Page 11 - Euroil Week 19 2020

EurOil PERFORMANCE EurOil
Equinor sees Q1 income evaporate amid price crunch
NORWAY
Equinor has taken a number of steps to boost cash flow.
NORWAY’S Equinor saw its operating income almost evaporate in the first quarter, as a result of the steep decline in oil prices in March.
The company reported a net operating profit of only $58mn in the three-month period, versus an income of $4.73bn a year earlier and $1.52bn in the previous quarter.
Equinor is the latest major to be stung by the collapse in oil and gas prices, caused by efforts to slow the spread of the coronavirus (COVID-19) pandemic. It booked $2.32bn in impairments in the period, mostly relating to its Norwegian and US onshore operations. This led the compa- ny’s pre-tax income to plunge to $81mn, from $4.88bn a year earlier. Post-tax it swung to a net loss of $705mn, from a $1.85bn profit.
The weak earnings came despite Equinor achieving a strong quarter operationally. Out- put reached a new height in the first quarter of 2.23mn barrels of oil equivalent per day (boepd), up 3% year on year. This growth came on the back of rising contributions from the Johan Sver- drup oil project, which was launched last Octo- ber and reached its first-phase plateau of 470,000 barrels per day (bpd) in late April.
This gain was more than offset by weaker prices, however, with the price at which Equinor sells its liquids falling 21% to $44.2 per barrel. Its gas prices were down 41% in both Europe and North America, averaging $4.06 and $1.86 per
mmBtu respectively.
Equinor has also suspended its 2020 produc-
tion guidance, having previously forecast 7% growth this year. It did so in light of Norway’s decision to impose production cuts starting next month. However, it stuck by its long-term projection of 3% annual growth between 2019 and 2026.
The company has also taken a number of steps to protect its cash flow. Earlier it suspended its $5bn buyback scheme, raised $5bn in debt due between 2025 and 2050 and cut its dividend by around two thirds. It has also scaled back its capital expenditure plan for this year, from $10bn to $8.5bn.
“We will continue to prioritise value over vol- ume and have already reduced activity, particu- larly in the US onshore,” CEO Eldar Saetre said in a statement. “We will consider further activity reductions and use the flexibility we have in our portfolio as necessary.”
Equinor also struck a deal on May 6 to shed its 4.9% stake in Sverdrup partner Lundin Energy for SEK3.3bn ($336mn). It did not identify the buyer.
The company gave up a 16% holding in the Swedish player last year, in exchange for $650mn in cash and an extra 2.6% interest in Sverdrup, raising its share in the North Sea field to 42.6% and leaving Lundin with 20%. ™
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