This summary is based on the second quarter fiscal 2007 earnings call conducted by Statoil ASA (STO) on July 30, 2007.
Sr. VP, IR: Lars Troen Sorensen
CFO and EVP: Eldar Sætre
Key Investors Issues
- Earnings per share were NOK5 compared to NOK4.42 in the second quarter of 2006.
- Net income was NOK11 billion compared to NOK9.8 billion in the second quarter of 2006.
- Exploration expenditure was NOK2.3 billion compared to NOK1.9 billion last year.
Second Quarter Highlights
Statoil had a net operating income of $26 billion against $30 billion in the same quarter last year.
The 13% lower EBIT is mainly due to a 3% lower oil price in Norwegian krone, 13% lower average gas price and 2% reduced liftings.
The company had a total under-lift of 33,000 barrels of oil equivalents per day split between 18,000 on the Norwegian Continental Shelf and 15,000 International.
Last year, Statoil had an over-lift of 26,000 barrels per day adding up to different into the net lifting position of approximately 60,000 barrels per day.
The net income was 11% higher, primarily due to lower income taxes of 61.3% compared to 69.4% in the same quarter last year.
The lower tax rate is mainly due to higher income contribution from activities outside of the Norwegian Continental Shelf, and an average tax rate on financial items which was lower than last year.
- The EPS increased by 13%, from the growth in net earnings and the reduced number of outstanding shares due to the share buyback program.
- Total oil and gas production was 1,112,000 barrels of oil equivalence per day which is up 3% from the same quarter last year, oil production alone increased by 4%.
Given the reservoir and production issues that the company has had on Kristin and Kvitebjørn, the overall production performed satisfactorily.
The ongoing efforts to complete the wells on Kristin and Kvitebjørn are following the renewed plans announced in May this year and the company expects to get the full contribution from both of these fields in 2008.
The company had a number of scheduled turnarounds, all of these activities have been performed according to plan and impacted production with around 16,000 barrels a day which is in line with guidance.
International production has an increasing interest for Statoil overall oil and gas production.
The international production increased by more than 10% to a total of 209,000 barrel per day, accounting for almost 20% of corporate oil and gas production. The increase comes mainly from new fields in production and ramping up for production from Angola, Azerbaijan and Algeria.
- The gas production from In Salah, in Algeria fell from the first quarter this year as a result of the PSA arrangements.
- Oil production increased 23% to 181,000 barrels per day, which is the highest oil production outside of Norway in Statoil''s history.
- Return on average capital employed was 23.6% compared with a return on average capital employed of 26.4 in 2006.
- The company maintains its position amongst the best performers on these indicators within peer group and this ranking also supports position as one of the companies with the best profitability and capital discipline in the sector.
Net interest bearing debt was $43 billion at the end of the second quarter compared to $30 billion at the end of the corresponding quarter last year.
That equals a net debt to capital employed of approximately 26%. The increase in net debt is mainly due to lower liquid assets combined with higher short-term funding.
