presentationstatoil phil energizing change

8/10/2019 Presentationstatoil Phil Energizing Change

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Agenda

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 naturalgas to the European

market

One of the world's

biggest sellers of

crude oil.


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About Statoil

0

50

100

150

200

250

300

2003 2002 2001 2000 1999

Total revenues

Net income

Founded 1972

Listed 2001

Total Turnover 2003

listed NOK 249 billion

24000 Employees


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About Statoil

Source: www.statoil.com/statoils_world

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 producingAngola
http://www.statoil.com/STATOILCOM/SVG00990.nsf/558c1c15aaac63f8c1256b74004a5bc3?OpenNavigatorhttp://www.statoil.com/STATOILCOM/SVG00990.nsf/558c1c15aaac63f8c1256b74004a5bc3?OpenNavigatorhttp://www.statoil.com/STATOILCOM/SVG00990.nsf/558c1c15aaac63f8c1256b74004a5bc3?OpenNavigatorhttp://www.statoil.com/STATOILCOM/SVG00990.nsf/558c1c15aaac63f8c1256b74004a5bc3?OpenNavigatorhttp://www.statoil.com/STATOILCOM/SVG00990.nsf/558c1c15aaac63f8c1256b74004a5bc3?OpenNavigatorhttp://www.statoil.com/STATOILCOM/SVG00990.nsf/558c1c15aaac63f8c1256b74004a5bc3?OpenNavigatorhttp://www.statoil.com/STATOILCOM/SVG00990.nsf/558c1c15aaac63f8c1256b74004a5bc3?OpenNavigator


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Shareholding

Listed June 2001; Oslo

and New York stock

exchanges

One-third of the

companys value was

permitted to to be sold

Main objective - to

strengthen the companys

competitive position andthe group with a broader

ownership base

Share price Oslo Stock Exchange2001-2004


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Shareholding

Government holds 76,3% of the shares

State ownership in Statoilstill important - ensuringthat company retains aNorwegian base.

State guidelines from theNorwegian Ministry ofPetroleum and Energy.

Statoils Board ofdirectorsresponsible fordevelopment

Rank Percent Name

1 76.33 The Norwegian State

2 2.28State 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

Top 10 Shareholders Sept. 2004


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Entry Barriers-Oil & Gas Market

Government restrictions on entry.

Major development projects or issues ofprinciple must be considered and approved bythe Storting. The oil and gas market is highlyregulated. Statoil has competitive advantage asa state owned company.

Economies of scale.

Benefit from producing on a large scale, whichmeans that the average cost of one barrel islower. Statoil is actively involved in the directtrade sector, delivering large quantities.


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Entry Barriers-Oil & Gas Market

Research and Development Expendi tureHeavy spending on research and developmentcan act as a strong deterrent to potentialentrants to the industry.

Statoils 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 forreviewing, defining and developing the

companys strategic market risk policies.

The main goals; ensure Statoils long termstrategic development and to reach targetsthrough 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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Emerging Markets Investment

Research

Venezuela

Russia


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Statoil in Venezuela

Largest oil reserves in the

western hemisphere

21,000 barrels of oil perday from the LL 652 and

Sincor fields,2003.

Committed 2004 to drill

three exploration wells in

the Plataforma Deltana

area

Statoil's share

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

Sincor LL652

Statoil's share


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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

Labour costs per hour (USD) 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

Economic FundamentalsCountry Investment Risk Venezuela


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Geopolitical, political and social risks areexpected to remain reasonably low until early2005.

Increasing risk factors: Bushs re-election Regional impact of the war on terrorism

Regional and Venezuela-specific US governmentpolicy goals

Hugo Chavezs government

Displaced from its position as the OPECs thirdlargest oil producer, due United Arab Emirates


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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 growth, fiscal and balance of

payments risksremain reasonably low through

2005

GDP slightly above average, though distributionvery uneven

Exportation of commodities: oil, gas and

aluminium

Rapid increases in public revenues



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So, Investment risk is expected to remainreasonably low through early 2005.

Low investment risk:

has been discounted in equities, leapedalmost 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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RegulatoryFramework

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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Capital & Credit Markets

Foreign debt credit rating raised from Caa1 to B2 (2004,Moodys)

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 torecord highs

CSE (Bolsa de Valores de Caracas)is the only StockExchange

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 onthe 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 Russias OAO

Gazprom Five service

stations in the Murmanskregion of north-western

Russia.


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Economic FundamentalsCountry 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

Budget balance (% of GDP)* 2.37 3.08 1.65 1.63

Public debt (% of GDP) 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

Foreign-exchange reserves (mUS$) 24,3 32,54 44,1 73,174


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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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High oil prices and strong global demand for oil -acceleration of growth in the country from thebeginning of 2004.

Forecast; GDP should grow by close to 7 percent in 2004, slowdown to 5.7 per cent expectedfor 2005.

Oil generates export revenues and taxes for the

state, but it creates few jobs. Financial crash 1998


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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 regulatoryframework

2000-2004, important structural reforms;

Package of laws to reduce bureaucratic

interference in businesses activities

Adoption of new codes of procedure for thevarious courts

Weakness, inefficiency and, in many cases,

corruption of the state administration, thejudiciary and the lawenforcement agencies

Arbitrary exercise of state power


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2) Bank Restructuring

Financial crisis of 1998 lead to reform of thesystem of banking regulation.

Since 2002; deposit insurance legislation, reformof the framework for prudential supervision,

steps to increase transparency in the sector,measures to facilitate the development ofspecific banking activities.

Emphasis on transparency will facilitate bettermonitoring of banks by private-sector agents.

Russias largest banks continue to be controlledby the state.


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3)Tax reformin the oil-sector of Russia

Russian tax reform implemented in 2002.

Changes in all three principle group of taxesimposed on oil producers;

Export duty scale became steeper and export duties,increased more rapidly.

Three resource payments: royalty, the tax for mineralresources reproduction and the excise tax on oil werereplaced by a single extraction tax (ET).

Oil extracting enterprises enjoyed profit tax ratereduction (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 TCSTARGET 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%

100 120 140 160 180 200 220 240 260 280 300 320


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Thank you for your

attention !

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