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 April 2021
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 contains a report of the first quarter 2021 results of Equinor
ASA.
Equinor first quarter 2021 results
Equinor reports adjusted
earnings of USD 5.47 billion and USD 2.66 billion after tax in the first quarter
of 2021. IFRS net operating income was USD 5.22 billion and the IFRS net income
was USD 1.85 billion.
The
first quarter of 2021 was characterised by:
·
Strong results due to price recovery, sustained cost improvements
and strict capital discipline.
·
Very strong cash flow and a 7.1 percentage points reduction of
adjusted net debt ratio to 24.6%.
·
Solid operational performance and high production efficiency. Some
impact from Covid-19 and restrictions on projects in execution.
·
Significant gain of USD 1.38 billion from farm downs in offshore
wind assets.
·
Cash dividend of USD 0.15 per share.
“With sustained
improvements and capital discipline, we are able to capture value from recovering
oil and gas prices and achieve our best quarterly results since 2014. We
deliver a net cash flow above 5 billion dollars and reduce our adjusted net
debt ratio to below
25 percent. The forceful response and solid operational performance delivered
by our organisation during the pandemic is providing for a strong position for safe
operations, value creation and cash flow generation in 2021 and going forward,”
says Anders Opedal, President and CEO of Equinor ASA.
“Equinor
aims to be a leader in the energy transition and during the quarter we strengthened
our position within offshore wind with the awarded offtake contracts from New
York State for Empire Wind 2 and Beacon Wind 1. We also booked capital gains of
around
1.4 billion dollars from farm downs, demonstrating our ability to create value from
accessing and maturing renewable projects. Within low carbon solutions we have
started construction of the Northern Lights terminal and secured funding for
three low carbon projects in the UK”, says Opedal.
Adjusted
earnings [5] were USD 5.47 billion in the first quarter, up from USD 2.05 billion
in the same period in 2020. Adjusted earnings after tax [5] were USD 2.66
billion, up from USD 0.56 billion in the same period last year.
Higher
realised prices for gas and liquids positively impacted the results from all
upstream segments, further supported by sustained costs improvements and strict
capital discipline.
Results
from the Marketing, midstream and processing segment were impacted by losses on
derivatives for gas forward sales, shut down of the Hammerfest LNG plant and weak
refinery margins.
The
Renewables segment delivers strong financial results with a capital gain from farm
downs of around USD 1.4 billion, included in both IFRS and adjusted results,
from the divestments of a 50% non-operated interest in the offshore wind
projects Empire Wind and Beacon Wind in the US and a 10% equity interest in the
Dogger Bank A and B in the UK.
IFRS
net operating income was USD 5.22 billion in the first quarter, up from USD 0.06
billion in the same period in 2020. IFRS net income was USD 1.85 billion in the
first quarter, compared to negative USD 0.71 billion in the first quarter of 2020.
Net operating income was impacted by higher prices for gas and liquids, gains
from transactions, and lower impairments of USD 0.43 billion in the first
quarter of 2021.
Equinor
delivered total equity production of 2,168 mboe per day in the first quarter, down
from 2,233 mboe per day in the same period in 2020. Shut down of the Hammerfest
LNG plant and maintenance at Peregrino were partially offset by higher flex gas
volumes, increased gas volumes from the US onshore and increased production
from Johan Sverdrup and Snorre Expansion. Equity production of renewable energy
for the quarter was 450 GWh, down from 558 GWh for the same period last year,
impacted by lower winds than expected for the season.
At
the end of first quarter 2021, Equinor has completed 5 exploration wells with 4
commercial discoveries and 11 wells were ongoing. The 4 discoveries at the
Norwegian continental shelf have added around 60 million boe net to Equinor near
existing infrastructure. Adjusted exploration expenses in the first quarter
were USD 0.23 billion, compared to USD 0.30 billion in the same quarter of
2020.
Cash
flows provided by operating activities before taxes paid and changes in working
capital amounted to USD 6.62 billion for the first quarter, compared to USD 4.50
billion for the same period in 2020. Organic capital expenditure
[5] was USD 1.96 billion for the first
Equinor first quarter 2021 2
three months of
2021. At quarters end, net debt to capital employed (1) was
24.6%, down from 31.7% last quarter. Including the lease liabilities according
to IFRS 16, the net debt to capital employed(1) was 30.6%.
The
board of directors has decided a cash dividend of USD 0.15 per share for the first
quarter 2021.
The
safety statistics for the first quarter of 2021 indicate fewer serious
incidents and personal injuries in Equinor compared to the same period last
year. The twelve-month average Serious Incident Frequency (SIF) for the period
ending at 31 March was 0.5 for 2021, down from 0.6 in 2020.
The twelve-month average Recordable Injury Frequency (TRIF) for the period
ending at 31 March was 2.3 for 2021, down from 2.4 in 2020.
|
Quarters
|
Change
|
(in USD million, unless
stated otherwise)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Net operating income/(loss)
|
5,220
|
(989)
|
58
|
>100%
|
Adjusted earnings [5]
|
5,467
|
756
|
2,047
|
>100%
|
Net income/(loss)
|
1,854
|
(2,416)
|
(705)
|
N/A
|
Adjusted earnings after tax [5]
|
2,662
|
(554)
|
561
|
>100%
|
Total equity liquids and gas
production (mboe per day) [4]
|
2,168
|
2,043
|
2,233
|
(3%)
|
Group average liquids price
(USD/bbl) [1]
|
56.4
|
40.6
|
44.2
|
28%
|
(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.
Equinor first quarter 2021 3
GROUP REVIEW
First quarter 2021
Total equity liquids and gas production
[4] was 2,168 mboe per day in the first
quarter of 2021, down 3% compared to 2,233 mboe per day in the first quarter of
2020 mainly due to expected natural decline, the shutdown at the Hammerfest LNG
plant and production halt on Peregrino in Brazil due to repairs. Ramp-up of
fields on the Norwegian continental shelf and higher flexible gas off-take partially
offset the decrease.
Total
entitlement liquids and gas production [3] was 2,014
mboe per day in the first quarter of 2021, down 3% compared to
2,076 mboe per day in the first quarter of 2020. The
production was negatively influenced by the factors mentioned above in addition
to higher US royalty volumes, partially offset by lower effects from production
sharing agreements (PSA) [4]. The net effect of PSA and US royalties was 154
mboe per day in total in the first quarter of 2021 compared to 157 mboe per day
in the first quarter of 2020.
Condensed income statement
under IFRS
|
Quarters
|
Change
|
(unaudited, in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
Total revenues and other income
|
17,549
|
11,746
|
15,130
|
16%
|
|
|
|
|
|
Purchases [net of inventory
variation]
|
(7,166)
|
(5,533)
|
(7,396)
|
(3%)
|
Operating and administrative
expenses
|
(2,120)
|
(2,156)
|
(2,603)
|
(19%)
|
Depreciation, amortisation and
net impairment losses
|
(2,797)
|
(3,478)
|
(4,438)
|
(37%)
|
Exploration expenses
|
(247)
|
(1,569)
|
(635)
|
(61%)
|
Net operating income/(loss)
|
5,220
|
(989)
|
58
|
>100%
|
Net income/(loss)
|
1,854
|
(2,416)
|
(705)
|
N/A
|
|
|
|
|
|
Balance sheet information: The sum of equity accounted
investments and non-current segment assets was USD 73,686 million for the
period ending 31 March 2021, compared to USD 71,505 million for the period
ending 31 March 2020.
Net
operating income was USD 5,220 million in the first quarter of
2021, compared to USD 58 million in the first quarter of 2020. The increase was
mainly due to higher average prices for liquids and gas, lower net impairments
in the first quarter of 2021 and gain on sale of assets in the Renewables (REN)
segment. Lower operational and administrative expenses and exploration expenses
in the first quarter of 2021 added to the increase, partially offset by lower
production for liquids in addition to weak refinery
margins in MMP.
In the first
quarter of 2021, net operating income was negatively impacted by impairments(2)
of USD 431 million and unrealised loss on gas derivatives of USD 16 million.
Net operating income was positively impacted by inventory hedge contracts of
USD 271 million in addition to operational storage effects of USD 105 million.
In the first
quarter of 2020, net operating income was negatively impacted mainly by net
impairments of USD 2,452 million and operational storage effects of USD 343
million.
(2) For more
information, see note 2 Segments to the Condensed interim financial statements.
Equinor first quarter 2021 4
Adjusted earnings
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Adjusted total revenues and other
income
|
17,287
|
11,985
|
14,970
|
15%
|
Adjusted purchases [6]
|
(7,071)
|
(5,298)
|
(7,856)
|
(10%)
|
Adjusted operating and administrative
expenses
|
(2,133)
|
(2,184)
|
(2,445)
|
(13%)
|
Adjusted depreciation,
amortisation and net impairment losses
|
(2,386)
|
(2,495)
|
(2,321)
|
3%
|
Adjusted exploration expenses
|
(230)
|
(1,252)
|
(302)
|
(24%)
|
Adjusted earnings [5]
|
5,467
|
756
|
2,047
|
>100%
|
Adjusted earnings after tax [5]
|
2,662
|
(554)
|
561
|
>100%
|
|
|
|
|
|
For items impacting net operating
income/(loss), see Use and reconciliation of non-GAAP financial measures in
the Supplementary disclosures.
|
Adjusted
total revenues and other income were USD 17,287 million in
the first quarter of 2021 compared to USD 14,970
million in the first quarter of 2020. The increase was
mainly due to higher average prices for liquids and gas, gain on sale of assets
in REN and higher gas production, especially from the E&P USA segment. The
increase was partially offset by lower liquids production from E&P
International and E&P USA. Losses on derivative positions were offset by higher
realised value of physical commodities sales in the MMP segment.
Adjusted
purchases [6] were USD 7,071 million in the first
quarter of 2021, compared to USD 7,856 million in the first quarter of 2020. The decrease
was mainly due to lower third-party volumes for liquids, partially
offset by higher average prices for liquids and gas.
Adjusted
operating and administrative expenses were USD 2,133
million in the first quarter of 2021, compared to USD 2,445
million in the first quarter of 2020. The decrease was mainly due to lower
transportation costs, especially in the MMP segment, primarily due to lower
freight rates on shipping of liquids in addition to lower operation and
maintenance cost due to reduced activity in E&P International and E&P
USA. The NOK/USD currency development partially offset the decrease.
Adjusted
depreciation, amortisation and net impairment losses were
USD 2,386 million in the first quarter of 2021, compared
to USD 2,321 million in the first quarter of 2020. The increase was mainly due
to higher investments and the NOK/USD currency development. The increase was
partially offset by higher reserves estimates, especially in the E&P
International segment, and a lower depreciation basis resulting from net
impairments in previous periods and a classification of a US onshore asset as held
for sale.
Adjusted
exploration expenses were USD 230
million in the first quarter of 2021, compared to USD 302 million
in the first quarter of 2020. The decrease was mainly due
to lower drilling cost and a lower portion of exploration expenditure
capitalised in earlier years being expensed this quarter. A lower portion of
exploration expenses being capitalised this quarter partially offset the
increase. For more information, see the table titled Adjusted exploration
expenses in the Supplementary disclosures.
After
total adjustments(3) of USD 247 million to net operating
income, Adjusted earnings [5] were USD 5,467 million in the first
quarter of 2021, up USD 3,420 million from the first
quarter of 2020.
Adjusted
earnings after tax [5] were USD 2,662 million in the first
quarter of 2021, which reflects an effective tax rate on adjusted earnings of 51.3%,
compared to 72.6% in the first quarter of 2020. The decrease in the effective
tax rate was mainly due to increased adjusted earnings in the first quarter of
2021 in entities with lower than average tax rates, and in entities without
recognised taxes.
Cash flows provided by
operating activities increased by USD 941 million
compared to the first quarter of 2020. The increase was mainly due to decreased
tax payments and higher liquids and gas prices, partially offset by a change in working capital and decreased cash flow
from derivatives.
Cash flows used in investing
activities decreased by USD 1,163 million
compared to the first quarter of 2020. The decrease was mainly due to increased
proceeds from sale of assets, decreased financial
investments and lower capital expenditures, partially offset by increased derivative payments.
(3) For
items impacting net operating income, see Use and reconciliation of non-GAAP
financial measures in the Supplementary disclosures.
Equinor first quarter 2021 5
Cash flows used in financing
activities increased by USD 1,839 million
compared to the first quarter of 2020. The increase was mainly due to repayment
of finance debt and increased payment of short-term debt, partially offset by
decreased dividend paid.
Total cash flows increased
by USD 264 million compared to the first quarter of 2020.
Free cash flow [5] in the first quarter of 2021 was USD
5,170 million compared to USD 362 million in the first quarter of 2020. The
increase was mainly due to higher operating cash flow mainly
due to higher liquids and gas prices, increased proceeds from sale of
assets, decreased tax payments, decreased dividend paid and lower capital expenditures, partially offset by decreased cash flow from derivatives.
OUTLOOK
·
Organic capital expenditures [5] are
estimated at an annual average of USD 9-10 billion for 2021-2022(4).
·
Equinor intends to continue to mature its attractive portfolio of
exploration assets and estimates a total exploration activity level of
around USD 0.9 billion for 2021, 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 2020–2026, production growth(5) [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 50 mboe per day for the full
year of 2021.
