There’s no pleasing the market these days. Shares of Statoil (STO) fell 1.54% to $24.96 today after the company reported first quarter earnings of $4.4 billion, its highest quarterly profit in three years and 33% higher than in the first quarter of 2017.
But the Wall Street consensus had been set at $4.56 billion in quarterly earnings so traders and investors sold today.
Statoil, the Norwegian national oil company, reported an increase in production to 2.18 million barrels of oil equivalent a day, up from 2.14 million barrels in the first quarter 2017. For all of 2018, Statoil reiterated its guidance for production growth of 1% to 2%. Capital spending will climb to $11 billion from $9.4 billion in 2017. The company also noted that cash generated from operations rose to $7.13 billion from $6.24 billion and its net debt ratio fell to 25.1% from 29% three months earlier.
Shares of Statoil in my 12-18 month Jubak Picks portfolio are up 18.8% since I added them to that portfolio on May 10, 2012.
Options in my Volatility Portfolio, the October 19, 2018 Call options with a strike at $25 (STO181019C00025000) fell 12% today and are now down 17% since I added them to this portfolio on April 12, 2018. (You can find my Volatility Portfolio on my subscription JubakAM.com site.)
I think the drop in share price is a buying opportunity on both the shares and the options–unless you think oil prices are headed down in the face of Middle East tensions. Statoil is my play on the price of Brent crude, which is more closely linked to events in the Middle East than is West Texas Intermediate, the U.S. benchmark.
