Equinor Earnings: Smaller-Than-Expected Earnings Decline; Full-Year Cash Return Plans Unchanged

Equinor’s EQNR 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 posted operating cash flow, excluding working capital and taxes, of $15.3 billion during the quarter compared with $21.0 billion in 2022. Capital expenditure totaled $2.3 billion and is expected to be $10 billion-$11 billion for the full year.

During the quarter, Equinor paid its ordinary dividend of $0.30, a special dividend of $0.60, and bought back $1.0 billion worth of shares. Given the strong financial performance, Equinor will move forward with the next tranche of its $6 billion repurchase plan for 2023 with $1.67 billion in repurchase.

All in all, Equinor reiterated its 2023 plan to return $17.0 billion to shareholders. This stands in contrast to some peers who reduced expected payouts for the second quarter. Our fair value estimate and moat rating are unchanged. Equinor is one of the cheaper integrated names in our coverage.

The upstream business saw volumes increase 1% from the year before largely due to the reopening of the Johan Sverdrup and Snohvit fields. However, higher volumes were offset by lower prices, which resulted in upstream adjusted earnings decreasing to $10.9 billion compared with $18.1 billion the year before. Full-year production is expected to grow about 3%

Marketing segment adjusted earnings rose to $1.3 billion from a loss of $92 million the year before, largely because of strong trading results. The renewables segment posted an adjusted loss of $83 million compared with a loss of $10 million last year on higher business development costs. Production from renewable energy increased 3% to 524 GWh.