Equinor first quarter 2022
Equinor (OSE: EQNR, NYSE: EQNR) reports first quarter 2022 adjusted earnings of $18.0 billion and $5.18 billion after tax. IFRS net operating income was $18.4 billion and IFRS net income of $4.71 billion.
The first quarter of 2022 was characterized by:
- The invasion of Ukraine impacted already tight energy markets, increasing commodity prices and volatility.
- Strong operational performance and increased gas production to Europe to support energy security.
- Very strong adjusted earnings and free cash flow* of $12.7 billion.
- Announcement of the exit process from Russia leading to a depreciation of $1.08 billion.
- Continuous progress on all strategic priorities with continued cost focus and capital discipline.
- Cash dividend of $0.20 per share, continuation of extraordinary cash dividend of $0.20 per share and second tranche of share buyback of approximately $1.33 billion.
“The invasion of Ukraine is a dark moment for Europe and our hearts go out to all who are suffering the consequences of brutal war. After being in Russia for three decades, we have seen the situation as untenable and have Acted decisively by halting new investments in Russia and initiating the process of exiting Equinor’s Russian joint ventures The exit from Russia will have a material impact on our employees and lead to write-downs of our assets in the country this quarter said Anders Opedal, President and CEO of Equinor ASA.
“With an energy crisis in Europe, Equinor’s top priority is to ensure safe and reliable deliveries. Good operational performance and good regularity enabled high production during the quarter. We have optimized gas production to deliver higher volumes, and Hammerfest LNG is on track for a safe start on May 17. In addition, the continued capital discipline and focus on costs has enabled us to deliver very strong financial results and cash flow, thereby strengthening the balance sheet,” says Opedal.
“Equinor is growing as a leading company in the energy transition with strong industrial advancements in oil and gas, renewable energy, as well as low carbon portfolios. On the Norwegian continental shelf, the fifth and final platform of the Johan Sverdrup field is installed and the turbines of the Hywind Tampen floating wind farm are being assembled. Equinor has been awarded operating licenses and contracts for the development of two CO2 storage sites, an important step in the work to establish the Norwegian continental shelf as a leading province in Europe for CO2 storage. In Brazil, production from the first wells for increased recovery at Roncador is underway,” says Opedal.
Strong financial results thanks to higher prices
Energy prices rose during the quarter as Russia’s invasion of Ukraine added uncertainty to already tight markets, particularly for European gas. Equinor realized higher liquids and gas prices and reported adjusted earnings* of $18.0 billion in the quarter, compared to $4.09 billion in the same period in 2021. Adjusted earnings after tax* s amounted to 5.18 billion USD, compared to 1.29 billion USD in the same period last year.
On February 28, Equinor announced its decision to halt new investments in Russia and begin the process of exiting its Russian joint ventures. We recorded net impairments of $1.08 billion related to assets in Russia this quarter.
The results of the Marketing, Intermediary and Processing segments were affected by the unfavorable effects of accounting for the fair value of price risk management derivatives. The negative effects were partially offset by strong business results, including a strong result from Danske Commodities.
IFRS net operating income was $18.4 billion in the quarter, compared to $5.22 billion in the same period in 2021. IFRS net income was $4.71 billion in the quarter. the quarter, compared to $1.85 billion in the first quarter of 2021. The net impairment reversal of $0.27 billion includes impairment reversals of $0.82 billion in the E&P Norway segment and $0.53 billion dollars in the E&P USA segments, mainly due to short-term commodity prices.
Strong operating performance with good consistency enabled high production in all segments.
Strong operational performance and strong production, as well as production optimized to deliver more gas to Europe, supported increased value creation during the quarter.
Equinor delivered total equity production of 2,106 mboe per day in the first quarter, compared to 2,168 mboe per day in the same period of 2021.
E&P Norway increased production by 4%, including a 10% increase in gas to Europe, supporting a gas share in Equinor’s equity production of 50%. Production from Martin Linge and increased production from Gina Krog and Gullfaks partially offset the effects of the expected decline and sale of Bakken in the United States.
The renewable energy segment delivered equity production of 511 GWh in the quarter, compared to 451 GWh for the same period last year, due to production from the Guanizuil IIA solar power plant in Argentina and offshore wind farms benefiting from higher wind speeds.
In the first quarter, Equinor completed 4 offshore exploration wells with no commercial discoveries and 4 wells were in progress at the end of the quarter.
Very strong cash flow and continued capital discipline further strengthening the balance sheet
Cash flow from operating activities before taxes paid and changes in working capital was $20.1 billion for the first quarter, compared to $6.62 billion for the same period in 2021. Organic investment* was $1.80 billion for the quarter.
At the end of the quarter, adjusted net debt to capital employed* was negative 22.2%, down from -0.8% in the fourth quarter of 2021. The only NCS tax installment paid during the quarter relates to the results of 2021. Including the rental debts according to IFRS 16, the net debt to capital employed* is negative by 10.7%.
Competitive capital allocation
The Board of Directors decided to pay a cash dividend of $0.20 per share and to continue the extraordinary cash dividend of $0.20 per share for the first quarter of 2022, in accordance with the communication during the update. Capital Markets Day in February.
Based on the very strong first quarter results, the strength of the balance sheet and the outlook, the Board of Directors has decided to launch a second tranche of the share buyback program of approximately $1.33 billion. This is in line with the communication during the capital markets update on the execution of a share buyback program for 2022 of up to $5 billion, and subject to the authorization of the annual general meeting of May 11, 2022. The second tranche will begin on May 16 and will end no later than July 26, 2022.
The first tranche of the share buyback program for 2022 was finalized on March 25, 2022 for a total value of $1 billion.
The first quarter 2022 capital distribution is based on continued strong commodity prices from the second half of 2021 and strong earnings in the first quarter of 2022.
All share repurchase amounts include shares to be repurchased by the Norwegian state.
Frequency of emissions and serious incidents
Average CO2 emissions from Equinor-operated upstream production, on a 100% basis, were 6.7 kg per boe in the first quarter, compared to 7.0 kg per boe for the full year 2021.
The year-over-year average serious incident frequency (SIF) was 0.5, unchanged from the first quarter of 2021.
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* This is a non-GAAP figure. The comparative figures and the reconciliation with IFRS are presented in the table Calculation of capital employed and the ratio of net debt to capital employed, as indicated in the Supplementary section of the report.
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More information from:
Peter Hutton, Senior Vice President of Investor Relations,
+44 7881 918 792 (mobile)
Sissel Rinde, Vice President Media Relations,
+47 412 60 584 (mobile)
This information is subject to the disclosure requirements in accordance with Section 5-12 of the Norwegian Securities Act.