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was negative USD 2.41 billion, following net impairments of USD 1.30 billion and
a write down of USD 0.98 billion related to the Tanzania LNG project.
2020 was characterised by:
- Results impacted by low oil and gas prices
- Solid operational performance during extraordinary circumstances
- Positive cash flow in a low-price environment
- Delivering USD 3.7 billion in capex and cost reductions, well above ambition
for the action plan to strengthen financial resilience
- Progressing and capturing value within renewables
- Setting ambition to be a net-zero energy company by 2050 to create value as
a leader in the energy transition
“Our results are impacted by the market turmoil during the year, but with strong
cost improvements and capital discipline we delivered positive net cash flow for
the quarter and the full year. During 2020 we have delivered more than 3.7
billion dollars in savings, well above our ambition for the action plan we
launched in March to strengthen financial resilience. We are well positioned for
value creation and strong cash flow in 2021 and the coming years,” says Anders
Opedal, President and CEO of Equinor ASA.
“I am impressed by how the organisation has responded, delivering strong
operational performance and production growth in a long-lasting challenging
situation during the pandemic. We are increasing production volumes from Johan
Sverdrup even further, and we used our flexibility to have high gas production
as gas prices increased in the quarter. In addition, we have started production
from Snorre Expansion ahead of time and well below cost estimates,” says Opedal.
“Equinor is committed to ensuring long-term competitiveness and creating value
as a leader in the energy transition, setting an ambition to be a net-zero
energy company by 2050. During 2020 we delivered significant progress in our
renewables portfolio, taking the investment decision for Dogger Bank A and B,
winning the largest ever offshore wind award in the US, starting construction at
Hywind Tampen and capturing value from transactions. We are also taking actions
to optimise within oil and gas, building a more robust portfolio for the future,
but resulting in a write down in Tanzania and an impairment related to an
operated US onshore asset in the quarter,” says Opedal.
Adjusted earnings [5] were USD 0.76 billion in the fourth quarter, down from USD
3.55 billion in the same period in 2019. Adjusted earnings after tax [5] were
negative USD 0.55 billion, down from USD 1.19 billion in the same period last
year. Low prices for liquids impacted the earnings for the quarter.
Equinor launched an action plan of USD 3 billion in March 2020 to strengthen
financial resilience, including a reduction in operating costs of USD 0.70
billion. Delivery on the plan resulted in savings of more than USD 3.7 billion,
including a reduction in fixed operating costs of around USD 1 billion. Unit
production costs are reduced by 5% since 2019, realising the 2021 ambition
already in 2020.
In the E&P Norway segment, Equinor realised weaker liquids prices and the
production was reduced mainly as a result of turnarounds moved to fourth quarter
due to the ongoing pandemic.
Results in the E&P International segment were impacted by low prices and the
impairment of the Tanzania LNG project of USD 0.98 billion. The E&P USA segment
was also impacted by weak prices, partially offset by significant reductions in
operating costs.
The Marketing, midstream and processing segment captured value from strong
trading results from gas to Europe, partially offset by low refinery margins and
shutdown of production at Hammerfest LNG plant.
New energy solutions delivered high availability on offshore wind assets. A
capital gain of around USD 1 billion is expected to be booked from the
divestment of a 50% non-operated interest of the offshore wind projects Empire
Wind and Beacon Wind in the US. A capital gain from the farm down of 10% equity
interest in Dogger Bank A and B in the UK is expected to be booked in the first
quarter of 2021.
IFRS net operating income was negative USD 0.99 billion in the fourth quarter,
down from positive USD 1.52 billion in the same period in 2019. IFRS net income
was negative USD 2.42 billion in the fourth quarter, compared to negative USD
0.23 billion in the fourth quarter of 2019. Net operating income was negatively
impacted by net impairments of USD 1.30 billion, mainly relating to a refinery
as a result of reduced margin assumptions and some increase in cost estimates,
and to an operated unconventional onshore asset in North America due to
reclassification as held for sale.
Equinor delivered total equity production of 2,043 mboe per day in the fourth
quarter, down from 2,198 mboe per day in the same period in 2019, with a minor
increase in gas share due to high flexible production in gas fields. Adjusting
for portfolio transactions the production growth for 2020 was 2.4%.
In 2020, Equinor completed 34 exploration wells with 16 commercial discoveries
and 1 well under evaluation. At year end, 12 wells were ongoing. Adjusted
exploration expenses in the fourth quarter were USD 1.25 billion, compared to
USD 0.44 billion in the same quarter in 2019.
The proved reserves replacement ratio (RRR) was negative 5% in 2020, following
capital discipline and the prioritisation of financial flexibility during market
uncertainty, with a three-year average of 95%. With 5.26 billion barrels in
proved reserves, Equinor’s reserves to production ratio (R/P) was 7.4 years.
Cash flows provided by operating activities before taxes paid and changes in
working capital amounted to USD 14.0 billion in 2020, compared to USD 21.8
billion in 2019. Organic capital expenditure [5] was USD 7.8 billion for 2020.
At year end, net debt to capital employed(1) was 31.7%, stable from 31.6% at the
end of the third quarter of 2020. Following the implementation of IFRS 16, net
debt to capital employed(1) was 37.3%.
The board of directors proposes to the annual general meeting a cash dividend of
USD 0.12 per share for the fourth quarter 2020.
Average CO2-emissions from Equinor’s operated upstream production, on a 100%
basis, was 8.0 kg per barrel in 2020.
The twelve-month average Serious Incident Frequency (SIF) for 2020 was 0.5, down
from 0.6 in 2019. The twelve-month average Recordable Injury Frequency (TRIF)
was 2.3 for 2020, compared to 2.5 in 2019.
(1) This is a non-GAAP figure. Comparison numbers and reconciliation to IFRS are
presented in the table Calculation of capital employed and net debt to capital
employed ratio as shown under the Supplementary section in the report.
[5] These are non-GAAP figures. See Use and reconciliation of non-GAAP financial
measures in the report for more details. For ROACE, see table Calculated ROACE
in the Supplementary disclosures for more details.
Further information from:
Investor relations
Peter Hutton, senior vice president Investor relations,
+44 7881 918 792 (mobile)
Helge Hove Haldorsen, vice president Investor Relations North America,
+1 281 224 0140 (mobile)
Press
Bård Glad Pedersen, vice president Media relations,
+47 918 01 791 (mobile)
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act
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