Goldman Sachs Downgrades Statoil (STO) to Neutral on Weak European Demand

Goldman Sachs downgraded shares of Statoil ASA (NYSE: STO) to a Neutral rating from its previous rating of Buy and notes that shares have outperformed their peers by 16 percent since mid March of 2010.

The firm reports weak European demand during the fourth quarter may provide risk to the company's gas volumes and pricing. Goldman's overall view on the company's strategy remains positive due to STO's high-impact exploration and access to unconventional resources.

For the first quarter, Goldman forecasts the return of production growth due to strong volumes coming from three major projects; Peregrino, Pazflor and Skarv.

An analyst at Goldman comments, "Concerns about the company’s longer-term growth opportunities should be eased by exceptional success in exploration. Mid-range reserve estimates for its four large discoveries in Brazil and Norway add about 1.3 bn bls of high value crude, almost four years of current oil production. This is very encouraging, with further exploration upside from these discoveries, attractive acreage in East Africa and the GoM, and a strong position in three of the most attractive unconventional basins in the US."

For an analyst ratings summary and ratings history on Statoil ASA click here. For more ratings news on Statoil ASA click here.

Shares of Statoil ASA closed at $26.65 yesterday.

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