·
Production for 2021 is estimated to be around
2% above 2020 level5.
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,
the ongoing 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.
(4)
USD/NOK exchange rate assumption of 9.0.
(5)
The growth percentage is based on historical production numbers, adjusted for
portfolio measures.
Equinor first quarter 2021 6
EXPLORATION & PRODUCTION NORWAY
First quarter 2021 review
Average daily production of
liquids and gas decreased by 1% to 1,384 mboe per day in the first quarter of
2021, compared to
1,394 mboe per day in the first quarter of 2020. The decrease was mainly due to natural decline and
shutdown at the Hammerfest LNG plant, partially offset by ramp-up on Johan
Sverdrup and higher flexible gas off-take.
Income statement under
IFRS
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Total revenues and other income
|
5,783
|
3,877
|
3,537
|
63%
|
|
|
|
|
|
Operating and administrative
expenses
|
(794)
|
(753)
|
(635)
|
25%
|
Depreciation, amortisation and
net impairment losses
|
(1,570)
|
(1,227)
|
(1,841)
|
(15%)
|
Exploration expenses
|
(70)
|
(94)
|
(94)
|
(26%)
|
|
|
|
|
|
Net operating income/(loss)
|
3,350
|
1,803
|
967
|
>100%
|
Balance
sheet information: The sum of equity accounted
investments and non-current segment assets was USD 34,300 million for the
period ending 31 March 2021, compared to USD 26,856 million for the period
ending 31 March 2020.
Net operating income was USD 3,350 million in the first quarter of 2021 compared to USD
967 million in the first quarter of 2020. The increase was mainly due to higher
liquids price and gas transfer price in addition to lower impairments.
In the first quarter of 2021, net operating income was negatively
impacted by impairment of assets of USD 276 million, partially offset by net overlifted
volumes of USD 65 million. In the first quarter of 2020, net operating income
was negatively impacted by impairment of assets of USD 859 million and a
negative impact from net underlifted volumes of USD 31 million.
Adjusted operating and administrative expenses increased mainly
due to the NOK/USD exchange rate development partially offset by lower
operation and maintenance cost due to general improvement initiatives. Adjusted
depreciation, amortisation and net impairment losses increased mainly due to
the NOK/USD exchange rate development, increased depreciation of the asset
retirement obligation (ARO) assets and reduced proved reserves. Adjusted
exploration expenses decreased mainly due to lower drilling costs.
After total adjustments of USD 213 million to net operating
income, Adjusted earnings[5] were USD 3,563 million in the first
quarter of 2021, compared to USD 1,863 million in the first quarter of 2020.
Adjusted earnings
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Adjusted total revenues and other
income
|
5,640
|
3,891
|
3,593
|
57%
|
|
|
|
|
|
Adjusted operating and
administrative expenses
|
(714)
|
(770)
|
(654)
|
9%
|
Adjusted depreciation,
amortisation and net impairment losses
|
(1,293)
|
(1,187)
|
(982)
|
32%
|
Adjusted
exploration expenses
|
(70)
|
(94)
|
(94)
|
(26%)
|
|
|
|
|
|
Adjusted earnings/(loss) [5]
|
3,563
|
1,841
|
1,863
|
91%
|
|
|
|
|
|
For items impacting net operating
income/(loss), see Use and reconciliation of non-GAAP financial measures in
the Supplementary disclosures.
|
Equinor first quarter 2021 7
Equinor first quarter 2021 8
EXPLORATION & PRODUCTION INTERNATIONAL
First quarter 2021 review
Average
daily equity production of liquids and gas was 360
mboe per day in the first quarter of 2021 compared to 421 mboe per day in the
first quarter of 2020. The decrease was primarily due to natural decline in
mature fields and repairs on Peregrino in Brazil resulting in a production
halt, partially offset by field specific production on the UK continental shelf
and in Russia.
Average
daily entitlement production of liquids and gas was
267 mboe per day in the first quarter of 2021 compared to 322 mboe per day in
the first quarter of 2020. The decrease was due to lower equity production
partially offset by lower effects from production sharing agreements (PSA). The
net effects from PSA were 93 mboe per day in the first quarter of 2021 compared
to 98 mboe per day in the first quarter of 2020.
Income statement under IFRS
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Total revenues and other income
|
1,049
|
747
|
1,347
|
(22%)
|
|
|
|
|
|
Purchases [net of inventory
variation]
|
(29)
|
(16)
|
(43)
|
(32%)
|
Operating and administrative
expenses
|
(252)
|
(288)
|
(498)
|
(49%)
|
Depreciation, amortisation and
net impairment losses
|
(400)
|
(588)
|
(870)
|
(54%)
|
Exploration expenses
|
(107)
|
(1,231)
|
(249)
|
(57%)
|
|
|
|
|
|
Net operating income/(loss)
|
261
|
(1,376)
|
(312)
|
N/A
|
Balance
sheet information: The sum of equity accounted
investments and non-current segment assets was USD 18,380 million for the
period ending 31 March 2021, compared to USD 19,983 million for the period
ending 31 March 2020.
Net
operating income was positive USD 261 million in the first
quarter of 2021 compared to negative USD 312 million in the first quarter of 2020. The increase was mainly due to higher
liquids and gas prices, lower depreciation and lower exploration expenses, in
addition to lower impairments in the first quarter of 2021 compared to the first
quarter of 2020. The increase was partially offset by lower entitlement
production in the first quarter of 2021.
In
the first quarter of 2021, net operating income was negatively impacted by net underlifted
volumes of USD 66 million and impairments of USD 55 million. In the first
quarter of 2020, net operating income was negatively impacted by net
impairments of USD 383 million.
Adjusted
operating and administrative expenses decreased mainly due to lower operation
and maintenance expenses. Adjusted depreciation, amortisation and net
impairment losses decreased mainly due to increased reserve estimates and lower
entitlement production from mature fields. Reduced ARO asset estimates and lower
depreciation basis resulting from net impairments in previous periods added to
the decrease, partially offset by higher investments and increased production
from specific fields. Adjusted exploration expenses decreased mainly due to a
lower portion of exploration expenditure capitalised in earlier years being
expensed this quarter in addition to lower drilling and other costs. A lower
portion of exploration expenditure being capitalised this quarter partially
offset the decrease.
After
total adjustments of USD 121 million to net operating income, Adjusted
earnings [5] were USD 382 million in the first quarter of 2021, up from USD
4 million in the first quarter of 2020.
Equinor first quarter 2021 9
Adjusted earnings
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020*
|
Q1 on Q1
|
|
|
|
|
|
Adjusted total revenues and other
income
|
1,198
|
706
|
1,148
|
4%
|
|
|
|
|
|
Adjusted purchases
|
(29)
|
(16)
|
(43)
|
(32%)
|
Adjusted operating and
administrative expenses
|
(334)
|
(317)
|
(366)
|
(9%)
|
Adjusted depreciation,
amortisation and net impairment losses
|
(349)
|
(516)
|
(543)
|
(36%)
|
Adjusted exploration expenses
|
(103)
|
(1,072)
|
(193)
|
(47%)
|
|
|
|
|
|
Adjusted earnings/(loss) [5]
|
382
|
(1,215)
|
4
|
>100%
|
|
|
|
|
|
* Reclassified to reflect change
to segment.
|
|
|
|
|
|
For items impacting net operating
income/(loss), see Use and reconciliation of non-GAAP financial measures in
the Supplementary disclosures.
|
Equinor first quarter 2021 10
EXPLORATION & PRODUCTION USA
First quarter 2021 review
Average
daily equity production of liquids and gas was 423
mboe per day in the first quarter of 2021 compared to 418 mboe per day in the
first quarter of 2020. The increase was mainly due to wells brought online late
in 2020 and less curtailment in the US onshore causing higher production,
partially offset by downtime due to planned maintenance and natural decline in
the US offshore.
Average
daily entitlement production of liquids and gas increased
slightly to 362 mboe per day in the first quarter of 2021 compared to 360 mboe
per day in the first quarter of 2020. The minor increase was mainly due to
the factors mentioned above.
Income statement under IFRS
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Total revenues and other income
|
993
|
644
|
885
|
12%
|
|
|
|
|
|
Operating and administrative
expenses
|
(335)
|
(305)
|
(371)
|
(10%)
|
Depreciation, amortisation and
net impairment losses
|
(436)
|
(653)
|
(1,236)
|
(65%)
|
Exploration expenses
|
(70)
|
(244)
|
(292)
|
(76%)
|
|
|
|
|
|
Net operating income/(loss)
|
152
|
(559)
|
(1,015)
|
N/A
|
Balance
sheet information: The sum of equity accounted
investments and non-current segment assets was USD 11,984 million for the
period ending 31 March 2021, compared to USD 15,549 million for the period
ending 31 March 2020.
Net
operating income was positive USD 152
million in the first quarter of 2021 compared to negative USD
1,015 million in the first quarter of 2020. The
increase was mainly due to higher commodity prices and lower impairments
of assets in the first quarter of 2021.
In
the first quarter of 2021, net operating income was negatively impacted by net
impairments of USD 40 million, relating to the unconventional US onshore
assets. In the first quarter of 2020, net operating income was negatively
impacted by impairments of USD 1,014 million, with the primary effect from
unconventional US onshore assets.
Adjusted
operating and administrative expenses decreased mainly due to lower activity
level in US onshore in the first quarter of 2021. Adjusted depreciation,
amortisation and net impairment losses decreased mainly due to lower depreciation
basis resulting from classification of a US onshore asset as held for sale in
the fourth quarter of 2020 and lower production in US offshore. Adjusted
exploration expenses increased mainly due to a higher portion of exploration
expenditure capitalised in earlier years being expensed this quarter and a
lower portion of exploration expenditure being capitalised. Lower drilling
costs partially offset the increase.
After
total adjustments of USD 40 million to net operating income, Adjusted
earnings [5] were USD 192 million in the first
quarter of 2021, up from USD 11 million in the first
quarter of 2020.
Adjusted earnings
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020*
|
Q1 on Q1
|
|
|
|
|
|
Adjusted total revenues and other
income
|
993
|
644
|
885
|
12%
|
|
|
|
|
|
Adjusted operating and administrative
expenses
|
(335)
|
(287)
|
(359)
|
(7%)
|
Adjusted depreciation, amortisation and net impairment losses
|
(408)
|
(442)
|
(500)
|
(18%)
|
Adjusted exploration expenses
|
(58)
|
(87)
|
(15)
|
>100%
|
|
|
|
|
|
Adjusted earnings/(loss) [5]
|
192
|
(172)
|
11
|
>100%
|
|
|
|
|
|
* Reclassified to reflect this
segment.
|
|
|
|
|
|
For items impacting net operating
income/(loss), see Use and reconciliation of non-GAAP financial measures in
the Supplementary.
|
Equinor first quarter 2021 11
Equinor first quarter 2021 12
MARKETING, MIDSTREAM & PROCESSING
First quarter 2021 review
Natural
gas sales volumes amounted to 15.6 billion standard
cubic meters (bcm) in the first quarter of 2021, a decrease of 0.8 bcm compared
to the first quarter of 2020. Of the total gas sales in the first quarter of
2021, entitlement gas was 13.6 bcm,
up 0.2 bcm from the first quarter of 2020. The increase was mainly due to
higher volumes DPI GLU entitlement, partially offset by the absence of equity LNG
volumes as a result of the outage at the Hammerfest LNG plant
due to shutdown.
Liquids
sales volumes amounted to 197.4 million barrels (mmbl) in
the first quarter of 2021, down by 7.3 mmbl compared to the first quarter of 2020
mainly due to decreased purchase from third party.
Average
invoiced European natural gas sales price was 64% higher
in the first quarter of 2021 compared to the first quarter of 2020 mainly due
to general strengthening of market prices. Average invoiced North American
piped gas sales price increased by 46% in the same period mainly due to increased
Henry Hub price due to cold weather.
Income statement under IFRS
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Total revenues and other income
|
15,789
|
11,601
|
14,802
|
7%
|
|
|
|
|
|
Purchases [net of inventory
variation] [6]
|
(14,176)
|
(10,273)
|
(13,500)
|
5%
|
Operating and administrative
expenses
|
(1,069)
|
(1,062)
|
(1,344)
|
(20%)
|
Depreciation, amortisation and
net impairment losses
|
(152)
|
(745)
|
(280)
|
(46%)
|
|
|
|
|
|
Net operating income/(loss)
|
392
|
(480)
|
(322)
|
N/A
|
Balance
sheet information: The sum of equity accounted
investments and non-current segment assets was USD 3,985 million for the period
ending 31 March 2021, compared to USD 4,324 million for the period ending 31
March 2020.
Net
operating income was positive USD 392 million in the first
quarter of 2021 compared to negative USD 322 million in the first quarter of
2020. The increase was mainly due to gain on inventory hedging effects of USD
287 million and positive results from liquids trading in the first quarter of
2021, compared to gain on inventory hedging effects of USD 65 million in the
first quarter of 2020. A positive effect from operational storage of USD 105
million due to change in market prices in addition to lower impairments,
compared to a negative effect from operational storage of USD 343 million in
the first quarter of 2020, contributed to the increase. Lower refinery margins
partially offset the increase.
