Lower oil prices push Norway’s Statoil to Q2 loss

Norway’s Statoil cut its 2016 capital spending outlook on Wednesday as it posted second-quarter earnings well below forecasts, hit by persistently low crude prices. “There’s a lot of uncertainty”. In the previous quarter, the company reported adjusted net income of $122 million, surpassing analysts’ consensus estimate of $16 million.

“Our financial results were affected by low oil and gas prices in the quarter”, Statoil CEO and Presient, Eldar Sætre, said.

Statoil’s key Norwegian exploration and production division produced less oil and gas than expected, had higher exploration costs and higher-than-expected operating expenses and general and administrative expenses, Swedbank analyst Teodor Sveen-Nielsen said in a note. Refining margins also fell by nearly half from a year earlier, producing a disproportionate effect on already low earnings, he added in an interview.

Its performance echoed that of BP on Tuesday, which posted a 45 percent drop in second-quarter profit, missing analysts’ forecasts and prompting another cut to the group’s 2016 investment budget to below $17 billion. That is 40 per cent lower than record spending of $20bn in 2014.

Statoil shares fell 4.7 percent to 137.80 kroner in morning trading in Oslo.

The company attributed the disappointing results to the continued low crude oil prices and a lower refining margin. That made the stock the worst performer on the 20-company STOXX Europe 600 Oil & Gas Index and pared this year’s gain to 12%.

The company’s adjusted loss was the first for that earnings measure in figures going back to 2008. The loss reflects an effective tax rate of 103.1%, up from 67.8% a year earlier.

STO’s adjusted net loss at its global unit tripled to $549M from a year ago, while profit at its Norwegian unit fell to $436M from $705M.

“‘We’re paying taxes in some countries where we’re losing money”, chief financial officer Hans Jakob Hegge said in an interview, citing Algeria, Azerbaijan, Angola and Nigeria.

Statoil kept its quarterly dividend at $0.2201 per share, in line with a promise, and repeated it would make the same payment for the third quarter.