Equinor Reports Surprise Profit in its Second Quarter 2020 results

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Equinor reports adjusted earnings of USD 0.35 billion and USD 0.65 billion after tax in the second quarter of 2020. IFRS net operating income was negative USD 0.47 billion and the IFRS net income was negative USD 0.25 billion.

The second quarter was characterised by:
  • Financial results impacted by the Covid-19 pandemic and very low commodity prices.
  • Strong trading results, capturing significant value in volatile markets.
  • Overall solid operational performance and cost reductions.
  • After-tax results positively impacted by temporary tax changes in Norway.
  • Net debt ratio(1) increased to 29.3% due to very low commodity prices and tax payments from 2019 earnings.

“Our financial results for the second quarter were impacted by very low realised oil and gas prices due to the Covid-19 pandemic, but also by a strong trading performance in volatile markets. We now see the gradual reopening of society in some parts of the world, while other regions are still heavily impacted by the pandemic.

Equinor Reports Surprise Profit in its Second Quarter 2020 results - Brand Spur
FILE PHOTO: A logo of Equinor is seen at the company’s headquarters in Fornebu, Norway May 21, 2018. REUTERS/Nerijus Adomaitis/File Photo

Equinor has taken forceful actions to protect the safety of our people and to contribute positively to society and mitigate the spread of the virus. We have also been able to maintain stable operations and implemented several measures to safeguard our financial strength,” says Eldar Sætre, President and CEO of Equinor ASA.

“We have reduced costs, maintained solid operational performance and continued to prioritise value over volume by deferring significant flexible gas production to periods with higher expected prices.

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We also continued to progress our highly competitive project portfolio, supported by active policy measures in Norway enabling the industry to continue to work on planned projects that will stimulate new investments and maintain activity in a challenging period.

Since the start of the quarter, we have signed contracts and framework agreements for more than 10 billion kroner to competitive suppliers in Norway,” says Sætre.

“We expect market volatility to continue going forward. The long-term market implications from Covid-19, with possible lower demand and reduced investments in the industry, remain uncertain.

However, Equinor’s strategic direction remains firm and we are committed to developing Equinor as a broad energy company to create value in a low carbon future.

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Together with our partners, we have taken positive investment decisions for transportation and storage of CO2 in the Northern Lights project and for the Sleipner field to be partly electrified with renewable energy from shore,” says Sætre.

Adjusted earnings were USD 0,35 billion in the second quarter, down from USD 3.15 billion in the same period in 2019. Adjusted earnings after tax were USD 0.65 billion, down from USD 1.13 billion in the same period last year.

Very low realised prices for both liquids and gas impacted the earnings for the quarter, while trading operations in volatile markets captured significant value.

Equinor is on track to deliver on the announced plan for reducing costs for 2020 by around USD 700 million compared to original estimates. Upstream operating costs and unit production costs are significantly reduced from the second quarter of 2019.

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For E&P Norway Equinor saw very low commodity prices and production was impacted by deferring significant gas volumes to later periods to capture higher expected value, as well as government, imposed oil production curtailments.

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As from the second quarter, Equinor has established E&P USA as a separate reporting segment. Results in this segment were impacted by very low commodity prices, while significant cost reductions contributed positively. Results in the E&P International segment (excluding E&P USA) were also impacted by low prices, despite a reduction of operating costs.

The Marketing, midstream and processing segment delivered a record high result in the quarter, particularly from crude oil and liquids trading where values were extracted from a market in contango and ability to utilise the asset portfolio. In addition, there was a positive contribution from the renegotiations of gas contracts.

New energy solutions delivered an around neutral result in the quarter, including costs related to maturation of new projects.

IFRS net operating income was negative USD 0.47 billion in the second quarter, down from USD 3.52 billion in the same period of 2019. IFRS net income was negative USD 0.25 billion in the second quarter, down from USD 1.48 billion in the second quarter of 2019.

Net operating income was impacted by net impairment charges of USD 0.37 billion, mainly related to a gas processing plant in Norway and exploration.

Equinor delivered total equity production of 2,011 mboe per day in the second quarter, at the same level as in the same period in 2019, with strong growth in liquids production on the NCS.

Adjusting for portfolio transactions and government-imposed curtailments, this represents a production growth of more than 4% compared to the second quarter of 2019. The flexibility in some gas fields was used to defer significant production into periods with higher expected gas prices.

The successful ramp-up of new fields, including Johan Sverdrup, as well as new well capacity, contributed to growth in production.

At the end of the second quarter, Equinor has completed 15 exploration wells with 6 commercial discoveries and 2 wells under evaluation. 17 wells were ongoing at the quarter-end. Adjusted exploration expenses in the quarter were USD 0.28 billion, compared to USD 0.24 billion in the same quarter of 2019.

Cash flows provided by operating activities before taxes paid and changes in working capital amounted to USD 6.86 billion in the first half of 2020, compared to USD 12.0 billion in the first half of 2019.

Organic capital expenditure [5] was USD 4.11 billion for the first six months of 2020. At the closing of the quarter net debt to capital employed was 29.3%, up from 25.8% at the end of the first quarter, mainly as a result of very low commodity prices and tax payments related to 2019 earnings.

Following the implementation of IFRS 16, net debt to capital employed was 34.7%.

The board of directors has decided a cash dividend of USD 0.09 per share for the second quarter of 2020.

The twelve-month average Serious Incident Frequency (SIF) for the period ending 30 June was 0.6 for 2020, compared to 0.5 in 2019. The twelve-month average Recordable Injury Frequency (TRIF) for the period ending 30 June was 2.3 for 2020, compared to 2.6 in 2019.

