Oil major Statoil swung to a surprise first quarter net loss on a writedown in the value of its U.S. shale business but its operating figures beat forecasts and the firm pleased investors by maintaining its dividend.
State-controlled Statoil, which operates in dozens of countries from Canada to Africa, said it had cut its price outlook for its U.S. business. It took about $6 billion in impairments, felt the effects of plunging crude and gas prices and enjoyed only a modest benefit from higher refining margins.
However, its exploration and refining businesses both performed better than gloomy expectations, output beat forecasts and its cash flow covered nearly all of its relatively high investment spending.
"Underlying it's a strong quarter, showing we can function as a company and deliver profitability with oil prices below $50 per barrel," Chief Executive Eldar Saetre said.
"We've assumed prices for 2017 of around $80 per barrel and then a careful rise after that," added Saetre, a company veteran who stepped up to the top job after Helge Lund left last year.
Crude prices bottomed out below $50 per barrel in January and even at $65 per barrel now, trade down from around $110 per barrel in June.
Statoil made a net loss of 35.4 billion crowns ($4.7 billion) for the quarter, below expectations for a profit of 3.8 billion crowns and down from a profit of 23.7 billion crowns a year earlier.
But its adjusted operating profit was 22.9 billion crowns, ahead of forecasts for 16.4 billion as its refining profit soared on increased margins, the international production business made a smaller-than-forecast loss and the Norwegian unit also performed ahead of expectations.
It paid a quarterly dividend of 1.80 crowns per share, in line with its guidance.
"This appears a robust set of results from Statoil in the context of quite low expectations," brokerage Jefferies said.
"While management is clearly responding to a lower near-term oil price outlook, Statoil still has one of the most challenged organic cash cycles amongst peers."
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Statoil shares were up 1.7 percent at 0750 GMT, reflecting relief about the strong operations as investors mostly ignored the non-cash impairments, seeing them as precautionary moves.
High spending remains a concern as Statoil plans to invest $18 billion this year, making the smallest spending cut among any of the majors.
"Exploration is incredibly important to us and we have the financial strength and capacity to take a long term perspective," Saetre said.
"I've been through situations before where we cut exploration because it was the easy thing to do. We were punished for that for years afterwards."