Norway's Statoil reassured investors on Tuesday by maintaining its dividend for the second and third quarters after posting better-than-expect results, despite taking a hit from the slump in oil prices.
The oil major recovered from a surprise net loss in the first quarter thanks to a strong performance in its oil refining segment and higher Norwegian oil production. It trimmed its capital expenditure target this year but kept other forecasts.
It announced a dividend for the second quarter of 1.8 crowns per share, as expected, and said it would state its third-quarter dividend in US dollars after the company switches to report in dollars, the currency in which oil prices are denominated.
The state-owned but partially listed company only began paying quarterly dividends as of the start of this year, prompting investors to question whether it would continue doing so as persistently low oil prices continue to batter the industry.
Oil prices need to be $100
Chief executive Eldar Saetre reiterated that the oil price needs to be at $100, $80 and $60 a barrel in 2016, 2017 and 2018 respectively for Statoil to generate the cashflow for dividends but also said it had flexibility in its cost cutting and divestment plans to pay investors if prices are lower.
“It is obvious that in the period until then (2018) ... the free cashflow from operations at $60 won’t cover investment and dividends. But we have a road map and a flexibility in our investment programme which means that we keep our (free cashflow) guidance,” Saetre told journalists.
Statoil said adjusted operating profit was 22.4 billion crowns ($2.74 billion), down from 32.3 billion crowns a year ago but above a forecast of 19.5 billion in a Reuters poll. Its adjusted net profit was 7.2 billion, beating expectations of 5.6 billion.
In contrast, British oil major BP missed second-quarter profit forecasts on Tuesday after taking a charge related to the settlement of the 2010 Gulf of Mexico spill.
“Statoil’s results prove once again just how resilient its business model actually is. Despite macro fears, Statoil is sailing through with strong operating performance and visible management response on costs,” Bernstein analysts said.
Statoil’s Norwegian production rose 7 per cent to 1.15 million barrels of oil equivalent a day, from which it made a profit of 18 billion crowns, but it failed to break even in its international business.
