Statoil Settling At Current Levels

StatoilHydro ASA (STO: 21.94 -0.09 -0.41%) is a Norway-based major international integrated oil and gas company. The company emerged in its present shape following the acquisition of Norsk Hydro’s (NHY: 12.90 0.00 0.00%) oil and gas business, which was completed on October 1, 2007.

We are maintaining our Hold recommendation on StatoilHydro ADRs following the company’s weak first quarter results, reflecting weak oil prices, higher taxes and unfavorable currency movements. We continue to believe that the positives in the Statoil story — strong finances and a relatively improved asset base following the Norsk Hydro acquisition — are more than offset by its substantial exposure to the mature and high-cost Norwegian Continental Shelf basin, particularly in the current tentative commodity-price environment.

There is no dearth of attractive investment opportunities in the integrated space, and we would prefer to stick with the super-majors — Exxon (XOM: 72.92 +1.16 +1.62%) and Chevron (CVX: 69.35 +0.14 +0.20%) — for low-risk ideas and Marathon (MRO: 33.41 +0.09 +0.27%) for high-beta. Marathon shares have been star performers in the current rally, up more than 50% in the last 12 weeks.