UNITED STATES
SECURITIES AND EXCHANGE
 
COMMISSION
WASHINGTON,
 
DC 20549
 
FORM 6-K
REPORT OF FOREIGN PRIVATE
 
ISSUER
PURSUANT TO RULE 13a
 
-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT
 
OF 1934
 
29 October 2020
Commission File Number 1-
 
15200
Equinor ASA
(Translation of registrant’s
 
name into English)
 
FORUSBEEN 50, N-4035, STAVANGER,
 
NORWAY
(Address of principal executive offices)
 
Indicate by check mark whether the
 
registrant files or will file annual
 
reports under cover of Form 20
 
-F
 
or Form 40-F:
 
Form 20-F
X
 
Form 40-F
 
Indicate by check mark if the registrant
 
is submitting the Form 6-K in
 
paper as permitted by Regulation S
 
-T Rule 101(b)(1):_____
 
Indicate by check mark if the registrant
 
is submitting the Form 6-K in
 
paper as permitted by Regulation S
 
-T Rule 101(b)(7):_____
 
This report on Form 6-K is being filed
 
for the purposes of incorporation
 
by reference in the Registration
 
Statements on Form F-3
 
(File No. 333-
239808) and Form S-8 (File No.
 
333-168426).
 
This report shall be deemed filed
 
and incorporated by reference in such
 
Registration
Statements and shall be deemed
 
to be a part thereof from the date
 
on which this report is furnished,
 
to the extent not superseded by
documents or reports subsequently
 
filed or furnished.
 
This document includes portions from
 
the previously published results
 
announcement of Equinor ASA as of,
 
and for the nine months ended
 
30
September 2020, as revised to comply
 
with the requirements of Item
 
10(e) of Regulation S-K regarding
 
non-GAAP financial information
promulgated by the U.S. Securities
 
and Exchange Commission regarding
 
non-GAAP financial information. This document does not update or
 
otherwise supplement the information contained in the previously
 
published results announcement.
 
 
 
 
Equinor
 
third
 
quarter
 
2020
 
results
Equinor reports IFRS net
 
operating income of negative
 
USD 2.02 billion and IFRS
 
net income of negative USD
 
2.12 billion in
the third quarter of 2020
 
,
 
following
 
net impairments of USD
 
2.93 billion mainly due to reduced
 
future price assumptions.
 
 
 
Solid results from operations
 
in a low-price environment
 
 
On track to deliver on
 
USD 3 billion action plan
 
to strengthen financial
 
resilience
 
Strong value creation
 
from renewables
 
Net debt ratio
(1)
 
increased to 31.6%, due
 
to net impairments
 
and payment for government
 
share of share buy-back
“Our financial results
 
are impacted by weak
 
prices as regions across
 
the world are still severely
 
affected by the pandemic.
 
We see the
results of our forceful
 
response to the market turmoil,
 
with significant cost improvements
 
and strict financial discipline.
 
Net impairments
in the quarter are
 
mainly due to reduced price assumptions.
 
Significant uncertainty
 
remains around the future
 
commodity price
development underlining
 
the importance of increased
 
competitiveness and
 
financial resilience,” says
 
Eldar Sætre, President and
 
CEO
of Equinor ASA.
 
“We deliver solid
 
operational results in the
 
quarter with an underlying
 
production growth of nine
 
percent. We progress
 
our competitive
project portfolio, supported
 
by the tax policy measures
 
in Norway,
 
with the delivery of
 
Plan for Development and
 
Operation of the
Breidablikk field.
 
Our specialised organisation
 
for late-life
 
production at the
 
Norwegian continental shelf
 
had a successful start
 
-up
showing improved production
 
efficiency and reduced
 
cost,“
 
says Sætre.
 
“We continue to
 
capture value from our renewable
 
energy portfolio and position
 
ourselves for profitable growth
 
in value chains for
carbon capture and
 
storage. This quarter we
 
announced our partnership
 
with BP,
 
including the divestment
 
of half of our share
 
of
offshore wind projects
 
Empire Wind and Beacon
 
Wind in the US.
 
We are progressing
 
H2H Saltend, a project
 
for large-scale
production of hydrogen
 
in the UK, and in Norway
 
we are progressing the Northern
 
Lights project as part
 
of creating full value chains
for carbon capture,
 
transportation and storage
 
,” says Sætre.
 
Equinor is on track
 
to deliver on the action plan
 
launched in March 2020
 
of USD 3 billion to strengthen
 
financial resilience,
 
including a
reduction of operating
 
costs of USD 0.70 billion.
 
Unit production costs are
 
significantly reduced from
 
third quarter last year.
 
 
In the E&P Norway segment
 
,
 
Equinor saw weak
 
prices impacting the
 
results but took advantage
 
of the flexibility in gas
 
production as
gas prices in Europe
 
recovered through the
 
quarter.
 
Results in the E&P International
 
segment were impacted
 
by low prices, partially
 
offset by a substantial
 
reduction in costs. The E&P
USA segment was also
 
impacted by weak prices,
 
while continuing efforts
 
to reduce activity and costs.
 
The Marketing, midstream
 
and processing segment
 
captured value from
 
gas sales to Europe, offset
 
by slightly negative refinery
margins in the quarter.
 
New energy solutions
 
delivered a positive result
 
in the quarter, including
 
costs related to maturation
 
of new projects. A capital
 
gain of
around USD 1 billion
 
from the divestment of
 
a 50% non-operated interest
 
of the offshore wind
 
projects Empire Wind
 
and Beacon Wind
in the US is expected
 
to be booked in the
 
first quarter of 2021.
 
 
IFRS net operating
 
income was negative
 
USD 2.02 billion in the third
 
quarter, down from
 
negative USD 0.47 billion
 
in the same period
of 2019. IFRS net income
 
was negative USD 2.12
 
billion in the third quarter,
 
down from negative USD 1.11
 
billion in the third quarter
of 2019. Net operating
 
income was impacted
 
by net impairment of USD 2.93
 
billion mainly due
 
to reduced future price
 
assumptions as
well as some reduction
 
s
 
in reserves estimates. Net
 
impairment include USD 1.38 billion
 
in the E&P USA segment,
 
of which USD 1.21
billion is related to US onshore.
 
Impairments in the E&P International
 
segment were USD 1.18
 
billion, while impairments
 
within the
E&P Norway segment was
 
USD 0.37 billion.
 
In total, USD 0.58
 
billion of the net impairment
 
was recognised as exploration
 
expenses.
 
Equinor delivered total
 
equity production of 1,994
 
mboe per day in the third quarter,
 
up from 1,909 mboe per
 
day in the same period in
2019, with an increased
 
share of gas.
 
Adjusting for portfolio
 
transactions and government
 
-imposed curtailments, this
 
represents an
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
underlying production
 
growth of around 9% compared
 
to the third quarter of
 
2019.
 
At the end of the
 
third quarter Equinor has completed
 
26 exploration wells
 
with 13 commercial discoveries
 
and two wells under
evaluation. At the quarter
 
end,
 
16 wells were ongoing. Exploration
 
expenses in the quarter
 
were USD 0.89 billion,
 
compared to USD
0.87 billion in the
 
same quarter of 2019.
 
Cash flows provided
 
by operating activities
 
before taxes paid and changes
 
in working capital amounted
 
to USD 10.2 billion in
 
the first
nine months of 2020,
 
compared to USD 16.6 billion
 
in the first nine months of
 
2019. IFRS capital expenditure
(2)
 
was USD 6.95
 
billion
for the first nine months
 
of 2020. Organic capital
 
expenditure [5] was USD 5.99
 
billion for the first nine months
 
of 2020. At the closing
of the quarter net
 
debt to capital employed
(3)
 
was 31.6%, up from 29.3
 
%
 
at the end of the second
 
quarter of 2020,
 
mainly impacted by
the net impairment
 
in the quarter,
 
as well as share buy-back
 
from the Norwegian state
 
.
 
Following the implementation
 
of IFRS 16, net
debt to capital employed
(3)
 
was 37.0%.
 
The board of director
 
s
 
has decided a cash dividend
 
of USD 0.11 per
 
share for the third quarter 2020.
 
The twelve-month average
 
Serious Incident Frequency
 
(SIF) for the period
 
ending 30 September
 
was 0.6 for 2020, similar
 
to the
same period for 2019.
 
The twelve-month average
 
Recordable Injury Frequency
 
(TRIF) for the period
 
ending 30 September
 
was 2.3 for
2020, compared to
 
2.5 in 2019.
 
 
Quarters
Change
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million, unless stated otherwise)
2020
2019
Change
(2,019)
(472)
(469)
>(100%)
Net operating income/(loss)
(2,434)
7,783
N/A
(2,124)
(251)
(1,107)
(92%)
Net income/(loss)
(3,080)
2,081
N/A
1,994
2,011
1,909
4%
Total equity
 
liquids and gas production (mboe
 
per day) [4]
2,079
2,032
2%
38.3
22.9
52.5
(27%)
Group average liquids price (USD/bbl)
 
[1]
35.2
55.8
(37%)
2
 
Defined as Additions to PP&E, intangibles
 
and equity accounted investments
 
in note 2 Segments to the Con
 
densed financial interim
statements.
 
3
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GROUP REVIEW
Third quarter 2020
Total equity liquids
 
and gas production
[4] was 1,994 mboe per day in the third
 
quarter of 2020, up 4% compared
 
to 1,909 mboe per day in
the third quarter of 2019 mainly
 
due to new fields on the NCS and
 
UKCS. Increased flexible
 
gas production added to the increase,
 
partially
offset by expected natural decline
 
mainly on the NCS, production halt
 
in Brazil and divestment of the Eagle
 
Ford asset in the E&P USA
segment in the fourth quarter of 2019.
 
 
Total entitlement
 
liquids and gas production
[3] was 1,865 mboe per day
 
in the third quarter of 2020, up 7%
 
compared to 1,745 mboe per
day in the third quarter of 2019. In
 
addition to the factors mentioned
 
above, production was positively
 
influenced by lower effects
 
from
production sharing agreements (PSA)
 
[4], and lower US royalty volumes.
 
The net effect of PSA and US
 
royalties was 129 mboe per
 
day in
total in the third quarter of 2020 compared
 
to 164 mboe per day in the
 
third quarter of 2019.
 
 
Quarters
Change
Condensed income statement under IFRS
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(unaudited, in USD million)
2020
2019
Change
11,339
7,603
15,610
(27%)
Total revenues
 
and other income
34,073
49,189
(31%)
(5,307)
(2,750)
(7,667)
(31%)
Purchases [net of inventory variation]
(15,453)
(22,928)
(33%)
(2,368)
(2,411)
(2,922)
(19%)
Operating and administrative expenses
(7,382)
(8,063)
(8%)
(4,798)
(2,522)
(4,619)
4%
Depreciation, amortisation and net
 
impairment losses
(11,757)
(9,039)
30%
(886)
(393)
(871)
2%
Exploration expenses
(1,914)
(1,374)
39%
(2,019)
(472)
(469)
>(100%)
Net operating income/(loss)
(2,434)
7,783
N/A
(201)
(248)
340
N/A
Net financial items
(426)
489
N/A
(2,220)
(720)
(129)
>(100%)
Income before tax
(2,859)
8,272
N/A
95
469
(978)
>(100%)
Income tax
(221)
(6,191)
(96%)
(2,124)
(251)
(1,107)
(92%)
Net income/(loss)
(3,080)
2,081
N/A
 
Net operating income
 
was negative USD 2,019
 
million in the third quarter
 
of 2020, compared to
 
negative USD 469 million in
 
the third
quarter of 2019. The
 
decrease was mainly
 
due to lower liquids and
 
gas prices in addition
 
to net impairments
4
 
primarily related to
reduced price assumptions
5
 
and negative reserve
 
updates. Strong results
 
from liquids trading in the
 
MMP segment in addition
 
to lower
operational and administrative
 
expenses, especially in
 
the MMP segment, partially
 
offset the decrease.
In the third quarter of
 
2020, net operating income
 
was negatively impacted
 
by net impairments
 
of USD 2,928 million
 
and provisions of
USD 108 million.
 
Changes in fair value of derivatives
 
and inventory hedge contracts
 
of USD 352 million partially
 
offset the decrease.
 
In the third quarter of
 
2019, net operating income
 
was negatively impacted
 
mainly by net impairment
 
s
 
of USD 2,794 million,
 
provisions
of USD 560 million
 
and changes in fair value
 
of derivatives and inventory
 
hedge contracts of USD 444
 
million and positively affected
by gain from sale of
 
assets of USD 849 million.
Total revenues
 
and other income
were USD 11
 
,339 million in the
 
third quarter of 2020 compared
 
to USD 15,610 million
 
in the third
quarter of 2019. The
 
decrease was mainly
 
due to lower average
 
prices for liquids
 
and gas.
Purchases [net of inventory variation]
 
[6] were USD 5,307
 
million in the third quarter
 
of 2020, compared to
 
USD 7,667 million in the
third quarter of 2019.
 
The decrease was mainly
 
due to lower average prices
 
for liquids and gas.
4
 
For more information, see note 2
 
Segments to the Condensed
 
interim financial statements.
5
 
For more information, see note 6
 
Property, plant
 
and equiptment and intangible assets
 
to the Condensed interim financial
 
statements.
 
 
 
 
Operating and administrative
 
expenses
were USD 2,368 million in
 
the third quarter of 2020,
 
compared to USD 2,922
 
million in the
third quarter of 2019.
 
The decrease was mainly
 
due to lower activity level
 
as a result of the Covid
 
-19 pandemic and the divest
 
ment of
the Eagle Ford asset
 
in the fourth quarter of
 
2019. Lower royalties and
 
production fees added
 
to the decrease. Higher
 
transportation
costs for liquids,
 
especially in the MMP segment,
 
partially offset the
 
decrease.
Depreciation, amortisation
 
and net impairment losses
were USD 4,798
 
million in the third quarter
 
of 2020, compared
 
to USD
4,619 million in the
 
third quarter of 2019. The
 
increase was mainly due
 
to ramp-up of new fields
 
on the NCS and
 
higher investments
especially in the E&P segments
 
in addition to higher
 
net impairments in the
 
third quarter of 2020. Higher
 
proved reserves estimates
especially in the E&P International
 
and E&P USA segments in
 
addition to lower depreciation
 
basis resulting from net
 
impairments in
previous periods
 
partially offset the
 
increase.
Exploration expenses
were USD 886 million
 
in the third quarter of 2020,
 
compared to USD 871 million
 
in the third quarter of 2019.
The increase was mainly
 
due to a lower portion
 
of exploration expenditures
 
being capitalised and
 
a higher portion of exploration
expenditure capitali
 
sed in earlier years being expensed
 
this quarter.
 
The increase was partially
 
offset by lower drilling
 
costs and lower
net impairments of
 
assets amounting to USD 575
 
million in the third quarter
 
of 2020, compared to
 
USD 608 million in the same
 
period
last year.
 
For more information, see
 
the table titled Exploration
 
expenses in the Supplementary
 
disclosures.
 
Net financial items
 
amounted to negative
 
USD 201 million in the third
 
quarter of 2020, compared
 
to positive USD 340 million
 
in the
third quarter of 2019.
 
The decrease of USD 541 million
 
was mainly due to a loss
 
of USD 131 million on net
 
foreign exchange in the
third quarter of 2020,
 
compared to a gain
 
of USD 295 million
 
in the third quarter of
 
2019. In addition, lower
 
gain on derivatives
 
related
to the long-term debt
 
portfolio with a gain
 
of USD 39 million in the
 
third quarter of 2020, compared
 
to a gain of USD 209 million
 
in the
third quarter of 2019
 
,
 
added to the decrease.
 
Positive change in interest
 
income and other financial
 
items due to positive effects
 
of
USD 235 million
 
in the third quarter of 2020,
 
compared to positive
 
effects of USD 180 million
 
in the third quarter of 2019
 
partially offset
the decrease.
 
Income tax
 
was USD 95 million in
 
the third quarter of 2020.
 
The effective tax rate
 
was 4.3%.
 
