Page 8 - Euroil Week 06 2020

EurOil PERFORMANCE EurOil
Equinor remains in red in Q4
The weak result came despite record production levels.
NORWAY
NORWEGIAN state oil company Equinor posted its second quarterly loss in a row on Feb- ruary 6, as a result of weaker prices and hefty impairment charges.
Its net loss for the three months ending December 31 came to $236mn, versus a $3.37bn profit a year earlier. The producer suffered a $1.1bn loss in the third quarter of 2019.
Adjusted earnings dropped 19% to $3.55bn, as revenues tumbled 32% to $15.17bn. Net operating income was $1.52bn, plunging from $6.75bn a year earlier, but improved from a loss of $469mn in the previous three months.
Equinor blamed the declines on $1.43bn of impairment fees related to associated compa- nies, derivatives and inventory hedge contracts, and write-down charges, as well as lower oil and gas prices.
The price at which Equinor sold its gas in its main market of Europe was down 31% year on year at $5.31 per mmbtu. Gas demand in Europe was sluggish this year, while increased imports of LNG drove down prices. Equinor sold its oil and other liquids at an average of $56.5 per barrel in the three-month period, down 4% compared with the same period in 2018.
“Record high production, reduced costs and continued strong capital discipline contributed to solid results in a quarter with lower commod- ity prices,” CEO Eldar Saetre said in a statement. “Going forward, we expect to grow production, returns and cash flow from a world-class project portfolio, representing 6bn barrels to Equinor with an average break-even oil price of below $35 per barrel.”
Equinor would have seen a much steeper decline in earnings were it not for the early Octo- ber launch of its Johan Sverdrup oil project in the North Sea. The field, with a break-even price of
only $30 per barrel, is already producing at a rate of 350,000 barrels per day (bpd). Output is slated to reach 440,000 bpd this summer, marking the end of its first development phase, and ramp up 660,000 bpd in the early 2020s under a second phase.
The field is operated by Equinor with a 42.6% stake, while Sweden’s Lundin Petroleum has 20%, Norway’s Petoro and Aker BP have 17.4% and 11.6%, and France’s Total has 8.44%.
Equinor’s production reached a record 2.198mn barrels of oil equivalent per day of oil and gas in the fourth quarter thanks to Svedrup’s start-up, up from 2.17mn boepd a year earlier. Full-year output averaged 2.074mn boepd, down from 2.111mn boepd in 2018, partly on natural decline and partly Equinor’s decision to cap gas production in response to low prices.
With further increases at Sverdrup, though, Equinor said it aimed to expand production by 7% in 2020, and achieve average annual growth of 3% between 2019 and 2026. Its exploration expenditure is seen falling to $1.4bn this year, from $1.6bn in 2019, while its capital expend- iture for 2020 is forecast at $10-11bn, versus $10bn last year.
Equinor also announced a 4% raise in its quarterly cash dividend to $0.27 per share, and the launch of the $675mn second tranche of a share buy-back programme, pending share- holder approval. Separately it also unveiled a new roadmap for reducing its net carbon intensity by at least 50% by 2050. This target will be reached by expanding Equinor’s wind generation busi- ness, making changes to its oil and gas portfolio, and using carbon capture and storage.
Other European producers have announced similar plans, including Lundin and Spain’s Rep- sol. ™
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