Adjusted
purchases [6] increased mainly due to higher prices
for both liquids and gas, partially offset by lower third-party volumes for
liquids. Adjusted operating and administrative expenses decreased mainly due to
lower transportation costs caused by lower freight rates on shipping of liquids
in addition to lower volumes. Adjusted depreciation,
amortisation and net impairment losses slightly increased.
After
total adjustments of USD 330 million to net operating income, Adjusted
earnings [5] were USD 61 million in the first quarter of 2021, compared to
USD 229 million in the first quarter of 2020. The decrease was mainly due to weaker
gas results from net change in fair value of gas derivatives, the absence of
LNG sales due to the outage at the Hammerfest LNG plant and lower refinery
margins, partially offset by improved results from liquids trading.
Equinor first quarter 2021 13
Adjusted earnings
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Adjusted total revenues and other
income
|
15,518
|
11,866
|
14,784
|
5%
|
|
|
|
|
|
Adjusted purchases [6]
|
(14,281)
|
(10,342)
|
(13,157)
|
9%
|
Adjusted operating and
administrative expenses
|
(1,081)
|
(1,064)
|
(1,311)
|
(18%)
|
Adjusted depreciation,
amortisation and net impairment losses
|
(95)
|
(107)
|
(87)
|
9%
|
|
|
|
|
|
Adjusted earnings [5]
|
61
|
352
|
229
|
(73%)
|
|
|
|
|
|
For items impacting net operating
income/(loss), see Use and reconciliation of non-GAAP financial measures in
the Supplementary disclosures.
|
Equinor first quarter 2021 14
RENEWABLES
As
from the first quarter of 2021, Equinor changed its reporting as REN became a
separate reporting segment. Previously the activities in REN were reported in
the segment “Other”. The change has its basis in the increased strategic
importance of the renewable business for Equinor and that the information is
regarded useful for the readers of the financial statements. Following the
change, Equinor has determined the adjusted earnings item of gain or loss from
sales of assets is not applicable to REN, as the management considers
presentation of the segment operations result, including the presentation of
the gain from divestments, as being reflective of the performance of the
segment at this point of time. See Use and reconciliation of non-GAAP financial
measures in the Supplementary disclosures for more information.
First quarter 2021 review
Power
generation(6) was
450 GWh in the first quarter of 2021, compared
to 558 GWh in the first quarter of 2020. The decrease was due to wind
being below seasonal average in the first quarter of 2021 compared to wind
being above seasonal average in the first quarter of 2020. The availability has
been high in the first quarter of 2021. For the Equinor operated windfarms the
twelve-month period ending
31 March average production-based availability was 96.6%.
The
Empire Wind 2 and Beacon Wind 1 projects in the US were awarded offtake
contracts early January 2021. The execution of the procurement award is subject
to the successful negotiation of a purchase and sale agreement, which the
partnership expects to finalise together with the New York State Energy
Research and Development Authority (NYSERDA).
Equinor
closed the divestments of offshore wind interests in the UK to Eni and in the
US to bp in the first quarter of 2021.
Income statement under IFRS
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Total revenues and other income
|
1,381
|
34
|
44
|
>100%
|
|
|
|
|
|
Operating and administrative
expenses
|
(40)
|
(93)
|
(33)
|
20%
|
Depreciation, amortisation and
net impairment losses
|
(0)
|
(1)
|
(0)
|
>100%
|
|
|
|
|
|
Net operating income/(loss)
|
1,341
|
(60)
|
11
|
>100%
|
Balance
sheet information: The sum of equity accounted
investments and non-current segment assets was USD 1,115 million for the period
ending 31 March 2021, compared to USD 1,140 million for the period ending 31
March 2020.
Net operating income
was USD 1,341 million in the first
quarter of 2021 compared to USD 11 million in the first quarter of 2020.
The increase was due to gain on the divestments(7) completed
in the first quarter of 2021 amounted to around USD 1.4 billion. Net operating
income was negatively impacted by lower net income from equity accounted
investments than in the first quarter of 2020. Net income from equity accounted
investments in operation was affected by lower production, while net loss from other
equity accounted investments presented higher costs compared to the first
quarter of 2020 due to the progressing of projects(8).
Adjusted
operating and administrative expenses increased mainly due to high project activity in the US, the UK and in Asia.
Adjusted depreciation, amortisation and net impairment losses remained at the
same level as in the first quarter of 2020.
(7) For
more information, see note 3 Acquisitions and disposals to the Condensed
interim financial statements.
(8) For more
information, see note 2 Segments to the Condensed interim financial statements.
Equinor first quarter 2021 15
After total adjustments of USD 3 million to net operating income, Adjusted
earnings [5] were USD 1,344 million in the first quarter of 2021, compared
to USD 13 million in the first quarter of 2020.
Equinor first quarter 2021 16
Adjusted earnings
|
Quarters
|
Change
|
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
|
|
Adjusted total revenues and other
income
|
1,384
|
35
|
46
|
>100%
|
|
|
|
|
|
|
|
Adjusted operating and
administrative expenses
|
(40)
|
(93)
|
(33)
|
20%
|
|
Adjusted depreciation,
amortisation and net impairment losses
|
(0)
|
(1)
|
(0)
|
>100%
|
|
|
|
|
|
|
|
Adjusted earnings [5]
|
1,344
|
(59)
|
13
|
>100%
|
|
|
|
|
|
|
|
For items impacting net operating
income/(loss), see Use and reconciliation of non-GAAP financial measures in
the Supplementary disclosures.
|
|
|
|
|
|
|
|
|
Equinor first quarter 2021 17
CONDENSED
INTERIM FINANCIAL STATEMENTS
First quarter 2021
CONSOLIDATED
STATEMENT OF INCOME
|
|
Quarters
|
Full year
|
(unaudited, in USD million)
|
Note
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
2020*
|
|
|
|
|
|
|
Revenues
|
|
16,129
|
11,876
|
15,065
|
45,753
|
Net income/(loss) from equity
accounted investments
|
|
30
|
(137)
|
71
|
53
|
Other income
|
3
|
1,391
|
7
|
(6)
|
12
|
|
|
|
|
|
|
Total revenues and other income
|
2
|
17,549
|
11,746
|
15,130
|
45,818
|
|
|
|
|
|
|
Purchases [net of inventory
variation]
|
|
(7,166)
|
(5,533)
|
(7,396)
|
(20,986)
|
Operating expenses
|
|
(1,901)
|
(2,005)
|
(2,406)
|
(8,831)
|
Selling, general and
administrative expenses
|
|
(218)
|
(151)
|
(197)
|
(706)
|
Depreciation, amortisation and
net impairment losses
|
6
|
(2,797)
|
(3,478)
|
(4,438)
|
(15,235)
|
Exploration expenses
|
|
(247)
|
(1,569)
|
(635)
|
(3,483)
|
|
|
|
|
|
|
Total operating expenses
|
2
|
(12,329)
|
(12,735)
|
(15,072)
|
(49,241)
|
|
|
|
|
|
|
Net operating income/(loss)
|
2
|
5,220
|
(989)
|
58
|
(3,423)
|
|
|
|
|
|
|
Interest expenses and other financial
expenses
|
|
(312)
|
(326)
|
(344)
|
(1,392)
|
Other financial items
|
|
(396)
|
(84)
|
367
|
556
|
|
|
|
|
|
|
Net financial items
|
4
|
(707)
|
(410)
|
23
|
(836)
|
|
|
|
|
|
|
Income/(loss) before tax
|
|
4,513
|
(1,400)
|
81
|
(4,259)
|
|
|
|
|
|
|
Income tax
|
5
|
(2,659)
|
(1,016)
|
(786)
|
(1,237)
|
|
|
|
|
|
|
Net income/(loss)
|
|
1,854
|
(2,416)
|
(705)
|
(5,496)
|
|
|
|
|
|
|
Attributable to equity holders of the company
|
|
1,851
|
(2,421)
|
(708)
|
(5,510)
|
Attributable to non-controlling
interests
|
|
3
|
6
|
3
|
14
|
|
|
|
|
|
|
Basic earnings per share (in USD)
|
|
0.57
|
(0.75)
|
(0.21)
|
(1.69)
|
Diluted earnings per share (in
USD)
|
|
0.57
|
(0.75)
|
(0.21)
|
(1.69)
|
Weighted average number of
ordinary shares outstanding (in millions)
|
|
3,248
|
3,247
|
3,305
|
3,269
|
Weighted average number of
ordinary shares outstanding diluted (in millions)
|
|
3,256
|
3,257
|
3,312
|
3,277
|
|
|
|
|
|
|
|
|
|
|
|
|
* Audited
|
|
|
|
|
|
Equinor first quarter 2021 18
Equinor first quarter 2021 19
CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
|
Quarters
|
Full year
|
(unaudited, in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
2020*
|
|
|
|
|
|
Net income/(loss)
|
1,854
|
(2,416)
|
(705)
|
(5,496)
|
|
|
|
|
|
Actuarial gains/(losses) on
defined benefit pension plans
|
117
|
(303)
|
122
|
(106)
|
Income tax effect on income and
expenses recognised in OCI1)
|
(25)
|
75
|
(42)
|
19
|
Items that will not be
reclassified to the Consolidated statement of income
|
91
|
(228)
|
80
|
(87)
|
|
|
|
|
|
Foreign currency translation
effects
|
(46)
|
2,798
|
(4,182)
|
1,064
|
Items that may be subsequently
reclassified to the Consolidated statement of income
|
(46)
|
2,798
|
(4,182)
|
1,064
|
|
|
|
|
|
Other comprehensive income/(loss)
|
45
|
2,570
|
(4,102)
|
977
|
|
|
|
|
|
Total comprehensive income/(loss)
|
1,899
|
154
|
(4,807)
|
(4,519)
|
|
|
|
|
|
Attributable to the equity
holders of the company
|
1,896
|
149
|
(4,810)
|
(4,533)
|
Attributable to non-controlling
interests
|
3
|
6
|
3
|
14
|
|
|
|
|
|
|
|
|
|
|
* Audited
|
|
|
|
|
1) Other comprehensive income
(OCI).
|
|
|
Equinor first quarter 2021 20
CONSOLIDATED
BALANCE SHEET
|
|
At 31 March
|
At 31 December
|
At 31 March
|
(unaudited, in USD million)
|
Note
|
2021
|
2020*
|
2020
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Property, plant and equipment
|
6
|
63,161
|
65,672
|
59,794
|
Intangible assets
|
6
|
8,150
|
8,148
|
10,145
|
Equity accounted investments
|
|
2,374
|
2,262
|
1,565
|
Deferred tax assets
|
|
4,880
|
4,974
|
3,833
|
Pension assets
|
|
1,437
|
1,310
|
682
|
Derivative financial instruments
|
|
1,573
|
2,476
|
1,339
|
Financial investments
|
|
3,922
|
4,083
|
3,018
|
Prepayments and financial
receivables
|
|
774
|
861
|
1,163
|
|
|
|
|
|
Total non-current assets
|
|
86,272
|
89,786
|
81,540
|
|
|
|
|
|
Inventories
|
|
2,917
|
3,084
|
2,095
|
Trade and other receivables
|
|
8,692
|
8,232
|
6,301
|
Derivative financial instruments
|
|
1,096
|
886
|
1,247
|
Financial investments
|
|
10,922
|
11,865
|
6,100
|
Cash and cash equivalents
|
|
8,992
|
6,757
|
6,866
|
|
|
|
|
|
Total current assets
|
|
32,619
|
30,824
|
22,609
|
|
|
|
|
|
Assets classified as held for
sale
|
3
|
1,100
|
1,362
|
0
|
|
|
|
|
|
Total assets
|
|
119,991
|
121,972
|
104,150
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
Shareholders' equity
|
|
35,764
|
33,873
|
36,327
|
Non-controlling interests
|
|
18
|
19
|
19
|
|
|
|
|
|
Total equity
|
|
35,782
|
33,892
|
36,346
|
|
|
|
|
|
Finance debt1)
|
4
|
27,991
|
29,118
|
20,086
|
Lease liabilities1)
|
|
3,006
|
3,220
|
2,826
|
Deferred tax liabilities
|
|
11,440
|
11,224
|
7,399
|
Pension liabilities
|
|
4,363
|
4,292
|
3,271
|
Provisions and other liabilities
|
7
|
17,817
|
19,731
|
14,763
|
Derivative financial instruments
|
|
550
|
676
|
1,063
|
|
|
|
|
|
Total non-current liabilities
|
|
65,167
|
68,260
|
49,408
|
|
|
|
|
|
Trade, other payables and
provisions
|
|
10,592
|
10,510
|
7,944
|
Current tax payable
|
5
|
3,249
|
1,148
|
3,568
|
Finance debt1)
|
4
|
2,784
|
4,591
|
4,532
|
Lease liabilities1)
|
|
1,131
|
1,186
|
1,076
|
Dividends payable
|
|
0
|
357
|
0
|
Derivative financial instruments
|
|
1,014
|
1,710
|
1,275
|
|
|
|
|
|
Total current liabilities
|
|
18,770
|
19,502
|
18,395
|
|
|
|
|
|
Liabilities directly associated
with the assets classified as held for sale
|
3
|
271
|
318
|
0
|
|
|
|
|
|
Total liabilities
|
|
84,209
|
88,081
|
67,803
|
|
|
|
|
|
Total equity and liabilities
|
|
119,991
|
121,972
|
104,150
|
|
|
|
|
|
* Audited
|
|
1) Lease liabilities are separated
from the line item Finance debt and 2020 has been reclassified.