In the third quarter of 2019,
 
income tax
was negative USD 978
 
million and the effective
 
tax rate was more than 100
 
%. For more information,
 
see note
 
5
 
Income taxes
 
to the
Condensed interim
 
financial statements.
Net income
 
in the third quarter
 
of 2020 was negative USD 2,124
 
million, down from negative
 
USD 1,107 million in the third
 
quarter of
2019.
 
The decrease was mainly
 
due to negative changes
 
in net operating income
 
as discussed above
 
in addition to negative changes
for net financial items,
 
partially offset by lower
 
and positive income tax.
 
 
Cash flows provided by operating
 
activities
decreased by USD 1,549 million
 
compared to the third quarter
 
of 2019. The decrease was
mainly due to lower liquids and gas
 
prices and a change in working
 
capital, partially offset by
 
decreased tax payments.
 
Cash flows used in investing
 
activities
increased by USD 2,877 million
 
compared to the third quarter
 
of 2019. The increase was mainly
 
due
to increased financial investments
 
and reduced proceeds from sale
 
of assets, partially offset by
 
lower cash flow used for business
combinations and capital expenditures.
 
Cash flows provided by financing
 
activities
increased by USD 820 million
 
compared to the third quarter
 
of 2019. The increase was mainly
due to increased short-term debt, increased
 
collateral received and decreased
 
dividend paid, partially offset
 
by increased payments related
 
to
the share buy-back programme and
 
repayment of finance debt.
 
 
Total cash flows
decreased by USD 3,606 million
 
compared to the third quarter
 
of 2019.
 
Free cash flow
 
[5] in the third quarter of 2020 was
 
USD 216 million compared
 
to negative USD 672 million in
 
the third quarter of 2019. The
increase was mainly due to lower cash
 
flow used for business combinations,
 
decreased tax payments and lower
 
capital expenditures, partially
offset by reduced proceeds from
 
sale of assets, lower liquids
 
and gas prices and increased payments
 
related to the share buy-
 
back
programme.
 
First nine months 2020
 
Net operating income
 
was negative USD 2,434 million
 
in the first nine months of 2020 compared
 
to positive USD 7,783 million
 
in the first
nine months of 2019. The decrease
 
was mainly due to lower liquids
 
and gas prices in addition to net impairments
6
 
primarily related to reduced
price assumptions
7
 
and negative reserve updates.
 
6
 
For more information, see note 2
 
Segments to the Condensed
 
interim financial statements
 
 
 
 
In the first nine months of 2020, net
 
operating income was negatively
 
impacted mainly by net impairments
 
of USD 5,752 million and provisions
of USD 290 million.
 
In the first nine months of 2019, net
 
operating income was negatively
 
affected mainly by net impairments
 
of USD 2,678 million, provisions
 
of
USD 557 million and positively impacted
 
by net gain of sale of assets
 
of USD 999 million and changes
 
in the fair value of derivatives
 
and
inventory hedge contracts of USD
 
267 million.
 
Total revenues and
 
other income
were USD 34,073 million in the first
 
nine months of 2020 compared
 
to USD 49,189 million in the first
 
nine
months of 2019. The decrease was
 
mainly due to lower average prices
 
for liquids and gas.
 
Purchases
[6]
 
were USD 15,453 millio
 
n
 
in the first nine months of 2020 compared
 
to USD 22,928 million in
 
the first nine months of 2019.
 
The
decrease was mainly due to lower average
 
prices for liquids and gas.
 
Operating and administrative expenses
were
 
USD 7,382 million in
 
the first nine months of 2020, a decrease
 
of USD 681 million compared
to in the first nine months of 2019. The
 
decrease was mainly due to the NOK/USD
 
exchange rate development in addition
 
to lower royalties
and production fees driven by lower
 
volumes and prices. The
 
divestment of the Eagle
 
Ford asset in the E&P USA segment
 
in the fourth
quarter of 2019 and reduced Gassled
 
removal costs added to the decrease.
 
Higher transportation costs for
 
liquids in the MMP segment
partially offset the decrease.
 
Depreciation, amortisation and net
 
impairment losses
 
were USD 11,757
 
million in the first nine months
 
of 2020, an increase of USD 2,
 
718
million compared to the first nine months
 
of 2019.
 
The increase was mainly due to higher
 
net impairments mainly related to
 
reduced price
assumptions and negative reserve
 
updates
2
. Ramp-up of new fields especially
 
on the NCS and UKCS and
 
higher investments mainly in the
US added to the increase. The increase
 
was partially offset by higher
 
proved reserves estimates for
 
several fields, lower depreciation
 
basis
resulting from net impairments
 
in previous periods and the NOK/USD
 
exchange rate development.
 
Exploration expenses
increased by USD 540 million
 
to USD 1,914 million
 
in the first nine months of 2020,
 
primarily due to net impairment
 
of
assets, higher portion of exploration
 
expenditure capitalised in earlier
 
years being expensed this period
 
and higher drilling costs. A higher
portion of exploration expenses
 
being capitalised and lower seismic
 
costs and other costs
 
compared to the first nine months
 
of 2019 partially
offset the increase. For more information,
 
see the table titled Exploration
 
expenses in the Supplementary
 
disclosures.
 
Net financial items
 
amounted to negative
 
USD 426
 
million in the first nine
 
months of 2020, compared
 
to positive USD 489
 
million in
the first nine months
 
of 2019.
 
The decrease of USD 914 million
 
was mainly due to a gain
 
of USD 421 million on derivatives
 
related to
a long-term debt
 
portfolio in the first nine
 
months of 2020 compared
 
to a gain of USD 781 million
 
in the first nine months of
 
2019.
 
A
loss of USD 156 million
 
on net foreign exchange in
 
the first nine months of 2020
 
compared to a gain of USD 201
 
million in the first
nine months of 2019
 
in addition to lower gain
 
of USD 375 million
 
on Interest income and
 
other financial items in the
 
first nine months
of 2020 compared to
 
a gain of USD 535 million
 
in the first nine months of
 
2019, added to the decrease.
 
Income tax
 
was USD negative 221
 
million in the first nine months
 
of 2020 and the effective
 
tax rate was negative
 
7.7%. Income tax in
the first nine months
 
of 2019 was USD 6,191
 
million and the effective
 
tax rate was 74,8%. For
 
more information, see
 
note 5 Income
tax to the Condensed
 
interim financial statements.
 
Net income
in the first nine
 
months of 2020 was negative
 
USD 3,080 million compared
 
to positive USD 2,081
 
million in the first nine
months of 2019. The
 
decrease was mainly
 
due to the negative changes
 
in net operating income
 
as discussed above in addition
 
to
negative changes in
 
net financial items, partially
 
offset lower income
 
tax.
 
Cash flows provided by operating
 
activities
 
decreased by USD 3,932 million
 
compared to the first nine months
 
of 2019. The decrease was
mainly due to lower liquids and gas
 
prices and a change in working
 
capital, partially offset by
 
decreased tax payments
 
and increased cash
flow from derivatives.
 
Cash flows used in investing
 
activities
increased by USD 920 million
 
compared to the first nine
 
months of 2019. The increase
 
was mainly
due to increased financial investments
 
and reduced proceeds from sale
 
of assets, partially offset
 
by lower cash flow used for
 
business
combinations and capital expenditures.
 
Cash flows provided by financing
 
activities
 
increased by USD 8,107 million
 
compared to the first nine months
 
of 2019. The increase was
mainly due to bond issues in the seco
 
nd quarter of 2020, increased short
 
-term debt and decreased dividend
 
paid, partially offset by
 
increased
payments related to the share buy-
 
back program and increased repayment
 
of finance debt.
 
Total cash flows
 
increased by USD 3,255 million
 
compared to the first
 
nine months of 2019.
 
Free cash flow
[5] for the first nine months
 
of 2020 was negative USD
 
1,277 million including USD 332
 
million received from the Lundin
divestment included in the line item
 
(increase)/decrease in financial
 
investment in the cash flow statement,
 
compared to USD 338 million
 
in the
7
 
For more information, see note 6
 
Property, plant
 
and equiptment and intangible assets
 
to the Condensed interim financial
 
statements.
 
 
 
 
first nine months of 2019. The decrease
 
was mainly due to lower liquids
 
and gas prices, reduced proceeds
 
from sale of assets and increased
payments related to the share buy-
 
back program, partially offset by
 
decreased tax payments, lower
 
cash flow used for busin
 
ess combinations,
lower capital expenditures and increased
 
cash flow from derivatives.
 
OUTLOOK
 
 
Organic capital expenditures
 
[5] are estimated
 
at around USD 8.5
 
billion for 2020
8
, around USD 10 billion
 
for 2021
8
, and
around USD
 
12 billion annual average
 
for 2022-2023
 
Equinor intends to continue
 
to mature its attractive portfolio
 
of exploration assets and
 
estimates a total
exploration activity
 
level
of around USD 1.1 billion
 
for 2020, excluding signature
 
bonuses,
 
accruals and field development
 
costs
 
Equinor’s ambition
 
is to keep the
unit of production cost
 
in the top quartile of
 
its peer group
 
For
 
the period 2019–2026,
production growth
 
[7] is expected
 
to come from new projects
 
resulting in around
 
3% CAGR
(Compound Annual
 
Growth Rate) based on
 
current forecast
 
Scheduled maintenance
 
activity
 
is estimated to reduce
 
equity production by around
 
30 mboe per day for the
 
full year of 2020
These forward-looking
 
statements reflect current
 
views about future events
 
and are, by their nature,
 
subject to significant risks
 
and
uncertainties because
 
they relate to events and
 
depend on circumstances
 
that will occur in the future.
 
We continue to monitor
 
the
impact of Covid-19
 
on our operations. Deferral
 
of production to create
 
future value, production
 
cuts, gas off-take,
 
timing of new
capacity coming on
 
stream, operational regularity,
 
impact of Covid-19
 
and activity level in
 
the US onshore represent
 
the most
significant risks related
 
to the foregoing production
 
guidance. There has been
 
considerable uncertainty
 
created by the Covid-19
pandemic and we are
 
still unable to predict the
 
ultimate impact of this
 
event, including impact
 
on general economic conditions
worldwide. Our future
 
financial performance,
 
including cash flow and
 
liquidity, will
 
be impacted by the
 
extent and duration
 
of the
current market conditions,
 
the development in realised
 
prices, including price
 
differentials and the
 
effectiveness of actions
 
taken in
response to the pandemic.
 
For further information,
 
see section Forward-looking
 
statements.
 
8
 
USD/NOK exchange rate assumption
 
of 9.5.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPLORATION & PRODUCTION NORWAY
 
Third quarter 2020 review
 
Average daily production
 
of liquids and gas
 
increased by 19% to
 
1,273 mboe per day
 
in the third quarter of 2020,
 
compared to
 
1,067 mboe per day
 
in the third quarter of 2019.
 
The increase was mainly
 
due to ramp-up of new fields.
Net operating income
 
was USD 431 million
 
in the third quarter of
 
2020 compared to USD 2,
 
558 million in the thir
 
d
 
quarter of 2019.
The decrease was mainly
 
due to lower liquids price
 
and gas transfer price in
 
addition to impairments.
 
Higher volumes partially offset
the decrease.
 
In the third quarter of
 
2020, net operating income
 
was negatively impacted
 
by impairments of USD 360
 
million, partially offset
 
by
overlifted volumes of
 
USD 23 million. In the third
 
quarter of 2019, net operating
 
income was positively
 
impacted by gain on sale of
assets of USD 840
 
million, partially offset by
 
a negative impact of USD
 
25 million related
 
to underlifted volumes.
Total
 
revenues and other
 
income
 
decreased mainly due
 
to lower liquids price and
 
gas transfer price. Higher
 
volumes partially offset by
the decrease.
 
Operating and administrative
 
expenses
 
decreased mainly due to
 
the NOK/USD exchange
 
rate development, lower
 
transportation cost
in addtion to lower activity
 
and reduced cost level as
 
a result of the Covid
 
-19 restrictions. Lower well
 
maintenance cost added
 
to the
decrease.
 
Depreciation, amortisation
 
and net impairment losses
 
increased mainly due
 
to net impairments primarily
 
related to negative reserve
updates and reduced
 
price assumptions.
 
Ramp-up of new fields
 
added to the increase
 
.
Exploration expenses
increased mainly due
 
to lower portion of exploration
 
expenditure being capitalised,
 
a higher portion of
exploration expenditure
 
capitalised earlier years
 
being expensed this
 
quarter and higher field development
 
costs.
 
Lower drilling costs
partially offset the
 
increase.
 
 
 
 
Quarters
Change
Income statement under IFRS
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
2,822
1,659
4,498
(37%)
Total revenues
 
and other income
8,018
13,876
(42%)
(735)
(706)
(817)
(10%)
Operating and administrative expenses
(2,076)
(2,441)
(15%)
(1,486)
(992)
(981)
51%
Depreciation, amortisation and net
 
impairment losses
(4,318)
(2,945)
47%
(170)
(65)
(142)
20%
Exploration expenses
(330)
(335)
(2%)
431
(104)
2,558
(83%)
Net operating income/(loss)
1,294
8,155
(84%)
 
First nine months 2020
 
 
Net operating income
 
for E&P Norway was USD
 
1,294 million
 
in the first nine months of
 
2020 compared to USD 8
 
,155 million in the
first nine months
 
of 2019. The decrease
 
was mainly due to lower
 
liquids price and gas
 
transfer price in addition to
 
impairments in the
first nine months
 
of 2020. Higher liquids
 
volumes partially offset
 
the decrease.
In the first nine months
 
of 2020,
 
net operating income was
 
negatively impacted by
 
impairments of USD 1,219
 
million and underlifted
volumes of USD 26 million
 
.
 
In the first nine months of
 
2019,
 
net operating income
 
was positively impacted
 
by a gain on sale of
 
assets
of USD 977 million,
 
partially offset by a negative
 
impact of USD 94 million
 
from underlifted volumes in
 
the period and an
implementation effect
 
of USD 42 million from a
 
change in accounting policy
 
for lifting imbalances.
 
Total
 
revenues and other
 
income
 
decreased by 42% in
 
the first nine months of
 
2020 compared to the
 
first nine months of 2019
 
,
 
mainly
due to lower liquids
 
prices and gas transfer price
 
.
 
Higher liquids volumes
 
partially offset the decrease
 
.
Operating and administrative
 
expenses
 
decreased mainly due to
 
the NOK/USD exchange
 
rate development and
 
reduced Gassled
removal costs.
Depreciation, amortis
 
ation and net impairment
 
losses
 
increased in the first nine
 
months of 2020 compared
 
to the first nine months
 
of
2019,
 
mainly due to impairments
 
primarily related to
 
negative reserve
 
updates and reduced
 
price assumptions in addition
 
to ramp-up
of new fields.
 
The NOK/USD exchange rate
 
development and higher
 
proved reserves estimates
 
for several fields partially
 
offset the
increase.
Exploration expenses
 
decreased mainly due
 
to lower drilling costs. Lower
 
portion of exploration
 
expenditure being capitali
 
sed and a
higher portion of exploration
 
expenditure capitalised
 
earlier years being expensed
 
this period partially offset
 
the decrease.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPLORATION & PRODUCTION INTERNATIONAL
 
In the second quarter
 
of 2020, Equinor changed
 
its internal reporting to management,
 
impacting the composition
 
of Equinor's
operating and reporting
 
segments. Equinor’s
 
upstream activities
 
in the USA are now reported
 
separately to management,
 
and such
information is also considered
 
to be useful to the users
 
of the financial statements,
 
resulting in the exploration
 
and production activities
in the USA being considered
 
a separate operating-
 
and reporting segment as
 
of the second quarter
 
of 2020. Previously these
activities were included
 
in the DPI operating segment
 
and presented as part
 
of the E&P International
 
reporting segment.
 
Third quarter 2020 review
 
Average daily equity production
 
of liquids and gas
 
was 323 mboe per day
 
in the third quarter of
 
2020 compared to 410 mboe
 
per
day in the third quarter
 
of 2019. The decrease was
 
primarily due to repairs on
 
Peregrino (Brazil) resulting in
 
a production halt, lower
gas nominations,
 
natural decline in mature
 
fields, partially offset
 
by production ramp
 
-up of new fields in the UK.
 
