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Statoil's Strong NCS Presence, New Projects to Boost Growth
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On Jun 23, 2016, we issued an updated research report on Norway-based Statoil ASA .
Statoil’s endeavor to improve recovery of resources in mature fields is commendable. The company has operations in all major hydrocarbon-producing regions of the world, with an emphasis on the Norwegian Continental Shelf (NCS). We believe that Statoil is well positioned to sustain its steady production growth over the coming years on the back of its large resource base at NCS.
Statoil aims to achieve an equity production of above 2.5 million barrels of oil equivalent in 2020. Growth is expected to be driven by new project start ups between 2014 and 2017, which would translate into an annual organic production growth of 1%. The second stream of projects, which are expected from 2017 to 2019, are likely to lead to an annual organic production growth of 2–4%. The state-controlled explorer intends to invest about $16 billion in 2016, lower than the investments made in 2015.
Statoil also remains focused on improving normalized returns on capital employed (ROCE) by maintaining disciplined capital outlays and reducing operating costs. The company is in a very strong financial position with a current net debt-to-capital employed ratio of 21.8%. The company also actively returns cash to investors through regular dividend payouts and share buybacks.
In recent times, Statoil has delivered strong exploration results and added significantly to its resource base through several high impact discoveries. The latest finds give the company access to new regions of Norway, Russia, Azerbaijan, Tanzania as well as Australia, thereby paving the way for long-term growth.
However, management remains cautious regarding uncertainties in gas value over volume, start-up and ramp-up, and operational regularity. Divestitures are also likely to adversely impact output in 2016. Thus, we remain skeptical about the company reaching its growth target.
Moreover, the Norwegian government’s concentrated ownership in the company significantly reduces liquidity and attractiveness of the stock in comparison with other European integrated players.
Zacks Rank and Other Stocks to Consider
Statoil holds a Zacks Rank #2 (Buy). Other well-ranked players from the energy sector are Boardwalk Pipeline Partners, LP , FutureFuel Corp. (FF - Free Report) and ReneSola Ltd. (SOL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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Statoil's Strong NCS Presence, New Projects to Boost Growth
On Jun 23, 2016, we issued an updated research report on Norway-based Statoil ASA .
Statoil’s endeavor to improve recovery of resources in mature fields is commendable. The company has operations in all major hydrocarbon-producing regions of the world, with an emphasis on the Norwegian Continental Shelf (NCS). We believe that Statoil is well positioned to sustain its steady production growth over the coming years on the back of its large resource base at NCS.
Statoil aims to achieve an equity production of above 2.5 million barrels of oil equivalent in 2020. Growth is expected to be driven by new project start ups between 2014 and 2017, which would translate into an annual organic production growth of 1%. The second stream of projects, which are expected from 2017 to 2019, are likely to lead to an annual organic production growth of 2–4%. The state-controlled explorer intends to invest about $16 billion in 2016, lower than the investments made in 2015.
Statoil also remains focused on improving normalized returns on capital employed (ROCE) by maintaining disciplined capital outlays and reducing operating costs. The company is in a very strong financial position with a current net debt-to-capital employed ratio of 21.8%. The company also actively returns cash to investors through regular dividend payouts and share buybacks.
STATOIL ASA-ADR Price and Consensus
STATOIL ASA-ADR Price and Consensus | STATOIL ASA-ADR Quote
In recent times, Statoil has delivered strong exploration results and added significantly to its resource base through several high impact discoveries. The latest finds give the company access to new regions of Norway, Russia, Azerbaijan, Tanzania as well as Australia, thereby paving the way for long-term growth.
However, management remains cautious regarding uncertainties in gas value over volume, start-up and ramp-up, and operational regularity. Divestitures are also likely to adversely impact output in 2016. Thus, we remain skeptical about the company reaching its growth target.
Moreover, the Norwegian government’s concentrated ownership in the company significantly reduces liquidity and attractiveness of the stock in comparison with other European integrated players.
Zacks Rank and Other Stocks to Consider
Statoil holds a Zacks Rank #2 (Buy). Other well-ranked players from the energy sector are Boardwalk Pipeline Partners, LP , FutureFuel Corp. (FF - Free Report) and ReneSola Ltd. (SOL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>