Norway's Statoil cut its 2016 capital spending guidance as it posted earnings well below forecasts on Wednesday, hit by persistently low crude prices, higher costs at home and abroad and weaker refinery margins, sending its shares lower.
Its performance echoed that of BP on Tuesday, which posted a 45% drop in second-quarter profit, missing analysts' forecasts and prompting another cut to the group's 2016 investment budget to below $17 billion, Reuters reported.
Statoil posted a near 70% drop in adjusted operating profit to $913 million in the second quarter from $2.9 billion a year ago, well below expectations for $1.4 billion seen in a Reuters poll of analysts. It cut its 2016 target for capital spending to $12 billion from $13 billion and its 2016 exploration spending target to $1.8 billion from $2 billion. Statoil shares lost more than 3% on Wednesday.
All three divisions of the company performed below forecasts. It was Statoil's worst-ever adjusted operating profit after that posted in its first quarter.
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-Nilsen said in a note to clients.
For the international division, "at first glance it looks like the miss is solely explained by high operating expense," Sveen-Nilsen added. For its third division, marketing processing and renewable energy, Statoil cited weaker refinery margins, as did BP.
"Our financial results were affected by low oil and gas prices in the quarter," Chief Executive Eldar Saetre said in a statement.
Though oil prices have climbed more than 60% from a near 13-year low in January they remain more than 60% below their June 2014 peak.
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.
It also maintained its production guidance, expecting annual organic production growth of around 1% from 2014 to 2017.
