Statoil Reports Robust Q1

 

Regarding new sanctions on Russia, Statoil's CEO told Reuters it was too early to say whether he would attend a high-profile St Petersburg economic forum in June as planned, as the firm had to assess the impact of the measures first.

 

Oil firms have seen their profit margins decline due to a rise in costs as crude becomes more difficult to extract and several big projects, such as Kashagan in Kazakhstan, have spiralled out of control.

 

Statoil was no exception in experiencing a squeeze in margins and in February said it would slash spending by $5 billion in 2014-2016, an 8 percent reduction from earlier expenditure plans, so it could pay more to shareholders.

 

Shares in Statoil were up 3.86 percent at 0755 GMT, outperforming a 0.79 percent gain in the European oil and gas index. The stock was among the best performers on the Oslo bourse, outstripping a 1.2 percent rise in the benchmark index.

 

Chief Executive Helge Lund said healthy prices and good results from its U.S. gas assets were behind the strong numbers. Statoil is present in all the major U.S. shale gas plays.

 

"The cold weather (in the United States) and good gas infrastructure (on the Northeastern Seaboard) has made it possible for us to get good prices," Lund told a news conference.

 

"This shows the importance of our gas assets in the U.S. and Europe."

 

The upbeat comment came in contrast with the view of U.S. shale by British major BP, which posted lower profits partly due to a $521 million write-off after a decision not to proceed with a U.S. shale gas project.

 

 

The United States imposed additional sanctions on Russia on Monday, ahead of expected additional moves by the European Union on Tuesday.

 

Statoil's CEO repeated the firm's position that it would comply with any sanctions imposed on Russia.

 

Statoil has several joint projects with Russia's largest oil company, Rosneft, including deals to explore for oil and gas in Siberia and above the Arctic Circle, as well as shale oil in the south of the country.

 

Last week, Statoil said Lund would attend the St Petersburg International Economic Forum in June.

 

But on Tuesday, Lund said it was too early to say whether he could go. "We must assess what the practical implications of the (new) sanctions are. We don't know yet what they will mean," he told Reuters.

 

Earlier this month, a top Statoil executive said it was business as usual with Russia despite the conflict in Ukraine.

 

 

Statoil's adjusted operating profit rose to 46.0 billion crowns ($7.7 billion), from 42.4 billion crowns for the same period a year earlier. The result beat the 42.02 billion crown expectation of analysts in a Reuters poll.

 

"Statoil has demonstrated its strong comparative advantages compared to other European integrateds," bank Societe Generale said.

 

Statoil reiterated its commitment to cut costs to boost margins. It offered a dividend payment of 1.80 crowns per share for the quarter, as expected, and said it intended to maintain that level in the coming two quarters.

 

The firm's total equity production averaged 1.978 million barrels of oil equivalent per day in the quarter, slightly above expectations for 1.966 million barrels.

 

(By Gwladys Fouche and Henrik Stolen, Editing by Terje Solsvik, Richard Borsuk and Dale Hudson)