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The first quarter of 2022 was characterised by:
- The invasion of Ukraine impacting already tight energy markets, increasing
commodity prices and volatility.
- Strong operational performance and increased production of gas to Europe to
support energy security.
- Very strong adjusted earnings and free cash flow* of USD 12.7 billion.
- Announced process for exiting Russia leading to an impairment of USD 1.08
billion.
- Continued progress on all strategic priorities with continued cost focus and
capital discipline.
- Cash dividend of USD 0.20 per share, continued extraordinary cash dividend
of USD 0.20 per share and second tranche of share buy-back of around USD
1.33 billion.
“The invasion of Ukraine stands as a dark moment for Europe and our thoughts are
with all suffering the consequences of the brutal war. After having been in
Russia for three decades, we saw the situation as untenable and acted decisively
by stopping new investments into Russia and by starting the process of exiting
Equinor’s Russian joint ventures. Exiting Russia will heavily impact our
employees, and it leads to impairments of our assets in the country this
quarter”, says Anders Opedal, president and CEO of Equinor ASA.
“With an energy crisis in Europe, Equinor’s top priority is securing safe and
reliable deliveries. Strong operational performance and good regularity gave
high production in the quarter. We have optimised the gas production to deliver
higher volumes, and Hammerfest LNG is on track for a safe start-up on 17 May.
Further, continued capital discipline and cost focus enabled us to deliver very
strong financial results and cash flow, strengthening the balance sheet”, says
Opedal.
“Equinor is developing as a leading company in the energy transition with
forceful industrial progress within oil and gas, renewables, as well as low-
carbon portfolios. On the Norwegian continental shelf the fifth and final
platform at the Johan Sverdrup field is installed and the turbines for the
floating wind farm Hywind Tampen are currently being assembled. Equinor has been
awarded licences and operatorships for the development of two CO2 storage sites,
an important milestone in the work to make the Norwegian continental shelf a
leading province in Europe for CO2 storage. In Brazil the production from the
first wells for increased recovery at Roncador is on stream”, says Opedal.
Strong financial results from higher prices
Energy prices increased in the quarter, as Russia’s invasion of Ukraine added to
the uncertainty in already tight markets, in particular for European gas.
Equinor realised higher prices for liquids and gas and delivered adjusted
earnings* of USD 18.0 billion in the quarter, up from USD 4.09 billion in the
same period in 2021. Adjusted earnings after tax* were USD 5.18 billion, up from
USD 1.29 billion in the same period last year.
On 28 February Equinor announced its decision to stop new investments into
Russia and to start the process of exiting its Russian joint ventures. We have
recognised net impairments of USD 1.08 billion related to assets in Russia this
quarter.
The Marketing, Midstream and Processing segment results were impacted by adverse
effects of fair value accounting of price risk management derivatives. The
negative effects were partially offset by strong trading results including a
strong result from Danske Commodities.
IFRS net operating income was USD 18.4 billion in the quarter, up from USD 5.22
billion in the same period in 2021. IFRS net income was USD 4.71 billion in the
quarter, compared to USD 1.85 billion in the first quarter of 2021. The net
impairment reversal of USD 0.27 billion includes impairment reversals of USD
0.82 billion in the E&P Norway segment and USD 0.53 billion in the E&P USA
segments, mainly due to the short-term commodity prices.
Strong operational performance with good regularity gave high production across
all segments.
Strong operational performance and high production, as well as optimised
production to deliver more gas to Europe, supported increased value creation in
the quarter.
Equinor delivered a total equity production of 2,106 mboe per day in the first
quarter, down from 2,168 mboe per day in the same period in 2021.
E&P Norway increased production by 4%, including an increase of gas to Europe of
10%, supporting a gas share of Equinor’s equity production of 50%. Production
from Martin Linge and increased production from Gina Krog and Gullfaks partially
offset the effects of expected decline and sale of Bakken in the US.
The Renewable segment delivered equity production of 511 GWh in the quarter, up
from 451 GWh for the same period last year, due to the production from the
Guanizuil IIA solar plant in Argentina and the offshore wind farms benefitting
from higher wind speeds.
In the first quarter Equinor completed 4 exploration wells offshore with no
commercial discoveries and 4 wells were ongoing at quarter end.
Very strong cash flow and continued capital discipline further strengthening the
balance sheet
Cash flows provided by operating activities before taxes paid and changes in
working capital amounted to USD 20.1 billion for the first quarter, compared to
USD 6.62 billion for the same period in 2021. Organic capital expenditure* was
USD 1.80 billion for the quarter.
At the end of the quarter adjusted net debt to capital employed* was negative
22.2%, further down from negative 0.8% in the fourth quarter of 2021. The one
tax instalment of NCS taxes paid in the quarter relates to 2021 results.
Including the lease liabilities according to IFRS 16, the net debt to capital
employed* was negative 10.7%.
Competitive capital distribution
The board of directors has decided a cash dividend of USD 0.20 per share, and to
continue the extraordinary cash dividend of USD 0.20 per share for the first
quarter of 2022, in line with communication at the Capital markets update in
February.
Based on the very strong first quarter results, the strength of the balance
sheet, and the outlook, the board has decided to initiate a second tranche of
the share buy-back programme of around USD 1.33 billion. This is in line with
communication at the Capital markets update of executing a share buy-back
programme for 2022 of up to USD 5 billion, and subject to authorisation from the
Annual General Meeting on 11 May 2022. The second tranche will commence on 16
May and will end no later than 26 July 2022.
The first tranche of the share buy-back programme for 2022 was completed on 25
March 2022 with a total value of USD 1 billion.
The first quarter 2022 capital distribution is based on a continuation of high
commodity prices from second half of 2021 and strong earnings into first quarter
of 2022.
All share buyback amounts include shares to be redeemed by the Norwegian State.
Emissions and serious incidents frequency
Average CO2-emissions from Equinor’s 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 of 2021.
The twelve-month average serious incident frequency (SIF) was 0.5, unchanged
from the first quarter in 2021.
- 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.
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)
This information is subject to the disclosure requirements pursuant to Section
5-12 of the Norwegian Securities Trading Act
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