Analyst Note| Allen Good, CFA |
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.