Transcript Statoil - TypePad

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Agenda
•
•
•
•
•
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About Statoil
Shareholding
Entry Barriers
Remaining Multinational
Risks
Emerging Markets Investment Research
– Venezuela
– Russia
• Financing Investment Activities
• W.A.C.C and W.M.C.C Calculations
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About Statoil
• Statoil, an integrated
oil and gas company.
• One of the major
suppliers of natural
gas to the European
market
• One of the world's
biggest sellers of
crude oil.
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About Statoil
• Founded 1972
• Listed 2001
• Total Turnover 2003
listed NOK 249 billion
• 24000 Employees
300
250
200
Total revenues
150
Net income
100
50
0
2003
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2002
2001
2000
1999
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About Statoil
• 50% of employees work
outside Norway
• Operator of 20 oil and
gas fields
• Represented in 28
countries
• 2003 imp. Int. operations
– Gas fields Algeria
– New producing Angola
Source: www.statoil.com/statoils_world
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Shareholding
• Listed June 2001; Oslo
and New York stock
exchanges
• One-third of the
company’s value was
permitted to to be sold
• Main objective - to
strengthen the company’s
competitive position and
the group with a broader
ownership base
Share price Oslo Stock Exchange
2001-2004
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Shareholding
• Government holds 76,3
% of the shares
• State ownership in Statoil
still important - ensuring
that company retains a
Norwegian base.
• State guidelines from the
Norwegian Ministry of
Petroleum and Energy.
• Statoil’s Board of
directors – responsible for
development
Top 10 Shareholders Sept. 2004
Rank
Percent Name
1
76.33
The Norwegian State
2
2.28
State Street Bank and Trust
Co.
3
1.44
JP Morgan Chase Bank
4
1.07
Bank of New York
5
0.86
Mellon Bank AS Agent
6
0.71
The Northern Trust Co.
7
0.49
JP Morgan Chase Bank
8
0.47
Folketrygtfondet
9
0.43
Investors Bank and Trust
10
0.42
Deutsche Bank AG
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Entry Barriers
-Oil & Gas Market
• Government restrictions on entry.
Major development projects or issues of
principle must be considered and approved by
the Storting. The oil and gas market is highly
regulated. Statoil has competitive advantage as
a state owned company.
• Economies of scale.
Benefit from producing on a large scale, which
means that the average cost of one barrel is
lower. Statoil is actively involved in the direct
trade sector, delivering large quantities.
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Entry Barriers
-Oil & Gas Market
• Research and Development Expenditure
Heavy spending on research and development
can act as a strong deterrent to potential
entrants to the industry.
Statoil’s research expenditure were NOK 1,004
million 2003, NOK 736 million 2002 and NOK
633 million in 2001.
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International Strategy
• Health, safety and the environment
• Zero harm
• Cut its share of greenhouse gas by 1.5 million
tonnes of carbon dioxide
• Close cooperation between government,
industry, and a select few environmental NGOs
• Zero accept in corrupt activities in any country
– Statoil belongs to the anti-corruption sub-committee
• Staff training.
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Corporate Risk Management
• “Top-down” approach
• Corporate Risk Committee; responsible for
reviewing, defining and developing the
company´s strategic market risk policies.
• The main goals; ensure Statoil’s long term
strategic development and to reach targets
through protecting financial flexibility, i.e.
avoiding different categories of financial distress,
down-rating and protecting cash flows.
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Foreign Exchange &
Interest Rate Risks
• Forward foreign exchange
– Receivables and payables
– Borrowing in foreign currencies
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Venezuela
Emerging Markets Investment
Research
Russia
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Statoil in Venezuela
• Largest oil reserves in the
western hemisphere
• 21,000 barrels of oil per
day from the LL 652 and
Sincor fields,2003.
