Statoil (NYSE:STO) reported on Thursday a second-quarter net income of US$1.436 billion, compared to a US$302-million loss in Q2 2016, as higher oil and gas prices and continued operational cost cuts helped the Norwegian oil major to boost revenues and cash flow.
Adjusted earnings jumped to US$3.023 billion from US$913 million in the second quarter of 2016, and slightly beat the analyst estimates of US$2.97 billion.
Excluding portfolio changes, Statoil's underlying production growth was 3 percent in Q2 2017 compared to the second quarter last year.
Cash flows provided by operating activities in the first half of 2017 jumped to US$9.931 billion compared to US$3.349 billion for the same period of 2016. Organic capital expenditure was US$4.5 billion in the first half of 2017, and the company kept its capex outlook at US$11 billion for this year.
"Our solid financial results and strong cash flow are driven by good operational performance with high production efficiency and continued cost improvements. At oil prices around 50 dollars per barrel, we have generated 4 billion dollars in free cash flow, and reduced our net debt ratio by 8.1 percentage points since the start of the year. We expect to deliver around 5% production growth this year, and at the same time realise an additional one billion dollars in efficiencies," Statoil President and CEO Eldar Sætre said in the company statement.
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Commenting on the Q2 results, Statoil chief financial officer Hans Jakob Hegge told Bloomberg that "we are confirming that we have transformed the company". Three years ago Statoil needed oil prices at US$100 per barrel to cover investments and dividend and today "we do the same at US$50," Hegge said.
Statoil is keeping its total capex guidance for 2017, but is cutting its exploration guidance for this year from US$1.5 billion to US$1.3 billion related to efficiency gains and stricter prioritization, Hegge noted.
By Tsvetana Paraskova for Oilprice.com
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