Average daily entitlement
 
production of liquids
 
and gas
was 255 mboe per day
 
in the third quarter of 2020
 
compared to
 
312 mboe per day in
 
the third quarter of 2019. The
 
decrease was due to lower
 
equity production partially
 
offset by lower effects
 
from
production sharing agreements
 
(PSA). The net effects
 
from PSA were 68 mboe
 
per day in the third quarter
 
of 2020 compared to
 
97 mboe per day
 
in the third quarter of 2019.
 
Net operating income
was negative USD 1,328
 
million in the third quarter
 
of 2020 compared to positive
 
USD 325 million in the third
quarter of 2019. The
 
decrease was mainly
 
due to higher impairments
 
in the third quarter of 2020,
 
lower liquids and gas prices
 
in
addition to lower
 
entitlement production.
 
In the third quarter of
 
2020, net operating income
 
was negatively impacted
 
by impairments of USD 1,176
 
million. In the third quarter of
2019, net operating income
 
was negatively impacted
 
by net impairments
 
of USD 56 million.
 
Total
 
revenues and other
 
income
 
decreased mainly due
 
to lower liquids and gas
 
prices in addition to lower
 
entitlement production
 
.
 
 
Operating and administrative
 
expenses
 
increased mainly due to
 
overlifted volumes in
 
the quarter in addition
 
to higher transportation
costs. The increase
 
was partially offset by lower
 
operation and maintenance
 
expenses in addition to
 
lower royalties and production
fees, driven by lower
 
volumes and prices.
 
Depreciation, amortisation
 
and net impairment losses
 
increased
 
mainly due to higher
 
net impairments, higher
 
proved reserves
estimates and lower
 
production from mature
 
fields. Ramp-up of new fields
 
on stream partially offset
 
the decrease.
 
Exploration expenses
 
increased mainly due
 
to impairments,
 
a lower portion of exploration
 
expenditure being capitalised
 
and a higher
portion of exploration
 
expenditure capitalised
 
earlier years being expensed
 
this quarter.
 
Lower drilling and field develo
 
pment costs
partially offset the
 
increase.
 
 
 
 
Quarters
Change
Income statement under IFRS
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
840
555
1,351
(38%)
Total revenues
 
and other income
2,742
4,608
(40%)
12
(26)
16
(25%)
Purchases [net of inventory variation]
(56)
(9)
>100%
(373)
(281)
(321)
16%
Operating and administrative expenses
(1,152)
(1,324)
(13%)
(1,504)
(509)
(620)
>100%
Depreciation, amortisation and net
 
impairment losses
(2,883)
(1,491)
93%
(304)
(288)
(100)
>100%
Exploration expenses
(840)
(367)
>100%
(1,328)
(548)
325
N/A
Net operating income/(loss)
(2,189)
1,418
N/A
 
 
 
First nine months 2020
Net operating income
 
for E&P International
 
was negative USD 2,189
 
million in the first nine
 
months of 2020, compared
 
to positive
USD 1,418 million in
 
the first nine months of
 
2019. The decrease was
 
mainly due to higher net
 
impairments in the
 
first nine months of
2020 and lower liquids
 
and gas prices.
 
In the first nine months
 
of 2020, net operating income
 
was negatively impacted
 
by net impairments
 
of USD 1,705 million.
 
In the first nine months
 
of 2019, net operating income
 
was positively impacted
 
by net impairment reversals
 
of USD 60 million and
negatively impacted
 
by an implementation effect
 
of USD 63 million from
 
a change in accounting policy
 
for lifting imbalances.
 
Total
 
revenues and other
 
income
 
decreased mainly due
 
to lower liquids and gas
 
prices.
 
Operating and administrative
 
expenses
decreased mainly due to
 
lower royalties and
 
production fees driven by
 
lower volumes and
prices.
 
Lower operation and maintenance
 
expenses added to
 
the decrease.
 
Depreciation, amortisation
 
and net impairment losses
 
increased due to higher
 
net impairments
 
and new fields on stream,
 
partially
offset by higher
 
proved reserves estimates
 
and lower production
 
from mature fields.
 
 
Exploration expenses
 
increased mainly due
 
to higher impairments,
 
a higher portion of exploration
 
expenditure capitalised in
 
earlier
years being expensed
 
this period and higher
 
drilling costs.
 
Lower field development
 
costs partially offset
 
the increase.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXPLORATION & PRODUCTION USA
 
In the second quarter
 
of 2020, Equinor changed
 
its internal reporting to management,
 
impacting the composition
 
of Equinor's
operating and reporting
 
segments. Equinor’s
 
upstream activities
 
in the USA are now reported
 
separately to management,
 
and such
information is also considered
 
to be useful to the users
 
of the financial statements,
 
resulting in the exploration
 
and production activities
in the USA being considered
 
a separate operating-
 
and reporting segment as
 
of the second quarter
 
of 2020. Previously these
activities were included
 
in the DPI operating segment
 
and presented as part
 
of the E&P International
 
reporting segment.
 
Third quarter 2020 review
 
Average daily equity production
 
of liquids and gas
 
was 398 mboe per day
 
in the third quarter of
 
2020 compared to 432 mboe
 
per
day in the third quarter
 
of 2019. The divestment
 
of the Eagle Ford asset
 
in 2019 resulted in a decrease,
 
as well as planned
maintenance and
 
weather shutdowns in the
 
US offshore.
 
New wells in the US onshore
 
and additional ownership
 
in the Caesar Tonga
field acquired in the
 
third quarter of 2019 partially
 
offset the decrease.
 
Average daily entitlement
 
production of liquids
 
and gas
decreased slightly to
 
337 mboe per day in the
 
third quarter of 2020
compared to 366
 
mboe per day in the third quarter
 
of 2019. The decrease
 
was due to lower equity production
 
slightly offset by lower
effects from US onshore
 
royalty volumes after
 
the divestment of the
 
Eagle Ford asset.
 
The net effects from US royalties
 
were 61
mboe per day in the
 
third quarter of 2020 compared
 
to 67 mboe per day in the third
 
quarter of 2019.
 
Net operating income
 
was negative USD 1,606
 
million in the third quarter of
 
2020 compared to negative
 
USD 2,587 million in the
third quarter of 2019.
 
The increase was mainly due
 
to lower depreciation,
 
net impairments and lower
 
operating costs due to the
divestment of the
 
Eagle Ford asset. Lower commo
 
dity prices partially
 
offset the increase.
 
In the third quarter of
 
2020, net operating income
 
was negatively impacted
 
by net impairments
 
of USD 1,377 million,
 
with the largest
effect on unconventional
 
US onshore assets.
 
In the third quarter of
 
2019, net operating income
 
was negatively impacted
 
by net impairments
 
of USD 2,532 million.
Total
 
revenues and other
 
income
 
decreased mainly due
 
to lower commodity prices.
 
 
Operating and administrative
 
expenses
 
decreased mainly due to
 
the divestment of
 
the Eagle Ford asset,
 
lower transportation cost
 
due
to reduced production
 
volumes in addition to
 
lower production fees driven
 
by lower prices.
 
Depreciation, amortisation
 
and net impairment losses
 
decreased mainly due
 
to lower net impairments,
 
lower
 
depreciation basis
resulting from impairments
 
in previous periods and
 
higher proved reserves estimates
 
in US offshore.
 
Increased investments in the
third quarter of 2020
 
and acquired interest
 
in the Caesar Tonga
 
field during 2019 partially
 
offset the decrease.
 
Exploration expenses
 
decreased mainly due
 
to lower impairments in
 
the third quarter of 2020
 
and a higher portion
 
of exploration
expenditure being capitalised,
 
partially offset by higher
 
drilling costs.
 
 
Quarters
Change
Income statement under IFRS
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
611
475
996
(39%)
Total revenues
 
and other income
1,971
3,179
(38%)
(344)
(293)
(425)
(19%)
Operating and administrative expenses
(1,008)
(1,226)
(18%)
(1,460)
(475)
(2,529)
(42%)
Depreciation, amortisation and net
 
impairment losses
(3,171)
(3,558)
(11%)
(413)
(40)
(629)
(34%)
Exploration expenses
(745)
(672)
11%
(1,606)
(332)
(2,587)
38%
Net operating income/(loss)
(2,953)
(2,278)
(30%)
 
 
 
First nine months 2020
Net operating income
 
for E&P USA was negative
 
USD 2,953 million in the first
 
nine months of 2020 compared
 
to negative USD
2,278 million in the
 
first nine months of 2019.
 
The decrease was mainly
 
due to higher net impairments
 
in the first nine months
 
of 2020
in addition to lower
 
liquids and gas prices. Lower
 
operating and administrative
 
expenses in addition to
 
lower depreciation expenses
partially offset the
 
decrease.
In the first nine months
 
of 2020, net operating income
 
was negatively impacted
 
by net impairment losses
 
of USD 2,296 million, mainly
due to reduced price
 
assumptions with the
 
largest effect being on
 
an unconventional US onshore
 
asset.
 
In the first nine months
 
of 2019, net operating income
 
was negatively impacted
 
by net impairments
 
of USD 2,532 million,
 
with the
largest effect
 
on unconventional US onshore
 
assets.
 
Total
 
revenues and other
 
income
 
decreased mainly due
 
to lower liquids and gas
 
prices.
 
Operating and administrative
 
expenses
 
decreased mainly due to
 
divestment of the
 
Eagle Ford asset in the fourth
 
quarter of 2019 in
addition to lower
 
severance taxes due to
 
lower prices.
 
Depreciation, amortisation
 
and net impairment losses
 
decreased mainly due
 
to lower net impairments,
 
lower depreciation basis
resulting from impai
 
rments in previous periods
 
and higher proved reserves
 
estimates in US offshore.
 
Increased investments and
acquired interest
 
in the Caesar Tonga
 
field during 2019 partially
 
offset the decrease.
 
Exploration expenses
 
increased mainly due
 
to higher drilling and field
 
development costs.
 
A higher portion of exploration
 
expenditure
being capitalised
 
partially offset the
 
increase.
 
 
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MARKETING, MIDSTREAM &
 
PROCESSING
 
Third quarter 2020 review
 
Natural gas sales
 
volumes
amounted to 14.1
 
billion standard cubic
 
meters (bcm) in the third quarter
 
of 2020, an increase of
 
1.6 bcm
compared to the
 
third quarter of 2019. Of the
 
total gas sales in the third
 
quarter of 2020, entitlement
 
gas was 12.6 bcm, up 1.4
 
bcm
from the third quarter
 
of 2019. The increase
 
was mainly due to higher NCS entitlement
 
volumes.
 
Liquids sales volumes
 
amounted to 218.7
 
million barrels (mmbl) in the
 
third quarter of 2020,
 
up 14.2 mmbl compared
 
to the third
quarter of 2019
 
mainly due to increased
 
NCS volumes.
 
Average invoiced European
 
natural gas sales price
was 48%
 
lower in the third
 
quarter of 2020 compared
 
to the third quarter of
2019 mainly due
 
to drop in European gas
 
prices.
Average invoiced North American
 
piped gas sales
 
price
 
decreased by 23% in
the same period mainly
 
due to the decreased Henry
 
Hub price.
 
Net operating income
was positive
 
USD 551 million in the third quarter
 
of 2020 compared to negative
 
USD 757 million in
 
the third
quarter of 2019. The
 
increase was mainly due to
 
inventory hedging effects
 
and unrealised gain on
 
derivatives amounting
 
of USD 325
million in the third quarter
 
of 2020, compared
 
to a loss on derivatives
 
of USD 453 million in the third
 
quarter of 2019. In addition,
provisions and impairment
 
s
 
related to damage to the
 
South Riding Point oil terminal
 
in Bahamas negatively impacted
 
net operating
income in the third quarter
 
of 2019.
Total
 
revenues and other
 
income and Purchases
 
[net of inventory variation]
 
decreased mainly due to
 
negative refinery margins
 
and
lower prices for all products.
 
Strong piped gas result
 
partially offset the
 
decrease.
Operating and administrative
 
expenses
 
decreased mainly due to
 
decreased provisions
 
in the third quarter of 2020
 
compared to the
third quarter of 2019
 
.
 
Depreciation, amortisation
 
and net impairment losses
 
decreased mainly due
 
to impairments in previous
 
periods.
 
 
Quarters
Change
Income statement under IFRS
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
11,055
7,486
14,188
(22%)
Total revenues
 
and other income
33,344
46,481
(28%)
(9,171)
(5,127)
(13,048)
(30%)
Purchases [net of inventory variation]
 
[6]
 
(27,799)
(41,581)
(33%)
(1,231)
(1,423)
(1,585)
(22%)
Operating and administrative expenses
(3,998)
(3,753)
7%
(102)
(326)
(311)
(67%)
Depreciation, amortisation and net
 
impairment losses
(709)
(504)
41%
551
610
(757)
N/A
Net operating income/(loss)
839
644
30%
 
First nine months 2020
Net operating income
 
for MMP was USD 839
 
million in the first nine
 
months of 2020 compared
 
to USD 644 million in
 
the first nine
months of 2019. The
 
increase was mainly due to
 
strong results from liquids
 
trading and price review
 
settlement in addition
 
to lower
provisions of USD 246
 
million in the first nine months
 
of 2020 compared to USD 510
 
million in the first nine
 
months of 2019. Weaker
refinery results and
 
higher impairments related
 
to refinery and infrastructure
 
assets in the third quarter
 
of 2020 partially offset
 
the
increase.
 
 
 
Total
 
revenues and other
 
income
 
and Purchases [net
 
of inventory variation]
 
decreased mainly due to
 
lower refining margins and
 
lower
prices for all products
 
,
 
partially offset by increased
 
results from gas and liquids
 
trading in addition to settlement
 
of price revisions.
 
