Yet another of the seemingly countless international energy investment opportunities posted results today. While Norwegian Statoil's
Top-line results will look very familiar if you've followed other big oil names like ExxonMobil
Likewise, profitability was still solid. Net income rose 51% as reported, and the company's production costs still look pretty good.
The big question, though, is how long this can and/or will last. Production guidance has been a bit dicey in the recent past, and while Statoil has the enviable position of being a major supplier of natural gas in Europe, the reserve life is quite low.
To that end, Statoil has been investing a lot of capital into new exploration, acquisition, and production of energy-producing assets. The question could be asked, though, whether the company is spending too much. It hasn't seemed shy about contracting with offshore drillers like Transocean
This is all, admittedly, something of a catch-22. If I criticize the company for low reserve life and production growth, obviously I can't criticize it for needing to spend more money acquiring assets and drilling new wells -- and the company has little choice but to pay up at today's rates.
All that said, I think this is one that's best left on the shelf. While there's a slim chance that Russia and Europe will escalate their feud over natural gas to a point at which Russia shuts off the tap (making Statoil's gas possibly even more valuable), that's not enough to get me interested. In addition to a controlling government ownership stake, there's just not much here that makes Statoil stand out as a great alternative. With so many other major oil companies trading at similar, or better, valuations, I think Foolish shoppers can find better deals elsewhere.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).