Page 6 - EurOil Week 06 2022

EurOil COMMENTARY EurOil

Equinor generates

record profit in Q4

The company benefitted from its significant exposure to the European spot

market, which has cost it dearly in previous years

NORWAY EQUINOR plans to deal out $10bn in payments price, RBC said, noting that “as the European
to shareholders this year after achieving record integrateds embark on energy transition strate-
WHAT: fourth-quarter pretax profits, the company gies, our analyst suggests Equinor has multiple
Equinor profits reached announced on February 9. structural advantages versus its peers, and we
a record in the fourth The earnings surge came on the back of soar- expect these advantages to be more widely rec-
quarter. ing natural gas prices in Europe coupled with a ognised over time.”
growth in output. Bernstein said Equinor’s medium-term
WHY: Equinor is the most exposed of Europe’s lead- guidance was “solid, with capex pressure absent
The company gained from ing gas suppliers to the spot market. While this guiding to $10bn in 2022 and 2023, while cash
soaring gas prices at has hurt the company in the past, it allowed it to flow rises helped by a higher $65 per barrel deck
European hubs. capitalise on record high hub prices in late 2021. and the portfolio economies and resilience stand
The company posted $15bn in adjusted out.”
WHAT NEXT: earnings before tax in the three-month period, “Solid results, solid messaging, solid portfo-
Equinor plans to deal out beating the analyst consensus by $1.8bn and lio,” it said.
$10bn in payments to comparing with just $756mn in the final quarter The company intends to raise its regular quar-
shareholders following of 2022. Net operating income reached $13.6bn, terly dividend to $0.20 per share from $0.18 per
the robust result. versus a $3.4bn loss a year before, and Equinor share, and will also pay out an extraordinary div-
achieved a net income of $3.37bn, marking a idend of $20 per share for four quarters, reflect-
reversal from a $2.242bn loss. ing bullish market conditions. It also plans to
“We are capturing value from high prices for expand its share buybacks in 2022 to $5bn from
gas and liquids with excellent performance and $1.3bn last year, bring overall cash flow to $10bn.
increased production,” Equinor CEO Anders “Equinor delivers a set of results well ahead of
Opedal said in a statement. “In addition, contin- expectations, especially in terms of shareholder
ued improvements and capital discipline con- remuneration,” Jefferies said in a note to its cli-
tributes to the strong free cash flow of $25bn and ents. “The planned $10bn shareholder distribu-
a significant strengthening of our balance sheet.” tion for 2022 represents a 10% yield, which sets
Equinor sold its gas on average for $28.76 per Equinor at the very high end of the IOC sector
mmBtu in the three months in Europe, up from range.”
only $5.04 a year earlier. It also gained from an Equinor’s numbers for last year contrast
11% growth in gas production to 1.08mn barrels starkly with its weak performance in 202, when
of oil equivalent per day, supported by gains at it recorded record losses. The pandemic weighed
the Troll, Oseberg and Ging Krog fields. Overall down on oil and gas prices that year and led
hydrocarbon extraction rose by 6% to 2.16mn Equinor to book hefty write-downs.
boepd, partly also thanks to growth at Johan Equinor also said it would expand its climate
Sverdrup. ambitions over the next decade, targeting a 50%
“The key driver of the beat was in Norway, reduction in Scope 1 and 2 emissions by 2030
where gas volumes were up sharply as the com- across its global operations, versus a previous
pany tried to take advantage of the strong envi- goal of 40% that was for its Norwegian business
ronment, while it also benefited from a higher only. Furthermore, 90% of the cut will be abso-
tax shield on its marketing, midstream and pro- lute, meaning that they cannot be offset using
cessing losses,” RBC Capital said in a research carbon credits and similar schemes.
note. The bank added that Equinor’s gearing “The new ambition is aligned with the Paris
had fallen to close to zero in the fourth quarter, agreement and a pathway to limit global warm-
although it was impacted by a $3.2bn working ing to 1.5 degrees Celsius,” Opedal said. “This
capital build. is a significant step that will demand a great
Equinor has been outperforming its share effort.”™

P6 www. NEWSBASE .com Week 06 10•February•2022