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Statoil (STO) to Remove "Oil" From Name, Rebrand as Equinor

Zacks Equity Research
Updated

Statoil ASA STO wants to rebrand itself as Equinor. The board of directors of the company wants to take out the "oil" from the name, expecting the move to reflect the company's growing interest and reach beyond petroleum.

Why Equinor?

The first part of the name, "Equi", stands for equal, equality and equilibrium, while "nor" indicates its Norwegian origin. As the company is trying to be at the front of the energy transition movement from oil and gas to greener sources, it wants to plough in 15-20% of its total spending in renewable energy by 2030, profoundly improving from 5% in 2017.

The company's strategy of developing a competitive portfolio, where low-carbon advantage takes a huge part, underpins the name change. Notably, in 2017, the company’s carbon emission reduction per barrel of oil equivalent increased more than 10% from the previous year. Moreover, in the last six months, the company has invested in offshore wind power and solar energy.

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Statoil's movement to rebrand itself comes just a few months after Norway’s trillion-dollar pension fund proposed to end its investments in oil and gas stocks. The government's intention was to steer away from the country's exposure to the volatility in the oil market.

Statoil expects the rebranding and focusing more on renewables to not change the company's backbone, the Norwegian continental shelf. The fate of rebranding will be decided on May 15, 2018, when the name will be proposed at the Annual General Meeting of the company. We note that 67% of the company is owned by the government of Norway, which has approved the change. Moreover, the unions of employees in the company are in favor of the move.

Per Bloomberg, the change of name is expected to cost the company in the range of 230 million kroner ($30 million)-250 million kroner.

About the Company

Statoil is a Norway-based major international integrated oil and gas company. The company has operations in all major hydrocarbon-producing regions of the world. It has an upstream focus on the Norwegian Continental Shelf. Due to strong offshore exposure, Statoil is a leader in subsea production. The company operates in four segments — Development and Production Norway, Development and Production International, Marketing, Midstream and Processing, as well as Other.

Price Performance

Statoil has gained 31.9% in the last year compared with 6.8% growth of its industry.

 

Zacks Rank and Other Stocks to Consider

Statoil sports a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks in the oil and energy sector are ConocoPhillips COP, Delek US Holdings, Inc. DK and Continental Resources, Inc. CLR, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based ConocoPhillips is an upstream energy player. Its revenues for first-quarter 2018 are anticipated to improve 9.6% from the prior-year quarter. The company witnessed a positive average earnings surprise of 144.5% in the trailing four quarters.

Brentwood, TN-based Delek US Holdings is a downstream energy company. Its revenues for 2018 are anticipated to improve 33.3% year over year. The company witnessed a positive earnings surprise of 25% in the fourth quarter of 2017.

Oklahoma City, OK-based Continental Resources is an oil and gas exploration and production company. Its revenues for first-quarter 2018 are expected to improve 53.8% from the year-ago quarter. For 2018, the bottom line is anticipated to be up 362.8%.

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