LONDON (E24): When the Eldar Sætre take the stage in front of analysts and journalists in London, it is with a joyful message, seen from the shareholders and Norwegian suppliers ‘ point of view.
Statoil is on the mend, after two years in a row with losses on the bottom line.
– We have fundamentally changed the prerequisites for the company, ” says Sætre to E24.
We have now come up on a effektivitetsnivå that we are very well satisfied with, as a basis to continue to improve, but in a more continuous way. We are done with the big prosjektforbedringsfasen, ” he says.
on Tuesday, let the company produce a weaker result for 2016 than the year before, partly as a result of new write-downs on foreign assets.
Read more: This is the group’s-the result
the Company’s adjusted earnings, which removes the special items and to give a better picture of the company’s underlying activity, fell by 58 per cent to nok 39 billion.
It is the fourth year in a row of declining operating profit.
Nevertheless, Statoil boss is optimistic.
He explains that the company’s upcoming projects up to 2022 on average are profitable at an oil price of 27 dollars a barrel, against 41 per barrel one year ago. In 2013 the company needed an oil price of 70 dollars a barrel to be profitable.
– I call it “transformational”, he says.
– We’ve come through this downturn, at least the worst part of it, with a financial situation that we are very comfortable with, ” he says.
Cut costs
Powerful cost-cutting make the company get more for your money, for example, when drilling wells.
And the company has overoppfylt its own target to cut costs by $ 2.5 billion annually, a goal that was increased by 50 per cent a year ago.
Read more: Cuts more than expected
the Company has so far cut the annual costs by 3.2 billion dollars, and aims to cut another billion dollars in the year.
– Now we are talking about what we call continuous improvement, and then it is the sum of many things that we need to work further with the industry, ” says Sætre.
He warns against making the same mistake as in the earlier downs, where the costs have increased rapidly again as oil prices have risen.
– If the industry now begins to relax and says that now it is over, now we can start to spend money again… to say it like that, we will invest, but we can not relax when it comes to still think streamlining and improvement, including in security, ” says Sætre.
So important is Statoil for the Norwegian economy
– large capacity
There has been a lot of restructuring in the shipping and supplynæringen in the past, due to overcapacity.
on Monday came the news that Farstad Shipping, Solstad Offshore and Deep Sea Supply plans to merge into a supplygigant.
– It is a fact that there is still too much capacity in relation to the level of activity we see on the Norwegian continental shelf, for a lot of capacity in a good part of the segments, not at least within the marine sector, riggsektoren, ” says Sætre.
– How this will come to play out in the form of structures and so on, I do not know but there is too much capacity in relation to the level of activity, which we believe will be quite evenly, ” he says.
number of FIELDS: This is some of the fields that make up Statoil’s vekstplaner until 2022.
Increases investments something
Statoil says now that it is waiting to invest nok 11 billion in 2017, after to have cut last year’s investments to 10.1 billion.
There are still a lot of money, but far below the investments of close to 20 billion dollars in 2014.
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– Unrealistic to believe that the price of oil when the 65 dollar
I think 2018 may be higher than 2017, but not much higher, ” says Sætre.
– the Level will be around this and no higher, and there is a whole other level than what we talked about earlier. We began this year with $ 13 billion, now we’re down around ten. Two years back we had a level of almost 20 billion in the company, ” he says.
Negative cash flow
There is no drømmesituasjon having to take up debt to cover investments and dividends, but it was the Statoil in 2015, with a free cash flow of minus nok 18 billion.
In 2016 was that the number still negative, at minus three billion dollars or 29,8 billion.
Statoil’s goal is to be able to bring in more money than it goes out at an oil price of 50 dollars a barrel in 2017. It is a tightening of last year’s goal, which was that the company should have a positive cash flow at 60 dollars a barrel in 2017 and 50 dollars a barrel in 2018.
Statoil to cut more than expected
– We point forward, we say we can invest in the projects we now have in front of us, who have very high-quality, and still maintain a debt / equity ratio at the level that we have to $ 50 barrel oil prices, he says.
– Should the oil price be higher, which we think, so will the gearing ratio and the capacity of our only be strengthened, he said.
New contracts
the Company is planning a number of new projects until 2022, with the robust profitability and the ability to produce 3.2 billion barrels of oil equivalent.
It may give additional contracts to Norwegian suppliers, who have already got the majority of the contracts of Johan Sverdrup’s first phase, and can look forward to the second phase in the years up to 2022.
Oljegigantene has not built much new production capacity in the last years, even though this is required to replace declining production from existing fields. At two years, global oil companies to cut investments by 40 per cent, according to Wood Mackenzie.
The international energy agency has warned that it may be too little supply of oil around the year 2020.
the Debt increases
Statoil continues to take up debt to pay for investments and dividends to the shareholders, and the company’s debt as a percentage of capital increased to 35,6 per cent by the end of 2016. One year ago was the 26,8 percent.
These lyspunktene see the experts in today’s disappointing Statoil-report
In earlier years, Statoil’s goal will be to keep the gearing ratio below 30% to avoid possible downgrades of the company’s creditworthiness, but in the last year, said the company that the gearing ratio could go up to 40 per cent if oil prices remained under $ 40 per barrel.
the oil price has since risen to 55 dollars a barrel, partly because of produksjonskutt from countries in and outside Opec, making Statoil’s needs in order to take up the debt less.
Thus, Sætre optimistic to be able to keep the debt in check.
When it comes to rating our the it is important, and we have said that we want to maintain a single A rating, and now we have actually a notch to go on, ” says Sætre.
– We also have a stable outlook. The ratings agencies look at more than the debt ratio, they also look at cash flow. It is very strong in relation to the debt and ability to service their debt. It is very strong, ” he says.
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