|
|
Equinor first quarter 2021 21
Equinor first quarter 2021 22
CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
(unaudited, in USD million)
|
Share capital
|
Additional paid-in capital
|
Retained earnings
|
Foreign currency translation reserve
|
Share-holders' equity
|
Non-controlling interests
|
Total equity
|
|
|
|
|
|
|
|
|
At 31 December 2019*
|
1,185
|
7,732
|
37,481
|
(5,258)
|
41,139
|
20
|
41,159
|
Net income/(loss)
|
|
|
(708)
|
|
(708)
|
3
|
(705)
|
Other comprehensive income/(loss)
|
|
|
80
|
(4,182)
|
(4,102)
|
|
(4,102)
|
Total comprehensive income/(loss)
|
|
|
|
|
|
|
(4,807)
|
Other equity transactions
|
|
(3)
|
(0)
|
|
(3)
|
(4)
|
(6)
|
|
|
|
|
|
|
|
|
At 31 March 2020
|
1,185
|
7,729
|
36,853
|
(9,439)
|
36,327
|
19
|
36,346
|
|
|
|
|
|
|
|
|
At 31 December 2020*
|
1,164
|
6,852
|
30,050
|
(4,194)
|
33,873
|
19
|
33,892
|
Net income/(loss)
|
|
|
1,851
|
|
1,851
|
3
|
1,854
|
Other comprehensive income/(loss)
|
|
|
91
|
(46)
|
45
|
|
45
|
Total comprehensive income/(loss)
|
|
|
|
|
|
|
1,899
|
Other equity transactions
|
|
(4)
|
0
|
|
(4)
|
(4)
|
(8)
|
|
|
|
|
|
|
|
|
At 31 March 2021
|
1,164
|
6,848
|
31,992
|
(4,240)
|
35,764
|
18
|
35,782
|
* Audited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equinor first quarter 2021 23
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|
|
Quarters
|
|
Full year
|
(unaudited, in USD million)
|
Note
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
2020*
|
|
|
|
|
|
|
Income/(loss) before tax
|
|
4,513
|
(1,400)
|
81
|
(4,259)
|
|
|
|
|
|
|
Depreciation, amortisation and
net impairment losses
|
6
|
2,797
|
3,478
|
4,438
|
15,235
|
Exploration expenditures written
off
|
|
64
|
1,284
|
435
|
2,506
|
(Gains)/losses on foreign
currency transactions and balances
|
4
|
(70)
|
491
|
(297)
|
646
|
(Gains)/losses on sale of assets
and businesses
|
3
|
(1,383)
|
20
|
14
|
18
|
(Increase)/decrease in other
items related to operating activities
|
|
222
|
168
|
235
|
918
|
(Increase)/decrease in net
derivative financial instruments
|
|
577
|
(5)
|
(289)
|
(451)
|
Interest received
|
|
39
|
12
|
65
|
162
|
Interest paid
|
|
(141)
|
(204)
|
(182)
|
(730)
|
|
|
|
|
|
|
Cash flows provided by operating
activities before taxes paid and working capital items
|
|
6,617
|
3,843
|
4,500
|
14,045
|
|
|
|
|
|
|
Taxes paid
|
|
(84)
|
(393)
|
(887)
|
(3,134)
|
|
|
|
|
|
|
(Increase)/decrease in working capital
|
|
(549)
|
(1,107)
|
1,431
|
(524)
|
|
|
|
|
|
|
Cash flows provided by operating
activities
|
|
5,984
|
2,343
|
5,043
|
10,386
|
|
|
|
|
|
|
Capital expenditures and
investments
|
|
(2,151)
|
(2,504)
|
(2,350)
|
(8,476)
|
(Increase)/decrease in financial
investments1)
|
|
699
|
(538)
|
599
|
(3,703)
|
(Increase)/decrease in derivative
financial instruments
|
|
(305)
|
(288)
|
(26)
|
(620)
|
(Increase)/decrease in other
interest-bearing items
|
|
(3)
|
218
|
0
|
202
|
Proceeds from sale of assets and
businesses
|
3
|
1,146
|
490
|
2
|
505
|
|
|
|
|
|
|
Cash flows used in investing
activities
|
|
(613)
|
(2,623)
|
(1,776)
|
(12,092)
|
|
|
|
|
|
|
New finance debt
|
|
0
|
0
|
0
|
8,347
|
Repayment of finance debt2)
|
|
(1,424)
|
(750)
|
0
|
(2,055)
|
Repayment of lease liabilities2)
|
|
(302)
|
(316)
|
(305)
|
(1,277)
|
Dividends paid
|
|
(355)
|
(292)
|
(845)
|
(2,330)
|
Share buy-back
|
|
0
|
(0)
|
(58)
|
(1,059)
|
Net current finance debt and
other financing activities
|
|
(1,015)
|
254
|
(49)
|
1,365
|
|
|
|
|
|
|
Cash flows provided by/(used in)
financing activities
|
|
(3,096)
|
(1,104)
|
(1,257)
|
2,991
|
|
|
|
|
|
|
Net increase/(decrease) in cash
and cash equivalents
|
|
2,274
|
(1,383)
|
2,010
|
1,285
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
|
(174)
|
296
|
(321)
|
294
|
Cash and cash equivalents at the
beginning of the period (net of overdraft)
|
|
6,757
|
7,844
|
5,177
|
5,177
|
|
|
|
|
|
|
Cash and cash equivalents at the
end of the period (net of overdraft)3)
|
|
8,857
|
6,757
|
6,866
|
6,757
|
|
|
|
|
|
|
* Audited
|
|
|
|
|
|
Equinor first quarter 2021 24
1) Full
year 2020 includes the sale of Lundin shares.
2) Repayment
of lease liabilities are separated from the line item Repayment of finance debt
and 2020 has been reclassified.
3) At
31 March 2021 cash and cash equivalents included a net overdraft of USD 135
million. At 31 December 2020 and at 31 March 2020 cash and cash equivalents net
overdraft were zero.
Equinor first quarter 2021 25
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 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 first quarter of 2021. Segment information for prior periods has been reclassified
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 first quarter of 2021 were
authorised for issue by the board of directors on
28 April 2021.
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 2020. IFRS as adopted by the
EU differs in certain respects from IFRS as issued by the IASB, but the
differences 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 2020.
There
have been no changes to the significant accounting policies during 2021
compared to the Consolidated annual financial statements for 2020.
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 rounding.
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 create additional estimation
uncertainties and impact key assumptions applied by Equinor in the valuation of
our assets and the measurement of our liabilities. Reference is made to note 2
Significant accounting policies in Equinor’s Consolidated annual financial
statements for 2020 and to note 8 Impact of the Covid-19 pandemic to these condensed
interim financial statements for further information.
Equinor first quarter 2021 26
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), MMP and Renewables (REN)
consist of the business areas DPN, DPUSA, MMP and NES 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
revenue growth, net operating income, 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 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, MMP and REN reporting segments.
As
from the first quarter of 2021, Equinor changed its reporting as REN became a
separate reporting segment. Previously the activities in REN
were reported in the segment “Other”. The new reporting structure
has been applied retrospectively with comparable figures reclassified. The
change has its basis in the increased strategic importance of the
renewable business for Equinor and that the information is regarded useful for
the readers of the financial statements.
Inter-segment
sales and related unrealised profits, mainly from the sale of crude oil and
products, are eliminated in the Eliminations column below. Inter-segment
revenues are based upon estimated market prices.
Segment
data for the first quarter of 2021, fourth quarter of 2020 and first quarter of
2020 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.
Equinor first quarter 2021 27
First quarter 2021
|
E&P Norway
|
E&P International
|
E&P USA
|
MMP
|
REN
|
Other
|
Eliminations
|
Total
|
(in USD million)
|
|
|
|
|
|
|
|
|
|
Revenues third party, other
revenues and other income
|
28
|
221
|
121
|
15,697
|
1,382
|
71
|
0
|
17,519
|
Revenues inter-segment
|
5,755
|
805
|
872
|
84
|
0
|
1
|
(7,517)
|
0
|
Net income/(loss) from equity
accounted investments
|
0
|
23
|
0
|
8
|
(1)
|
0
|
0
|
30
|
|
|
|
|
|
|
|
|
|
Total revenues and other income
|
5,783
|
1,049
|
993
|
15,789
|
1,381
|
71
|
(7,517)
|
17,549
|
|
|
|
|
|
|
|
|
|
Purchases [net of inventory variation]
|
0
|
(29)
|
(0)
|
(14,176)
|
0
|
(0)
|
7,040
|
(7,166)
|
Operating, selling, general and
administrative expenses
|
(794)
|
(252)
|
(335)
|
(1,069)
|
(40)
|
93
|
277
|
(2,120)
|
Depreciation, amortisation and
net impairment losses
|
(1,570)
|
(400)
|
(436)
|
(152)
|
(0)
|
(240)
|
0
|
(2,797)
|
Exploration expenses
|
(70)
|
(107)
|
(70)
|
0
|
0
|
0
|
0
|
(247)
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
(2,433)
|
(788)
|
(841)
|
(15,397)
|
(40)
|
(147)
|
7,317
|
(12,329)
|
|
|
|
|
|
|
|
|
|
Net operating income/(loss)
|
3,350
|
261
|
152
|
392
|
1,341
|
(76)
|
(200)
|
5,220
|
|
|
|
|
|
|
|
|
|
Additions to PP&E,
intangibles and equity accounted investments
|
1,308
|
396
|
157
|
38
|
128
|
(13)
|
0
|
2,014
|
|
|
|
|
|
|
|
|
|
Balance sheet information
|
|
|
|
|
|
|
|
|
Equity accounted investments
|
3
|
1,154
|
0
|
91
|
1,097
|
30
|
0
|
2,374
|
Non-current segment assets
|
34,297
|
17,226
|
11,984
|
3,894
|
18
|
3,892
|
0
|
71,312
|
Non-current assets not allocated
to segments
|
|
|
|
|
|
|
|
12,586
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
|
|
|
|
|
86,272
|
Equinor first quarter 2021 28
Fourth quarter 2020
|
E&P Norway
|
E&P International
|
E&P USA
|
MMP
|
|
|
Eliminations
|
Total
|
(in USD million)
|
REN1)
|
Other1)
|
|
|
|
|
|
|
|
|
|
Revenues third party, other
revenues and other income
|
58
|
143
|
83
|
11,519
|
13
|
67
|
0
|
11,883
|
Revenues inter-segment
|
3,819
|
771
|
561
|
77
|
0
|
1
|
(5,229)
|
0
|
Net income/(loss) from equity
accounted investments
|
0
|
(168)
|
0
|
5
|
21
|
5
|
0
|
(137)
|
|
|
|
|
|
|
|
|
|
Total revenues and other income
|
3,877
|
747
|
644
|
11,601
|
34
|
73
|
(5,229)
|
11,746
|
|
|
|
|
|
|
|
|
|
Purchases [net of inventory
variation]
|
(0)
|
(16)
|
(0)
|
(10,273)
|
0
|
0
|
4,756
|
(5,533)
|
Operating, selling, general and
administrative expenses
|
(753)
|
(288)
|
(305)
|
(1,062)
|
(93)
|
176
|
170
|
(2,156)
|
Depreciation, amortisation and
net impairment losses
|
(1,227)
|
(588)
|
(653)
|
(745)
|
(1)
|
(263)
|
0
|
(3,478)
|
Exploration expenses
|
(94)
|
(1,231)
|
(244)
|
0
|
0
|
0
|
0
|
(1,569)
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
(2,074)
|
(2,123)
|
(1,202)
|
(12,081)
|
(94)
|
(87)
|
4,926
|
(12,735)
|
|
|
|
|
|
|
|
|
|
Net operating income/(loss)
|
1,803
|
(1,376)
|
(559)
|
(480)
|
(60)
|
(15)
|
(303)
|
(989)
|
|
|
|
|
|
|
|
|
|
Additions to PP&E,
intangibles and equity accounted investments
|
1,340
|
1,026
|
123
|
47
|
19
|
258
|
0
|
2,813
|
|
|
|
|
|
|
|
|
|
1) Reclassified.