Operating and administrative
 
expenses
 
increased mainly due to
 
higher transportation
 
cost for liquid volumes.
Depreciation, amortisation
 
and net impairment losses
 
increased mainly due
 
to higher impairments the
 
first nine months of 2020
compared to the
 
first nine months of 2019.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED INTERIM FINANCIAL
 
STATEMENTS
 
Third quarter 2020
CONSOLIDATED
 
STATEMENT
 
OF INCOME
 
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(unaudited, in USD million)
Note
2020
2019
2019*
11,250
7,563
14,704
Revenues
 
33,878
48,011
62,911
86
33
46
Net income/(loss) from equity accounted
 
investments
 
190
149
164
3
7
860
Other income
 
5
1,028
1,283
11,339
7,603
15,610
Total revenues
 
and other income
2
34,073
49,189
64,357
(5,307)
(2,750)
(7,667)
Purchases [net of inventory variation]
(15,453)
(22,928)
(29,532)
(2,187)
(2,234)
(2,732)
Operating expenses
(6,826)
(7,422)
(9,660)
(181)
(177)
(190)
Selling, general and administrative
 
expenses
(555)
(642)
(809)
(4,798)
(2,522)
(4,619)
Depreciation, amortisation and net
 
impairment losses
6
(11,757)
(9,039)
(13,204)
(886)
(393)
(871)
Exploration expenses
(1,914)
(1,374)
(1,854)
(13,359)
(8,075)
(16,079)
Total operating
 
expenses
2
(36,506)
(41,405)
(55,058)
(2,019)
(472)
(469)
Net operating income/(loss)
2
(2,434)
7,783
9,299
(343)
(379)
(343)
Interest expenses and other financial
 
expenses
 
(1,066)
(1,029)
(1,450)
142
130
683
Other financial items
 
640
1,517
1,443
(201)
(248)
340
Net financial items
4
(426)
489
(7)
(2,220)
(720)
(129)
Income/(loss) before tax
 
(2,859)
8,272
9,292
95
469
(978)
Income tax
5
(221)
(6,191)
(7,441)
(2,124)
(251)
(1,107)
Net income/(loss)
(3,080)
2,081
1,851
 
 
 
 
 
 
(2,127)
(254)
(1,107)
Attributable to equity holders of the company
(3,088)
2,079
1,843
3
3
1
Attributable to non-controlling interests
8
2
8
(0.65)
(0.08)
(0.33)
Basic earnings per share (in USD)
(0.94)
0.62
0.55
(0.65)
(0.08)
(0.33)
Diluted earnings per share (in USD)
(0.94)
0.62
0.55
3,248
3,276
3,329
Weighted average number of ordinary
 
shares outstanding (in millions)
3,276
3,330
3,326
3,257
3,284
3,337
Weighted average number of ordinary
 
shares outstanding diluted (in
millions)
3,284
3,338
3,334
* Audited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED
 
STATEMENT
 
OF COMPREHENSIVE INCOME
 
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(unaudited, in USD million)
2020
2019
2019*
(2,124)
(251)
(1,107)
Net income/(loss)
(3,080)
2,081
1,851
34
41
192
Actuarial gains/(losses) on defined
 
benefit pension plans
197
365
427
(6)
(8)
(49)
Income tax effect on income and
 
expenses recognised in OCI
1)
(56)
(86)
(98)
27
33
142
Items that will not be reclassified to
 
the Consolidated statement
 
of
income
141
279
330
888
1,560
(1,726)
Currency translation adjustments
(1,734)
(1,254)
(51)
0
0
57
Share of OCI from equity accounted
 
investments
0
44
44
888
1,560
(1,668)
Items that may be subsequently reclassified
 
to the Consolidated
statement of income
(1,734)
(1,210)
(7)
915
1,593
(1,526)
Other comprehensive income/(loss)
(1,593)
(930)
323
(1,209)
1,342
(2,633)
Total comprehensive
 
income/(loss)
(4,673)
1,151
2,174
(1,212)
1,340
(2,633)
Attributable to the equity holders of the
 
company
(4,682)
1,149
2,166
3
3
1
Attributable to non-controlling interests
8
2
8
* Audited
1) Other comprehensive income (OCI).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED
 
BALANCE SHEET
 
At 30 September
At 30 June
At 31 December
At 30 September
(unaudited, in USD million)
Note
2020
2020
2019*
2019
ASSETS
Property, plant and
 
equipment
6
62,988
63,941
69,953
69,954
Intangible assets
6
9,667
10,317
10,738
10,877
Equity accounted investments
1,650
1,599
1,442
1,421
Deferred tax assets
4,251
3,794
3,881
3,435
Pension assets
1,103
963
1,093
871
Derivative financial instruments
1,964
1,630
1,365
1,486
Financial investments
3,437
3,157
3,600
3,185
Prepayments and financial receivables
1,240
1,311
1,214
1,174
 
Total non-current
 
assets
86,300
86,711
93,285
92,403
 
Inventories
2,860
2,974
3,363
2,501
Trade and other receivables
6,108
5,489
8,233
6,917
Derivative financial instruments
570
589
578
949
Financial investments
10,563
9,319
7,426
7,203
Cash and cash equivalents
7,844
9,700
5,177
6,838
 
Total current
 
assets
27,944
28,072
24,778
24,408
 
Assets classified as held for sale
3
188
0
0
297
 
Total assets
114,432
114,783
118,063
117,108
 
EQUITY AND LIABILITIES
Shareholders' equity
34,084
35,587
41,139
40,983
Non-controlling interests
24
23
20
16
 
Total equity
34,108
35,610
41,159
40,999
 
Finance debt
4
32,193
31,647
24,945
24,401
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax liabilities
9,451
8,907
9,410
9,731
Pension liabilities
3,705
3,572
3,867
3,765
Provisions and other liabilities
7
19,191
18,097
17,951
18,269
Derivative financial instruments
787
967
1,173
1,409
 
Total non-current
 
liabilities
65,328
63,191
57,346
57,576
 
Trade, other payables
 
and provisions
8,118
8,620
10,450
8,663
Current tax payable
5
543
674
3,699
4,115
Finance debt
4
5,277
5,463
4,087
4,375
Dividends payable
292
297
859
864
Derivative financial instruments
765
928
462
516
 
Total current
 
liabilities
14,996
15,982
19,557
18,533
 
Total liabilities
80,324
79,173
76,904
76,109
 
Total equity
 
and liabilities
114,432
114,783
118,063
117,108
* Audited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED
 
STATEMENT
 
OF CHANGES IN EQUITY
 
(unaudited, in USD million)
Share
capital
Additional
paid-in
capital
Retained
earnings
Currency
translation
adjustments
OCI from
equity
accounted
investments
Share-
holders'
equity
Non-
controlling
interests
Total equity
At 31 December 2018*
1,185
8,247
38,790
(5,206)
(44)
42,970
19
42,990
Net income/(loss)
2,079
2,079
2
2,081
Other comprehensive income/(loss)
279
(1,254)
44
(930)
(930)
Total comprehensive
 
income/(loss)
1,151
Dividends
(2,596)
(2,596)
(2,596)
Share buy-back
1)
(500)
(500)
(500)
Other equity transactions
(12)
(29)
(40)
(5)
(45)
At 30 September 2019
1,185
7,735
38,523
(6,460)
0
40,983
16
40,999
At 31 December 2019*
1,185
7,732
37,481
(5,258)
0
41,139
20
41,159
Net income/(loss)
(3,088)
(3,088)
8
(3,080)
Other comprehensive income/(loss)
141
(1,734)
0
(1,593)
(1,593)
Total comprehensive
 
income/(loss)
(4,673)
Dividends
(1,476)
(1,476)
(1,476)
Share buy-back
1)
(21)
(869)
(890)
(890)
Other equity transactions
(8)
(0)
(8)
(4)
(12)
At 30 September 2020
1,164
6,855
33,056
(6,991)
0
34,084
24
34,108
* Audited
 
 
1) In September 2019
 
Equinor launched a USD 5
 
billion share buy-back programme,
 
where the first tranche of the
 
programme of around
 
USD 1.5 billion has been finalis
 
ed. A proportionate share of 67%
 
from the Norwegian State was
 
redeemed in accordance with an
agreement with the Ministry of Petroleum
 
and Energy for the Norwegian State
 
to maintain their ownership percentage
 
in Equinor.
 
The
redemption was approved by the
 
annual general meeting held
 
14 May 2020.
 
The first tranche of USD 500 million
 
acquired in the market has been
 
recognised as a reduction in equity
 
as treasury shares in third
quarter 2019.
 
The State’s share including
 
interest and dividends has been
 
recognised as a short-term obligation
 
and as a reduction in
equity as treasury shares, subsequent
 
to the decision at the annual
 
general meeting held on 14 May
 
2020. The liability of USD 0.9
 
billion
 
(NOK 9.1 billion) was settled 23 July
 
2020. The corresponding shares
 
of the first tranche of the buyback
 
programme were cancelled
 
on 16 July 2020.
 
Equinor has suspended the remaining
 
share buy-back programme until
 
further notice. The announced
 
second tranche of around
 
USD 675 million, including the Norwegian
 
State share, will under the current
 
market conditions not be executed
 
as previously
 
announced
and planned.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED
 
STATEMENT
 
OF CASH FLOWS
 
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(unaudited, in USD million)
Note
2020
2019
2019*
(2,220)
(720)
(129)
Income/(loss) before tax
(2,859)
8,272
9,292
4,798
2,522
4,619
Depreciation, amortisation and net
 
impairment losses
6
11,757
9,039
13,204
662
125
650
Exploration expenditures written
 
off
1,222
673
777
131
321
(295)
(Gains)/losses on foreign currency
 
transactions and balances
4
156
(201)
(224)
(1)
(15)
(851)
(Gains)/losses on sale of assets
 
and businesses
3
(2)
(994)
(1,187)
258
257
678
(Increase)/decrease in other items
 
related to operating
activities
750
1,159
1,016
(182)
25
141
(Increase)/decrease in net derivative
 
financial instruments
(446)
(988)
(595)
41
43
50
Interest received
150
166
215
(146)
(198)
(226)
Interest paid
(526)
(526)
(723)
3,342
2,360
4,637
Cash flows provided by operating activities
 
before taxes paid
and working capital items
10,201
16,600
21,776
(110)
(1,744)
(1,447)
Taxes paid
(2,742)
(5,636)
(8,286)
(600)
(248)
990
(Increase)/decrease in working capital
583
1,010
259
2,632
368
4,180
Cash flows provided by operating activities
 
8,043
11,975
13,749
0
(0)
(1,794)
Cash used in business combinations
1)
3
0
(2,274)
(2,274)
(1,723)
(1,899)
(2,637)
Capital expenditures and investments
(5,972)
(7,504)
(10,204)
(1,034)
(2,730)
2,584
(Increase)/decrease in financial investments
2)
(3,165)
(801)
(1,012)
(261)
(45)
182
(Increase)/decrease in derivatives financial
 
instruments
(332)
295
298
(18)
2
0
(Increase)/decrease in other interest-
 
bearing items
(16)
8
(10)
14
0
1,519
Proceeds from sale of assets and
 
businesses
3
16
1,726
2,608
(3,023)
(4,671)
(146)
Cash flows used in investing activities
(9,469)
(8,549)
(10,594)
0
8,347
0
New finance debt
8,347
0
984
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,642)
(318)
(855)
Repayment of finance debt
(2,266)
(1,389)
(2,419)
(287)
(904)
(859)
Dividends paid
(2,037)
(2,492)
(3,342)
(1,001)
0
(91)
Share buy-back
3)
(1,059)
(91)
(442)
1,308
(150)
(639)
Net current finance debt and other
1,110
(41)
(277)
(1,623)
6,975
(2,443)
Cash flows provided by/(used in)
 
financing activities
4,095
(4,012)
(5,496)
(2,014)
2,672
1,590
Net increase/(decrease) in cash and
 
cash equivalents
2,669
(587)
(2,341)
158
162
(154)
Effect of exchange rate changes
 
on cash and cash
equivalents
(1)
(153)
(38)
9,700
6,866
5,379
Cash and cash equivalents at the beginning
 
of the period (net
of overdraft)
5,177
7,556
7,556
7,844
9,700
6,816
Cash and cash equivalents at the end
 
of the period (net of
overdraft)
4)
7,844
6,816
5,177
* Audited
1) Net after cash and
 
cash equivalents acquired.
2) Includes sale of Lundin
 
shares in the second quarter
 
of 2020.
 
For more information,
 
see note 3 Acquisition
 
and disposals.
3) For more information,
 
see Consolidated statement of
 
changes in equity.
4) At 30 September 2020
 
cash and cash equivalents
 
net overdraft was zero. At 30
 
September 2019 net overdraft was
 
USD 22
 
million and
 
at 31 December 2019 net overdraft
 
was zero.
 
 
 
Notes to the Condensed interim
 
financial statements
 
1 Organisation and basis of preparation
 
Organisation and principal
 
activities
 
Equinor ASA, originally
 
Den Norske Stats Oljeselskap
 
AS, was founded in 1972 and
 
is incorporated and domiciled
 
in Norway.
 
The
address of its registered
 
office is Forusbeen
 
50, N-4035 Stavanger,
 
Norway.
 
The Equinor group’s
 
(Equinor’s) business consists
 
principally of the exploration,
 
production, transportation,
 
refining and marketing of
petroleum and petroleum
 
-derived products, and
 
other forms of energy.
 
Equinor ASA is listed
 
on the Oslo Børs (Norway)
 
and the New
York
 
Stock Exchange (USA).
 
All of Equinor's oil and
 
gas activities and net
 
assets on the Norwegian continental
 
shelf
 
(NCS) are owned by Equinor
 
Energy AS, a
100% owned operating
 
subsidiary of Equinor
 
ASA. Equinor Energy AS is co
 
-obligor or guarantor
 
of certain debt obligations
 
of Equinor
ASA.
 
Following changes
 
in Equinor's internal reporting
 
to management the
 
composition of Equinor's operating
 
and reporting segments
 
has
changed as of the second
 
quarter of 2020. Segment
 
information for prior
 
periods has been restated
 
to align with the new segment
presentation. For
 
further information see
 
note 2 Segments to
 
these Condensed interim
 
financial statements.
 
Equinor's Condensed
 
interim financial statements
 
for the third quarter
 
of 2020 were authorised
 
for issue by the board
 
of directors on
 
28 October 2020.
 
Basis of preparation
 
These Condensed interim
 
financial statements are
 
prepared in accordance
 
with International Accounting
 
Standard 34 Interim
Financial Reporting as
 
issued by the International
 
Accounting Standards
 
Board (IASB) and as adopted
 
by
 
the European Union (EU).
The Condensed interim
 
financial statements do
 
not include all the information
 
and disclosures required
 
by International Financial
Reporting Standards
 
(IFRS) for a complete
 
set of financial statements,
 
and these Condensed interim
 
financial statements should
 
be
read in conjunction
 
with the Consolidated
 
annual financial statements
 
for 2019.
 
IFRS as adopted by the
 
EU differs
 
in certain respects
from IFRS as issued
 
by the IASB, but the d
 
ifferences do not impact
 
Equinor's financial statements
 
for the periods presented.
 
A
description of the
 
significant accounting policies
 
applied in preparing these
 
Condensed interim financial
 
statements is included
 
in
Equinor`s Consolidated
 
annual financial statements
 
for 2019.
 
On 1 January 2020,
 
Equinor implemented amendments
 
to IFRS 3 Business Combinations,
 
which apply to relevant
 
transactions that
occur on or after
 
the implementation date. The
 
amendments introduce
 
clarification to the definition
 
of a business, and also
 
establish
an optional test to identify
 
a concentration of fair
 
value that, if applied and
 
met, will lead to the conclusion
 
that an acquired set of
activities and assets
 
is not a business.
 
There have been
 
no other changes to the
 
significant accounting policies
 
during the first nine months
 
of 2020 compared to the
Consolidated annual
 
financial statements for
 
2019.
 
The Condensed interim
 
financial statements reflect
 
all adjustments which
 
are, in the opinion of management,
 
necessary for a fair
presentation of the
 
financial position,
 
results of operations and
 
cash flows for the dates
 
and interim periods presented.
 
Interim period
results are not necessarily
 
indicative of results of
 
operations or cash flows
 
for
 
an annual period. Certain
 
amounts in the comparable
periods in the note disclosures
 
have been reclassified to
 
conform to current period
 
presentation. The subtotals
 
and totals in some of
the tables may not equal
 
the sum of the amounts
 
shown due to roundin
 
g.
 
The Condensed interim
 
financial statements are
 
unaudited.
 
Use of estimates
 
The preparation of financial
 
statements in conformity
 
with IFRS requires management
 
to make judgments, estimates
 
and assumptions
that affect the application
 
of policies and reported
 
amounts of assets,
 
liabilities, income and expenses.
 
The estimates and associated
assumptions are
 
based on historical
 
experience and various
 
other factors that
 
are believed to be reasonable
 
under the circumstances,
the results of which
 
form the basis for making the
 
judgments about carrying
 
values of assets and liabilities
 
that are not readily
apparent from other
 
sources. Actual results may
 
differ from these estimates.
 
The estimates and underlying
 
assumptions are reviewed
on an on-going basis,
 
considering current and
 
expected future market
 
conditions. A change in
 
an accounting estimate
 
is recognised in
the period in which
 
the estimate is revised if
 
the revision affects only
 
that period, or in the period
 
of the revision and future
 
periods if
the revision affects
 
both current and future periods.
 
The ongoing Covid-19
 
pandemic and the steep
 
oil price decline experienced
during 2020 create
 
additional estimation uncertainties
 
and impact key assumptions
 
applied by Equinor
 
in the valuation of our
 
assets
 
 
and the measurement
 
of our liabilities, and related
 
sensitivities. Reference
 
is made to note 8 Impact of
 
the Covid-19 pandemic
 
and oil
price decline for further
 
information.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 Segments
 
Equinor’s operations
 
are managed through
 
the following operating segments
 
(business areas): Development
 
& Production Norway
(DPN), Development
 
& Production International
 
(DPI), Development & Production
 
Brazil (DPB), Development
 
& Production USA
(DPUSA), Marketing,
 
Midstream & Processing (MMP),
 
New Energy Solutions
 
(NES), Technology,
 
Projects & Drilling (TPD),
Exploration (EXP) and
 
Global Strategy & Business
 
Development (GSB).
 
