Even if production went up, led the drop in oil prices that results also dropped significantly.
Statoil delivered earnings in the fourth quarter which was 80 percent lower than the same quarter last year. Operating income for the fourth quarter of 2014 was 9.0 billion, down from NOK 43.9 billion in 2013.
It led to the company after tax had a loss of 8.9 billion. In the third quarter, Statoil had a loss of 4.8 billion.
The bad results were according to the company mainly related to impairments in the international business and certain exploration licenses, partially offset by gains on the sale of assets.
Adjusted earnings in the fourth quarter 2014 was 26.9 billion, compared with 42.3 billion dollars in the fourth quarter 2013.
The term adjusted earnings means that the result is adjusted for such depreciation and other abnormal records.
Adjusted earnings after tax in the fourth quarter 2014 was 4.3 billion, down from 11.0 billion in the same period last year.
Increased tax impairments
According to Statoil, the adjusted earnings after taxes impacted by an effective tax rate of 84 percent in the fourth quarter, compared with a normal level of about 70 percent. The high effective tax rate in the quarter was mainly due to expensed exploration costs with limited tax credit.
– Statoil quarterly were affected by the significant drop in oil prices. The result was also affected by specific accounting items, says Statoil CEO Eldar Saetre.
– Underlying operating profit and cash flow in 2014 was solid. The result is characterized by profitable growth, strong operational improvements, trading – and marketing results. We have a robust financial position and we maintain a stable dividend. Through considerable flexibility in the investment program we are well equipped for a sustained weaker and more uncertain market.
Adjusted earnings for 2014 was 136.1 billion dollars, compared with 163.1 billion dollars in 2013. This is a decrease around 17 percent and in line with analysts’ expectations.
More cuts
Statoil presented a comprehensive improvement during the Capital Markets Day in February 2014, where the goal was annual cost reductions of $ 1.3 billion per years from 2016.
The company currently provides an update to the capital, where organic investments for 2015 reduced from $ 20 billion (150 billion) to 18 billion dollars (135 billion).
improvement program escalated by 30 percent to $ 1.7 billion (13 billion) per year from 2016, and where the expected annual organic production growth is 2 percent until 2016 and 3 percent from 2016 to 2018.
Statoil nevertheless proposes to the AGM a dividend for the fourth quarter of NOK 1.80 per share, with the intention of paying a stable dividend for the first three quarters of 2015.
The annual dividend for 2014 was 7.20 per share, an increase from 7.00 million in 2013.
– Our financial position is robust, we maintain our financial capacity and we have a solid balance sheet. We intend to fulfill our obligations to shareholders and pay a competitive dividend says Sætre.
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