Investors who are eyeing Statoil’s growth prospects should also note that the Norwegian energy company is going through organizational upheaval. While the changes might help the partially government-owned company in the long run, they add uncertainty to Statoil’s earnings statements in the meantime.The company is trying to overcome the threat of declining oil fields on the home front by undertaking major investments and divestitures. For example, Statoil is betting on the growing U.S. onshore oil and gas industry. The company said Wednesday that its roughly $4.7 billion acquisition of Brigham Exploration last year, which has provided oil assets in North Dakota and Montana, is progressing according to plan.
Meanwhile the company sold its 54% stake in its retail unit Statoil Fuel & Retail ASA this week for around $1 billion in profit to Alimentation Couche-Tard Inc. The Canadian convenience store chain said Wednesday that most of the investors in the remaining portion of Statoil Fuel & Retail also agreed to its tender offer, which had been NOK 51.20 for each share they held.
Management has changed too. Statoil said Wednesday that its board deputy chairman Marit Arnstad resigned, effective immediately, and its nomination committee will start searching for a new board member. Arnstad, a former member of the Norwegian Parliament and minister of petroleum and energy from 1997 to 2000, was one of seven independent directors on Statoil’s 10 person board. She had been re-elected on June 13 to hold her position another year, but abandoned it after obtaining a place in the government as transport minister, according to news reports.
These recent transformations aren’t the only ones at Statoil in the recent past. For example, the U.K. residential natural gas supplier Centrica said in November 2011 that it bought Statoil’s fields in the Norwegian North Sea for £1 billion. After entering an agreement with Iraqi authorities in 2010 to develop the West Qurna 2 field with Lukoil, Statoil began transferring its 18.75% stake in the project to its Russian partner in the following year.
In part due to such developments, Statoil’s financial statements reflect an AGR score of 8, indicating higher accounting and governance risk than 92% of comparable companies. This doesn’t necessarily mean that Statoil is doing anything wrong. (The company actually has a C rating on its corporate governance overall and demonstrates numerous virtues, such as using environmentally-sustainable technology for petroleum storage or granting employees an annual bonus of up to 5% that is tied to financial targets.) But the low AGR score does show that as Statoil’s management grapples with change, it’s going to be harder for them to know and accurately report their earnings.
Investors in the company are making a risky bet.
Region: Western Europe
Industry: Integrated Oil / Gas
Market Cap: NOK 438,120.1mm (Large Cap)
ESG Rating: C
AGR: Very Aggressive (8)
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