UPDATE 3-Statoil Q4 in line, on track for goals
reuters.com Tue February 18, 2003 10:09 AM ET (Adds details, CEO quotes in paragraphs 5-6, 8-10, 12-13, 17-20; updates share price in paragraph 14)
By John Acher
OSLO, Feb 18 (Reuters) - Norway's biggest oil and gas group Statoil STL.OL reported stronger underlying fourth-quarter results on Tuesday, spurred by higher production, and said it was on target to meet its goals for 2004.
October-December earnings for Statoil, the biggest Nordic company in terms of 2002 turnover, ahead of Finnish mobile phone maker Nokia NOK1V.HE , were boosted by higher oil and gas output, lofty oil prices and currency gains.
Fourth-quarter operating profit for the state-controlled group rose to 11.20 billion Norwegian crowns ($1.60 billion) from 9.47 billion a year earlier.
The result slightly undershot analysts' average expectation for quarterly earnings before interest and tax (EBIT) of 11.65 billion crowns, but was well within the range of estimates.
On the pre-tax level, quarterly earnings beat the average expectation by rising to 13.84 billion crowns from 8.79 billion.
Gas output in particularly was strong, with record volumes both for the quarter and the full year, Statoil said.
"The result for 2002 shows that we're well on our way to achieving our goals for 2004," Statoil said in a statement. It did not give an earnings outlook for this year but said oil and gas output would dip this year before growing again.
"The reasons we have a good result are pretty basic -- higher production, good regularity (of operations), lower costs and improvement on all the key ratios that we are following," Chief Executive Olav Fjell told an analyst conference.
"We are one step closer to meeting the targets that we defined for 2004 and also the (production) volume target for 2007," he said.
The company forecast output would dip to 1.06 million barrels of oil equivalent per day in 2003 from 1.07 million last year, before rising again to 1.12 mboe in 2004 and climbing to 1.26 mboe per day in 2007.
Statoil said normalised return on average capital employed, a key profitability gauge, rose to 10.8 percent in 2002 from 9.5 percent a year earlier, towards a goal of 12 percent for 2004. Fjell said Statoil was the most profitable firm in its peer group in terms of return on capital employed, and he showed Statoil heading a list of 10 rivals including Shell RD.AS SHEL.L , BP BP.L , ExxonMobil XOM.N , Occidental OXY.N , ChevronTexaco CVX.N , ConocoPhillips COP.N and others.
"Measured on return on average capital employed, we have the best numbers for 2002," Fjell said. But he acknowledged that the market had been especially tough on downstream competitors.
Shares in Statoil traded up almost one percent at 53.00 crowns at 1450 GMT, slightly outpacing a 0.6 percent rise in the Oslo benchmark index .OSEBX but lagging a stronger DJ Stoxx energy index .SXEP .
During the past 12 months, the stock has gone from a high of 73.50 in April to an all-time low of 49.60 in late November.
"It was a strong report. I don't think market players will change their estimates after this," analyst Lars Marius Furu at Handelsbanken Capital Markets said after the presentation.
INCREASING INTERNATIONALISATION
With prospects on the Norwegian shelf diminishing, Statoil is increasingly looking abroad, and Fjell said overseas reserves would eventually exceed 50 percent. But he did not say when.
Statoil's 2004 production goal of 1.12 mboe per day assumes that one million of that will be produced on the Norwegian shelf and 120,000 from operations abroad. But international production is seen rising to 260,000 boe per day by 2007, while Norway production would hold stable at a million.
"This is a pretty steep increase -- it means that international production will almost double three times between now and 2007," Fjell said. "Our idea is that our expansion will come abroad, and the Norwegian shelf will be the basis for it."
Statoil's international operations include an Iranian gas field, with significant projects also off Angola, Nigeria and Venezuela.
Fourth-quarter oil and gas production rose seven percent year-on-year to 1.17 million barrels of oil equivalent (mboe) per day, in line with the firm's guidance. Full-year oil and gas output also grew seven percent.
Statoil said it would have six new fields in production by late 2003, but estimated 2003 gas sales would ease to 19 billion standard cubic metres this year from 19.6 billion last year.
Statoil's full-year earnings per share adjusted for special items rose to 7.72 crowns from 7.32 a year ago. It proposed a dividend of 2.90 crowns per share versus 2.85 crowns for 2001.
Full-year revenues rose to 243.81 billion Norwegian crowns ($34.77 billion) from 236.96 billion, just ahead of Nokia's 30.1 billion euros ($32.27 billion) for 2002.
(Additional reporting by Inger Sethov and Ola Peter Krohn Gjessing in Oslo)