Lofty Scandinavian tax rates take a big bite out of the Nordic operators' bottom lines. International activity in lower tax regimes helps to offset that tax burden. Statoil's international expansion is doing wonders for its tax rate, and consequently its net earnings. With the firm's recently consummated merger with Norsk Hydro's
Lower taxes are a much-needed boost, given the high costs that are eating away at operating margins. Trailing-twelve-month production costs per BOE have risen over 10% this year. Given the global deepwater exploration fervor, I don't see cost pressures letting up any time soon.
Other elements of Statoil's performance were mixed. Price realizations faltered, but we can hardly blame the company for that. More importantly, production rose a modest amount -- nothing on the order of Apache's
Compared to its large peers, Statoil is performing quite well. If this firm intrigues you, keep an eye on the upcoming Norsk Hydro integration. If all goes well, we're looking at a seriously savvy offshore operator.
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