• Committed 2004 to drill
three exploration wells in
the Plataforma Deltana
area
Statoil's share
30,00%
25,00%
20,00%
15,00%
Statoil's share
10,00%
5,00%
0,00%
Sincor
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LL652
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Economic Fundamentals
– Country Investment Risk Venezuela
May 26th 2004
From the Economist Intelligence Unit
Source: Country data
2000
2001
2002
2003
GDP (% real change pa)
3.24
2.79
-8.88
-9.20
Government consumption (% of GDP)
7.23
8.59
8.06
8.90
Budget balance (% of GDP)
-1.65
-4.41
-4.80
-5.80
Public debt (% of GDP)*
27.01
30.41
38.35
38.60
3.22
3.44
2.45
2.11
Recorded unemployment (%)**
13.90
13.30
15.90
21.00
Foreign-exchange reserves (mUS$)
13,09
9,239
8,49
16
Labour costs per hour (USD)
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Economic Fundamentals
– Country Investment Risk Venezuela
• Geopolitical, political and social risks are
expected to remain reasonably low until early
2005.
• Increasing risk factors:
– Bush’s re-election
– Regional impact of the war on terrorism
– Regional and Venezuela-specific US government
policy goals
– Hugo Chavez’s government
– Displaced from its position as the OPEC´s third
largest oil producer, due United Arab Emirates
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Economic Fundamentals
– Country Investment Risk Venezuela
• Oil sector: 25% of GDP, 80% of Venezuela's
total exports and 50% of the government
income.
• Production decline; GDP fell 8.9% in 2002 and
9.2% in 2003
• Unemployment 21% and inflation 27.1% in 2003
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Economic Fundamentals
– Country Investment Risk Venezuela
• Economic growth, fiscal and balance of
payments risks – remain reasonably low through
2005
• GDP slightly above average, though distribution
very uneven
• Exportation of commodities: oil, gas and
aluminium
• Rapid increases in public revenues
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Economic Fundamentals
– Country Investment Risk Venezuela
• So, Investment risk is expected to remain
reasonably low through early 2005.
• Low investment risk:
– has been discounted in equities, leaped
almost 250 % higher in 2003
– cheap international bonds // Latin America //
other other oil producing emerging markets.
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Financial Sector
• Chavez survived the referendum with 58% of the
votes
– fiscal profligacy will keep the public finances in deficit,
despite firm oil prices
– continue attract FDI with the aim of boosting fiscal oil
revenue
– non-oil FDI put off by uncertain legal and regulatory
regime
– domestic investment and profitability will remain
crippled by price and exchange controls.
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Policy Issues
• Petroleum,mainstay of the economy since the
1920s
• 80% of export revenue
• 25% of GDP
• largely uncompetitive manufacturing industries
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Legal System
• Republic and a federal state
• The President of the Republic, same as Head of
State and Head of issues for example
regulations for the execution of laws
• Legal rules:national, state and municipal.
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Regulatory Framework
• System to prevent and prosecute corruption
• Fines and/or prison sentences
• Technical Judicial Police - open cases
– private bankers for the 1994-95
financial crisis
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Banking System
•
•
•
•
Commercial banks
Government-owned banks
Foreign-owned banks
Commercial banks comprise the largest group
– accept demand deposits (checking accounts) without
paying interest
• Savings accounts and time deposits are freely
negotiated on a minimum 30 days term
• Lending is almost all short term, not exceed
three years.
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Banking System
• Central bank is legally an independent entity
• Operates under the control of the Ministry of
Finance
• Responsible; government monetary, tax and
foreign exchange policies
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Capital & Credit Markets
• Foreign debt credit rating raised from Caa1 to B2 (2004,
Moody’s)
• Fitch Ratings upped the country's credit rating to "BB-"
from "B+" with a stable outlook 2004.
• keep up payments of foreign debt after oil prices rose to
record highs
• CSE (Bolsa de Valores de Caracas)is the only Stock
Exchange
– common/ ordinary shares and preferred shares
– owned by brokers the National Securities
Commission (CNV)
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Capital & Credit Markets
• Second highest growth in the world in 2003
• 2004, the Caracas bourse is leading the ranking
• To obtain dollars; buy shares in CANTV
exchange them for US deposit receipts listed on
the New York Stock Exchange
• The telephone company, 40% of trading volume,
the only stock in demand by foreign investors
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Statoil in Russia
• Representation office in
Moscow since August
1991.
• Cooperation with Lukoil,
Gazprom and Rosneft
• Cooperated in 1995-2000
with Russia’s OAO
Gazprom Five service
stations in the Murmansk
region of north-western
Russia.