The reporting segments
 
Exploration & Production Norway
 
(E&P Norway),
 
Exploration & Production
 
USA (E&P USA) and MMP consist
of the business areas
 
DPN,
 
DPUSA and MMP respectively.
 
The operating segments
 
DPI and DPB are aggregated
 
into the reporting
segment Exploration
 
& Production International
 
(E&P International). The
 
aggregation has its basis in
 
similar economic characteristics,
such as similar long-term
 
average gross margins,
 
the assets’ long term and
 
capital-intensive nature and
 
exposure to volatile oil and
gas commodity prices,
 
the nature of products, service
 
and production processes,
 
the type and class of customers,
 
the methods of
distribution and regulatory
 
environment. The operating
 
segments NES, GSB, TPD,
 
EXP and corporate
 
staffs and support
 
functions
are aggregated into
 
the reporting segment “Other”
 
due to the immateriality
 
of these operating segments.
 
The majority of the costs
within the operating segments
 
GSB, TPD and EXP are allocated
 
to the E&P Norway,
 
E&P USA, E&P International
 
and MMP reporting
segments.
 
In the second quarter
 
of 2020, Equinor changed
 
its internal reporting to management,
 
impacting the composition
 
of Equinor's
operating and reporting
 
segments. Equinor’s
 
upstream activities
 
in the USA is as from the
 
second quarter reported
 
separately to
management. The fact
 
that such information
 
is also considered to be
 
useful to the users of
 
the financial statements,
 
resulted in the
exploration and production
 
activities in the USA as of
 
the second quarter
 
of 2020 were considered
 
a separate operating-
 
and reporting
segment. Previously
 
these activities were included
 
in the DPI operating segment
 
and presented as part
 
of the E&P International
reporting segment.
 
The eliminations
 
section includes the
 
elimination of inter-segment
 
sales and related unrealised
 
profits, mainly from the
 
sale of crude oil
and natural gas. Inter-segment
 
revenues are based upon
 
estimated market prices.
 
 
Segment data for the
 
third quarter and the first
 
nine months of 2020 and
 
2019 is presented below.
 
The reported measure
 
of segment
profit is net operating
 
income/(loss)
.
 
Deferred tax assets, pension
 
assets and non-current
 
financial assets are not allocated
 
to the
segments.
 
The measurement basis
 
for segments is IFRS as applied
 
by the group with the exception
 
of IFRS 16 Leases
 
and the line item
Additions to PP&E, intangibles
 
and equity accounted
 
investments. All IFRS 16 leases
 
are presented within the
 
Other segment. The
lease costs for the period
 
are allocated to the
 
different segments
 
based on underlying lease
 
payments, with a corresponding
 
credit in
the Other segment.
 
Lease costs allocated to
 
licence partners are recognised
 
as other revenues
 
in the Other segment. Additions
 
to
PP&E, intangible assets
 
and equity accounted
 
investments in the E&P and
 
MMP segments include
 
the period’s allocated
 
lease costs
related to activity
 
being capitalised with
 
a corresponding negative addition
 
in the Other segment. The
 
line item Additions to PP&E,
intangibles and equity
 
accounted investments excludes
 
movements related to
 
changes in asset retirement
 
obligations.
 
 
Third quarter 2020
E&P
Norway
 
E&P
Internationa
l
E&P USA
MMP
Other
Eliminations
 
Total
 
(in USD million)
Revenues third party,
 
other revenues and other
income
15
91
76
11,000
71
0
11,253
Revenues inter-segment
2,806
731
535
47
1
(4,121)
0
Net income/(loss) from equity accounted
 
investments
0
18
0
8
60
0
86
Total revenues
 
and other income
 
2,822
840
611
11,055
132
(4,121)
11,339
Purchases [net of inventory variation]
0
12
0
(9,171)
1
3,851
(5,307)
Operating, selling, general and administrative
expenses
(735)
(373)
(344)
(1,231)
152
163
(2,368)
Depreciation, amortisation and net
 
impairment losses
(1,486)
(1,504)
(1,460)
(102)
(247)
0
(4,798)
Exploration expenses
(170)
(304)
(413)
0
1
0
(886)
 
 
 
 
 
 
 
 
 
 
Total operating
 
expenses
(2,391)
(2,168)
(2,217)
(10,504)
(93)
4,014
(13,359)
Net operating income/(loss)
431
(1,328)
(1,606)
551
39
(107)
(2,019)
Additions to PP&E, intangibles
 
and equity accounted
investments
1,103
357
252
35
278
0
2,025
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2019
E&P
Norway
 
E&P
Internationa
l
E&P
 
USA
MMP
Other
Eliminations
 
Total
 
(in USD million)
(restated)
(restated)
Revenues third party,
 
other revenues and other
income
866
403
106
14,099
90
0
15,564
Revenues inter-segment
3,630
939
888
85
1
(5,543)
0
Net income/(loss) from equity accounted
 
investments
 
2
9
2
4
29
0
46
Total revenues
 
and other income
 
4,498
1,351
996
14,188
121
(5,543)
15,610
Purchases [net of inventory variation]
0
16
(1)
(13,048)
(0)
5,366
(7,667)
Operating, selling, general and administrative
expenses
(817)
(321)
(425)
(1,585)
41
185
(2,922)
Depreciation, amortisation and net
 
impairment losses
(981)
(620)
(2,529)
(311)
(177)
0
(4,619)
Exploration expenses
(142)
(100)
(629)
0
0
0
(871)
Total operating
 
expenses
(1,940)
(1,025)
(3,583)
(14,945)
(137)
5,551
(16,079)
Net operating income/(loss)
 
2,558
325
(2,587)
(757)
(16)
8
(469)
Additions to PP&E, intangibles
 
and equity accounted
investments
2,920
511
1,408
127
111
0
5,077
 
 
First nine months 2020
E&P
Norway
 
E&P
Internationa
l
E&P
 
USA
MMP
Other
Eliminations
 
Total
 
(in USD million)
Revenues third party,
 
other revenue and other income
33
308
285
33,087
169
0
33,882
Revenues inter-segment
7,985
2,412
1,686
232
3
(12,318)
0
Net income/(loss) from equity accounted
 
investments
0
22
0
26
142
0
190
Total revenues
 
and other income
 
8,018
2,742
1,971
33,344
315
(12,318)
34,073
Purchases [net of inventory variation]
0
(56)
0
(27,799)
1
12,400
(15,453)
Operating, selling, general and administrative
expenses
(2,076)
(1,152)
(1,008)
(3,998)
336
516
(7,382)
Depreciation, amortisation and net
 
impairment losses
(4,318)
(2,883)
(3,171)
(709)
(676)
0
(11,757)
Exploration expenses
(330)
(840)
(745)
0
1
0
(1,914)
Total operating
 
expenses
(6,724)
(4,931)
(4,924)
(32,505)
(338)
12,916
(36,506)
 
 
 
 
 
 
 
 
 
 
 
Net operating income/(loss)
1,294
(2,189)
(2,953)
839
(23)
599
(2,434)
Additions to PP&E, intangibles
 
and equity accounted
investments
3,511
1,582
945
142
768
0
6,948
Balance sheet information
Equity accounted investments
2
581
0
90
977
0
1,650
Non-current segment assets
 
31,442
18,710
14,113
4,427
3,964
0
72,655
Non-current assets not allocated to
 
segments
 
11,995
Total non-current
 
assets
 
86,300
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First nine months 2019
E&P
Norway
 
E&P
Internationa
l
E&P
 
USA
MMP
Other
Eliminations
 
Total
 
(in USD million)
(restated)
(restated)
Revenues third party,
 
other revenue and other income
1,026
1,310
320
46,149
235
0
49,040
Revenues inter-segment
12,835
3,271
2,854
312
3
(19,275)
0
Net income/(loss) from equity accounted
 
investments
15
27
5
20
82
0
149
Total revenues
 
and other income
 
13,876
4,608
3,179
46,481
320
(19,275)
49,189
Purchases [net of inventory variation]
1
(9)
(1)
(41,581)
(0)
18,661
(22,928)
Operating, selling, general and administrative
expenses
(2,441)
(1,324)
(1,226)
(3,753)
103
578
(8,063)
Depreciation, amortisation and net
 
impairment losses
(2,945)
(1,491)
(3,558)
(504)
(541)
0
(9,039)
Exploration expenses
(335)
(367)
(672)
0
0
0
(1,374)
Total operating
 
expenses
(5,721)
(3,190)
(5,457)
(45,837)
(439)
19,239
(41,405)
Net operating income/(loss)
8,155
1,418
(2,278)
644
(120)
(36)
7,783
Additions to PP&E, intangibles
 
and equity accounted
investments
5,860
2,291
2,486
674
596
0
11,907
Balance sheet information
Equity accounted investments
 
2
306
81
88
943
0
1,421
Non-current segment assets
 
33,737
20,562
17,307
4,956
4,270
0
80,831
Non-current assets not allocated to
 
segments
 
10,151
Total non-current
 
assets
 
92,403
In the third quarter of
 
2020 Equinor recognised
 
net impairment of USD 2,928
 
million of which USD 575 million
 
was classified as
exploration expenses.
 
 
In the E&P Norway segment
 
the impairments were
 
USD 365 million of which USD 5
 
million related to
 
exploration assets.
 
The
impairments were mainly
 
due to price reductions
 
and reduced reserve estimates.
 
 
In the E&P International
 
segment the impairments
 
were USD 1,176 million
 
of which USD 183 million
 
related to exploration asset
 
s.
 
The
impairments were caused
 
by reduced price assumptions
 
and reduction in reserve
 
estimates in the Europa
 
and Asia and the North
America - conventional
 
other areas.
 
 
In the E&P USA segment the
 
net impairment was USD 1,37
 
7
 
million of which USD 386
 
million was classified
 
as exploration expenses.
Impairment losses of
 
USD 1,611
 
million were mainly caused
 
by reduced price
 
assumptions. USD 1,447
 
million related
 
to North
America non-conventional
 
assets and USD 164 million
 
related
 
to North America -
 
conventional offshore
 
Gulf of Mexico assets
 
.
Impairment reversals
 
of USD 234 million
 
related
 
to North America non
 
-conventional assets due
 
to performance trends and
accelerated production.
 
 
 
 
Most of the renewabl
 
e
 
assets in Equinor Group
 
are accounted for using
 
equity method and the results
 
are presented in the Other
reporting segment.
 
The net income from the
 
equity accounted investments
 
within the operating segment
 
NES was USD 60 million in
the third quarter of 2020
 
and USD 142 million in
 
the first nine months of 2020,
 
which compares to USD 29 million
 
in the third quarter of
2019 and USD 82 million
 
in the first nine months
 
of 2019. Current quarter
 
result was materially impacted
 
by the reversal of losses in
the Dogger Bank projects
 
.
 
This was partially offset
 
by lower income from other
 
equity accounted investments
 
including the effect
 
of
reduced ownership
 
share in Arkona wind
 
farm compared to 2019.
 
 
For information regarding
 
acquisition and dispo
 
sal of interests, see note
 
3 Acquisitions and disposals.
 
 
See also note 8 Impact
 
of the Covid-19 pandemic
 
and oil price decline.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from contract
 
s
 
with customers
 
by geographical areas
 
When attributing the
 
line item Revenues third party,
 
other revenues and other
 
income to the country of the
 
legal entity executing
 
the
sale for the third quarter
 
of 2020, Norway constitutes
 
82%
 
and the US constitutes
 
13%
 
of such revenues. For
 
the third quarter of 2019
 
,
Norway and the US constituted
 
73%
 
and 20%
 
of such revenues,
 
respectively.
 
 
For the first nine
 
months of 2020, Norway constitutes
 
81%
 
and the US constitutes
 
14%
 
of such revenues. For
 
the first nine months of
2019, Norway and the
 
US constituted 74%
 
and 19% of such revenues
 
,
 
respectively.
 
 
Non-current assets
 
by country
At 30 September
At 30 June
At 31 December
At 30 September
(in USD million)
2020
2020
2019
2019
Norway
37,327
36,383
40,292
39,994
USA
14,858
16,524
17,776
18,455
Brazil
8,752
8,796
8,724
8,669
UK
4,175
4,913
5,657
5,261
Azerbaijan
1,684
1,696
1,598
1,551
Canada
1,468
1,435
1,672
1,651
Angola
1,270
1,331
1,564
1,669
Tanzania
985
964
964
964
Denmark
911
887
984
958
Algeria
845
866
915
930
Other countries
2,030
2,064
1,986
2,149
Total non-current
 
assets
1)
74,305
75,858
82,133
82,252
 
1)
 
Excluding deferred tax assets,
 
pension assets and non
 
-current financial assets.
 
 
 
Revenues from contracts
 
with customers and other revenues
Quarters
Full Year
(in USD million)
Q3 2020
Q2 2020
Q3 2019
2019
Crude oil
6,635
4,018
8,667
33,505
Natural gas
1,351
1,188
2,236
11,281
 
- European gas
1,048
923
1,847
9,366
 
- North American gas
229
196
290
1,359
 
- Other incl. LNG
74
68
99
556
Refined products
1,560
1,258
2,404
10,652
Natural gas liquids
1,282
839
1,224
5,807
Transportation
295
286
205
967
Other sales
91
88
123
445
Revenues from contracts with customers
11,215
7,677
14,859
62,657
Taxes paid
 
in-kind
27
(9)
83
344
Physically settled commodity derivatives
(16)
152
(610)
(1,086)
Gain/(loss) on commodity derivatives
(44)
(318)
298
732
Other revenues
70
61
74
265
Total other
 
revenues
36
(114)
(155)
254
Revenues
11,250
7,563
14,704
62,911
 
 
 
 
 
 
 
 
 
 
 
3 Acquisitions and disposals
 
 
Divestment of non-operated
 
interest in the Empire
 
Wind and Beacon Wind assets
 
on the US east coast
On 10 September 2020
 
Equinor entered into an
 
agreement with BP to sell
 
50% non-operated interests
 
in the Empire Wind and
Beacon Wind assets
 
for a total consideration
 
before adjustments
 
of USD 1.1 billion. Through
 
this transaction, the two
 
companies are
also establishing a strategic
 
partnership for further growth
 
within offshore wind
 
in the US. Following the
 
transaction, Equinor will
remain the operator
 
with a 50% interest.
 
The 100% of interest share
 
has been reclassified
 
as held for sale. The transaction
 
has an
effective date of
 
1 January 2020 and
 
is expected to close in early
 
2021, subject to customary
 
conditions including purchase
 
price adjustments and
authority approval.
 
Upon transaction closing, the
 
gain will be presented in
 
the line item Other income
 
in the Consolidated statement
 
of
income in the Other
 
segment.
 
 
Divestment of remaining shares
 
in Lundin
On 8 May 2020 Equinor
 
closed the divestment of
 
its remaining (4.9%) financial
 
shareholding in Lundin
 
Energy AB (formerly Lundin
Petroleum AB). The consideration
 
is SEK 3.3 billion (USD 0.3
 
billion). The impact on the
 
Consolidated statement
 
of income in the
second quarter was
 
a loss of USD 0.1 billion
 
and was recognised as
 
Interest income and other
 
financial items.
 
 
Investment in interest
 
onshore Argentina
On 30 January 2020
 
Equinor closed a transaction
 
to acquire a 50% ownership
 
share in SPM Argentina
 
S.A (SPM) from Schlumberger
Production Management
 
Holding Argentina B.V.
 
Shell acquired the remaining
 
50% ownership share
 
of SPM.
 
SPM holds a 49%
interest in the Bandurria
 
Sur onshore block in Argentina,
 
and the block is in the
 
pilot phase of development.
 
The consideration
including final adjustments
 
is USD 187 million. In
 
the second quarter
 
,
 
Equinor increased its shareholding
 
in the Bandurria Sur
 
by 5.5%
to 30% for a final
 
consideration of USD 44 million.
 
