Adjusted net income dropped to 9.9 billion kroner ($1.6 billion) from 11.3 billion kroner a year earlier, the Stavanger-based company said today. That missed the 10.9 billion-krone average of 17analyst estimates compiled by Bloomberg. Net income rose to 12 billion kroner from 4.3 billion kroner, while sales fell to 142.6 billion kroner from 147 billion kroner.
The company sank as much as 2.7 percent in Oslo, the most in a month, and was down 2.5 percent at 184 kroner by 9:06 a.m.
These were “overall weak earnings,” Teodor Sveen Nilsen, an analyst at Swedbank First Securities, said in a note. “We continue to believe that the share is expensive, both on a relative and absolute basis.” Nilsen said he will probably maintain his advice to investors to reduce their holdings.
State-controlled Statoil this year joined oil companies including Royal Dutch Shell Plc (RDSA) in cutting or slowing spending to counter rising costs and stagnant energy prices. Statoil said in February it would focus on improving shareholder returns at the expense of previous production-growth targets.
“Our quarterly earnings were impacted by divestments, seasonal effects and lower gas prices,” Chief Executive Officer Helge Lund said in a statement. “We have deferred gas production to enhance value, but remain on track for delivering on our production guiding for 2014.”
Output fell to 1.799 million barrels of oil equivalent a day in the second quarter from 1.967 million a year earlier, trailing the 1.832 million barrel average of 25 analyst estimates compiled by the company. Statoil, which has sold more than $5.5 billion of assets since October 2012, said in April that maintenance would reduce its production by 110,000 barrels of oil equivalent a day in the quarter.
Earnings were hampered by impairment charges of 4.3 billion kroner on its U.S. onshore business, eroding a gain of 3.6 billion kroner from the sale of a stake in the Shah Deniz natural gas project in Azerbaijan.
“The writedown is primarily due to the fact that we see lower prices for a longer period because it takes more time to build infrastructure in the U.S.,” Lund said in Oslo. “Prices in the short term are lower than we had expected.”
The 67 percent state-owned producer will pay a dividend of 1.8 krone a share for the second quarter. Lund said in April the dividend for the second and third quarters would match the 1.8 kroner payout for the first quarter.
Statoil got an average of $99.7 a barrel for oil in the quarter, up from $93.9 a year earlier. Gas prices averaged 1.44 kroner a cubic meter, down from 1.98 kroner a year earlier.
It maintained a capital expenditure target of about $20 billion for the three years to 2016. Exploration spending will be $3.5 billion in 2014, with about 50 wells planned. Statoil also kept its output-growth targets for the period through 2016.
Statoil has cut about 1,000 jobs from staff and support services, Lund said. The company plans to reduce its workforce by an additional 1,100 to 1,400 positions, he said.
An efficiency program set in motion this year to help cut costs is starting to show results with gains of 15 percent in drilling operations, the CEO said.