Company Reports

Equinor's first-quarter adjusted earnings decreased to $7.5 billion before tax and $2.6 billion after tax, compared with $12.0 billion and $3.5 billion last year, respectively, largely due to lower gas prices. Operating cash flow, excluding working capital and taxes, was $9.7 billion during the quarter, compared with $15.3 billion in 2023. Capital expenditures, which totaled $2.8 billion in the quarter, are expected to be $13 billion for the full year.

Equinor is accelerating its push into renewable energy in pursuit of its 2050 net-zero goal. Central to its strategy is growth of its burgeoning renewable power business, primarily offshore wind. While net installed capacity only stands at 0.9 gigawatts at end-2023, Equinor plans to grow that to 12-16 GW by 2030.

Equinor’s shares fell as result of fourth-quarter earnings missing expectations and management decreasing the extraordinary dividend. The sharp selloff looks to be an overreaction, in our view. Quarterly adjusted earnings decreased to $8.7 billion before tax and $1.9 billion after tax, compared with $17.0 billion and $4.7 billion last year, respectively, as oil and gas prices continue to fall from extraordinary levels. Equinor posted operating cash flow, excluding working capital and taxes, of $10.9 billion during the quarter compared with $21.0 billion in 2022. The after-tax earnings figure came in below expectations due to a higher-than-expected tax rate from one-off items. Underlying segment operating earnings actually outperformed Equinor’s analyst-compiled consensus figures. As such, we do not view the earnings miss as warranting such a share price drop.

Equinor’s third-quarter adjusted earnings decreased to $8.0 billion before tax and $2.7 billion after tax, compared with $24.5 billion and $7.2 billion last year, respectively, because of oil and natural gas prices falling from extraordinary levels in 2022. Operating cash flow, excluding working capital and taxes, was $11.3 billion during the quarter compared with $24.5 billion in 2022. Capital expenditure totaled $2.6 billion and is still expected to be $10 billion-$11 billion for the full year.

Equinor is accelerating its push into renewable energy in pursuit of its 2050 net-zero goal. Central to its strategy is growth of its burgeoning offshore wind business. While net installed capacity only stands at 0.6 gigawatts at end-2022, Equinor plans to grow that to 12-16 GW by 2030, a target it previously set for 2035. To do so, it plans to increase renewable spending from 12% of total capital investment to over 50% by 2030, including a cumulative gross $23 billion over the next five years.

Equinor’s second-quarter adjusted earnings decreased to $7.5 billion before tax and $1.8 billion after tax, compared with $17.6 billion and $6.8 billion last year, respectively, due to lower oil and natural gas prices.

Equinor's first-quarter adjusted earnings decreased to $12.0 billion before tax and $3.5 billion after tax, compared with $17.9 billion and $5.5 billion last year, but exceeded market expectations, leading shares higher.

Equinor is accelerating its push into renewable energy in pursuit of its 2050 net-zero goal. Central to its strategy is growth of its burgeoning offshore wind business. While net installed capacity only stands at 0.6 gigawatts at end-2022, Equinor plans to grow that to 12-16 GW by 2030, a target it previously set for 2035. To do so, it plans to increase renewable spending from 12% of total capital investment to over 50% by 2030, including a cumulative gross $23 billion over the next five years.

Equinor exceeded market expectations with fourth-quarter earnings, but it was the 50% increase in the quarterly dividend and continuation of the buyback at 2022 levels for 2023 that likely sent shares higher. Quarterly adjusted earnings increased slightly to $15.1 billion before tax and $5.8 billion after tax, compared with $15.0 billion and $4.4 billion, respectively, the year prior as higher oil and gas prices were partially offset by higher energy costs. Equinor posted operating cash flow, excluding working capital and taxes, of $21.0 billion during the quarter compared with $18.0 in 2021.

Equinor's quarterly adjusted earnings increased to $24.3 billion before tax and $6.7 billion aftertax, compared with $9.8 billion and $2.8 billion, respectively the year before due to higher oil and gas prices. Equinor posted operating cash flow, excluding working capital and taxes, of $24.5 billion during the quarter compared with $10.8 billion in 2021. Capital expenditures increased slightly to $2.1 billion.

Equinor is accelerating its push into renewable energy in pursuit of its 2050 net-zero goal. Central to its strategy is growth of its burgeoning offshore wind business. While net installed capacity only stands at 0.7 gigawatts at end-2021, Equinor plans to grow that to 12-16 GW by 2030, a target it previously set for 2035. To do so, it plans to increase renewable spending from 12% of total capital investment to over 50% by 2030, including a cumulative gross $23 billion over the next five years.

Equinor's quarterly adjusted earnings soared to $17.6 billion before tax and $5.0 billion after tax, compared with $4.6 billion and $1.6 billion, respectively, the year before thanks to higher oil and gas prices. Equinor posted operating cash flow, excluding working capital and taxes, of $18.1 billion during the quarter compared with $6.5 billion in 2021. Capital expenditures fell slightly to $1.7 billion.