The investment in SPM was
 
accounted for as
 
a joint venture using the
 
equity
method and reported
 
in the E&P International
 
segment.
 
 
4 Financial items
 
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(in USD million)
2020
2019
2019
(131)
(321)
295
Gains/(losses) on net foreign exchange
(156)
201
224
235
262
180
Interest income and other financial
 
items
375
535
746
39
189
208
Gains/(losses) on derivative financial
 
instruments
 
421
781
473
(343)
(379)
(343)
Interest and other finance expenses
(1,066)
(1,029)
(1,450)
(201)
(248)
340
Net financial items
(426)
489
(7)
 
Gains on derivative
 
financial instruments for
 
the first nine months of 2020
 
of USD 421 million and
 
for the first nine months
 
of 2019 of
 
USD 781 million,
 
are mainly due to decreased
 
interest rates.
 
 
Equinor has a US Commercial
 
paper programme available
 
with a limit of USD 5 billion
 
of which USD 787 million
 
has been utilised as
of
 
30
 
September 2020.
 
 
In the first nine months
 
of 2020, Equinor recorded
 
total lease payments of
 
USD 1,054 million, of which
 
USD 93 million were payment
of interests and USD 961
 
million were down-payment
 
of lease liabilities. Lease
 
liabilities as at 30
 
September 2020 were USD 4,218
million, presented in
 
the balance sheet within
 
the line items Current
 
and Non-current finance
 
debt with USD 1,039 million
 
and USD
3,120 million,
 
respectively.
 
 
In the second quarter
 
of 2020 Equinor ASA issued
 
bonds with maturities
 
from 5 to 30 years for a
 
total amount of USD 8.3 billion.
 
The
bonds were issued
 
in USD and EUR, amounting
 
to USD 6.5 billion and
 
EUR 1.75 billion, and
 
are fully and unconditionally
 
guaranteed
by Equinor Energy AS.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 Income taxes
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(in USD million)
2020
2019
2019
(2,220)
(720)
(129)
Income/(loss) before tax
(2,859)
8,272
9,292
95
469
(978)
Income tax
(221)
(6,191)
(7,441)
4.3%
65.2%
>(100%)
Effective tax rate
(7.7%)
74.8%
80.1%
 
The tax rate for the
 
third quarter 2020 and for the
 
first nine months of
 
2020 was primarily influenced
 
by losses including net
impairments recognised
 
in countries with unrecognised
 
deferred taxes or in countries
 
with lower than average tax
 
rates.
 
The tax rate
was also influenced
 
by currency effects in entities
 
that are taxable in other
 
currencies than the functional
 
currency,
 
partially offset by
the temporary changes
 
to Norway’s petroleum
 
tax system.
 
 
The tax rate for the
 
first nine months of 2020
 
was also influenced by changes
 
in best estimates for uncertain
 
tax positions.
 
 
The tax rate for the
 
third quarter of 2019 and
 
the first nine months of 2019
 
was primarily influenced by losses
 
recognised in countries
with unrecognised deferred
 
tax assets partially offset
 
by the tax exempted
 
divestment of shares in
 
Lundin.
 
 
 
The tax rate for the
 
full year 2019 was primarily
 
influenced by losses recognised
 
in countries with unrecognised
 
deferred tax assets or
in countries with lower
 
than average tax rates, partially
 
offset by tax exempted
 
gains on divestments.
 
 
 
6 Property, plant and equipment and intangible assets
(in USD million)
Property, plant and
equipment
Intangible
assets
Balance at 31 December 2019
69,953
10,738
Additions
 
7,595
551
Transfers
 
67
(67)
Disposals and reclassifications
 
(15)
(6)
Transferred to assets classified
 
as held for sale
(10)
(177)
Expensed exploration expenditures
 
and net impairment losses
-
(1,222)
Depreciation, amortisation and net
 
impairment losses
(11,737)
(20)
Effect of foreign currency translation
 
adjustments
(2,864)
(130)
Balance at 30 September 2020
62,988
9,667
Right-of-use (RoU)
 
assets are included within
 
property,
 
plant and equipment with
 
a net book value of USD 3,944
 
million as at
 
30
 
September 2020. Additions
 
to RoU assets amount to
 
USD 1,001 million.
 
Gross depreciation and
 
impairment of RoU assets
amounts to USD 927
 
million in the first nine
 
months of 2020,
 
of
 
which depreciation
 
costs of USD 278 million
 
have been allocated to
exploration and development
 
activities and are presented
 
net on the Depreciation,
 
amortisation and net impairment
 
losses and
Additions lines in
 
the table above.
Equinor’s Block 2 Exploration
 
License in Tanzania
 
was due to expire in June
 
2018 but based on indications
 
from the Tanzanian
authorities that the license
 
would be extended the asset
 
has remained capitalised.
 
The license was formally
 
extended by 3.5 years in
and from the second
 
quarter of 2020. The capitalised
 
expenditures included
 
in intangible assets related
 
to the license are USD 962
million.
 
 
 
 
 
 
 
 
 
 
 
 
Impairments and impairment
 
reversals
For information on impairment
 
losses and reversals per
 
reporting segment, see note
 
2 Segments.
 
First nine months 2020
Property, plant and
equipment
Intangible
assets
Total
(in USD million)
Producing and development assets
4,732
589
5,321
Goodwill
-
1
1
Acquisition costs related to oil and gas
 
prospects
-
434
434
Total net
 
impairment losses/(reversals)
 
recognised
4,732
1,023
5,755
 
The net impairments
 
have been recognised
 
in the Consolidated statement
 
of income as Depreciation,
 
amortisation and net
impairment losses and
 
Exploration expenses
 
based on the impaired
 
assets’ nature of property,
 
plant and equipment and
 
intangible
assets, respectively.
 
 
The recoverable
 
amounts in the third
 
quarter of 2020 were discounted
 
cash flows based on value
 
in use.
 
Value in
 
use estimates and discounted
 
cash flows used to determine
 
the recoverable amount
 
of assets tested for impairment
 
are
based on internal
 
forecasts on costs,
 
production profiles and
 
commodity prices.
 
 
Changes to accounting assumptions
 
Management’s
 
future commodity price assumptions
 
and currency assumptions
 
are used for value-in-use
 
impairment testing. The
same assumptions
 
are also used for evaluating
 
investment opportunities,
 
together with other relevant
 
criteria, including among others
robustness targets
 
(value creation in lower
 
commodity price scenarios).
 
While there are inherent
 
uncertainties in the assumptions,
 
the
commodity price
 
assumptions as well as
 
currency assumptions
 
reflect management’s
 
best estimate of the price
 
and currency
development over the
 
life
 
of the Group’s assets
 
based on its view of relevant
 
current circumstances and
 
the likely future development
of such circumstances,
 
including energy demand
 
development, energy
 
and climate change policies
 
as well as the speed of the
 
energy
transition, population
 
and economic growth,
 
geopolitical risks, technology
 
and cost development, and
 
other factors. Management’s
best estimate also takes
 
into consideration a range
 
of external forecasts.
 
 
During the third quarter,
 
Equinor has performed
 
a thorough and broad
 
analysis of the expected
 
development in drivers
 
for the different
commodity markets
 
and exchange rates,
 
following the recent and
 
ongoing Covid-19 situation
 
and management has gained
 
more
insight into the development
 
of the different markets
 
in which we operate. Significant
 
uncertainty continues to
 
exist regarding future
commodity price
 
development due to
 
the potential long-term impact
 
on demand resulting from
 
the ongoing Covid-19
 
pandemic and
the measures taken
 
to contain it, energy investments
 
in the transition to a
 
lower carbon economy and
 
future supply actions by
 
OPEC+
and other factors. Following
 
management’s analysis
 
of the expected development
 
in drivers for the different
 
commodity markets and
exchange rates, Equinor
 
has decided to revise
 
the assumptions. As a result,
 
both short-
 
and long-term prices have
 
been reduced,
some by more than
 
twenty percent. Management
 
will continue to monitor
 
these developments and
 
the impact they may have
 
on its
commodity price
 
assumptions.
 
 
For Brent-blend,
 
compared to current prices,
 
we expect a strengthening
 
of the prices through the
 
2020s.
 
In 2025,
 
the assumption is 65
USD/bbl (78 USD/bbl)
 
,
 
with a further increase towards
 
2030. Beyond 2030
 
,
 
we expect a gradual decline
 
with an estimate of 64
USD/bbl in 2040
 
(82 USD/bbl),
 
which approximates the
 
average price level for the
 
period 2021-2050. In 2050,
 
the oil prices are
expected to be below
 
60 USD/bbl. All commodity
 
prices are on a real
 
2020 basis, and comparables
 
as per fourth quarter 2019
 
are
given in brackets.
 
For natural gas in the
 
UK (NBP), we expect
 
some volatility,
 
where the trend is a gradua
 
l
 
increase in prices from today’s
 
current prices
up to 6.5 USD/mmBtu in
 
2030 (7.7 USD/mmBtu).
 
From 2030, we expect
 
prices at levels sufficient
 
to incentivise the next
 
LNG
investment cycle
 
and a flatter price-curve,
 
with the price gradually
 
increasing to 7.8
 
USD/mmBtu close to
 
2040 (7.7 USD/mmBtu).
Beyond 2040, a declining
 
price trend is foreseen
 
as the energy transition
 
is expected to impact the demand
 
side. For 2050, the price
has been set at the
 
pre-2035 level. Henry Hub
 
follows the same pattern,
 
gradually increasing from
 
today’s current prices
 
to
 
3.3
USD/mmBtu in 2030
 
(3.7 USD/mmBtu) and
 
gradually increasing to 3
 
.7 USD/mmBtu in 2040 (3.7
 
USD/mmBtu) before gradually
declining through the
 
2040s.
 
 
Equinor has performed
 
analyses of the NOK currency
 
exchange rates, which
 
suggests that a return
 
to a previously assumed
 
long-
term equilibrium is less
 
likely. This
 
conclusion is supported
 
by the historical 5-year average
 
and spot prices in the
 
currency market, as
 
 
well as an expected
 
lower oil price and increased
 
market uncertainty.
 
Equinor has therefore implemented
 
new long-term exchange
rates from 2023 onwards.
 
The NOK/USD rate has
 
been revised to 8.5
 
(previously 7.0), while
 
the NOK/EUR rate has
 
been revised to
10.0 (from previously
 
9.0).
 
In 2020 we have
 
continued to see a significant
 
drop in risk-free interest
 
rates. Long-term risk-free
 
interest rates (10 years)
 
have
decreased by approximately
 
1.3 percentage points
 
in the period from year
 
-end 2019 to 30 September
 
2020. The stock market
recovery after the initial
 
Covid-19 impact in March,
 
and despite lower expectations
 
of future cash flows, is
 
indicating a lower market
risk premium. The low
 
interest rates combined
 
with lack of good alternative
 
investment opportunities,
 
channels more funds
 
towards
the equity market resulting
 
in investors accepting lower
 
returns on investments,
 
and we see a downward
 
shift in the estimated equity
risk premium. Taking
 
this into account, Equinor
 
has adjusted the Weighted
 
Average Cost of Capital
 
(WACC) for accounting
 
purposes,
real post-tax, down
 
from 6% to 5% with effe
 
ct as of the third quarter
 
of 2020.
 
 
Please refer to note
 
8 Impact of the Covid-19
 
pandemic and oil price.
 
Sensitivities
 
Commodity prices have
 
historically been volatile. Significant
 
downward adjust
 
ments of Equinor’s commodity
 
price assumptions would
result in impairment
 
losses on certain producing and
 
development assets
 
in Equinor’s portfolio, while
 
an opposite adjustment
 
could
lead to impairment
 
-reversals. If a decline
 
in commodity price
 
forecasts over the lifetime
 
of the assets were 30%,
 
considered to
represent a reasonably
 
possible change, the impairment
 
amount to be recognised
 
could illustratively be
 
in the region of USD 12 billion
before tax effects.
 
This illustrative impairment
 
sensitivity,
 
based on a simplified method,
 
assumes no changes
 
to input factors other
than prices; however,
 
a price reduction of 30%
 
is likely to result in changes
 
in business plans as well
 
as other factors used when
estimating an asset’s
 
recoverable amount. These
 
associated changes reduce
 
the stand-alone impact on
 
commodity price sensitivity.
 
 
Changes in such
 
input factors would
 
likely include a reduction in
 
the cost level in the oil and
 
gas industry as well as offsetting
 
currency
effects, both of which
 
have historically occurred
 
following significant changes
 
in commodity prices. The
 
illustrative sensitivity is
therefore not considered
 
to represent a best estimate
 
of an expected impairment
 
impact, nor an estimated impact
 
on revenues or
operating income in
 
such a scenario. In comparison,
 
following the amended assumptions
 
and the decline in commodity
 
prices
presently disclosed
 
for this quarter,
 
the impairment impact recognised
 
is considerably lower.
 
A significant and prolonged
 
reduction in
oil and gas prices would
 
also result in mitigating
 
actions by Equinor and
 
its licence partners, as a
 
reduction of oil and gas
 
prices would
impact drilling plans
 
and production profiles for
 
new and existing assets.
 
Quantifying such impacts
 
is considered impracticable,
 
as it
requires detailed
 
technical, geological and
 
economical evaluations
 
based on hypothetical
 
scenarios and not based
 
on existing
business or development
 
plans.
 
 
7 Provisions, commitments, contingent liabilities and contingent
 
assets
 
Asset retirement obligation
 
Equinor’s estimated asset
 
retirement obligations
 
(ARO) have increased
 
by USD 928 million compared
 
to year-end 2019, mainly
 
due to
the decrease in discount
 
rate. Changes in ARO are
 
reflected within property,
 
plant and equipment and
 
provisions in the Consolidated
balance sheet.
 
 
Onerous contract
 
Due to significant
 
ly reduced expected use of
 
a transportation agreement
 
,
 
Equinor provided in the second
 
quarter USD 154 million
 
as
an onerous contract.
 
In third quarter the provision
 
has increased to USD 162
 
million. The provision
 
is recognised in the MMP segment
as an operating expense
 
in the Consolidated statement
 
of income and has been
 
included in the line item
 
Provisions and other
liabilities in the Consolidated
 
balance sheet.
 
 
Price review arbitration
 
Some long-term gas sales
 
agreements contain price
 
review clauses, which in
 
certain cases lead to claims
 
subject to arbitration.
The exposure related
 
to price reviews has been
 
reduced by approximately
 
USD 1.3 billion due to
 
settlements
 
in the second quarter.
The remaining exposure
 
for gas delivered prior to 30
 
September is immaterial. Price
 
review related changes
 
in the second quarter
represent an income
 
of approximately USD 150
 
million before tax and
 
USD 30 million after tax
 
.
 
The amounts have
 
been reflected in
the Consolidated
 
statement of income as
 
revenues
 
and income tax, respectively.
 
 
A dispute between the
 
Federal Government of Nigeria
 
and the Governments of Rivers,
 
Bayelsa and Akwa Ibom States
 
in
Nigera
 
In October 2018,
 
the Supreme Court
 
of Nigeria rendered
 
a judgement in a dispute
 
between the Federal Gover
 
nment of Nigeria and
the Governments of
 
Rivers, Bayelsa and Akwa
 
Ibom States in favour
 
of the latter.
 
The Supreme Court judgement
 
provides for
potential retroactive
 
adjustment of certain production
 
sharing contracts in
 
favour of the Federal Government,
 
including OML 128
(Agbami). This case
 
has been withdrawn by
 
the plaintiff in the second
 
quarter of 2020 with no impact
 
on Equinor’s Interim financial
statements.
 
 
 
 
Dispute with Brazilian
 
tax authorities
 
Brazilian tax authorities
 
issued an updated tax assessment
 
for 2011
 
for Equinor’s Brazilian subsidiary
 
which was party to Equinor’s
divestment of 40%
 
of the Peregrino field to
 
Sinochem at that time. The
 
assessment disputed
 
Equinor’s allocation of the sale
 
proceeds
between entities and
 
assets involved, resulting
 
in a significantly higher assessed
 
taxable gain and related
 
taxes payable in Brazil.
Equinor disagreed with
 
the assessment and had
 
the case brought forward
 
to the second instance
 
of the Administrative Cour
 
t
 
in Brazil
which decided the case
 
in Equinor’s favour.
 