|
|
|
|
|
|
|
|
|
Equinor first quarter 2021 29
First quarter 2020
|
E&P Norway
|
E&P International1)
|
E&P USA1)
|
MMP
|
REN1)
|
Other1)
|
Eliminations
|
Total
|
(in USD million)
|
|
|
|
|
|
|
|
|
|
Revenues third party, other
revenues and other income
|
8
|
166
|
141
|
14,695
|
0
|
49
|
0
|
15,059
|
Revenues inter-segment
|
3,530
|
1,166
|
743
|
96
|
0
|
1
|
(5,536)
|
0
|
Net income/(loss) from equity
accounted investments
|
0
|
16
|
0
|
11
|
44
|
0
|
0
|
71
|
|
|
|
|
|
|
|
|
|
Total revenues and other income
|
3,537
|
1,347
|
885
|
14,802
|
44
|
50
|
(5,536)
|
15,130
|
|
|
|
|
|
|
|
|
|
Purchases [net of inventory
variation]
|
0
|
(43)
|
(0)
|
(13,500)
|
0
|
(0)
|
6,146
|
(7,396)
|
Operating, selling, general and
administrative expenses
|
(635)
|
(498)
|
(371)
|
(1,344)
|
(33)
|
92
|
187
|
(2,603)
|
Depreciation, amortisation and
net impairment losses
|
(1,841)
|
(870)
|
(1,236)
|
(280)
|
(0)
|
(209)
|
0
|
(4,438)
|
Exploration expenses
|
(94)
|
(249)
|
(292)
|
0
|
0
|
0
|
0
|
(635)
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
(2,571)
|
(1,660)
|
(1,899)
|
(15,124)
|
(33)
|
(117)
|
6,333
|
(15,072)
|
|
|
|
|
|
|
|
|
|
Net operating income/(loss)
|
967
|
(312)
|
(1,015)
|
(322)
|
11
|
(68)
|
797
|
58
|
|
|
|
|
|
|
|
|
|
Additions to PP&E,
intangibles and equity accounted investments
|
1,289
|
741
|
425
|
56
|
1
|
102
|
0
|
2,615
|
|
|
|
|
|
|
|
|
|
Balance sheet information
|
|
|
|
|
|
|
|
|
Equity accounted investments
|
2
|
501
|
0
|
91
|
953
|
19
|
0
|
1,565
|
Non-current segment assets
|
26,854
|
19,482
|
15,549
|
4,233
|
187
|
3,633
|
0
|
69,939
|
Non-current assets not allocated
to segments
|
|
|
|
|
|
|
|
10,036
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
|
|
|
|
|
81,540
|
|
|
|
|
|
|
|
|
|
1) Reclassified.
|
|
|
|
|
|
|
|
|
In the first quarter of 2021,
Equinor recognised impairments of USD 428 million of which USD 17 million was acquisition
cost and signature bonuses classified as exploration expenses. The line item Exploration
expenses in the Consolidated statement of income also
includes impairment of capitalised exploration well cost. For information
regarding impairment of capitalised exploration cost, see note 6 Property,
plant and equipment and intangible assets.
Equinor first quarter 2021 30
In the E&P International segment the impairments were USD 55
million of which USD 4 million was classified as exploration expenses. The
impairment of other assets of USD 51 million was mainly caused by a decision to
discontinue production on a North America offshore asset.
In
the E&P USA segment the impairments were USD 40 million of which USD 12
million was classified as exploration expenses. The impairment is related to an
Equinor-operated onshore asset measured at fair value less cost of disposal in
connection with reclassification to held for sale.
In
the E&P Norway segment the impairment was USD 276 million and was caused by
increased cost estimates and decreased production estimates of an asset under
construction.
In
the MMP segment the impairments were USD 57 million. The main impairment
trigger was reduced revenue estimates on a gas pipeline.
For
information on group impairment losses and reversals, see note 6 Property,
plant and equipment and intangible assets.
For
information regarding acquisition and disposal of interests, see note 3
Acquisitions and disposals.
See
also note 8 Impact of the Covid-19 pandemic.
Equinor first quarter 2021 31
Revenues from contracts 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 first quarter of
2021, Norway constitutes 79% and USA constitutes 16% of such revenues. For the
first quarter of 2020, Norway and USA constituted 80% and 15% of such revenues, respectively.
Non-current assets by
country
|
|
|
|
|
|
|
|
|
At 31 March
|
At 31 December
|
At 31 March
|
(in USD million)
|
2021
|
2020
|
2020
|
|
|
|
|
Norway
|
40,261
|
42,192
|
32,274
|
USA
|
12,867
|
13,172
|
16,524
|
Brazil
|
8,226
|
8,203
|
8,619
|
UK
|
4,256
|
4,398
|
4,968
|
Azerbaijan
|
1,670
|
1,683
|
1,671
|
Canada
|
1,445
|
1,527
|
1,372
|
Russia
|
974
|
973
|
476
|
Denmark
|
918
|
953
|
862
|
Angola
|
897
|
725
|
1,320
|
Algeria
|
794
|
808
|
880
|
Other countries
|
1,378
|
1,447
|
2,539
|
|
|
|
|
Total non-current assets1)
|
73,686
|
76,082
|
71,505
|
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)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
2020
|
|
|
|
|
|
Crude oil
|
8,714
|
6,015
|
7,840
|
24,509
|
|
|
|
|
|
Natural gas
|
3,298
|
2,503
|
2,170
|
7,213
|
- European gas
|
2,661
|
2,100
|
1,767
|
5,839
|
- North American gas
|
422
|
295
|
290
|
1,010
|
- Other incl. Liquefied natural
gas
|
216
|
108
|
113
|
363
|
|
|
|
|
|
Refined products
|
2,373
|
1,687
|
2,029
|
6,534
|
Natural gas liquids
|
1,910
|
1,499
|
1,449
|
5,069
|
Transportation
|
256
|
172
|
329
|
1,083
|
Other sales
|
112
|
365
|
136
|
681
|
|
|
|
|
|
Revenues from contracts with customers
|
16,664
|
12,242
|
13,954
|
45,088
|
|
|
|
|
|
Taxes paid in-kind
|
78
|
28
|
47
|
93
|
Physically settled commodity
derivatives
|
(159)
|
(27)
|
99
|
209
|
Gain/(loss) on commodity
derivatives
|
(523)
|
(442)
|
912
|
108
|
Other revenues
|
69
|
74
|
52
|
256
|
Total other revenues
|
(536)
|
(367)
|
1,110
|
665
|
|
|
|
|
|
Revenues
|
16,129
|
11,876
|
15,065
|
45,753
|
Equinor first quarter 2021 32
3 Acquisitions and disposals
Divestment
of 10% of Dogger Bank Farm A and B
On
26 February 2021, Equinor closed the transaction with Eni to sell a 10% equity
interest in the Dogger Bank Wind Farm A and B assets in the UK for a total
consideration of GBP 206.4 million (USD 285 million), resulting in a gain of
GBP 202.8 million (USD 280 million). After closing, the new overall
shareholdings in Dogger Bank A and Dogger Bank B are SSE Renewables (40%),
Equinor (40%), and Eni (20%). Equinor will continue to equity account for the
remaining investment as a joint venture. The gain is
presented in the line item Other income in the Consolidated statement of income
in the REN segment.
Bakken onshore unconventional field
On
9 February 2021, Equinor agreed to divest its interests in the Bakken field in
the US states of North Dakota and Montana to Grayson Mill Energy, backed by
EnCap Investments, for a total consideration of USD 900 million before interim
period adjustments. At the end of March 2021, a total of USD
150 million has been received as prepayment and is presented in
the line items Cash and cash equivalents and Trade, other payables and provisions in the Consolidated
balance sheet. The effective date of the transaction is 1 January 2021. Closing
was subject to the satisfaction of customary conditions including authority
approvals and took place on 26 April 2021. Bakken is classified as held for
sale 31 March 2021. For further information see note 9 Subsequent
events.
Divestment of non-operated interest in the
Empire Wind and Beacon Wind assets on the US east coast
On
29 January 2021, Equinor closed the transaction with BP to sell 50% of the
non-operated interests in the Empire Wind and Beacon Wind assets for a preliminary
total consideration after interim period adjustments of USD 1.2 billion, resulting
in a gain of USD 1.1 billion for the divested part, of which USD 500 million had
been prepaid at the end of December 2020. Through this transaction, the two
companies have established a strategic partnership for further growth within
offshore wind in the USA. Following the transaction, Equinor remains the
operator with a 50% interest. Equinor consolidated the assets until transaction
closing, and thereafter the investments are classified as joint ventures and
accounted for using the equity method. The gain is
presented in the line item Other income in the Consolidated statement of income
in the REN segment.
4 Financial items
|
Quarters
|
Full year
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
2020
|
|
|
|
|
|
Net foreign currency exchange
gains/(losses)
|
70
|
(491)
|
297
|
(646)
|
Interest income and other
financial items
|
(105)
|
379
|
(122)
|
754
|
Gains/(losses) other derivative
financial instruments
|
(360)
|
27
|
193
|
448
|
Interest and other finance
expenses
|
(312)
|
(326)
|
(344)
|
(1,392)
|
|
|
|
|
|
Net financial items
|
(707)
|
(410)
|
23
|
(836)
|
Gains/(losses) on derivative financial instruments is a loss of USD 360 million in the first quarter of 2021, compared
to a gain of
USD 193 million in the first quarter of 2020, mainly due to increased interest
rates.
Equinor has a US Commercial paper programme available with a limit
of USD 5 billion of which USD 250 million has
been utilised as of
31 March 2021.
In the first quarter of 2021, Equinor recorded total lease
payments of USD 329 million, of which USD 27 million were payment of interest
and USD 302 million were down-payment of lease liabilities.
Equinor first quarter 2021 33
5 Income taxes
|
Quarters
|
Full year
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
2020
|
|
|
|
|
|
Income/(loss) before tax
|
4,513
|
(1,400)
|
81
|
(4,259)
|
Income tax
|
(2,659)
|
(1,016)
|
(786)
|
(1,237)
|
Effective tax rate
|
58.9%
|
(72.6%)
|
>100%
|
(29.0%)
|
The tax rate for the first
quarter of 2021 was primarily influenced by positive operating income in
countries with unrecognised deferred tax assets.
The
tax rate for the fourth quarter of 2020 and for the full year 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 and changes in best
estimates for uncertain tax positions.
The
tax rate for the first quarter of 2020 was primarily influenced by losses
including impairments recognised in countries with unrecognised deferred tax assets
or in countries with lower than average tax rates and currency effects in
entities that are taxable in other currencies than the functional currency.
6 Property, plant
and equipment and intangible assets
(in USD million)
|
Property, plant and equipment
|
Intangible assets
|
|
|
|
|
|
Carrying amount at 31 December
2020
|
65,672
|
8,148
|
|
Additions
|
160
|
78
|
|
Transfers
|
3
|
(3)
|
|
Disposals and reclassifications
|
12
|
(2)
|
|
Transferred to assets classified
as held for sale
|
43
|
12
|
|
Expensed exploration expenditures
and net impairment losses
|
-
|
(64)
|
|
Depreciation, amortisation and
net impairment losses
|
(2,791)
|
(7)
|
|
Foreign currency translation
effects
|
61
|
(13)
|
|
|
|
|
|
Carrying amount at 31 March 2021
|
63,161
|
8,150
|
|
|
|
|
|
|
|
|
|
Right-of-use (RoU) assets are
included within property, plant and equipment with a net book value of USD 3,854 million per
31 March 2021. Additions to RoU assets amount to USD 50 million. Gross
depreciation of RoU assets amount to USD 313 million in the first
quarter of 2021, of which depreciation costs of USD 80 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.
Net impairments/(reversal)
of impairments
For information on impairment losses and reversals per reporting
segment, see note 2 Segments.
First quarter
|
Property, plant and equipment
|
Intangible assets
|
|
Total
|
(in USD million)
|
2021
|
2020
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
|
|
Producing and development assets
|
410
|
2,116
|
12
|
277
|
423
|
2,393
|
Goodwill
|
-
|
-
|
1
|
1
|
1
|
1
|
Acquisition costs related to oil
and gas prospects
|
-
|
-
|
4
|
59
|
4
|
59
|
|
|
|
|
|
|
|
Total net impairment loss/(reversal)
recognised
|
410
|
2,116
|
18
|
337
|
428
|
2,453
|
Equinor first quarter 2021 34
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 first quarter of 2021 were mainly 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.
7 Provisions,
commitments, contingent liabilities and contingent assets
Asset
retirement obligation
Equinor’s
estimated asset retirement obligations (ARO) have decreased by USD 1,489
million to USD 15,802 million compared to year-end 2020, mainly due to the increase
in discount rates. Changes in ARO are reflected within Property, plant and
equipment and Provisions and other liabilities in the Consolidated balance
sheet.
Supreme
Court decision related to ICMS indirect tax (Imposto sobre Circulaçao de
Mercadorias - Tax on the Circulation of Goods and Certain Services)
In
Brazil, the State of Rio de Janeiro in 2015 published a law whereby crude oil
extraction would be subject to a 18% ICMS indirect tax (Imposto sobre
Circulaçao de Mercadorias - Tax on the Circulation of Goods and Certain
Services). The Brazilian Industry Association filed a suit with the Federal
Supreme Court of Brazil challenging the law’s constitutionality, and in March
2021 the plenary of Brazil’s Supreme Court declared the State of Rio de
Janeiro’s law to be unconstitutional. The decision is still not formally final,
as the State may present motions for clarification of any part of the decision.
However, the Supreme Court’s decision significantly strengthens Equinor’s
position in the ICMS related legal proceedings which previously were initiated
by Equinor and which currently are ongoing for the Roncador and Peregrino
fields in in the legal system of the State of Rio de Janeiro. Following the
Supreme Court’s decision, Equinor evaluates the probability of any cash outflow
in these cases, where the maximum exposure for Equinor at first quarter end
2021 totals USD 620 million, to be remote. As no provisions have previously
been made in the matter, the Brazilian Supreme Court’s decision does not impact
Equinor’s condensed interim financial statements for the first quarter 2021.
