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Norwegian Equinor’s profits crash by 98% due to oil price slump

Norwegian Equinor’s profits crash by 98% due to oil price slump

Oslo, May 8 - Neftegaz.RU. Equinor saw its profits slide by 98% as the Covid-19 pandemic and oil price crash took effect.

Adjusted earnings were $2.05 billion in the 1st quarter, down from $4.19 billion in the same period in 2019. Adjusted earnings after tax were $0.56 billion, down from $1.54 billion in the same period last year. Lower prices for both liquids and gas impacted the earnings for the quarter.

IFRS net operating income was $0.06 billion in the 1st quarter, down from $4.73 billion in the same period of 2019. IFRS net income was negative $0.71 billion in the 1st quarter, down from positive $1.71 billion in the 1st quarter of 2019.

Net operating income was impacted by net impairment charges of $2.45 billion, of which $0.86 billion relates to assets at the Norwegian continental shelf and $1.40 billion to the international portfolio. Impairments are mainly triggered by reduction in short-term price assumptions.

Despite achieving record high production in the 1st quarter of 2020, partly due to the Mariner field in the UK, CEO Eldar Saetre said Equinor will “prioritise value over volume” going forward.

Equinor has already started activity reductions, particularly in the US onshore, and will consider more as necessary. The firm has scrapped any further production guidance for the rest of the year due to the crisis, but said it expects annual growth of 3% on average between 2019 and 2026.

Equinor already announced a $3 billion “action plan” to deal with the economic crisis, including cancelling its share buyback programme and cutting the shareholder dividend by two-thirds.

Saetre said: “Our financial results in the quarter were impacted by the lower commodity prices. However, we delivered strong operational performance with record high production and solid cash flow under these market conditions. Uncertainty remains high with very low commodity prices and increased differentials towards the end of first quarter and in the start of the 2nd quarter."

To read the article in Russian.