Equinor has received confirmation
 
that the decision is considered
 
final and non-
appealable. The final
 
ruling did not have any
 
impact on Equinor’s Interim
 
Financial statement.
 
 
KKD Oil Sands Partnership
 
Canadian tax authorities
 
have issued a proposal
 
of re-assessment for
 
2014 for Equinor’s Canadian
 
subsidiary which was
 
party to
Equinor’s divestment
 
of 40% of the KKD Oil Sands
 
partnership at that
 
time. The proposal disputes
 
the partners allocation
 
between
entities and assets
 
involved. Maximum exposure
 
is estimated to be approximately
 
USD 360 million.
 
The ongoing process
 
of formal
communication with
 
the Canadian tax authorities,
 
as well as any subsequent
 
litigation that may become
 
necessary,
 
may take several
years. No taxes will
 
become payable until the matter
 
has been finally settled.
 
Equinor is of the view that
 
all applicable tax regulations
have been applied in
 
the case and that Equinor
 
has a strong position.
 
No amounts have consequently
 
been provided for in
 
the
accounts.
 
 
Deviation notices from Norwegian
 
tax authorities
 
 
With reference
 
to the previously disclosed
 
dispute in Norway regarding
 
the level of Research
 
& Development cost to be
 
allocated to
the offshore tax
 
regime, a Norwegian supreme
 
court ruling announced
 
in second quarter and
 
Equinor’s subsequent correspondence
with the Norwegian
 
tax authorities in third quarter
 
has resulted in a reduced
 
maximum exposure in
 
this matter to approximately
 
USD
250 million. Equinor
 
provides for its best estimate
 
in the matter.
 
 
Suit for an annulment of Petrobras'
 
sale of the interest
 
in BM-S-8 to Equinor
 
 
In March 2017, the
 
Union of Workers of
 
Oil Tankers
 
of Sergipe (Sindipetro)
 
filed a class action suit against
 
Petrobras, Equinor and
ANP - the Brazilian
 
Regulatory Agency - to see
 
k
 
annulment of Petrobras'
 
sale of the interest and operatorship
 
in BM-S-8 to Equinor,
 
a
transaction which was
 
closed in November 2016.
 
There was also an injunction
 
request aiming to suspend
 
the assignment, which first
was granted in April
 
2017 by a federal judge,
 
but subsequently lifted
 
by the federal court. The
 
injunction request has now been
 
finally
dismissed by the
 
courts.
 
 
Claim from Petrofac regarding
 
multiple variation order
 
requests performed in Algeria
 
(In Salah)
 
 
Petrofac International
 
(UAE) LLC (PIUL) was awarded
 
the EPC Contract to execute
 
the ISSF Project (the In
 
Salah Southern
Fields Project which
 
has finalised the development
 
of four gas fields in
 
central Algeria). Following
 
suspension of activity
 
after the
terrorist attack at
 
another field in Algeria
 
(In Amenas) in 2013, PIUL issued
 
multiple Variation
 
Order Requests (VoRs
 
)
 
related to the
costs incurred for stand
 
-by and remobilisation costs
 
after the evacuation
 
of expatriates.
 
Several VoRs have
 
been paid, but the
settlement of the
 
remaining has been
 
unsuccessful. PIUL initiated
 
arbitration on 7 August
 
2020 claiming an estimated
 
amount of USD
533 million, of which
 
Equinor In Salah AS holds
 
a 31,85%
 
share. Equinor's maximum
 
exposure amounts
 
to USD 170 million. Equinor
provides for its best
 
estimate in the matter.
 
 
During the normal course
 
of its business Equinor
 
is involved in legal and
 
other proceedings, and several
 
claims are unresolved and
currently outstanding.
 
The ultimate liability or
 
asset, respectively,
 
in respect of such litigation
 
and claims cannot be
 
determined now.
Equinor has provided
 
in its Condensed interim
 
financial statements for
 
probable liabilities related
 
to litigation and claims based
 
on the
company's best judgement.
 
Equinor does not expect
 
that its financial position,
 
results of operations or
 
cash flows will be materially
affected by the resolution
 
of these legal proceedings.
 
 
8 Impact of the Covid-19 pandemic and oil price decline
 
 
The COVID-19 pandemic
 
with global lockdowns
 
has slowed, and in
 
many countries, contracted
 
economic growth and
 
has had
dramatic consequences
 
for energy demand. As a result,
 
commodity prices collapsed
 
in the first half of 2020 before
 
a partial re-bounce
in the second half, impacting
 
the energy industry
 
and Equinor.
 
The full extent, duration
 
and consequences
 
of the Covid-19 pandemic
and the resulting operational
 
and economic impact
 
for Equinor cannot be
 
ascertained at this time.
 
However, resulting
 
changes in
market risk and economic
 
circumstances impact
 
Equinor’s assumptions about the
 
future and related sources
 
of
 
estimation uncertainty.
Updates of certain information
 
previously provided in
 
Equinor’s Annual financial statement
 
s
 
for 2019, as well as other
 
relevant
information, are consequently
 
included below.
 
 
The mitigation effects
 
from COVID-19 have
 
had a massive impact on oil
 
demand, particularly mobility
 
fuels. According to the
International Energy
 
Agency (IEA), Global energy
 
demand in 2020 is estimated
 
to drop by 5-6%, with
 
the largest uncertainty being
around the shake of
 
a second wave of lockdowns
 
in the last quarter this
 
year. Significant
 
Opec+ supply cuts and shut
 
-in production
around the world
 
following the announcement
 
at 1 May 2020, have so
 
far prevented another
 
price collapse and storages
 
running full.
 
 
 
 
 
 
 
 
 
In Norway,
 
where Equinor has production
 
on the NCS, the Norwegian
 
Government announced
 
unilateral oil production
 
cuts portioned
out to relevant fields
 
via their production
 
licenses. Equinor complies
 
with the revised production
 
permits issued by the
 
authorities, but
for the third quarter
 
of 2020 the production cuts
 
in Norway and internationally
 
did not have significant impact
 
on the total production.
 
 
An updated overview
 
of Equinor’s price assumptions
 
as of 30 September
 
2020 has been provided
 
in note 6 Property,
 
plant and
equipment and intangible
 
assets. Equinor has evaluated
 
the reasonable possible
 
changes in certain assumptions
 
as of 30 September
2020. For interest rate
 
and currency risk, the
 
reasonable possible change
 
remains unchanged from 31
 
December 2019.
 
As of 30 September
 
2020, the reasonable possible
 
change in prices is deemed
 
to be -50%/+50% for short-term
 
contracts, and -
30%/+30% for the long
 
-term derivatives, based
 
on their duration. The short
 
-term price contracts are
 
considered more volatile
compared to year-end
 
2019.
 
 
The table below contains
 
the price risk sensitivities
 
of Equinor's commodity-based
 
derivatives contracts.
 
Equinor enters into
commodity-based derivative
 
contracts mainly to
 
manage short-term commodity
 
risk. However,
 
since none of the derivative
 
financial
instruments included
 
in the table below are
 
part of formal hedging relationships,
 
any changes in their fair
 
values would be recognised
in the Consolidated
 
statement of income.
 
Commodity price sensitivity
 
30 September 2020
31 December 2019
(in USD million)
- 50%
+ 50%
- 30%
+ 30%
Crude oil and refined products net gain/(losses)
1,092
(1,092)
569
(563)
Natural gas and electricity net gains/(losses)
333
283
(33)
49
 
Due to market developments
 
and related consequences,
 
certain Equinor suppliers
 
and customers have indicated
 
that contractual
clauses such as those
 
involving force majeure
 
are being explored. The
 
potential impact for Equinor,
 
if any, is
 
currently uncertain.
 
 
As a measure to
 
maintain activity in the oil and
 
gas related industry,
 
the Norwegian Government
 
on 19 June 2020 enacted
 
temporary
targeted changes to
 
Norway’s petroleum tax
 
system for investments
 
incurred in 2020 and 2021
 
and for new projects with
 
final
investment decisions
 
submitted by end of 2022.
 
The changes are effective
 
from 1 January 2020 and
 
provide companies with
 
a direct
tax deduction in the
 
special petroleum tax (56%
 
tax rate) instead of tax depreciation
 
over 6 years. One of the
 
changes is that the tax
uplift benefit, which
 
has increased from 20.8%.
 
to 24% will be recognised
 
over one year instead of
 
four years. Tax
 
depreciation
towards the ordinary
 
corporate tax (22% tax
 
rate) will continue with a
 
six-year depreciation profile.
 
The totality of the petroleum
 
tax
changes will increase
 
the profitability for investments
 
and strengthen Equinor’s’
 
liquidity.
 
9 Subsequent events
 
On 28 October 2020,
 
the board of directors
 
resolved to declare a dividend
 
for the third quarter
 
of 2020 of USD 0.11
 
per share. The
Equinor shares will
 
trade ex-dividend 11
 
February 2021 on the Oslo
 
Børs and for ADR holders
 
on the New York
 
Stock Exchange.
Record date will be
 
12 February 2021 and payment
 
date will be 26 February
 
2021.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supplementary disclosures
 
 
Operational data
Quarters
Change
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
Operational data
2020
2019
Change
Prices
43.0
29.2
61.9
(31%)
Average Brent oil price (USD/bbl)
40.8
64.7
(37%)
39.6
23.5
52.6
(25%)
E&P Norway average liquids price (USD/bbl)
35.9
56.6
(37%)
39.1
24.4
58.1
(33%)
E&P International average liquids price
 
(USD/bbl)
37.3
60.3
(38%)
32.2
19.0
45.9
(30%)
E&P USA average liquids price (USD/bbl)
30.3
48.6
(38%)
38.3
22.9
52.5
(27%)
Group average liquids price (USD/bbl)
 
[1]
35.2
55.8
(37%)
349
229
465
(25%)
Group average liquids price (NOK/bbl)
 
[1]
335
486
(31%)
1.45
0.91
3.96
(63%)
E&P Norway average internal gas
 
price (USD/mmbtu) [9]
1.70
4.66
(64%)
1.13
1.26
1.74
(35%)
E&P USA average internal gas price (USD/mmbtu)
 
[9]
1.31
2.29
(43%)
2.72
2.24
5.19
(48%)
Average invoiced gas prices - Europe
 
(USD/mmbtu) [8]
3.06
5.95
(49%)
1.53
1.47
1.99
(23%)
Average invoiced gas prices - North
 
America (USD/mmbtu) [8]
1.63
2.51
(35%)
(0.1)
3.9
5.9
>(100%)
Refining reference margin (USD/bbl)
 
[2]
1.8
4.4
(58%)
Entitlement production (mboe per day)
619
637
497
25%
E&P Norway entitlement liquids production
635
507
25%
220
235
266
(17%)
E&P International entitlement liquids
 
production
240
272
(12%)
151
172
182
(17%)
E&P USA entitlement liquids production
170
172
(2%)
991
1,044
946
5%
Group entitlement liquids production
1,045
951
10%
654
644
570
15%
E&P Norway entitlement gas production
681
691
(1%)
35
31
47
(25%)
E&P International entitlement gas
 
production
41
39
4%
185
179
183
1%
E&P USA entitlement gas production
179
181
(1%)
874
854
799
9%
Group entitlement gas production
901
911
(1%)
1,865
1,897
1,745
7%
Total entitlement
 
liquids and gas production [3]
1,946
1,862
5%
Equity production (mboe per day)
619
637
497
25%
E&P Norway equity liquids production
635
507
25%
283
291
352
(20%)
E&P International equity liquids
 
production
309
355
(13%)
173
195
212
(18%)
E&P USA equity liquids production
194
209
(7%)
1,076
1,123
1,061
1%
Group equity liquids production
1,138
1,071
6%
654
644
570
15%
E&P Norway equity gas production
681
691
(1%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40
34
58
(31%)
E&P International equity gas production
47
61
(22%)
224
210
220
2%
E&P USA equity gas production
213
210
2%
918
888
848
8%
Group equity gas production
941
961
(2%)
1,994
2,011
1,909
4%
Total equity
 
liquids and gas production [4]
2,079
2,032
2%
NES power production
319
305
342
(7%)
Power generation (GWh)
1,181
1,278
(8%)
Exchange rates
Quarters
Change
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
Exchange rates
2020
2019
Change
0.1095
0.1000
0.1129
(3%)
NOK/USD average daily exchange rate
0.1050
0.1150
(9%)
0.1055
0.1026
0.1100
(4%)
NOK/USD period-end exchange
 
rate
0.1055
0.1100
(4%)
9.1321
10.0023
8.8573
3%
USD/NOK average daily exchange rate
9.5266
8.6979
10%
9.4814
9.7446
9.0874
4%
USD/NOK period-end exchange
 
rate
9.4814
9.0874
4%
1.1685
1.1008
1.1118
5%
EUR/USD average daily exchange
 
rate
1.1239
1.1234
0%
1.1708
1.1198
1.0889
8%
EUR/USD period-end exchange rate
1.1708
1.0889
8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Health, safety and the
 
environment
Twelve months average per
First nine months
First nine months
Q3 2020
Q3 2019
Health, safety and the environment
2020
2019
Injury/incident frequency
2.3
2.5
Total recordable
 
injury frequency (TRIF)
2.3
2.5
0.6
0.6
Serious Incident Frequency (SIF)
0.5
0.6
Oil spills
165
226
Accidental oil spills (number of)
116
170
317
8,850
Accidental oil spills (cubic metres)
158
8,824
First nine months
Full year
Climate
2020
2019
Upstream CO2 intensity (kg CO2/boe)
1)
8.1
9.5
 
1) Total
 
scope 1 emissions
 
of CO2 (kg CO2) from exploration
 
and production, divided by
 
total production (boe).
 
 
 
Exploration expenses
Quarters
Change
Exploration expenses
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
142
97
179
(21%)
E&P Norway exploration expenditures
369
437
(16%)
143
234
219
(35%)
E&P International exploration expenditures
598
578
3%
65
76
24
>100%
E&P USA exploration expenditures
186
90
>100%
349
407
422
(17%)
1)
Group exploration expenditures
1,151
1,106
4%
2)
87
14
39
>100%
Expensed, previously capitalised
 
exploration expenditures
200
59
>100%
(125)
(140)
(201)
(38%)
Capitalised share of current period's
 
exploration activity
(459)
(405)
14%
575
111
611
(6%)
Impairment (reversal of impairment)
1,022
614
67%
886
393
871
2%
Exploration expenses according
 
to IFRS
1,914
1,374
39%
1) 27 wells with activity with 11
 
completed in the third quarter
 
of 2020 compared to 21 wells
 
with 11 completed
 
in the third quarter of 2019.
2) 42 wells with activity with 26 completed
 
the first nine months of 2020
 
compared to 42 wells
 
with 32 completed in the first
 
nine months of
2019.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calculation of capital employed
 
and net debt to capital
 
employed ratio
 
The table below reconciles
 
the net interest-bearing
 
debt adjusted, the capital
 
employed, the net debt to
 
capital employed ratio
adjusted including lease
 
liabilities and the net debt
 
to capital employed adjusted
 
ratio with the most directly
 
comparable financial
measure or measures
 
calculated in accordance
 
with IFRS.
 