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 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
In 2021, the
Covid-19 pandemic continues to impact worldwide economic growth and energy
demand, and the uncertainties with regard to recovery from the effects of the
pandemic remain. During the first quarter of 2021, oil prices rebounded after
an unprecedented collapse and increased volatility in 2020. Developments
related to the ongoing pandemic, such as new or continued lockdowns or other
measures implemented by various countries, new outbreaks, and the success of
ongoing vaccination efforts, will continue to impact energy demand, energy
prices, and related volatilities in 2021 and beyond.
On
19 March 2021, Equinor published its 2020 Annual Report and Form 20-F. The
impact of the Covid-19 pandemic for the Equinor group, including the impact for
future energy price levels and demand, is discussed and reflected in a number
of notes to those 2020 annual Consolidated financial statements. The Covid-19
pandemic related information with a reach beyond 2020 continue, in all material
aspects, to apply for the first quarter of 2021.
During
the first quarter of 2021, Equinor has only experienced immaterial effects of
the pandemic from assets in operation, due to measures taken to maintain and
secure safe production. The Covid-19 pandemic continues to impact Equinor’s
maintenance and development project portfolio world-wide with personnel
limitation issues causing schedule delays and cost increases. The
situation continues to be unpredictable and may have additional consequences
for the progress and costs of our projects.
Equinor first quarter 2021 35
Within the group, the activities of Equinor’s Brazilian organisation,
and especially the Peregrino field projects, are the most impacted by the Covid-19
pandemic, and the situation in Brazil is continuously and closely monitored by
Equinor management. Strict measures have been implemented, including office
closures, scale-back of offshore activities, quarantines, and a strong focus on
safety.
9 Subsequent events
On 28 April 2021, the board of directors resolved to declare a
dividend for the first quarter of 2021 of USD 0.15 per share. The Equinor
shares will trade ex-dividend 11 August 2021 on the Oslo Børs and for ADR
holders on the New York Stock Exchange. Record date will be 12 August 2021 and
payment date will be 27 August 2021.
On
26 April 2021, Equinor closed the agreement with Grayson Mill Energy to
divest its interest in the Bakken field for a total preliminary
consideration USD 849 million, including USD 150 million in prepayment and
interim period settlement. The interim period settlement only includes cash
received and cost paid up to closing. The consideration will be final in early
2022.
Equinor first quarter 2021 36
Supplementary disclosures
Operational data
|
|
|
|
|
|
|
|
|
Quarters
|
Change
|
Operational data
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Prices
|
|
|
|
|
Average Brent oil price (USD/bbl)
|
60.9
|
44.2
|
50.3
|
21%
|
E&P Norway average liquids
price (USD/bbl)
|
57.3
|
42.1
|
44.7
|
28%
|
E&P International average
liquids price (USD/bbl)
|
58.6
|
41.3
|
46.7
|
25%
|
E&P USA average liquids price
(USD/bbl)
|
50.5
|
34.5
|
39.2
|
29%
|
Group average liquids price
(USD/bbl) [1]
|
56.4
|
40.6
|
44.2
|
28%
|
Group average liquids price
(NOK/bbl) [1]
|
480
|
367
|
420
|
14%
|
E&P Norway average internal
gas price (USD/mmbtu) [9]
|
5.46
|
3.88
|
2.61
|
>100%
|
E&P USA average internal gas
price (USD/mmbtu) [9]
|
2.28
|
1.34
|
1.70
|
34%
|
Average invoiced gas prices -
Europe (USD/mmbtu) [8]
|
6.65
|
5.04
|
4.06
|
64%
|
Average invoiced gas prices -
North America (USD/mmbtu) [8]
|
2.71
|
1.99
|
1.86
|
46%
|
Refining reference margin
(USD/bbl) [2]
|
1.5
|
0.4
|
1.8
|
(16%)
|
|
|
|
|
|
Entitlement production (mboe
per day)
|
|
|
|
|
E&P Norway entitlement
liquids production
|
662
|
616
|
649
|
2%
|
E&P International entitlement
liquids production
|
212
|
222
|
265
|
(20%)
|
E&P USA entitlement liquids
production
|
150
|
145
|
186
|
(19%)
|
Group entitlement liquids
production
|
1,024
|
983
|
1,100
|
(7%)
|
E&P Norway entitlement gas
production
|
723
|
698
|
745
|
(3%)
|
E&P International entitlement
gas production
|
55
|
45
|
57
|
(3%)
|
E&P USA entitlement gas production
|
212
|
187
|
174
|
22%
|
Group entitlement gas production
|
990
|
930
|
976
|
1%
|
Total entitlement liquids and gas
production [3]
|
2,014
|
1,912
|
2,076
|
(3%)
|
|
|
|
|
|
Equity production (mboe per
day)
|
|
|
|
|
E&P Norway equity liquids
production
|
662
|
616
|
649
|
2%
|
E&P International equity
liquids production
|
299
|
286
|
354
|
(15%)
|
E&P USA equity liquids
production
|
169
|
166
|
213
|
(20%)
|
Group equity liquids production
|
1,130
|
1,068
|
1,216
|
(7%)
|
E&P Norway equity gas
production
|
723
|
698
|
745
|
(3%)
|
E&P International equity gas production
|
61
|
53
|
67
|
(9%)
|
E&P USA equity gas production
|
254
|
224
|
205
|
24%
|
Group equity gas production
|
1,037
|
975
|
1,018
|
2%
|
Total equity liquids and gas
production [4]
|
2,168
|
2,043
|
2,233
|
(3%)
|
|
|
|
|
|
REN power generation
|
|
|
|
|
Power generation (GWh) Equinor
share
|
450
|
480
|
558
|
(19%)
|
|
|
|
|
|
Equinor first quarter 2021 37
Exchange rates
|
|
|
|
|
|
|
|
|
|
|
Quarters
|
Change
|
Exchange rates
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
NOK/USD average daily exchange
rate
|
0.1174
|
0.1108
|
0.1053
|
12%
|
NOK/USD period-end exchange rate
|
0.1173
|
0.1172
|
0.0952
|
23%
|
USD/NOK average daily exchange
rate
|
8.5146
|
9.0279
|
9.5007
|
(10%)
|
USD/NOK period-end exchange rate
|
8.5249
|
8.5326
|
10.5057
|
(19%)
|
EUR/USD average daily exchange
rate
|
1.2048
|
1.1920
|
1.1019
|
9%
|
EUR/USD period-end exchange rate
|
1.1725
|
1.2271
|
1.0956
|
7%
|
Equinor first quarter 2021 38
Health, safety and the environment
|
|
|
|
|
|
|
|
|
Twelve months average per
|
|
First quarter
|
First quarter
|
Q1 2021
|
Q1 2020
|
|
Health, safety and the
environment
|
2021
|
2020
|
|
|
|
|
|
|
|
|
|
Injury/incident frequency
|
|
|
2.3
|
2.4
|
|
Total recordable injury frequency
(TRIF)
|
2.2
|
2.2
|
0.5
|
0.6
|
|
Serious Incident Frequency (SIF)
|
0.3
|
0.6
|
|
|
|
Oil spills
|
|
|
121
|
205
|
|
Accidental oil spills (number of)
|
24
|
38
|
33
|
9,026
|
|
Accidental oil spills (cubic
metres)
|
4
|
123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
Full year
|
Climate
|
|
|
|
2021
|
2020
|
|
|
|
|
|
|
Upstream CO2 intensity (kg
CO2/boe) 1)
|
6.3
|
8.0
|
1) Total
scope 1 emissions of CO2 (kg CO2) from exploration and production, divided by
total production (boe).
Equinor first quarter 2021 39
Reconciliation
of net operating income/(loss) to adjusted earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table specifies the
adjustments made to each of the profit and loss line item included in the net
operating income/(loss) subtotal.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items impacting net
operating income/(loss) in the first quarter of 2021
|
Equinor group
|
|
Exploration & Production Norway
|
|
Exploration & Production International
|
|
Exploration & Production USA
|
|
Marketing, Midstream & Processing
|
|
Renewables
|
|
Other
|
(in USD million)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income/(loss)
|
5,220
|
|
3,350
|
|
261
|
|
152
|
|
392
|
|
1,341
|
|
(276)
|
Total revenues and other income
|
(262)
|
|
(143)
|
|
149
|
|
-
|
|
(271)
|
|
3
|
|
-
|
Changes in fair value of
derivatives
|
16
|
|
-
|
|
-
|
|
-
|
|
16
|
|
-
|
|
-
|
Periodisation of inventory
hedging effect
|
(287)
|
|
-
|
|
-
|
|
-
|
|
(287)
|
|
-
|
|
-
|
Impairment from associated
companies
|
3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
-
|
Over-/underlift
|
6
|
|
(143)
|
|
149
|
|
-
|
|
-
|
|
-
|
|
-
|
Purchases [net of inventory
variation]
|
95
|
|
-
|
|
-
|
|
-
|
|
(105)
|
|
-
|
|
200
|
Operational storage effects
|
(105)
|
|
-
|
|
-
|
|
-
|
|
(105)
|
|
-
|
|
-
|
Eliminations
|
200
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
200
|
Operating and administrative
expenses
|
(14)
|
|
80
|
|
(82)
|
|
-
|
|
(11)
|
|
-
|
|
-
|
Over-/underlift
|
(5)
|
|
78
|
|
(82)
|
|
-
|
|
-
|
|
-
|
|
-
|
Other adjustments
|
2
|
|
2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Provisions
|
(11)
|
|
-
|
|
-
|
|
-
|
|
(11)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and
net impairment losses
|
411
|
|
276
|
|
50
|
|
28
|
|
57
|
|
-
|
|
-
|
Impairment
|
411
|
|
276
|
|
50
|
|
28
|
|
57
|
|
-
|
|
-
|
Exploration expenses
|
17
|
|
-
|
|
4
|
|
12
|
|
-
|
|
-
|
|
-
|
Impairment
|
17
|
|
-
|
|
4
|
|
12
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sum of adjustments to net
operating income/(loss)
|
247
|
|
213
|
|
121
|
|
40
|
|
(330)
|
|
3
|
|
200
|
Adjusted earnings/(loss) [5]
|
5,467
|
|
3,563
|
|
382
|
|
192
|
|
61
|
|
1,344
|
|
(76)
|
Tax on adjusted earnings
|
(2,805)
|
|
(2,586)
|
|
(206)
|
|
(0)
|
|
(31)
|
|
(5)
|
|
23
|
Adjusted earnings/(loss) after
tax [5]
|
2,662
|
|
977
|
|
176
|
|
192
|
|
30
|
|
1,339
|
|
(53)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equinor first quarter 2021 40
Items impacting net operating income/(loss) in the first quarter
of 2020
|
Equinor group
|
Exploration & Production Norway
|
Exploration & Production International*
|
|
Exploration & Production USA*
|
Marketing, Midstream & Processing
|
|
Renewables*
|
Other*
|
(in USD million)
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income/(loss)
|
58
|
967
|
(312)
|
|
(1,015)
|
(322)
|
|
11
|
730
|
Total revenues and other income
|
(159)
|
56
|
(199)
|
|
-
|
(18)
|
|
2
|
-
|
Changes in fair value of
derivatives
|
53
|
6
|
-
|
|
-
|
47
|
|
-
|
-
|
Periodisation of inventory
hedging effect
|
(65)
|
-
|
-
|
|
-
|
(65)
|
|
-
|
-
|
Impairment
|
2
|
-
|
-
|
|
-
|
-
|
|
2
|
-
|
Over-/underlift
|
(150)
|
50
|
(199)
|
|
-
|
-
|
|
-
|
-
|
Purchases [net of inventory variation]
|
(459)
|
-
|
-
|
|
-
|
343
|
|
-
|
(802)
|
Operational storage effects
|
343
|
-
|
-
|
|
-
|
343
|
|
-
|
-
|
Eliminations
|
(802)
|
-
|
-
|
|
-
|
-
|
|
-
|
(802)
|
Operating and administrative
expenses
|
158
|
(19)
|
133
|
|
11
|
32
|
|
-
|
-
|
Over-/underlift
|
114
|
(19)
|
133
|
|
-
|
-
|
|
-
|
-
|
Gain/loss on sale of assets
|
11
|
-
|
-
|
|
11
|
-
|
|
-
|
-
|
Provisions
|
32
|
-
|
-
|
|
-
|
32
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and
net impairment losses
|
2,116
|
859
|
327
|
|
736
|
194
|
|
-
|
-
|
Impairment
|
2,163
|
859
|
374
|
|
736
|
194
|
|
-
|
-
|
Reversal of Impairment
|
(47)
|
-
|
(47)
|
|
-
|
-
|
|
-
|
-
|
Exploration expenses
|
334
|
-
|
56
|
|
278
|
-
|
|
-
|
-
|
Impairment
|
334
|
-
|
56
|
|
278
|
-
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Sum of adjustments to net
operating income/(loss)
|
1,989
|
896
|
317
|
|
1,026
|
551
|
|
2
|
(802)
|
Adjusted earnings/(loss) [5]
|
2,047
|
1,863
|
4
|
|
11
|
229
|
|
13
|
(73)
|
Tax on adjusted earnings
|
(1,486)
|
(1,313)
|
79
|
|
(0)
|
(268)
|
|
(0)
|
16
|
Adjusted earnings/(loss) after
tax [5]
|
561
|
550
|
83
|
|
11
|
(39)
|
|
13
|
(56)
|
|
|
|
|
|
|
|
|
|
|
* Reclassified to reflect change
to segment.
