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    Equinor's US business sees reversal in fortune


The company's US business earned six times more in the first six months of 2022 versus the same period last year.

by: NGW

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Equinor's US business sees reversal in fortune

Equinor reported on August 31 that its US upstream portfolio was now generating some of its highest-value production, a year and a half after the company downscaled that business after incurring billions of dollars of losses on its investments.

The company produced 332,000 barrels of oil equivalent/day in the first six months of this year in the US, marking a 18% decline year/year due to the sale of its Bakken assets in April 2021. But despite this dip, the company still earned six times more in period, $2.2bn.

Equinor sold its Bakken assets to US private equity firm EnCap Investments for $900mn – a mere fraction of what it paid for them a decade earlier. The company entered the US at a time when there was significant hype about the country's shale sector, but shale producers were left reeling after the 2014 oil price collapse, and again after the coronavirus pandemic triggered a market downturn in 2020. 

Equinor CEO Anders Opedal lamented in February last year that the company "should not have made these investments," as it expanded in the US at a time when "higher oil prices were expected in the future." Prices are once again soaring, however, amid the global energy crisis that has been exacerbated by reductions in Russian oil and gas exports.

"After a repositioning, I am pleased to see that our portfolio is delivering record high cash flow back to the company," Equinor's vice president for international upstream, Chris Golden, said in a statement.

Equinor wrote off some $11.5bn from the value of its US shale assets last year, including $8bn at Bakken and the remainder at the Eagle Ford formation in Texas. It sold the latter position to Spain's Repsol in 2019 for $325mn.

The state-owned company's previous losses in the US drew scrutiny from Norwegian lawmakers, prompting an independent review by PWC to be commissioned. The review concluded that the company had based its decisions on overly optimistic price assumptions and should have addressed problems sooner.