This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Review Of Financial Reporting For Statoil's 2012 Annual Report Completed

Stocks in this article: STL STO

STAVANGER, Norway, March 11, 2014 (GLOBE NEWSWIRE) -- Finanstilsynet (The Financial Supervisory Authority of Norway) has completed a periodic review of the consolidated financial statements of Statoil ASA (OSE:STL, NYSE:STO) for 2012.

The review has covered selected areas of Statoil's financial reporting for 2012. Finanstilsynet has identified three issues where it considers Statoil's practice not to be in accordance with International Financial Reporting Standards (IFRS).

Statoil's view is that the company's practice has been in line with IFRS. Having considered the three issues, Statoil has nevertheless decided to adapt its future practices in line with Finanstilsynet's view for two of the issues, as Statoil considers Finanstilsynet's view also to reflect an acceptable solution. Statoil will appeal the third issue to the Ministry of Finance. Both the current auditor (KPMG), and the auditor in the period up to and including 2011 (EY), concurred with Statoil's assessments as part of their audits of the financial statements.

The changes following from Finanstilsynet's evaluation of the two issues that Statoil is taking note of, will be reflected in the accounts for 2013. These relate to the calculation of value in use estimates applied for impairment purposes and the definition of cash generating units.

Statoil has assessed the impact of the two issues on its previously published financial statements in accordance with IAS 8, and has concluded that the issues in sum are not material for the historical periods in question. Finanstilsynet's conclusions regarding these issues will consequently not result in any changes to previously published accounts.

The two issues for which Statoil will adopt Finanstilsynet's interpretation are:

The use of reliability intervals in impairment tests. There is an inherent uncertainty related to several parameters that determine the valuation of Statoil's assets. In order to ensure an objective and systematic practice, Statoil has, in line with economic valuation theory, applied a reliability interval in connection with impairment tests. Finanstilsynet is of the opinion that this practice is not in accordance with IFRS. As a consequence, Statoil has discontinued this approach to valuation.

Identification of a cash generating units relating to onshore activities in the US. Unconventional oil and gas resources often cover an extensive geographical area. A principal question is therefore if, and when, it is required to divide such resources into smaller cash generating units for impairment testing purposes. The dialogue between Finanstilsynet and Statoil has focused on the Marcellus play in the US. Statoil has treated Marcellus as one cash generating unit, in line with established industry practice, and reflecting the early phase of development for the areas in question. Finanstilsynet is of the opinion that Marcellus should be split into more than one cash generating unit, and Statoil has changed its accounting approach in this matter.

The third issue relates to the timing of provision for a contract for import capacity for LNG to the US. The evaluation of the precise timing of the provision has been complex, and Statoil has discussed this matter thoroughly with its auditors (KPMG and EY) in order to ensure correct treatment in the historical periods in question. The provision was reflected in the financial statements in the first quarter of 2013. Finanstilsynet believes it should have been recognised in an earlier period. Statoil will file an appeal with the Ministry of Finance for this part of Finanstilsynet's decision. Statoil will also request a stay. Statoil's equity as of 2013 will not be impacted by the outcome of the appeal. If the appeal is not successful, Statoil's net income for 2013 will be improved with a corresponding negative impact in previous periods.

In its dialogue with Finanstilsynet, Statoil has described the thorough and professional assessments on which the company has based its practice. Common to all three issues is the fact that they relate to the valuation of non-financial assets. This is an area that requires deep insight and knowledge of the business and the markets, and depends upon professional judgement in the accounting assessments.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs