings after tax were $0.8bn, compared with a loss of $0.3bn last year. Higher prices for both oil and gas, solid operational performance with high production, strong liquids trading and refinery margins all helped.
IFRS net operating income was $1.1bn, compared with $0.7bn in the same period of 2016. Net operating income was impacted by net impairments charges of $0.8bn, following a write-down of US shale assets of $0.9bn, triggered by lower than expected production. Applying international financial reporting standards, it reported a loss of $0.5bn – worse than last year's loss of $0.4bn.
Adjusted exploration expenses in the quarter were $0.4bn, down from $0.6bn in the third quarter of 2016. Cash flows provided by operating activities before tax amounted to $14.9bn in the first nine months of 2017 compared with $9.9bn for the same period last year. Organic capital expenditure was $6.7bn in the first nine months of 2017. At the end of third quarter, net debt to capital employed was 27.8%.
William Powell