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Statoil (STO) Beats on Earnings in Q2, Revenues Grow Y/Y

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Statoil ASA’s (STO - Free Report) reported adjusted earnings of 40 cents per ADR in second-quarter 2017, while the Zacks Consensus Estimate was 38 cents. The company incurred a loss of 1 cent per ADR in the year-earlier quarter. Total revenue grew 37.1% year over year to $14.9 billion. Higher liquids and gas prices alongside increased production contributed to the growth.
 

Statoil ASA Price, Consensus and EPS Surprise

 

Statoil ASA Price, Consensus and EPS Surprise | Statoil ASA Quote

Operational Performance

In the reported quarter, total equity production of liquids and gas rose 2% year over year to 1,996 million barrels of oil equivalent per day (MMBOE/d). This was mainly due to stronger operational performance and new production from start-up on various fields. Expected natural decline on mature fields and lower ownership shares from divestments partially offset the increase.

In the first half of 2017, Statoil made nine discoveries and drilled 14 exploration wells. Adjusted exploration expenses in the reported quarter were $224 million, down from $423 million in the second quarter of 2016.

In the reported quarter, total entitlement production of liquids and gas rose 1% to 1,836 MMBOE/d. The increase was due to higher equity production and was partly nullified by negative effect from production sharing agreements (PSA effect).

Financials

Cash flow from operations amounted to $9,931 million in the first half of 2017 compared with $6,278 million in the same period last year. In light of low liquids and gas prices in the quarter, Statoil maintained a strong capital structure. Net debt to capital employed at the end of the quarter was reduced to 27.5% from 31.2% in the corresponding quarter last year. Organic capital expenditure was $4.5 billion in the first six months of 2017.
 
Outlook

Statoil lowered its organic capital expenditure guidance from $12 billion to $11 billion and its exploration guidance from $1.8 billion to $1.3 billion. Organic production growth for the period 2016–2020 is expected at a CAGR of about 3%, while organic production growth for 2017 is projected to be around 5% above the 2016 level. Statoil intends to achieve an additional $1 billion in efficiency improvements in 2017 with a total of $4.2 billion.

Zacks Rank and Stocks to Consider

Currently, Statoil carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Enbridge Energy, LP (EEP - Free Report) , Braskem S.A. (BAK - Free Report) and TransCanada Corp (TRP - Free Report) . While Braskem and TransCanada sport a Zacks Rank #1 (Strong Buy), Enbridge Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enbridge Energy delivered a positive earnings surprise of 128.57% in the preceding quarter. The company beat estimates in three of the trailing four quarters with an average positive earnings surprise of 38.22%.

Braskem delivered a positive earnings surprise of 107.79% in the quarter ending September 2016.

TransCanada delivered a negative earnings surprise of 7.58% in the preceding quarter. It surpassed estimates in two of the trailing four quarters with an average positive earnings surprise of 1.06%.

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