Statoil share price up, cuts 2015 capital expenditure by $2 billion

Statoil ASA said on Friday it would reduce spending in 2015 and boost cost cuts as Norway’s largest energy group reported fourth-quarter net loss.

For the three months ended December the government-controlled company reported a net loss of NOK 8.9 billion. The figure compares with a net profit of NOK 14.8 billion during the same period a year earlier and analysts projections of NOK 9.6 billion in profit.

Revenue stood at NOK 147 billion, slightly better than NOK 146.5 billion a year earlier, but down from expectations of NOK 150.07 billion.

The company said quarterly earnings were hit by the sharp drop in oil prices, while net income was affected by specific accounting charges, which were equal to NOK 18 billion. Statoil contributed the number mainly to impairment losses related to its international operations and exploration assets.

For the past year Statoil reported a net income of NOK 22 billion with a revenue of NOK 606.8 billion versus profit of NOK 39.2 billion and NOK 616.6 billion in sales stated in 2013.

Statoil joined fellow energy companies, including BP, Chevron and Total, in cutting its capital expenditure for this year and said its would spent $18 billion on new projects, down from the $20 billion it had previously targeted.

Additionally, the company said it would boost its cost-cutting program by 30% to $1.7 billion per year from 2016, while increasing organic production annually to 2016 by 2% and by 3% from next year to 2018. These actions “will provide total cash improvements” of $5 billion, the company said.

Statoil said it will postpone or cut additional projects, including an 8-month delay for its Snorre 2040. The company has already dropped a series of projects, including major ones like Angolan exploration and an oil sands venture in Canada.

Despite its troubles, the company proposed a dividend of NOK 1.80 for the recent three months and said it would keep payments flat for the first three quarter of 2015.

Output for the quarter came in at 2.103 million barrels of oil equivalent a day, 8% better compared year-over-year, but the average price of Brent oil fell 30% to $76.6 per barrel.

“We continue to deliver in accordance with our cost and capital efficiency programs. Our operational efficiency has been high, our work to improve safety continues to show good progress,” said Chief Executive Eldar Sætre.

Statoil gained 1.75% on Thursday and closed at NOK 139.60 in Oslo. On Friday the stock gained 2.01% to NOK 142.40 at 09:34 GMT, marking a one-year decrease of 4.83%. The company is valued at NOK 445.14 billion.

According to the 32 analysts offering 12-month price targets for Statoil have a median target of NOK 139.00, with a high estimate of NOK 225.00 and a low estimate of NOK 90.00. The median estimate represents a 0.43% decrease from the last closing price.