Oil could take until 2018 to recover: Statoil CFO
Statoil (STL-NO) is still “investing a lot” in the sector, according to the Norwegian oil giant’s chief financial officer, but it is planning for oil to stay around $50 a barrel until 2018.
“We think that 2018 might be the year when we see a rebound (in oil prices) and that is taken into account in our planning assumptions,” Hans Jakob Hegge, chief financial officer of Statoil, told CNBC Europe’s “Squawk Box” Monday.
“In February this year we had the capital markets update and we looked at (assumptions of) $60, $70 and $80 (per barrel) for the years 2016, 2017 and 2018 and now some peers are talking about looking at (assumptions of) $50 a barrel so we’ll do another update in the new year.”
Investors braced themselves last week to hear how the lower price environment has impacted profits for oil majors. Oil prices have more than halved since June 2014 when a barrel of benchmark Brent crude fetched $114. On Monday, Brent was trading at $49.25.
Last week, Statoil posted-third quarter profits at nearly half of last year’s level despite ongoing efforts to cut costs. Similar to its peers, the Norwegian company is focused on maintaining its dividend and much of its exploration activity despite the volatile environment.
“We’ve taken down the capex (capital expenditure) from $18 billion this year to $17.5 billion and a further $1 billion lower this quarter, so we’re definitely working on the expenditure level in these volatile times,” he said.
Hegge, who has been CFO since August and is a member of CNBC’s CFO Council, said Statoil has more than 40 projects in its development portfolio although they have postponed many of them. However, he said the company was “still investing a lot.”
“This is the third highest investment level in history for the company, so we’re still investing a lot more money but we will definitely look at our plans and try to improve them, because we sanction projects when the timing is right,” he said.