Statoil ASA’s (STO) first-quarter 2014 adjusted earnings of $1.22 per ADR comfortably beat the Zacks Consensus Estimate of 62 cents. The quarterly results also showed an improvement from the year-earlier adjusted earnings of 36 cents per ADR courtesy of higher U.S. gas sales volumes and margins.
Adjusted net income after tax came in at NOK15.8 billion (US$2.6 billion) in the first quarter, higher than the year-earlier level of NOK12.0 billion (US$2.0 billion).
In the first quarter, total revenue rose 6% year over year to NOK 169.6 billion ($27.8 billion), mainly due to higher prices for both liquids and gas.
Operational Performance
In the reported quarter, average equity production of liquids and gas increased 4% year over year to 734 million barrels of oil equivalent per day (MMBOE/d). The upside came mainly from ramped up production in the Marcellus and Eagle Ford fields. This was partially offset by the expected natural decline at several fields, particularly in Angola, and political disruption in Libya.
In the reported quarter, average entitlement production of liquids and gas increased 10% to 526 MMBOE/d, primarily on increased equity production and a lower negative effect from production sharing agreements.
Total oil and gas equity production averaged 1.978 million barrels of oil equivalent per day (MMBOE/d) in the first quarter compared with 1.998 MMBOE/d in the year-earlier quarter. Of the total quarterly output, 56% was liquids and 44% was natural gas.
Total oil and gas entitlement production averaged 1.770 MMBOE/d during the quarter (54% liquids and 46% natural gas) compared with 1.774 MMBOE/d in the year-earlier period.
The company's realized liquids prices averaged $99.2 per barrel, down 4.2% year over year. Natural gas price realization averaged NOK 2.57 and NOK 1.49 per standard cubic meter in Europe and North Americas, respectively.
Financials
The company reported cash and cash equivalents of NOK 131.7 billion at quarter end versus NOK 64.6 billion at the end of the year-ago quarter. For the reported quarter, operating cash flow was NOK 55.0 billion. Net debt-to-capitalization ratio was 10.0% versus 13.3% in the year-ago quarter.
Outlook
The company has projected organic capital expenditures of around $20 billion and exploration activity of about $3.5 billion for 2014. Statoil plans to complete drilling of around 50 wells during the year.
Statoil currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider other energy sector stocks such as Pioneer Energy Services Corp. (PES), RSP Permian, Inc. (RSPP) and Clayton Williams Energy, Inc. (CWEI). All these stocks currently sport a Zacks Rank #1 (Strong Buy).
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