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The third quarter of 2021 was characterised by:
- Strong results due to higher prices and solid operating performance
- Very strong cash flow and continued improvement of adjusted net debt
ratio(1) to 13.2%.
- Optimising gas production and Troll Phase 3 brought on stream
- Cash dividend of USD 0.18 per share and increasing second tranche of share
buy-back from USD 300 million to USD 1 billion
âWe capture value from the higher commodity prices and with a solid operational
performance we deliver strong results. Strict capital discipline and a very
strong net cash flow strengthen our balance sheet and improve our adjusted net
debt ratio to 13.2%,â says Anders Opedal, President and CEO of Equinor ASA.
âThe global economy is in recovery, but we are still prepared for volatility
related to the impact of the pandemic. The current unprecedented level and
volatility in European gas prices underlines the uncertainty in the market.
Equinor has an important role as a reliable energy provider to Europe and we
have taken steps to increase our gas exports to respond to the high demand,â
says Opedal.
âThe highly profitable Troll Phase 3 was brought on stream and Martin Linge has
been ramping up, both supplying gas to Europe with low emissions from
production. Our large offshore wind projects are progressing according to plan.
Together with our partners, we reached an important milestone with the East
Coast Cluster in the UK named as one of the two first carbon capture, usage and
storage clusters in the country. In Norway, we launched a plan for industry
cooperation for the transition of the Norwegian Continental Shelf as an energy
hub in a low carbon future,â says Opedal.
Adjusted earnings [5] were USD 9.77 billion in the third quarter, up from USD
0.78 billion in the same period in 2020. Adjusted earnings after tax [5] were
USD 2.78 billion, up from USD 0.27 billion in the same period last year.
IFRS net operating income was USD 9.57 billion in the third quarter, up from
negative USD 2.02 billion in the same period in 2020. IFRS net income was USD
1.41 billion in the third quarter, compared to negative USD 2.12 billion in the
third quarter of 2020. Net operating income was impacted by higher prices for
gas and liquids, significant positive effects from derivatives mainly related to
European gas, and net reversal of impairments of USD 0.51 billion including a
reversal of USD 0.98 billion related to an offshore asset in E&P Norway and an
impairment of USD 0.48 billion related to a refinery in the Marketing, midstream
and processing segment.
The results of all E&P segments are positively impacted by the higher commodity
prices. Strong operational performance, continued improvement focus and strict
capital discipline supported additional value creation and strong cash flow.
Based on updated estimates, taxes to be paid on the Norwegian Continental Shelf
in the fourth quarter are expected at around USD 6.32 billion(2), of which USD
4.99 billion was paid on 1 October. Half of the petroleum taxes to Norway
related to 2021 will be paid in the first half of 2022.
E&P Norway also benefitted from a positive contribution from new fields in
production. With only one tax payment based on previously lower price
expectations, E&P Norway contributed significantly to the group cash flow in the
quarter.
The Marketing, midstream and processing segment delivered high results mainly
due to the mark to market impact of derivatives related to gas sales to Europe.
These gains will be followed by losses in the segment when volumes are delivered
under the long-term contracts.
The decision to take derivative positions has been beneficial to the group but
created volatility in this segment. In addition to the effect from the
derivatives related to the European gas market, the results were positively
impacted by solid results from North American gas.
Compared to the same quarter last year the Renewables segment experienced lower
winds for the offshore wind assets, partially offset by high availability and
higher electricity prices. From the third quarter Equinor has decided to change
its policy and will exclude gains and losses from sales of assets from the
adjusted earnings for the Renewables segment.
Equinor delivered total equity production of 1,996 mboe per day in the third
quarter, up from 1,994 mboe per day in the same period in 2020. Production from
a new field and increased production from Johan Sverdrup, as well as solid
production efficiency and optimised gas production was partially offset by the
divestment of Bakken and the shutdown of Hammerfest LNG. Equity production of
renewable energy for the quarter was 304 GWh, down from 319 GWh for the same
period last year, impacted by lower wind than the seasonal average.
At the end of third quarter 2021, Equinor had completed 17 exploration wells
with 6 commercial discoveries and 11 wells were ongoing. Adjusted exploration
expenses in the third quarter were USD 0.21 billion, compared to USD 0.30
billion in the same quarter of 2020.
Cash flows provided by operating activities before taxes paid and changes in
working capital amounted to USD 10.80 billion for the third quarter, compared to
USD 3.34 billion for the same period in 2020. Organic capital expenditure [5]
was USD 5.89 billion for the first nine months of 2021. At the end of the
quarter adjusted net debt to capital employed (3) was 13.2 %, down from 16.4% in
the second quarter of 2021. Including the lease liabilities according to IFRS
16, the net debt to capital employed (3) was 20.2%.
The board of directors has declared a cash dividend of USD 0.18 per share for
the third quarter of 2021.
In the quarter Equinor completed the market transactions of the first tranche of
the share buy-back program for 2021 with a total value of USD 99 million. This
corresponds to USD 300 million in total, including shares to be redeemed from
the Norwegian State and annulled.
Based on favourable commodity price conditions, strong cash flow generation and
an adjusted net debt ratio(3) of 13.2% the board of directors has decided to
increase the size of the second tranche of the share buy-back, from an
indicative level of USD 300 million communicated at the Capital Market Day in
June, to USD 1 billion, including shares to be redeemed from the Norwegian
State. The second tranche commences on 27 October and will end no later than 31
January 2022.
The twelve-month average Serious Incident Frequency (SIF) for the period ending
30 September was 0.4 for 2021, down from 0.5 in 2020. The twelve-month average
Recordable Injury Frequency (TRIF) for the period ending 30 September was 2.5,
up from 2.3 in 2020.
Further information from:
Investor relations
Peter Hutton,
Senior vice president Investor relations,
+44 7881 918 792 (mobile)
Press
Sissel Rinde,
vice president Media relations,
+47 412 60 584 (mobile)
(1) (3) 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.
(2) Based on USD/NOK exchange rate of 8.78
[5] These are non-GAAP figures. See Use and reconciliation of non-GAAP financial
measures in the report for more details.
This information is subject to the disclosure requirements pursuant to Section
5-12 of the Norwegian Securities Trading Act
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