Equinor Earnings: Selloff on Lower Payouts an Overreaction

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.