Statoil expected to cut spending and output
Norway’s Statoil will be the latest of the energy giants to show its cards tomorrow, as it unveils its fourth-quarter results and a strategy update.
Statoil’s rivals – Shell, BG Group and BP – have failed to ignite the market with their results, as weak oil prices, low US gas prices and poor refining margins continue to drag down the sector.
But the key focus tomorrow will be on Statoil’s capital spending plans and production levels.
Last year, Statoil set a target of investing $21bn (£12.9bn) per year from 2013 to 2016, with the aim of producing 2.5m barrels per day in 2020.
“A lower production target plus ongoing disposals would give Statoil the ability to reduce its capex spend and bring cash in/cash out into better balance,” said Investec.
“But, in our view, this is already largely anticipated by the market and shares would react negatively if Statoil doesn’t announce a capex/production pullback.”
Results-wise, RBC Capital Markets estimates fourth-quarter net income of 12.31bn Norwegian Krone (£1.21bn), while Investec predicts fourth quarter at 12.5bn Norwegian Krone – both are slightly below consensus.
This is lower than Statoil’s net income of 15.1bn Norwegian Krone in the fourth quarter of 2012, but it’s still up from 12.1bn Norwegian Krone in the third quarter of 2013.
RBC is also calling for more information on the Johan Sverdrup project, a large Norwegian oil field where Statoil has delayed starting production.