Equinor (OSE: EQNR, NYSE: EQNR) reports adjusted
earnings of positive USD 0.76 billion and negative USD 0.55 billion
after tax in the fourth quarter of 2020. IFRS net operating income
was negative USD 0.99 billion and the IFRS net income was negative
USD 2.41 billion, following net impairments of USD 1.30 billion and
a write down of USD 0.98 billion related to the Tanzania LNG
project.
2020 was characterised by:
- Results impacted by low oil and gas prices
- Solid operational performance during extraordinary
circumstances
- Positive cash flow in a low-price environment
- Delivering USD 3.7 billion in capex and cost reductions, well
above ambition for the action plan to strengthen financial
resilience
- Progressing and capturing value within renewables
- Setting ambition to be a net-zero energy company by 2050 to
create value as a leader in the energy transition
“Our results are impacted by the market turmoil during the year,
but with strong cost improvements and capital discipline we
delivered positive net cash flow for the quarter and the full year.
During 2020 we have delivered more than 3.7 billion dollars in
savings, well above our ambition for the action plan we launched in
March to strengthen financial resilience. We are well positioned
for value creation and strong cash flow in 2021 and the coming
years,” says Anders Opedal, President and CEO of Equinor ASA.
“I am impressed by how the organisation has responded,
delivering strong operational performance and production growth in
a long-lasting challenging situation during the pandemic. We are
increasing production volumes from Johan Sverdrup even further, and
we used our flexibility to have high gas production as gas prices
increased in the quarter. In addition, we have started production
from Snorre Expansion ahead of time and well below cost estimates,”
says Opedal.
“Equinor is committed to ensuring long-term competitiveness and
creating value as a leader in the energy transition, setting an
ambition to be a net-zero energy company by 2050. During 2020 we
delivered significant progress in our renewables portfolio, taking
the investment decision for Dogger Bank A and B, winning the
largest ever offshore wind award in the US, starting construction
at Hywind Tampen and capturing value from transactions. We are also
taking actions to optimise within oil and gas, building a more
robust portfolio for the future, but resulting in a write down in
Tanzania and an impairment related to an operated US onshore asset
in the quarter,” says Opedal.
Adjusted earnings [5] were USD 0.76 billion in the fourth
quarter, down from USD 3.55 billion in the same period in 2019.
Adjusted earnings after tax [5] were negative USD 0.55 billion,
down from USD 1.19 billion in the same period last year. Low prices
for liquids impacted the earnings for the quarter.
Equinor launched an action plan of USD 3 billion in March 2020
to strengthen financial resilience, including a reduction in
operating costs of USD 0.70 billion. Delivery on the plan resulted
in savings of more than USD 3.7 billion, including a reduction in
fixed operating costs of around USD 1 billion. Unit production
costs are reduced by 5% since 2019, realising the 2021 ambition
already in 2020.
In the E&P Norway segment, Equinor realised weaker liquids
prices and the production was reduced mainly as a result of
turnarounds moved to fourth quarter due to the ongoing
pandemic.
Results in the E&P International segment were impacted by
low prices and the impairment of the Tanzania LNG project of USD
0.98 billion. The E&P USA segment was also impacted by weak
prices, partially offset by significant reductions in operating
costs.
The Marketing, midstream and processing segment captured value
from strong trading results from gas to Europe, partially offset by
low refinery margins and shutdown of production at Hammerfest LNG
plant.
New energy solutions delivered high availability on offshore
wind assets. A capital gain of around USD 1 billion is expected to
be booked from the divestment of a 50% non-operated interest of the
offshore wind projects Empire Wind and Beacon Wind in the US. A
capital gain from the farm down of 10% equity interest in Dogger
Bank A and B in the UK is expected to be booked in the first
quarter of 2021.
IFRS net operating income was negative USD 0.99 billion in the
fourth quarter, down from positive USD 1.52 billion in the same
period in 2019. IFRS net income was negative USD 2.42 billion in
the fourth quarter, compared to negative USD 0.23 billion in the
fourth quarter of 2019. Net operating income was negatively
impacted by net impairments of USD 1.30 billion, mainly relating to
a refinery as a result of reduced margin assumptions and some
increase in cost estimates, and to an operated unconventional
onshore asset in North America due to reclassification as held for
sale.
Equinor delivered total equity production of 2,043 mboe per day
in the fourth quarter, down from 2,198 mboe per day in the same
period in 2019, with a minor increase in gas share due to high
flexible production in gas fields. Adjusting for portfolio
transactions the production growth for 2020 was 2.4%.
In 2020, Equinor completed 34 exploration wells with 16
commercial discoveries and 1 well under evaluation. At year end, 12
wells were ongoing. Adjusted exploration expenses in the fourth
quarter were USD 1.25 billion, compared to USD 0.44 billion in the
same quarter in 2019.
The proved reserves replacement ratio (RRR) was negative 5% in
2020, following capital discipline and the prioritisation of
financial flexibility during market uncertainty, with a three-year
average of 95%. With 5.26 billion barrels in proved reserves,
Equinor’s reserves to production ratio (R/P) was 7.4 years.
Cash flows provided by operating activities before taxes paid
and changes in working capital amounted to USD 14.0 billion in
2020, compared to USD 21.8 billion in 2019. Organic capital
expenditure [5] was USD 7.8 billion for 2020. At year end, net debt
to capital employed(1) was 31.7%, stable from 31.6% at the end of
the third quarter of 2020. Following the implementation of IFRS 16,
net debt to capital employed(1) was 37.3%.
The board of directors proposes to the annual general meeting a
cash dividend of USD 0.12 per share for the fourth quarter
2020.
Average CO2-emissions from Equinor’s operated upstream
production, on a 100% basis, was 8.0 kg per barrel in 2020.
The twelve-month average Serious Incident Frequency (SIF) for
2020 was 0.5, down from 0.6 in 2019. The twelve-month average
Recordable Injury Frequency (TRIF) was 2.3 for 2020, compared to
2.5 in 2019.
* * *(1) This is a non-GAAP figure. Comparison numbers and
reconciliation to IFRS are presented in the table Calculation of
capital employed and net debt to capital employed ratio as shown
under the Supplementary section in the report.
[5] These are non-GAAP figures. See Use and reconciliation
of non-GAAP financial measures in the report for more details. For
ROACE, see table Calculated ROACE in the Supplementary disclosures
for more details.
* * *
Further information from:
Investor relationsPeter Hutton, senior vice
president Investor relations,+44 7881 918 792 (mobile)
Helge Hove Haldorsen, vice president Investor Relations North
America,+1 281 224 0140 (mobile)
PressBård Glad Pedersen, vice president Media
relations,+47 918 01 791 (mobile)
This information is subject to the disclosure requirements
pursuant to Section 5-12 the Norwegian Securities Trading Act
- Equinor fourth quarter 2020 Financial statements and
review
- Equinor fourth quarter 2020 and year end results press
release
- Equinor 4th quarter and full year 2020 results CEO and CFO
presentation
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