|
|
|
|
|
|
|
|
|
|
Equinor first quarter 2021 41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items impacting net
operating income/(loss) in the fourth quarter of 2020
|
Equinor group
|
|
Exploration & Production Norway
|
|
Exploration & Production International
|
|
Exploration & Production USA
|
|
Marketing, Midstream & Processing
|
|
Renewables*
|
|
Other*
|
(in USD million)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating income/(loss)
|
(989)
|
|
1,803
|
|
(1,376)
|
|
(559)
|
|
(480)
|
|
(60)
|
|
(317)
|
Total revenues and other income
|
240
|
|
15
|
|
(41)
|
|
-
|
|
265
|
|
1
|
|
-
|
Changes in fair value of
derivatives
|
(50)
|
|
-
|
|
-
|
|
-
|
|
(50)
|
|
-
|
|
-
|
Periodisation of inventory
hedging effect
|
315
|
|
-
|
|
-
|
|
-
|
|
315
|
|
-
|
|
-
|
Impairment from associated
companies
|
1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1
|
|
-
|
Over-/underlift
|
(24)
|
|
17
|
|
(41)
|
|
-
|
|
-
|
|
-
|
|
-
|
Gain/loss on sale of assets
|
(3)
|
|
(3)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Purchases [net of inventory
variation]
|
234
|
|
-
|
|
-
|
|
-
|
|
(69)
|
|
-
|
|
303
|
Operational storage effects
|
(69)
|
|
-
|
|
-
|
|
-
|
|
(69)
|
|
-
|
|
-
|
Eliminations
|
303
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
303
|
Operating and administrative
expenses
|
(28)
|
|
(18)
|
|
(29)
|
|
18
|
|
(2)
|
|
-
|
|
3
|
Over-/underlift
|
(53)
|
|
(18)
|
|
(35)
|
|
-
|
|
-
|
|
-
|
|
-
|
Other adjustments
|
1
|
|
-
|
|
1
|
|
(0)
|
|
-
|
|
-
|
|
-
|
Gain/loss on sale of assets
|
21
|
|
-
|
|
-
|
|
18
|
|
-
|
|
-
|
|
3
|
Provisions
|
3
|
|
-
|
|
5
|
|
-
|
|
(2)
|
|
-
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and
net impairment losses
|
983
|
|
41
|
|
72
|
|
211
|
|
638
|
|
-
|
|
22
|
Impairment
|
983
|
|
41
|
|
72
|
|
211
|
|
638
|
|
-
|
|
22
|
Exploration expenses
|
317
|
|
-
|
|
160
|
|
158
|
|
-
|
|
-
|
|
-
|
Impairment
|
315
|
|
-
|
|
157
|
|
158
|
|
-
|
|
-
|
|
-
|
Provisions
|
3
|
|
-
|
|
3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sum of adjustments to net
operating income/(loss)
|
1,746
|
|
38
|
|
161
|
|
387
|
|
832
|
|
1
|
|
327
|
Adjusted earnings/(loss) [5]
|
756
|
|
1,841
|
|
(1,215)
|
|
(172)
|
|
352
|
|
(59)
|
|
10
|
Tax on adjusted earnings
|
(1,310)
|
|
(1,133)
|
|
38
|
|
(0)
|
|
(215)
|
|
9
|
|
(9)
|
Adjusted earnings/(loss) after
tax [5]
|
(554)
|
|
707
|
|
(1,178)
|
|
(172)
|
|
137
|
|
(50)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Reclassified to reflect change
to segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equinor first quarter 2021 42
Adjusted earnings after tax by reporting segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
|
|
Q1 2021
|
|
|
|
Q4 2020*
|
|
|
|
Q1 2020*
|
|
(in USD million)
|
Adjusted earnings
|
Tax on adjusted earnings
|
Adjusted earnings after tax
|
|
Adjusted earnings
|
Tax on adjusted earnings
|
Adjusted earnings after tax
|
|
Adjusted earnings
|
Tax on adjusted earnings
|
Adjusted earnings after tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E&P Norway
|
3,563
|
(2,586)
|
977
|
|
1,841
|
(1,133)
|
707
|
|
1,863
|
(1,313)
|
550
|
E&P International
|
382
|
(206)
|
176
|
|
(1,215)
|
38
|
(1,178)
|
|
4
|
79
|
83
|
E&P USA
|
192
|
(0)
|
192
|
|
(172)
|
(0)
|
(172)
|
|
11
|
(0)
|
11
|
MMP
|
61
|
(31)
|
30
|
|
352
|
(215)
|
137
|
|
229
|
(268)
|
(39)
|
REN
|
1,344
|
(5)
|
1,339
|
|
(59)
|
9
|
(50)
|
|
13
|
(0)
|
13
|
Other
|
(76)
|
23
|
(53)
|
|
10
|
(9)
|
1
|
|
(73)
|
16
|
(56)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equinor consolidation
|
5,467
|
(2,805)
|
2,662
|
|
756
|
(1,310)
|
(554)
|
|
2,047
|
(1,486)
|
561
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rates on adjusted
earnings
|
|
|
51.3%
|
|
|
|
173.2%
|
|
|
|
72.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
* For the first quarter of 2020,
E&P International and E&P USA have been reclassified to reflect
change to segments and for the first quarter of 2020 and the fourth quarter
of 2020, this also applies to the REN and Other segment.
|
Reconciliation of adjusted
earnings after tax to net income
|
|
|
|
|
|
Reconciliation of adjusted
earnings after tax to net income
|
|
Quarters
|
(in USD million)
|
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
|
|
|
|
|
Net operating income/(loss)
|
A
|
5,220
|
(989)
|
58
|
Income tax less tax on net
financial items
|
B
|
2,863
|
844
|
1,345
|
|
|
|
|
|
Net operating income after tax
|
C = A-B
|
2,358
|
(1,834)
|
(1,287)
|
|
|
|
|
|
Items impacting net operating
income1)
|
D
|
247
|
1,746
|
1,989
|
Tax on items impacting net
operating income
|
E
|
(57)
|
466
|
141
|
|
|
|
|
|
Adjusted earnings after tax [5]
|
F = C+D-E
|
2,662
|
(554)
|
561
|
|
|
|
|
|
Net financial items
|
G
|
(707)
|
(410)
|
23
|
Tax on net financial items
|
H
|
204
|
(171)
|
559
|
|
|
|
|
|
Net income/(loss)
|
I = C+G+H
|
1,854
|
(2,416)
|
(705)
|
|
|
|
|
|
1) Represents the total
adjustments to net operating income made to arrive at adjusted earnings (i.e.
adjusted purchases, adjusted operating and administrative expenses, adjusted
depreciation, amortisation and impairment expenses and adjusted exploration
expenses, each of which are presented and reconciled to the relevant related
IFRS figure for the periods presented in this report).
|
Equinor first quarter 2021 43
Equinor first quarter 2021 44
Adjusted earnings MMP break down
|
|
|
|
|
|
Adjusted earnings break down
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020
|
Q1 on Q1
|
|
|
|
|
|
Natural Gas Europe
|
(30)
|
226
|
309
|
N/A
|
Natural Gas US
|
2
|
22
|
(11)
|
N/A
|
Liquids
|
156
|
107
|
(38)
|
N/A
|
Other
|
(66)
|
(3)
|
(31)
|
>(100%)
|
|
|
|
|
|
Adjusted earnings MMP
|
61
|
352
|
229
|
(73%)
|
Adjusted exploration
expenses
|
|
|
|
|
|
|
Adjusted exploration
expenses
|
Quarters
|
Change
|
(in USD million)
|
Q1 2021
|
Q4 2020
|
Q1 2020*
|
Q1 on Q1
|
|
|
|
|
|
E&P Norway exploration
expenditures
|
114
|
101
|
130
|
(12%)
|
E&P International exploration
expenditures
|
133
|
94
|
221
|
(40%)
|
E&P USA exploration
expenditures
|
17
|
25
|
45
|
(62%)
|
|
|
|
|
|
Group exploration expenditures
|
264
|
220
|
395
|
(33%)1)
|
Expensed, previously capitalised
exploration expenditures
|
47
|
969
|
98
|
(52%)
|
Capitalised share of current
period's exploration activity
|
(81)
|
65
|
(195)
|
(58%)
|
Impairment (reversal of
impairment)
|
17
|
315
|
336
|
(95%)
|
|
|
|
|
|
Exploration expenses according to
IFRS
|
247
|
1,569
|
635
|
(61%)
|
|
|
|
|
|
Items impacting net operating
income/(loss)2)
|
(17)
|
(317)
|
(334)
|
(95%)
|
|
|
|
|
|
Adjusted exploration expenses
|
230
|
1,252
|
302
|
(24%)
|
|
|
|
|
|
* E&P International and
E&P USA have been reclassified to reflect change to segments.
|
|
|
|
|
|
1) 16 wells with activity with 5
completed in the first quarter of 2021 compared to 22 wells with 5 completed
in the first quarter of 2020.
2) For items impacting net
operating income/(loss), see Reconciliation of net operating income/(loss) to
adjusted earnings in the Supplementary disclosures.
|
Equinor first quarter 2021 45
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 31 March
|
At 31 December
|
At 31 March
|
(in USD million)
|
|
2021
|
2020
|
2020
|
|
|
|
|
|
Shareholders' equity
|
|
35,764
|
33,873
|
36,327
|
Non-controlling interests
|
|
18
|
19
|
19
|
|
|
|
|
|
Total equity
|
A
|
35,782
|
33,892
|
36,346
|
|
|
|
|
|
Current finance debt and lease
liabilities
|
|
3,915
|
5,777
|
5,608
|
Non-current finance debt and
lease liabilities
|
|
30,997
|
32,338
|
22,912
|
|
|
|
|
|
Gross interest-bearing debt
|
B
|
34,913
|
38,115
|
28,520
|
|
|
|
|
|
Cash and cash equivalents
|
|
8,992
|
6,757
|
6,866
|
Current financial investments
|
|
10,922
|
11,865
|
6,100
|
|
|
|
|
|
Cash and cash equivalents and
financial investment
|
C
|
19,914
|
18,621
|
12,966
|
|
|
|
|
|
Net interest-bearing debt [10]
|
B1 = B-C
|
14,998
|
19,493
|
15,554
|
|
|
|
|
|
Other interest-bearing elements
1)
|
|
773
|
627
|
608
|
Normalisation for cash-build up
before tax payment (50% of Tax Payment) 2)
|
|
39
|
-
|
362
|
|
|
|
|
|
Net interest-bearing debt
adjusted normalised for tax payment, including lease liabilities [5]
|
B2
|
15,811
|
20,121
|
16,524
|
|
|
|
|
|
Lease liabilities
|
|
4,137
|
4,405
|
3,902
|
|
|
|
|
|
Net interest-bearing debt
adjusted [5]
|
B3
|
11,674
|
15,716
|
12,622
|
|
|
|
|
|
Calculation of capital
employed [5]
|
|
|
|
|
Capital employed
|
A+B1
|
50,781
|
53,385
|
51,900
|
Capital employed adjusted, including lease liabilities
|
A+B2
|
51,593
|
54,012
|
52,870
|
Capital employed adjusted
|
A+B3
|
47,456
|
49,608
|
48,968
|
|
|
|
|
|
Calculated net debt to
capital employed [5]
|
|
|
|
|
Net debt to capital employed
|
(B1)/(A+B1)
|
29.5%
|
36.5%
|
30.0%
|
Net debt to capital employed
adjusted, including lease liabilities
|
(B2)/(A+B2)
|
30.6%
|
37.3%
|
31.3%
|
Net debt to capital employed
adjusted
|
(B3)/(A+B3)
|
24.6%
|
31.7%
|
25.8%
|
Equinor first quarter 2021 46
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.