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Economic Fundamentals
– Country Investment Risk Russia
May 26th 2004
From the Economist Intelligence Unit
Source: www.eonomist.com
2000
2001
2002
2003
GDP (% real change pa)
10.05
5.09
4.66
7.33
Government consumption (% of GDP)
15.09
16.44
17.69
16.89
2.37
3.08
1.65
1.63
62.15
49.35
42.01
34.80
Labour costs per hour (USD)
0.44
0.63
0.78
1.00
Recorded unemployment (%)
10.49
9.03
8.00
8.47
24,3
32,54
44,1
73,174
Budget balance (% of GDP)*
Public debt (% of GDP)
Foreign-exchange reserves (mUS$)
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Economic Fundamentals
– Country Investment Risk Russia
• Oil and gas; 20 percent of Russia's economy, 55
percent of export earnings, 40 percent of total
tax revenues.
• The world's second largest oil exporter
• Its subsoil contains 33 percent of the world's gas
reserves
• Supplies 30 percent of Europe's gas needs.
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Economic Fundamentals
– Country Investment Risk Russia
• High oil prices and strong global demand for oil acceleration of growth in the country from the
beginning of 2004.
• Forecast; GDP should grow by close to 7 per
cent in 2004, slowdown to 5.7 per cent expected
for 2005.
• Oil generates export revenues and taxes for the
state, but it creates few jobs.
• Financial crash 1998
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Economic Fundamentals
– Country Investment Risk Russia
• Trend towards real exchange rate appreciation.
• Investment risk expected to remain low over the
short and medium-terms.
• In the long-term, investment risk is expected to
increase.
• Political risk is expected to remain low over all
investment horizons.
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Financial Sector
1) Policy, legal and regulatory framework
2) Bank Restructuring
3) Tax Reform in the oil-sector of Russia
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1) Policy, legal and regulatory
framework
•
•
•
•
2000-2004, important structural reforms;
Package of laws to reduce bureaucratic
interference in businesses’ activities
Adoption of new codes of procedure for the
various courts
Weakness, inefficiency and, in many cases,
corruption of the state administration, the
judiciary and the lawenforcement agencies
Arbitrary exercise of state power
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2) Bank Restructuring
• Financial crisis of 1998 lead to reform of the
system of banking regulation.
• Since 2002; deposit insurance legislation, reform
of the framework for prudential supervision,
steps to increase transparency in the sector,
measures to facilitate the development of
specific banking activities.
• Emphasis on transparency will facilitate better
monitoring of banks by private-sector agents.
• Russia’s largest banks continue to be controlled
by the state.
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3)Tax reform
in the oil-sector of Russia
• Russian tax reform implemented in 2002.
• Changes in all three principle group of taxes
imposed on oil producers;
– Export duty scale became ‘steeper’ and export duties,
increased more rapidly.
– Three resource payments: royalty, the tax for mineral
resources reproduction and the excise tax on oil were
replaced by a single extraction tax (ET).
– Oil extracting enterprises enjoyed profit tax rate
reduction (from 35% to 24%)
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W.A.C.C & W.M.C.C
Calculations
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Statoil Capital Cost
 Kd= Weighted Average Interest Rate= 4.06 %
 Ki= Kd x (1 - T)= 3.87 x (1 - 0.4)= 2.44%
 Ks= D1/P0 + g= 2.95/ 96 + 0.017= 4.80%
 Kn= D1/Nn + g= 2.95/ 77 + 0.017= 5.60%
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Statoil TCS
TARGET CAPITAL STRUCTURE

Long Term Debt = 64%

Common Stock Equity = 36%
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Statoil Breaking Points
Assumtion of Ki up to 70% of total balance sheet
gives an Afi of 130 184 250 NOK
BPLTD = 130 184 250 / 0.64= 203 412 891 NOK
BPCSE = 46 758 000 / 0.36= 129 883 333 NOK
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Statoil W.A.C.C Calculations
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IOS Schedule
12%
10%
8%
6%
4%
2%
100
120
140
160
180
200
220
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240
260
280
300
320
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Thank you for your
attention !
QUESTIONS?
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