Equinor third quarter 2019 results
October 24 2019 - 12:43AM
Equinor (OSE: EQNR, NYSE: EQNR) reports adjusted
earnings of USD 2.59 billion and USD 1.08 billion after tax in the
third quarter of 2019. IFRS net operating income was negative USD
0.47 billion and the IFRS net income was negative USD 1.11 billion,
following net impairments of USD 2.79 billion mainly due to more
cautious price assumptions.
- Financial results impacted by lower prices and deferral of gas
production to capture higher value
- High activity level with five new projects on stream since
second quarter
- Strong progress in building industrial scale within renewable
energy
- Clean-up operation at South Riding Point in the Bahamas
following Hurricane Dorian
- Introduction of a USD 5 billion share buy-back programme over
three years
“We maintain strong cost and capital discipline, but our results
are impacted by lower commodity prices in the quarter. In addition,
we have decided to use our flexibility to defer gas production to
periods with higher expected prices. Based on our strong balance
sheet and outlook for profitable growth, we have in the quarter
demonstrated our commitment to capital distribution and are
executing the first tranche of a 5-billion-dollar share buy-back
programme,” says Eldar Sætre, President and CEO of Equinor ASA.
“Since the beginning of third quarter, we have started
production from Trestakk, Mariner, Snefrid Nord, Utgard, and Johan
Sverdrup. At Johan Sverdrup, the field has already achieved a daily
production above 200,000 barrels. The five new fields are expected
to deliver on average more than 200,000 high value barrels per day
net to Equinor in 2020. We are developing a portfolio of profitable
projects with low CO2 emissions, and we are on track to deliver
strong production growth in 2020 and a 3% average annual production
growth from 2019 to 2025,” says Sætre.
“The last few months have been a game-changer for our offshore
wind business. Together with SSE, we were the winning bidder with
three projects at Dogger Bank in the UK, making it the largest
offshore wind farm development in the world. In addition, we won
the opportunity to develop Empire Wind offshore New York, delivered
development plans for Hywind Tampen and realised significant value
from the farm-down in the Arkona wind farm offshore Germany,” says
Sætre.
Adjusted earnings [5] were USD 2.59 billion in the third
quarter, down from USD 4.84 billion in the same period in 2018.
Adjusted earnings after tax [5] were USD 1.08 billion, down from
USD 1.99 billion in the same period last year. Lower prices for
both liquids and gas impacted the earnings for the quarter.
Underlying operating costs and administrative expenses are
stable from the same period last year. The Marketing, Midstream and
Processing segment has delivered strong trading results. Invoiced
European gas prices were more than 50% higher than average spot
prices, based on realised gains from the longer dated gas sales
contracts.
IFRS net operating income was negative USD 0.47 billion in the
third quarter, down from USD 4.60 billion in the same period of
2018. IFRS net income was negative USD 1.11 billion in the third
quarter, down from positive USD 1.67 billion in the third quarter
of 2018. Net operating income was impacted by net impairment
charges of USD 2.79 billion, of which USD 2.24 billion relates to
unconventional onshore assets in North America, mainly as a result
of more cautious price assumptions.
Equinor delivered total equity production of 1,909 mboe per day
in the third quarter, down 8% from the same period in 2018. The
flexibility in the gas fields is used to delay production to
periods with higher expected gas prices. High turnaround activity
also impacted the production. Successful start-ups and ramp-up of
new fields as well as new well capacity partly offset the reduction
in production. The Johan Sverdrup field was put in production 5
October and currently five wells are producing. All eight
pre-drilled wells are expected to be put in production by the end
of November, giving a production capacity well above 300.000
barrels per day. The field is expected to reach plateau during
summer 2020.
As of the end of third quarter 2019, Equinor has completed 32
exploration wells with 14 commercial discoveries. Adjusted
exploration expenses [5] in the quarter were USD 0.26 billion,
compared to USD 0.24 billion in the same quarter of 2018, with more
wells drilled and completed.
Cash flows provided by operating activities before taxes paid
and changes in working capital amounted to USD 16.60 billion for
the first nine months of 2019 compared to USD 20.43 billion in the
same period of 2018. Organic capital expenditure [5] was USD 7.38
billion for the first nine months of 2019. At quarter end, net debt
to capital employed1 was 22.5%, also impacted by currency effects
and the impairments in the quarter. Following the implementation of
IFRS 16, net debt to capital employed [1] was 28.4%.
The board of directors has decided on a dividend of USD 0.26 per
share for the third quarter. In the third quarter Equinor launched
a share buy-back programme of up to USD 5 billion over a period
until the end of 2022. In the first tranche shares will be
purchased for up to USD 500 million in the market, and by the end
of the third quarter shares for USD 91 million have been settled
and paid.
The twelve-month average Serious Incident Frequency (SIF) was
0.6 for the twelve months ended 30 September 2019, compared to 0.5
for the same period a year ago. In the aftermath of Hurricane
Dorian, Equinor has mobilised significant resources to safeguard
people and the environment, and to clean up the spills at and
around the South Riding Point terminal in the Bahamas.
* * *
[1] This is a non-GAAP figure. Comparison numbers and
reconciliation to IFRS are presented in the table Calculation of
capital employed and net debt to capital employed ratio as shown
under the Supplementary section in the report.
[5] For adjustments to net operating income, see Use and
reconciliation of non-GAAP financial measures in the Supplementary
disclosures.
* * *
Further information from:
Investor relations Peter Hutton, senior vice
president Investor relations, +44 7881 918 792 (mobile)
Helge Hove Haldorsen, vice president Investor Relations North
America, +1 281 224 0140 (mobile)
Press Bård Glad Pedersen, vice president Media
relations, +47 918 01 791 (mobile)
This information is subject to the disclosure requirements
pursuant to Section 5-12 the Norwegian Securities Trading Act
- Equinor-CFO-presentation-3rd-Quarter-2019-results
- Equinor-Press-release-Third-quarter-2019-results
- Equinor-Third-Quarter-2019-Financial-statements-and-review
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