OSLO: Norwegian oil firm Statoil cut its investment budget on Friday and took big writedowns on the value of its assets due to plunging crude oil prices, but maintained its dividend and promised a flat dividend in the first three quarters of 2015.
State controlled Statoil cut its 2015 investment budget to$18 billion from $20 billion, reduced its output growth forecast, and said it aims to cut costs further to reduce its cash flow break even level by $30 per barrel of oil, it said in a statement.
“Our financial position is robust, and we maintain a stable dividend,” newly appointed Chief Executive Eldar Saerte said in a statement. “Through our significant flexibility in our investment programme we are well prepared for continuous market weakness and uncertainty.”
With oil prices falling by more than half since June, energy firms from BP to Chevron have been slashing costs, delaying or cancelling projects and reducing shareholder returns to save cash.
Statoil has already cut a string of projects, such as its expensive exploration in Angola and its Canadian oil sands venture, but has maintained that it needed to keep on paying the quarterly dividend, which it introduced just last year.
It also took a net 18 billion crowns ($137.53 million) worth of one-off charges in the quarter, primarily for its international exploration portfolio and cancelled rig contracts, the firm said.
The low oil price is a drain, however, and analysts said that based on earlier targets, Statoil needed oil prices over $110 per barrel, twice the current level, just for cash flow break even after investments and dividends.
Still, with a net debt to capital employed ratio of 20 percent, Statoil can afford to raise debt while keeping its credit rating at least in the single A category, analysts added.
It also has plenty of non-core assets to sell and Statoil may divest further after more than $10 billion worth of asset sales in the past five years.
Statoil shares are down 8 percent over the past year, underperforming a flat European oil and gas index but the stock is trading at 1.25 times its book value, broadly in line with peers such as Shell and Total.
