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Equinor reports net loss, collapse

in core earnings in Q2

NORWAY NORWAY’S Equinor suffered its fourth quar- Its gas production in Norway was down 8% in
terly loss in a row in the three months ending the second quarter at 694,000 boepd.
The company has June 30, after booking significant upstream Its oil output in the country was up 26% at
suffered its fourth net losses on low prices and production cuts. 643,000 boepd, thanks to rising supply at the
loss in a row. The company booked a net loss of $251mn in Johan Sverdrup project. It would have been
the period, compared with a loss of $705mn in higher but for government-mandated cuts intro-
the previous three months and a $1.48bn gain in duced in June.
the second quarter of 2019. This result was on the “Our financial results for the second quarter
back of $992mn of adjusted depreciation, amor- were impacted by very low realised oil and gas
tisation and net impairment losses. prices due to the COVID-19 pandemic, but also
Equinor’s earnings before interest and tax by a strong trading performance in volatile mar-
(EBIT) slumped to $354mn, down from $3.15bn kets,” CEO Eldar Saetre commented. “We have
a year earlier, and it swung to a net operating reduced costs, maintained solid operational per-
loss of $472mn, versus $3.52bn in the year-ago formance and continued to prioritise value over
period. Revenues tumbled 56% year on year, volume by deferring significant flexible gas pro-
landing at $7.6bn. duction to periods with higher expected prices.”
Unsurprisingly, Equinor blamed the weaker Equinor also made a gain from tax breaks
numbers primarily on the coronavirus (COVID- approved by the Norwegian government in early
19) pandemic and the resulting collapse in oil June.
and gas prices. All three of its upstream busi- The company in May abandoned its target
nesses – E&P Norway, E&P International and for a 7% growth in production, given market cir-
E&P USA – suffered adjusted earnings losses cumstances, but is yet to provide updated guid-
in the three months. But its midstream, market- ance. It is still forecasting 3% compound annual
ing and processing division managed $1.16bn growth between 2019 and 2026, thanks to new
in positive adjusted earnings, compared with a projects coming on stream.
$465mn loss a year earlier, thanks to the strong Equinor has also slashed spending plans for
performance of its trading division. 2020 and was the first major to cut its dividend.
Equinor produced 2.122mn barrels of oil It will pay out only $0.09 per share in the second
equivalent per day (boepd) in the period, up quarter, the same amount as for the first quarter,
1% y/y, as growth at Johan Sverdrup and other but two thirds less than what it had pledged at the
new projects was mostly countered by declines start of the year.
elsewhere. The company has also left its long-term price
Over 60% of the firm’s supply still comes from assumptions unchanged, unlike other European
fields in Norway, where it has been restricting majors. But it plans to update its price outlook in
gas flows for the much of the last year, keeping the third quarter, which will likely result in hefty
gas in the ground until prices sufficiently recover. write-downs. ™

P16 www. NEWSBASE .com Week 30 30•July•2020