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    Norwegian Equinor's Q3 Loss Tops $2bn


Upstream impairments caused by lower prices dragged a positive operating result below the line.

by: William Powell

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Natural Gas & LNG News, Premium, Corporate, Exploration & Production, Financials

Norwegian Equinor's Q3 Loss Tops $2bn

Norwegian state producer Equinor reported October 29 a third-quarter net operating loss of $2.02bn, four times the loss in Q3 2019; and a net loss of $2.12bn – almost double the loss in Q3 2019 – following net impairments of $2.93bn. Of that, almost half – $1.38bn – came from the US. Upstream Norway accounted for $0.37bn and exploration expenses accounted for another $0.58bn of the impairments.

Its adjusted earnings were $0.78bn, down from $2.59bn in Q3 2019; and after tax earnings were $0.27bn, down from $1.08bn.

It described its results as "solid" given the low-price environment and said it was on track to deliver its $3bn action plan to strengthen financial resilience. It said it had delivered "solid operational results in the quarter with an underlying production growth of 9%." And it took advantage of the flexibility in gas production as gas prices in Europe recovered through the quarter. Its net debt ratio rose to 31.6% owing to impairments and payment for the government share of share buy-back.

CEO Eldar Saetre – who will next week be replaced by Anders Opedal a few days after the new CFO Svein Skeie is in place – said Equinor's financial results were impacted as regions across the world are still severely affected by the pandemic but reflected also its "forceful response to the market turmoil, with significant cost improvements and strict financial discipline." 

He said the tax policy measures in Norway were helping development upstream, including the plan for developing the Breidablikk field. And it has set up a team to focus on improving production efficiency at lower cost on mature developments on the Norwegian continental shelf.

“We continue to capture value from our renewable energy portfolio and position ourselves for profitable growth in value chains for carbon capture and storage. This quarter we announced our partnership with BP, including the divestment of half of our share of offshore wind projects Empire Wind and Beacon Wind in the US. We are progressing H2H Saltend, a project for large-scale production of hydrogen in the UK, and in Norway we are progressing the Northern Lights project as part of creating full value chains for carbon capture, transportation and storage,” Saetre said.

Equity production was 1.994mn barrels of oil equivalent (boe)/day, up from 1.909mn boe/d in the same period in 2019, with an increased share of gas. On a like-for-like basis this was up by about 9% on Q3 2019. Adjusted exploration expenses in the quarter were $0.30bn, compared with $0.26bn in the same quarter of 2019.

Cash flow for the first nine months was down about a third year on year, at $10.2bn before tax and changes in working capital and organic capital expenditure was $5.99bn for the first nine months of 2020. 

The quarter ended with the fire at a turbine in the Hammerfest LNG plant, which led to a police investigation into the causes early October, aided by the petroleum safety authority.