High oil and gas prices drove a stellar first quarter for Equinor as quarterly adjusted earnings soared to $18.0 billion before tax and $5.2 billion after tax, compared with $4.1 billion and $1.3 billion, respectively, the year before. Equinor posted free cash flow (operating cash flow including working capital less capital investment) of $13.6 billion during the quarter compared with $3.8 billion the year before. Given the strong financial performance, Equinor will move forward with the next tranche of its $5 billion repurchase plan for 2022 with $1.33 billion in repurchases and continuation of the extraordinary quarterly dividend of $0.20 per share. We expect Equinor to fully execute on its previously announced repurchase and dividend plans, implying $10 billion of total distribution for 2022 or about 9% of its current market capitalization. Our fair value estimate and moat rating are unchanged. We recently increased our fair value estimate to incorporate the strong commodity price environment, leaving the shares trading at a discount currently.

Equinor is accelerating its push into renewable energy in pursuit of its 2050 net-zero goal. Central to its strategy is growth of its burgeoning offshore wind business. While net installed capacity only stands at 0.7 gigawatts at end-2021, Equinor plans to grow that to 12-16 GW by 2030, a target it previously set for 2035. To do so, it plans to increase renewable spending from 12% of total capital investment to over 50% by 2030, including a cumulative gross $23 billion over the next five years.

Following BP’s announcement to exit its Rosneft stake (see our Feb. 28 note), Equinor announced it would stop new investments and start the process of exiting Russia as well. Equinor has minimal exposure to Russia, producing only 27 mboed in fourth-quarter 2021, about 1% of its total. Year-end non-current assets of $1.2 billion in Russia were a little less than 2% of its total. Equinor holds interest in one offshore and several onshore oil and gas fields, increasing its presence in 2020 by acquiring a minority interest in 12 onshore conventional exploration licenses from Rosneft. Given the relatively small position, our fair value estimate is unchanged.

Integrated oils have been dealing with sanctions on Russia for some time as many of those imposed from the 2014 annexation of Crimea remain in place. While they have had little impact, the Russian invasion of Ukraine is likely to spur a new round of sanctions that are perhaps more punitive. As we wrote in our Feb 23. note, however, we think sanctions that disrupt the flow of oil and natural gas out of Russia are unlikely given the West’s aversion to the higher prices that would likely follow. Meanwhile, Russia is unlikely to withhold volumes given its reliance on oil and gas revenue. Furthermore, effective sanctions that bite, might materially impact Western firms, making them less likely to be implemented, as well. That said, the uncertainty adds a new level of risk for those firms operating in the country. Of the integrated oils, we find BP and TotalEnergies to be the most exposed.

Thanks largely to higher commodity prices and a 6% increase in production volumes, Equinor posted record quarterly adjusted earnings of $15.0 billion before tax and $4.4 billion after tax, compared with $756 million and a loss of $554 million, respectively the year before. Combined with continued capital discipline, Equinor posted full-year free cash flow (operating cash flow including working capital less capital investment) of $20.8 billion compared with $1.9 billion in 2020.

Equinor’s third-quarter results showed marked improvements in all segments, except for renewables. A surge in oil and gas prices lifted earnings and strengthened cash flow generation. For the quarter, adjusted after-tax earnings were $2.8 billion compared with $271 million the year before. The strong results prompted an increase in its next tranche of repurchases to $1 billion from $300 million.

Equinor is accelerating its push into renewable energy in pursuit of its 2050 net-zero goal. Central to its strategy is growth of its burgeoning offshore wind business. While installed capacity only stands at 1.3 GW currently, Equinor plans to grow that to 12-16 GW by 2030, a target it previously set for 2035. To do so, it plans to increase renewable spending from 12% of total capital investment to over 50% by 2030, including a cumulative gross $23 billion during the next five years.

Equinor’s second-quarter earnings improved considerably from the year before as its upstream operations benefited from the increase in oil and gas prices, offsetting weakness in its other segments. For the quarter, adjusted after-tax earnings were $1.6 billion compared with $646 million the year before. All three upstream segments--Norway, International, and U.S.--swung from a loss last year to earnings this year primarily due to higher prices that more than offset lower volumes. Entitlement production fell 3% to 1,845 mboed from 1,897 mboed a year before on planned turnarounds, natural decline, divestments, and lower volumes from production sharing agreements. Full-year guidance remains for 2% growth adjusted for divestments. Marketing segment earnings dropped to $144 million from $1.2 billion the year before largely on lower trading results. The renewables segment posted a loss of $31 million compared with a $1 million loss last year. This segment remains in investment mode and is unlikely to generate meaningful earnings for several years outside of gains from project farm downs as it did in the first quarter. Equinor is targeting installed capacity of 12-16 GW by 2030.