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Statoil (STO) Incurs Loss in Q3; Revenues Decrease Y/Y

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Statoil ASA’s (STO - Free Report) incurred adjusted loss of 9 cents per ADR in third-quarter 2016, which compared unfavourably with the Zacks Consensus Estimate of earnings of 8 cents. The company had posted adjusted earnings of 14 cents in the year-earlier quarter. The massive deterioration can be primarily attributed to lower liquids and gas prices. Lower refinery margins also contributed to the underperformance, which was partially offset by good operational performance and reduced underlying operating costs.

Total revenue plunged 11.6% year over year to $12.11 billion.

Operational Performance

In the reported quarter, total equity production of liquids and gas declined 5% year over year to 1,805 million barrels of oil equivalent per day (MMBOE/d). This was mainly due to planned maintenance and deferral of gas sales.
 
In the third quarter, Statoil made two discoveries on the Norwegian Continental Shelf (NCS) and one in Canada. As of Sep 30, 2016, Statoil completed 21 wells. Adjusted exploration expenses in the reported quarter were $581 million compared with $412 million in the third quarter of 2015.

In the reported quarter, total entitlement production of liquids and gas decreased 5% to 1,651 MMBOE/d. The downside was due to lower equity production and the favourable impact of production sharing agreements (PSA effect).

Financials

Cash flow from operations was $7 billion in the first nine months of 2016 compared with $11.4 billion in the year-earlier period. In spite of low liquids and gas prices in the quarter, Statoil maintained a strong capital structure and net debt to capital employed at the end of the quarter was 30.3%. Organic capital expenditure was $7.8 billion in the first nine months of 2016.

STATOIL ASA-ADR Price, Consensus and EPS Surprise

 

STATOIL ASA-ADR Price, Consensus and EPS Surprise | STATOIL ASA-ADR Quote

Outlook

For 2016, Statoil lowered its capital expenditure guidance from $12 billion to $11 billion and its exploration guidance from $1.8 billion to $1.5 billion. Organic production growth for the period 2014–2017 is expected at a CAGR of about 1% from the 2014 level, rebased for divestments.

Zacks Rank

Statoil currently has a Zacks Rank #3 (Hold).

Some better-ranked players from the same sector are Enbridge Inc. (ENB - Free Report) , Braskem SA (BAK - Free Report) and TransCanada Corporation (TRP - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enbridge Inc. reported a negative earnings surprise of 10.00% in the prior-year quarter.
 
TransCanada posted a positive earnings surprise of 22.92% in the last reported quarter.

Enviva Partners has a mixed earnings surprise history. The partnership posted positive earnings surprises in two of the last four quarters. It reported a positive earnings surprise of 20.51% in the preceding quarter.

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