 
Calculation of capital employed and net debt to capital employed
 
ratio
At 30
September
At 30 June
At 31
December
At 30
September
(in USD million)
2020
2020
2019
2019
Shareholders' equity
34,084
35,587
41,139
40,983
Non-controlling interests
24
23
20
16
Total equity
 
A
34,108
35,610
41,159
40,999
Current finance debt
5,277
5,463
4,087
4,375
Non-current finance debt
32,193
31,647
24,945
24,401
Gross interest-bearing debt
B
37,471
37,110
29,032
28,776
Cash and cash equivalents
7,844
9,700
5,177
6,838
Current financial investments
10,563
9,319
7,426
7,203
Cash and cash equivalents and financial
 
investment
 
C
18,407
19,020
12,604
14,041
Net interest-bearing debt [10]
B1 = B-C
19,064
18,091
16,429
14,735
Other interest-bearing elements
 
1)
669
832
791
878
Normalisation for cash-build up
 
before tax payment (50% of Tax
 
Payment)
 
2)
259
-
-
670
Net interest-bearing debt adjusted normalised
 
for tax payment, including
lease liabilities [5]
B2
19,992
18,923
17,219
16,283
Lease liabilities
4,218
4,154
4,339
4,383
Net interest-bearing debt adjusted [5]
B3
15,774
14,768
12,880
11,899
Calculation of capital employed [5]
Capital employed
A+B1
53,172
53,700
57,588
55,734
 
 
 
 
 
 
 
 
Capital employed adjusted, including
 
lease liabilities
A+B2
54,100
54,532
58,378
57,282
Capital employed adjusted
A+B3
49,883
50,378
54,039
52,898
Calculated net debt to capital employed
 
[5]
Net debt to capital employed
(B1)/(A+B1)
35.9%
33.7%
28.5%
26.4%
Net debt to capital employed adjusted,
 
including lease liabilities
(B2)/(A+B2)
37.0%
34.7%
29.5%
28.4%
Net debt to capital employed adjusted
(B3)/(A+B3)
31.6%
29.3%
23.8%
22.5%
1) Cash
 
and cash equivalents
 
adjustments regarding collateral
 
deposits classified as cash
 
and cash equivalents
 
in the Consolidated
balance sheet but considered
 
as non-cash in the non
 
-GAAP calculations as well
 
as financial investments
 
in Equinor Insurance
AS classified as current
 
financial investments.
2) Adjustment
 
to net interest-bearing debt
 
for cash build-up in the first
 
quarter and the third quarter
 
before tax payment on 1
 
April
and 1 October.
 
This is to exclude 50% of
 
the cash build-up to have
 
a more even allocation of
 
tax payments between the
 
four
quarters and hence
 
a more representative net
 
interest-bearing debt.
 
 
 
USE AND RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Non-GAAP financial
 
measures are defined as numerical
 
measures that either exclude
 
or include amounts or
 
certain accounting items
that are not excluded
 
or included in the comparable
 
measures calculated and
 
presented in accordance with
 
GAAP (i.e. IFRS).
Management considers
 
adjusted earnings and adjusted
 
earnings after tax together
 
with other non-GAAP financial
 
measures as
defined below,
 
to provide a better indication
 
of the underlying operational
 
and financial performance
 
in the period (excluding
financing), and therefore
 
better facilitate comparisons
 
between periods.
 
The following financial
 
measures may be considered
 
non-GAAP financial
 
measures:
 
 
Net debt to capital employed,
 
Net debt to capital
 
employed adjusted,
 
including lease
 
liabilities and
Net debt to capital
employed ratio adjusted
 
– Following implementation
 
of IFRS 16 Equinor presents
 
a “net debt to capital employed
 
adjusted”
excluding lease liabilities
 
from the gross interest
 
-bearing debt. Comparable
 
numbers are presented
 
in the table Calculation of
capital employed
 
and net debt to capital
 
employed ratio in the report
 
include Finance lease according
 
to IAS17, adjusted for
marketing instruction
 
agreement
 
Organic capital expenditures
 
– Capital expenditures,
 
defined as Additions to PP&E,
 
intangibles and
 
equity accounted
investments in note
 
2 Segments to the Condensed
 
financial interim statements,
 
amounted to USD 2.0 billion
 
in the third quarter
of 2020. Organic
 
capital expenditures are
 
capital expenditures excluding
 
acquisitions, recognised
 
lease assets (RoU assets)
 
and
other investments with
 
significant different cash
 
flow pattern. In the third quarter
 
of 2020, a total of USD 0.3
 
billion are excluded in
the organic capital expenditures.
 
Forward-looking organic capital
 
expenditures included
 
in this report are not reconcilable
 
to its
most directly comparable
 
IFRS measure without
 
unreasonable efforts,
 
because the amounts
 
excluded from such IFRS measure
to determine organic
 
capital expenditures cannot
 
be predicted with reasonable
 
certainty.
 
Free cash flow for
 
the third quarter 2020
 
- includes the following line items
 
in the Consolidated statement
 
of cash flows: Cash
flows provided by operating
 
activities before taxes
 
paid and working capital
 
items (USD 3.3 billion),
 
taxes paid (negative USD 0.1
billion), cash used in
 
business combinations
 
(USD 0.0 billion), capital
 
expenditures and investments
 
(negative USD 1.7 billion),
(increase) decrease
 
in other items interest bearing
 
(USD 0.0 billion), proceeds
 
from sale of assets and
 
businesses (USD 0.0
billion), dividend paid
 
(negative USD 0.3 billion)
 
and share buy-back (negative
 
USD 1.0 billion), resulting
 
in a free cash flow of
USD 0.2 billion in the
 
third quarter of 2020.
 
Free cash flow for
 
the first nine months of 2020
 
- includes the following line items
 
in the Consolidated statement
 
of cash flows:
Cash flows provided
 
by operating activities
 
before taxes paid and working
 
capital items (USD 10.2
 
billion), taxes paid (negative
USD 2.7 billion),
 
cash used in business
 
combinations (USD 0.0 billion),
 
capital expenditures and
 
investments (negative USD 6.0
billion), (increase) decrease
 
in other items interest bearing
 
(USD 0.0 billion), proceeds
 
from sale of assets
 
and businesses,
including USD 0.3 billion
 
received from the Lundin
 
divestment included in
 
(increase)/decrease in financial
 
investments (USD 0.3
billion), dividend paid
 
(negative USD 2.0 billion)
 
and share buy-back
 
(negative USD 1.1 billion),
 
resulting in a free cash flow
 
of
negative USD 1.3 billion
 
in the first nine months of
 
2020.
 
 
 
FORWARD-LOOKING STATEMENTS
This report contains
 
certain forward-looking statements
 
that involve risks and
 
uncertainties. In some
 
cases, we use words
 
such as
"ambition", "continue",
 
"could", "estimate", “intend”,
 
"expect", "believe", "likely",
 
"may", "outlook", "plan", "strategy",
 
"will", "guidance",
“targets”, “in line
 
with”, “on track”, “consistent”
 
and similar expressions
 
to identify forward-looking
 
statements. Forward
 
-looking
statements include
 
all statements other than
 
statements of historical
 
fact, including, among others,
 
statements regarding Equinor’s
plans, intentions,
 
aims, ambitions and expectations
 
with respect to the Covid
 
-19 pandemic including
 
its impacts, consequences
 
and
risks; Equinor’s USD 3 billion
 
action plan for 2020 to
 
strengthen financial
 
resilience; Equinor’s response
 
to the Covid-19 pandemic,
including anticipated
 
measures to protect people,
 
operations and value creation,
 
operating costs and assumptions;
 
the commitment to
develop as a broad
 
energy company; future
 
financial performance, including
 
cash flow and liquidity;
 
the share buy-back programme,
including its suspension;
 
accounting policies;
 
production cuts, including
 
their impact on the level
 
and timing of Equinor’s production;
plans to develop
 
fields; changes to Norway’s
 
petroleum tax system; market
 
outlook and future economic
 
projections and assumptions,
including commodity
 
price assumptions;
 
organic capital expenditures
 
through 2023;
 
intention to mature its
 
portfolio; estimates
regarding exploration
 
activity levels; ambition
 
to keep unit of production
 
cost in the top quartile
 
of its peer group; scheduled
maintenance activity
 
and the effects on
 
equity production thereof;
 
completion and results
 
of acquisitions and disposals;
 
expected
amount and timing of
 
dividend payments; and
 
provisions and contingent
 
liabilities.
 
You should
 
not place undue reliance
 
on these forward-looking
 
statements. Our actual
 
results could differ
 
materially from those
anticipated in the
 
forward-looking statements
 
for many reasons.
 
These forward-looking
 
statements reflect current
 
views about future events
 
and are, by their nature,
 
subject to significant risks
 
and
uncertainties because
 
they relate to events and
 
depend on circumstances
 
that will occur in the future.
 
There are a number of
 
factors
that could cause
 
actual results and developments
 
to differ materially
 
from those expressed or
 
implied by these forward-looking
statements, including
 
levels of industry product
 
supply, demand
 
and pricing, in particular
 
in light of recent significant
 
oil price volatility
triggered,
 
among other things, by
 
the changing dynamic
 
among OPEC+ members
 
and the uncertainty regarding
 
demand created by
the Covid-19 pandemic;
 
the impact of Covid-19;
 
levels and calculations of
 
reserves and material
 
differences from reserves
 
estimates;
unsuccessful drilling;
 
operational problems;
 
health, safety and environmental
 
risks; natural disasters,
 
adverse weather conditions,
climate change, and
 
other changes to business
 
conditions; the effects
 
of climate change; regulations
 
on hydraulic fracturing; securit
 
y
breaches, including breaches
 
of our digital infrastructure
 
(cybersecurity); ineffectiveness
 
of crisis management systems;
 
the actions of
counterparties and
 
competitors; the development
 
and use of new technology,
 
particularly in the renewable
 
energy sector; inability
 
to
meet strategic objectives;
 
the difficulties involving
 
transportation infrastructure;
 
political and social stability
 
and economic growth
 
in
relevant areas of
 
the world; an inability
 
to attract and retain personnel;
 
inadequate insurance
 
coverage; changes or uncertainty
 
in or
non-compliance with
 
laws and governmental regulations;
 
the actions of the Norwegian
 
state as majority shareholder;
 
failure to meet
our ethical and social
 
standards; the political
 
and economic policies
 
of Norway and other o
 
il-producing countries; non
 
-compliance with
international trade sanctions;
 
the actions of field partners;
 
adverse changes in
 
tax regimes; exchange
 
rate and interest rate
fluctuations; factors
 
relating to trading, supply and
 
financial risk; general
 
economic conditions; and
 
other factors discussed
 
elsewhere
in this report. Additional
 
information, including information
 
on factors that may
 
affect Equinor’s business,
 
is contained in Equinor’s
Annual Report on Form
 
20-F for the year
 
ended December 31,
 
2019, filed with the U.S. Securities
 
and Exchange Commission
(including section 2.11
 
Risk review - Risk factors
 
thereof). Equinor’s 2019 Annual
 
Report and Form 20-F is available
 
at Equinor’s
website www.equinor.com.
 
Although we believe that
 
the expectations reflected
 
in the forward-looking statements
 
are reasonable, we
cannot assure you that
 
our future results, level of
 
activity, performance
 
or achievements will meet
 
these expectations. Moreover,
neither we nor any other
 
person assume responsibility
 
for the accuracy and completeness
 
of these forward-looking
 
statements. Any
forward-looking statement
 
speaks only as of the
 
date on which such
 
statement is made, and,
 
except as required
 
by applicable law, we
undertake no obligation
 
to update any of these statements
 
after the date of this report,
 
whether to make them either
 
conform to actual
results or changes in
 
our expectations or
 
otherwise.
 
We use certain
 
terms in this document,
 
such as “resource” and
 
“resources” that the SEC’s rules
 
prohibit us from including in
 
our filings
with the SEC. U.S. investors
 
are urged to closely consider
 
the disclosures in our Form 20
 
-F, SEC File
 
No. 1-15200. This
 
form is
available on our website
 
or by calling 1-800-SEC-0330
 
or logging on to
www.sec.gov
.
 
Although we believe
 
that the expectations reflected
 
in the forward-looking statements
 
are reasonable, we cannot
 
assure you that our
future results, level
 
of activity, performance
 
or achievements will meet
 
these expectations.
 
Moreover, neither
 
we nor any other person
assumes responsibility
 
for the accuracy and completeness
 
of the forward-looking statements.
 
Unless we are required
 
by law to update
these statements, we
 
will not necessarily update
 
any of these statements
 
after the date of this
 
report, either to make
 
them conform to
actual results or changes
 
in our expectations.
 
 
 
END NOTES
 
1. The
 
group's average liquids
 
price is a volume-weighted
 
average of the segment
 
prices of crude oil, condensate
 
and natural gas
liquids (NGL).
2. The
 
refining reference margin
 
is a typical average gross
 
margin of our two refineries,
 
Mongstad and Kalundborg.
 
The reference
margin will differ
 
from the actual margin,
 
due to variations in
 
type of crude and other feedstock,
 
throughput, product yields,
 
freight
cost, inventory,
 
etc.
3. Liquids
 
volumes include oil, condensate
 
and NGL, exclusive of royalty
 
oil.
4. Equity
 
volumes represent
 
produced volumes under
 
a production sharing agreement
 
(PSA) that correspond to
 
Equinor's ownership
share in a field. Entitlement
 
volumes, on the other hand,
 
represent Equinor's share
 
of the volumes distributed
 
to the partners in the
field, which are subject
 
to deductions for,
 
among other things, royalty
 
and the host government's
 
share of profit oil. Under
 
the
terms of a PSA, the amount
 
of profit oil deducted from
 
equity volumes will normally
 
increase with the cumu
 
lative return on
investment to the
 
partners and/or production
 
from the licence. Consequently,
 
the gap between entitlement
 
and equity volumes
 
will
likely increase in
 
times of high liquids prices.
 
The distinction between
 
equity and entitlement is
 
relevant to most PSA regimes,
whereas it is not
 
applicable in most concessionary
 
regimes such as those
 
in Norway,
 
the UK, the US, Canada
 
and Brazil.
 
5. These
 
are non-GAAP figures. See
 
Use and reconciliation of
 
non-GAAP financial measures
 
in the Supplementary
 
disclosures for
more details.
6. Transactions
 
with the Norwegian State.
 
The Norwegian State, represented
 
by the Ministry of Petroleum
 
and Energy (MPE), is the
majority shareholder
 
of Equinor and it also
 
holds major investments
 
in other entities. This ownership
 
structure means that Equinor
participates in transactions
 
with many parties that are
 
under a common ownership
 
structure and therefore
 
meet the definition of a
related party.
 
Equinor purchases liquids
 
and natural gas from the Norwegian
 
State, represented by
 
SDFI (the State's Direct
Financial Interest).
 
In addition, Equinor sell
 
s
 
the State's natural gas production
 
in its own name, but for
 
the Norwegian State's
account and risk
 
as well as related expenditures
 
are refunded by the
 
State. All transactions are
 
considered priced on an
 
arm’s-
length basis.
7. The
 
production guidance
 
reflects our estimates
 
of proved reserves calculated
 
in accordance with US Securities
 
and Exchange
Commission (SEC) guidelines
 
and additional production
 
from other reserves not
 
included in proved reser
 
ves estimates. The
growth percentage
 
is based on historical
 
production numbers, adjusted
 
for portfolio measures
 
.
8. The
 
group's average invoiced
 
gas prices include volumes
 
sold by the MMP segment.
9. The
 
internal transfer price
 
paid from the MMP segment
 
to the E&P Norway and
 
E&P USA segments.
10. Since different
 
legal entities in the group
 
lend to projects and others
 
borrow from banks, project
 
financing through external
 
bank or
similar institutions is
 
not netted in the balance
 
sheet and results in over
 
-reporting of the debt stated
 
in the balance sheet compared
to the underlying exposure
 
in the group. Similarly,
 
certain net interest-bearing
 
debt incurred from activities
 
pursuant to the
Marketing Instruction
 
of the Norwegian government
 
are off-set against
 
receivables on the SDFI. Some
 
interest-bearing elements
are classified together
 
with non-interest bearing elements,
 
and are therefore included
 
when calculating the net
 
interest-bearing
debt.
 
 
Signatures
Pursuant to the requirements of the
 
Securities Exchange Act of 1934,
 
the registrant has duly caused this
 
report to be signed on its behalf
 
by
the undersigned, thereunto duly authoris
 
ed.
 
EQUINOR ASA
(Registrant)
 
Dated: 29 October, 2020
By: ___/s/ Lars Christian Bacher
 
 
Name: Lars Christian Bacher
Title:
 
Chief Financial Officer
Equinor ASA (NYSE:EQNR)
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