Statoil ASA, Norway’s biggest oil company, unexpectedly posted a profit in the first quarter as reduced costs helped offset the lowest crude prices in almost 12 years.
Statoil reported adjusted earnings after tax of $122 million, down from $902 million a year earlier, it said in a statement Wednesday. That beat the average forecast for a $125 million loss in a Bloomberg survey of 12 analysts. Adjusted earnings after tax is a measure that excludes financial and other items to better reflect underlying operations.
“Our financial results were affected by low oil and gas prices in the quarter,” Chief Executive Officer Eldar Saetre said in the statement. “We delivered strong operational performance across all business areas, high production efficiency and results in line with expectations from liquids trading and refining.”
Statoil and rivals such as Royal Dutch Shell Plc and BP Plc have seen earnings weighed down by a collapse in crude prices since the middle of 2014. Most of the majors have responded by cutting spending, delaying projects, streamlining operations and eliminating jobs in order to protect their cash flow and pay dividends.
Statoil, which is 67 percent owned by the Norwegian government, in February deepened cuts to capital expenditure to about $13 billion in 2016, a target it reiterated Wednesday. The company will pay a dividend of 22 cents for the first quarter, in line with the board’s intention to keep payouts flat for the first three quarters. Statoil introduced a scrip dividend program in February, letting shareholders opt for new shares at a discount instead of cash.
Statoil’s adjusted net-debt-to-capital-employed ratio rose to 28.1 percent at the end of the first quarter from 26.8 percent at the end of 2015.
The company produced 2.05 million barrels of oil equivalent in the first quarter, little changed from 2.06 million barrels a year earlier and beating a 2.03 million barrel estimate in a survey of 26 analysts conducted by Statoil. It reiterated a production-growth target of about 1 percent a year from 2014 to 2017, adjusted for asset sales.
Adjusted net earnings were dragged down by a loss in Statoil’s international operations which widened by 66 percent to $647 million, while its Norwegian unit’s profit fell to $463 million from $730 million a year earlier. The trading and refining unit posted an adjusted profit of $355 million, down from $628 million.
While Statoil expects “volatility” in the oil market to continue, it sees indications of a gradual rebalancing, CEO Saetre said in an interview with Bloomberg TV.
“There’s still too much physical capacity out there compared to the demand side, so it’s a market that is not balanced -- there’s still a downward pressure on the oil price,” he said. “But there’s more support, seemingly, than we’ve seen before.”
(Updates with details, Statoil CEO comment.)
To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net. To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Stephen Treloar, Jonas Bergman
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