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UPDATE 2-Statoil profit jumps with overseas operations back in the black
May 4, 2017 / 11:20 AM / 5 months ago

UPDATE 2-Statoil profit jumps with overseas operations back in the black

* First-quarter operating profit $3.3 bln

* First international profit since third-quarter of 2014

* First-quarter petroleum output up 5 percent

* Maintains 2017 forecasts and dividend

* Statoil CEO sees oil prices at $50-$60 (Adds detail)

By Nerijus Adomaitis

OSLO, May 4 (Reuters) - Statoil reported a far bigger jump in first-quarter operating profit than expected on Thursday, helped by the first profit from the Norwegian company’s international operations since 2014 and higher oil prices.

Like rivals such as Royal Dutch Shell, the majority state-owned oil and gas company benefited from a 55 percent increase in crude prices from the same period a year ago and its cost-cutting efforts.

Statoil’s overall adjusted operating profit came in at $3.3 billion, well above the $2.67 billion expected by analysts and $857 million a year earlier.

Its international operations, which include Angola, Brazil and the United States and account for about a third of total output, made a profit of $272 million, the first positive result since the third quarter of 2014 when oil prices began to slide.

Swedbank analyst Teodor Sveen-Nilsen said he was likely to raise his estimate for Statoil’s full-year operating earnings by 6 percent to 9 percent after the strong quarterly results, which were also helped by low operation and exploration costs.

Statoil shares rose as much as 3.7 percent and were 2.5 percent higher on the Oslo exchange by 1050 GMT, outperforming a European oil and gas index which was up 1 percent.

“Statoil benefited from multiple macro tailwinds this quarter, in particular stronger European gas pricing, which we believe was a key driver in this set of numbers,” RBC Capital Markets analyst Biraj Borkhataria, who has a “sector perform” rating on the stock, said in a note.

Statoil maintained its plan to spend $1.5 billion on exploration this year, including in the Barents Sea where it will start its drilling campaign soon.

It also stuck to plans to raise production by 4 percent to 5 percent this year. Output rose 5 percent in the first quarter to 2,146 million barrels of oil equivalent per day (boed), with output from the Norwegian continental shelf at a five-year high.

“Our solid financial result and strong cash flow across all segments was driven by higher prices, good operational performance and an organic production growth of 5 percent,” Statoil said in a statement.

The company is the main supplier of natural gas to Britain and the second-largest supplier to Europe after Russia’s Gazprom .

Oil prices, a key driver of Statoil’s earnings, were expected to trade in a range of $50-$60 per barrel in the next 12 months, the company’s Chief Executive Eldar Saetre told Norwegian broadcaster TV2.

Brent crude was trading at about $50 a barrel on Thursday.

The company took a $2.3 billion charge in its fourth-quarter results due to weaker oil price outlook. (Additional reporting by Ole Petter Skonnord; editing by David Clarke)

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