Equinor first quarter 2021 47
Net adjusted financial items 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other financial items
|
Net foreign exchange gains (losses)
|
Gains (losses) derivative financial instruments
|
Interest and other finance expenses
|
Net before tax
|
Estimated tax effect
|
Net after tax
|
|
|
Net adjusted financial items
in the first quarter of 2021
|
|
(in USD million)
|
|
|
|
|
|
|
|
|
|
|
Financial items according to IFRS
|
(105)
|
70
|
(360)
|
(312)
|
(707)
|
204
|
(503)
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange (FX) impacts
(incl. derivatives)
|
8
|
(70)
|
-
|
-
|
(62)
|
-
|
-
|
|
Interest rate (IR) derivatives
|
-
|
-
|
360
|
-
|
360
|
-
|
-
|
|
Fair value adjustment financial
investments and other
|
192
|
-
|
-
|
-
|
192
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
201
|
(70)
|
360
|
-
|
491
|
(0)
|
491
|
|
|
|
|
|
|
|
|
|
|
Adjusted financial items
|
96
|
-
|
-
|
(312)
|
(216)
|
204
|
(13)
|
|
Net adjusted financial items
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other financial items
|
Net foreign exchange gains (losses)
|
Gains (losses) derivative financial instruments
|
Interest and other finance expenses
|
Net before tax
|
Estimated tax effect
|
Net after tax
|
|
|
Net adjusted financial items
in the first quarter of 2020
|
|
(in USD million)
|
|
|
|
|
|
|
|
|
|
|
Financial items according to IFRS
|
(122)
|
297
|
193
|
(344)
|
23
|
559
|
582
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange (FX) impacts
(incl. derivatives)
|
(35)
|
(297)
|
-
|
-
|
(332)
|
-
|
-
|
|
Interest rate (IR) derivatives
|
-
|
-
|
(193)
|
-
|
(193)
|
-
|
-
|
|
Fair value adjustment financial
investment
|
164
|
-
|
-
|
-
|
164
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Adjusted financial items
|
7
|
-
|
-
|
(344)
|
(338)
|
561
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
Equinor first quarter 2021 48
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:
·
Adjusted earnings are based on
net operating income/(loss) and adjusts for certain items affecting the income
for the period in order to separate out effects that management considers may
not be well correlated to Equinor’s underlying operational performance in the
individual reporting period. Management considers adjusted earnings to be a
supplemental measure to Equinor’s IFRS measures, which provides an indication
of Equinor’s underlying operational performance in the period and facilitates
an alternative understanding of operational trends between the periods.
Adjusted earnings include adjusted revenues and other income,
adjusted purchases, adjusted operating expenses and selling, general and
administrative expenses, adjusted depreciation expenses and adjusted
exploration expenses.
·
Adjusted earnings after tax – equals
the sum of net operating income/(loss) less income tax in business areas and
adjustments to operating income taking the applicable marginal tax into
consideration. Adjusted earnings after tax excludes net financial items and the
associated tax effects on net financial items. It is based on adjusted earnings
less the tax effects on all elements included in adjusted earnings (or calculated
tax on operating income and on each of the adjusting items using an estimated
marginal tax rate). In addition, tax effect related to tax exposure items not
related to the individual reporting period is excluded from adjusted earnings
after tax. Management considers adjusted earnings after tax, which reflects a
normalised tax charge associated with its operational performance excluding the
impact of financing, to be a supplemental measure to Equinor’s net income.
Certain net USD denominated financial positions are held by group companies
that have a USD functional currency that is different from the currency in
which the taxable income is measured. As currency exchange rates change between
periods, the basis for measuring net financial items for IFRS will change
disproportionally with taxable income which includes exchange gains and losses
from translating the net USD denominated financial positions into the currency
of the applicable tax return. Therefore, the effective tax rate may be
significantly higher or lower than the statutory tax rate for any given period.
Adjusted taxes included in adjusted earnings after tax should not be considered
indicative of the amount of current or total tax expense (or taxes payable) for
the period.
Adjusted earnings and adjusted earnings after tax should be
considered additional measures rather than substitutes for net operating income/(loss)
and net income/(loss), which are the most directly comparable IFRS measures.
There are material limitations associated with the use of adjusted earnings and
adjusted earnings after tax compared with the IFRS measures as such non-GAAP
measures do not include all the items of revenues/gains or expenses/losses of
Equinor that are needed to evaluate its profitability on an overall basis.
Adjusted earnings and adjusted earnings after tax are only intended to be
indicative of the underlying developments in trends of our on-going operations
for the production, manufacturing and marketing of our products and exclude
pre-and post-tax impacts of net financial items. Equinor reflects such
underlying development in our operations by eliminating the effects of certain
items that may not be directly associated with the period's operations or
financing. However, for that reason, adjusted earnings and adjusted earnings
after tax are not complete measures of profitability. These measures should
therefore not be used in isolation.
·
Return on average capital employed after tax (ROACE) –
this measure provides useful information for both the group and investors about
performance during the period under evaluation. Equinor uses ROACE to measure
the return on capital employed, regardless of whether the financing is through
equity or debt. The use of ROACE should not be viewed as an alternative to
income before financial items, income taxes and minority interest, or to net
income, which are measures calculated in accordance with GAAP or ratios based
on these figures. For a reconciliation for adjusted earnings
after tax, see Reconciliation of net operating income/(loss) to adjusted
earnings as presented earlier in this report.
·
Capital employed adjusted – this measure
is defined as Equinor's total equity (including non-controlling interests) and net
interest-bearing debt adjusted.
·
Net interest-bearing debt adjusted – this
measure is defined as Equinor's interest bearing financial liabilities less
cash and cash equivalents and current financial investments, adjusted for
collateral deposits and balances held by Equinor's captive insurance company
and balances related to the SDFI.
·
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.
Equinor first quarter 2021 49
Equinor first quarter 2021 50
· Organic
capital expenditures – Capital
expenditures, defined as Additions to PP&E, intangibles and equity
accounted investments in note 2 Segments to the Condensed interim financial
statements, amounted to USD 2.0 billion in the first quarter of 2021. Organic
capital expenditures are capital expenditures excluding acquisitions,
recognised lease assets (RoU assets) and other investments with significant
different cash flow pattern. In the first quarter of 2021, a total of USD 0.1
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 first quarter 2021
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 6.6 billion), taxes paid (negative USD 0.1 billion), capital
expenditures and investments (negative USD 2.2 billion), (increase)/decrease in
other items interest-bearing (USD 0.0 billion), proceeds from sale of assets
and businesses (USD 1.1 billion), dividend paid (negative USD 0.4 billion) and
share buy-back (USD 0.0 billion), resulting in a free cash flow of USD 5.2
billion in the first quarter of 2021.
Amended principles for adjusted earnings with effect from the
first quarter of 2021:
With effect from the first quarter of 2021 Equinor has changed its
policy for how gain or loss from sales of assets are to be recognised in
Adjusted earnings for the Renewables segment. Previously gain or loss from
sales of assets within the renewables segment has been excluded from the
adjusted earnings performance measure, while as of the first quarter of 2021
such gain or loss will be included as part of the adjusted earnings performance
measure for the segment. The change in policy for the adjusted earnings
performance measure does not impact the other reporting segments, where such
gain or loss will continue to be excluded from the adjusted earnings
performance measure. The policy has been retrospectively applied, but with no
impact on the comparable numbers for 2020.
In the fourth quarter of 2019 a gain of USD 212 million was recognised
as a gain on sale of assets in the Arkona offshore windfarm in the Renewables
segment.
The change in policy for gain or loss from sales of assets in the
Renewables segment is based on the increased activity and significance of the
segment (REN as a separate reporting segment with effect of the first quarter
of 2021), where management consider such gain or loss on divestments to be an
integral part of the performance of the segment. Early access at scale with a
subsequent partial divestment is an integral part of the strategy for the
Renewables segment that distinguishes it from the other segments in Equinor.
Adjusted
earnings adjust for the following items:
·
Changes in fair value of derivatives: Certain gas
contracts are, due to pricing or delivery conditions, deemed to contain
embedded derivatives, required to be carried at fair value. Also, certain
transactions related to historical divestments include contingent
consideration, are carried at fair value. The accounting impacts of changes in
fair value of the aforementioned are excluded from adjusted earnings. In
addition, adjustments are also made for changes in the unrealised fair value
of derivatives related to some natural gas trading contracts. Due
to the nature of these gas sales contracts, these are classified as financial
derivatives to be measured at fair value at the balance sheet date. Unrealised
gains and losses on these contracts reflect the value of the difference between
current market gas prices and the actual prices to be realised under the gas
sales contracts. Only realised gains and losses on these contracts are
reflected in adjusted earnings. This presentation best reflects the
underlying performance of the business as it replaces the effect of temporary
timing differences associated with the re-measurements of the derivatives to
fair value at the balance sheet date with actual realised gains and losses for
the period.
·
Periodisation of inventory hedging effect: Commercial
storage is hedged in the paper market and is accounted for using the lower of
cost or market price. If market prices increase above cost price, the inventory
will not reflect this increase in value. There will be a loss on the derivative
hedging the inventory since the derivatives always reflect changes in the
market price. An adjustment is made to reflect the unrealised market increase
of the commercial storage. As a result, loss on derivatives is matched by a
similar adjustment for the exposure being managed. If market prices decrease
below cost price, the write-down of the inventory and the derivative effect in
the IFRS income statement will offset each other and no adjustment is made.
·
Over/underlift: Over/underlift is accounted for
using the sales method and therefore revenues were reflected in the period the
product was sold rather than in the period it was produced. The over/underlift
position depended on a number of factors related to our lifting programme and
the way it corresponded to our entitlement share of production. The effect on
income for the period is therefore adjusted, to show estimated revenues and
associated costs based upon the production for the period to reflect
operational performance and comparability with peers.
·
The operational storage is not hedged and is not part of
the trading portfolio. Cost of goods sold is measured based on the FIFO
(first-in, first-out) method, and includes realised gains or losses that arise
due to changes in market prices. These gains or losses will fluctuate from one
period to another and are not considered part of the underlying operations for
the period.
·
Impairment and reversal of impairment are excluded
from adjusted earnings since they affect the economics of an asset for the
lifetime of that asset, not only the period in which it is impaired or the
impairment is reversed. Impairment and reversal of impairment can impact both
the exploration expenses and the depreciation, amortisation and impairment line
items.
Equinor first quarter 2021 51
·
Gain or loss from sales of assets is
eliminated from the measure since the gain or loss does not give an indication
of future performance or periodic performance; such a gain or loss is related
to the cumulative value creation from the time the asset is acquired until it
is sold. Following the first quarter of 2021, Equinor has determined the
adjusted earnings item of gain or loss from sales of assets is not applicable
to the reporting segment, REN, as the management considers presentation of the
segment operations result, including the presentation of the gain from
divestments, as being reflective of the performance of the segment at this
point of time.
·
Eliminations (Internal unrealised profit on inventories):
Volumes derived from equity oil inventory will vary depending on
several factors and inventory strategies, i.e. level of crude oil in inventory,
equity oil used in the refining process and level of in-transit cargoes.
Internal profit related to volumes sold between entities within the group, and
still in inventory at period end, is eliminated according to IFRS (write down
to production cost). The proportion of realised versus unrealised gain will
fluctuate from one period to another due to inventory strategies and
consequently impact net operating income/(loss). Write-down to production cost
is not assessed to be a part of the underlying operational performance, and
elimination of internal profit related to equity volumes is excluded in
adjusted earnings.
·
Other items of income and expense are adjusted
when the impacts on income in the period are not reflective of Equinor’s
underlying operational performance in the reporting period. Such items may be
unusual or infrequent transactions but they may also include transactions that
are significant which would not necessarily qualify as either unusual or
infrequent. Other items are carefully assessed and can include transactions
such as provisions related to reorganisation, early retirement, etc.
·
Change in accounting policy are
adjusted when the impacts on income in the period are unusual or infrequent,
and not reflective of Equinor’s underlying operational performance in the
reporting period.
For more information on our use of non-GAAP financial measures,
see section 5.2 Use and reconciliation of non-GAAP financial measures in
Equinor's 2020 Annual Report and Form 20-F.
Equinor first quarter 2021 52
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", 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, including with
respect to the Covid-19 pandemic and its impacts, consequences and risks;
Equinor's response to the Covid-19 pandemic, including measures to protect
people, operations and value creation, operating costs and assumptions; the
commitment to develop as a broad energy company; the ambition to be a leader in
the energy transition; future financial performance, including cash flow and
liquidity; accounting policies; production cuts, including their impact on the
level and timing of Equinor's production; market outlook and future economic
projections and assumptions, including commodity price assumptions; organic
capital expenditures through 2022; intention to optimise and mature our
portfolio; estimates regarding exploration activity levels; ambition to keep
unit of production cost in the top quartile of our peer group; estimates and
expectations regarding production growth; 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; levels and calculations of
reserves and material differences from reserves estimates; natural disasters,
adverse weather conditions, climate change, and other changes to business
conditions; regulatory stability and access to attractive renewable
opportunities; unsuccessful drilling; operational problems, in particular in
light of quarantine rules and social distancing requirements trigerred by the
Covid-19 pandemic; health, safety and environmental risks; impact of the
Covid-19 pandemic; the effects of climate change; regulations on hydraulic
fracturing; security breaches, including breaches of our digital infrastructure
(cybersecurity); ineffectiveness of crisis management systems; the actions of
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; reputational
damage; exercise of ownership by the Norwegian state; an inability to attract
and retain personnel; risks related to implementing a new corporate structure;
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 oil-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, 2020, filed with the U.S. Securities and Exchange
Commission (including section 2.12 Risk review - Risk factors thereof).
Equinor's 2020 Annual Report and Form 20-F is available at Equinor's website
www.equinor.com.
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. 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, either to make them conform to actual
results or changes in our expectations.
Equinor first quarter 2021 53
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 cumulative 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 report 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 sells 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.
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 reserves
estimates.
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 authorised.
EQUINOR
ASA
(Registrant)
Dated:
29 April, 2021
By: ___/s/ Svein
Skeie
Name: Svein
Skeie
Title: Chief Financial Officer
Equinor first quarter 2021 54