Story by The Wall Street Journal
Statoil ASA, the Norwegian oil company, has justified its decision to report quarterly earnings in dollars instead of local kroner from next year by the need to make its results more predictable in an industry dominated by dollar transactions.
One Statoil shareholder, however, stands to face more unpredictable yields from the oil firm: the Norwegian government.
With a 67% interest in the company, the government is on the receiving end of billions of kroner in Statoil dividends every year. This year, its share of the payout is expected to exceed 15 billion kroner, or nearly $2 billion.
When Statoil starts to calculate its annual dividend in dollars, the amount ending in the government’s pocket may fluctuate sharply, depending on the value of the Norwegian krone.
If the krone, which trades at 8.15 to the dollar, returned to its 20-year average of 6.80, it would shave off roughly 15% of the government’s windfall. But should the krone continue to slide against the dollar, the government would receive a bigger check from Statoil.
The Norwegian government said that Statoil had informed authorities about its decision to shift to the dollar, adding that the company was free to decide which currency it wanted to report its results.
The switch, announced earlier this week, was hailed by analysts, who said that it made sense since most of the company’s revenue, costs, and debts are denominated in dollars.
Statoil has set its second-quarter dividend in both dollars and kroner, at $0.2201 per share and 1.80 kroner per share, unchanged from previous quarters, but said third-quarter dividend will be announced solely in dollars.
The krone has weakened more than 20% against the dollar in the past year and is trading a near 13-year low, as plunging global oil prices have curbed economic growth prospects in the oil-focused Nordic country.