Is Statoil About To Pay For Its Exploration Failure?

Published at 02:55PM - 02/12/14

Market analysts believe that Statoil could be facing financial concerns following its failed exploration packages. These have required significant company investment. Exploratory target areas in the US Gulf, Norway and Angola were found to yield little by way of returns, and yet charter rigs were hired by Statoil at record rates.

To compound the issue, the price of oil has since plummeted and Statoil’s leadership team has been forced to commit to an in-depth cost cutting regime in order to meet its commitments for a dividend. However, any drastic bailout could damage prospects for future capacity.

The Norwegian company pursued a risky strategy when it decided to explore new markets, and now it needs to slash operational costs as deeply and as quickly as possible. Only two fields in Tanzania can be regarded as its major finds for this year. After a sustained period of significant investment, combined with investor expectations and dividend promises, its already strained cash flow could falter under the burden.

Last updated on 08:54AM - 04/12/14