Equinor's Ebit Plunges 89% in Q2

Earnings before interest and tax (Ebit) at Norway's state oil company Equinor tumbled 89% year on year in the second quarter, as revenues were hurt by lower prices and government-mandated cuts to production that began in June.

Ebit came to $0.35bn in the three months ending June 30, versus $3.15bn a year before. It booked a net loss of $251mn, its fourth quarterly one in a row and in contrast to a $1.48bn profit a year before. Revenues were down 56% yr/yr at $7.6bn. 

Equinor's three upstream divisions  – E&P Norway, E&P International and E&P USA – all swung to adjusted earnings losses in the quarter, whereas its midstream, marketing and processing division achieved $1.16bn in adjusted earnings, versus a loss of $465mn a year before. The company attributed this is strong trading performance.

Equinor's production averaged 2.122mn barrels of oil equivalent/day in the three months, up 1% yr/yr, as growth at the Johan Sverdrup oilfield in the North Sea and other new projects was mostly offset by declines elsewhere. Its Norwegian gas output fell 8% to 694,000 boe/d, as Equinor held back volumes because of low prices. Oil production in Norway was also lower because of the government's decision to cut national output by 250,000 b/d in June from a baseline level of 1.86mn b/d.

"Our financial results for the second quarter were impacted by very low realised oil and gas prices due to the Covid-19 pandemic, but also by a strong trading performance in volatile markets," CEO Eldar Saetre said. "We have reduced costs, maintained solid operational performance and continued to prioritise value over volume by deferring significant flexible gas production to periods with higher expected prices."