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The Norwegian Oil and Gas Company Equinor Reported a Loss in the First Quarter of the Year Due to Low Oil Prices and Losses of US $ 2.5 Billion, but Delivered Record Production During the Period.
Equinor reported on Thursday (07) adjusted earnings of US $ 2.05 billion in the first quarter, compared to US $ 4.19 billion in the same period of 2019. Adjusted net income after taxes was US $ 0.56 billion, down from US $ 1.54 billion in the same period last year. Lower prices for liquids and gas impacted the quarter’s results.
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The IFRS net operating income was US $ 0.06 billion in the first quarter, compared to US $ 4.73 billion in the same period of 2019.
The IFRS net income was negative at US $ 0.71 billion in the first quarter, following net losses of US $ 2.45 billion, down from US $ 1.71 billion positive in the first quarter of 2019.
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The net operating revenue was impacted by impairment charges of US $ 2.45 billion, of which US $ 0.86 billion in assets in the Norwegian continental shelf and US $ 1.40 billion in international portfolio.
The impairments were triggered mainly by a reduction in short-term price assumptions.
Eldar Sætre, President and CEO of Equinor, said: “Our financial results for the quarter were impacted by lower commodity prices. However, we delivered strong operational performance with record production and solid cash flow in these market conditions. Uncertainty remains high with very low commodity prices and widening differentials at the end of the first quarter and the beginning of the second quarter.
“We will continue to prioritize value over volume and have already reduced activity, primarily in the U.S. onshore. We will consider further reductions in activity and will use the flexibility we have in our portfolio as needed.”
Recording Output
Equinor delivered a total record production of 2.233 mboe per day in the first quarter, a 3% increase compared to the same period in 2019.
The successful ramp-up of new fields, as well as new well capacity, contributed to the production growth.
The ramp-up of Johan Sverdrup significantly contributed to the increase in production for the quarter, and the field reached a higher plateau production level of 470,000 boe per day at the end of April.
Equinor expects to provide an average annual production growth of about 3% from 2019 to 2026. Due to market uncertainties, production restrictions imposed by the government, and Equinor’s value-over-volume approach, Equinor has suspended other production guidance for 2020.
Equinor expects an organic capital expenditure of about US $ 8.5 billion in 2020 and is updating its organic investment expectation for 2021 to about US $ 10 billion.
The board of directors declared a cash dividend of US $ 0.09 per share in the first quarter of 2020, a 67% reduction compared to the proposed dividend level in the fourth quarter of 2019.
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