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Equinor Reports Surprise Profit in its Second Quarter 2020 results - Brand SpurEquinor Reports Surprise Profit in its Second Quarter 2020 results - Brand Spur

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Equinor Reports Surprise Profit in its Second Quarter 2020 results - Brand SpurEquinor Reports Surprise Profit in its Second Quarter 2020 results - Brand Spur

Latest News

New entrant AECO Energy launches business innovation to deliver ‘last mile of value chain’ to Singapore’s maturing open electricity market

  • AECO Energy announces the launch of its operations in Singapore to provide innovation to the open electricity market for businesses with generation 2.0 of its technology and service offerings.
  • The company will introduce three solutions as part of its initial portfolio, customisable to specific business needs.

SINGAPORE - Media OutReach - 13 April 2021 - AECO Energy, a new entrant to Singapore's electricity sector, has today announced the launch of its operations. AECO Energy will be the first-of-its kind energy technology and services company aimed at innovating customer-centric offerings in electricity and renewable energy markets.

With over 12 years of experience in delivering open market electricity services and solutions to businesses in Australia under the Power Choice brand, AECO Energy is bringing its second generation of services and technology to Singapore for the first time. AECO's second generation delivers on two major offerings.

Firstly, AECO delivers the 'last mile' of value in Singapore Open Electricity Market (OEM) value chain by providing innovative services to assist businesses to manage, plan and make better buying decisions.

AECO is all about enabling increased profits for businesses. AECO has a customer-centric mission to use its low-cost proven technology and expert-led services to enable better business decisions within a complex electricity market with multiple providers and opaque medium- to long-term pricing information. This comes against the backdrop of Singapore's maturing OEM, which gives businesses and consumers the autonomy to buy and choose their electricity providers - the freedom to choose.

AECO Energy's technology platform, MarketPro™ with its unique, electricity futures market simulator Rate Watch™, delivers business and electricity efficiency and empowers businesses through relevant and timely pricing information, while also helping Singapore businesses make better buying decisions via automated tenders and reverse auctions. Moreover, for businesses who do not have the capability and capacity to manage and purchase its own electricity, AECO Energy Portfolio™ delivers scalable buying power with a fully-managed contract management and purchasing aggregation service for small, medium and large businesses.

Alan Jones, CEO, Chairman & Founder, AECO Energy, said: "We are incredibly excited and humbled to be joining Singapore's dynamic energy scene with our low-cost, high-value products and services. Our mission is clear: just like Amazon is revolutionising the 'last mile' of product supply chains with its same day delivery, we are also delivering the 'last mile' of the value chain in Singapore's OEM that enables more businesses better purchasing decisions, more business profitability and growing all of Singapore's economy."

Secondly, with SGX-listed entities, enterprises and multinational corporations (MNCs)' increasing emphasis on sustainability, AECO (through its SustainPro™ offering) will bring for the first-time in Singapore the benefit of AECO's direct relationship with generators of International Renewable Certificates (I-REC). This enables Southeast Asian markets the benefit of medium- to long-term low-cost and structured REC solutions to meet renewable energy targets and sustainability goals. This translates to more profits by providing more predictable costs for businesses in meeting their sustainability and renewable energy goals.

"As a specialised company, unburdened with corporate overheads and distractions from Singapore's local market participants, we can offer companies who are based anywhere in Southeast Asia, sustainability and renewable energy solutions that span markets and countries at a lower and more predictable price. We are honoured to play our part to bring sustainability and increased renewable energy throughout the world and to do so while benefiting our customers' cost structures," continued Mr. Jones.

AECO Energy is introducing three offerings as part of its electricity management solutions:

  • MarketPro™: Businesses can optimise costs and seize market opportunities with exclusive access to customised market price information through AECO Energy's integrated online procurement and management platform equipped with Rate Watch™, a market simulation and automated procurement technology from as low as SGD $149 per month.
  • Portfolio™: Businesses get exclusive access to economies of scale with better buying power through professional and expert-managed energy procurement portfolios overseen by AECO Energy experts. This allows enterprises to focus on their core business while AECO Energy experts will fully-manage their electricity contracts and make better buying decisions on their behalf from as low as an additional SGD $74 per month.
  • SustainPro™: SustainPro focuses on helping businesses meet their sustainability goals at the lowest cost. AECO Energy offers lower costs on the procurement of Renewable Energy Certificates (RECs) and tailored REC supply solutions designed to meet transition needs towards a more sustainable business.

"With the understanding that business needs are unique for every organisation, our energy experts will work closely with customers here in Singapore to help them reduce costs, drive efficiency and make better buying decisions. By providing technology-enabled, insights-driven energy technology solutions, we want to create a profound impact on our customers' businesses to better position them for sustainable growth in the long-term," concluded Alan.

About AECO Energy:

Based in Singapore, the AECO Pacific Group owns and operates the Power Choice and AECO Energy brands. A leading pioneer for more than 12 years in electricity brokerage and consulting services in Asia Pacific focusing on deregulated electricity markets, AECO Pacific helps businesses with electricity procurement and management backed by market intelligence. Transforming and saving businesses more, AECO's combined experience in energy leadership and innovative technology solutions remain unmatched in dynamic and changing energy markets. For more information, visit https://powerchoice.com.au/ and https://aecoenergy.sg/.

Equinor Reports Surprise Profit in its Second Quarter 2020 results - Brand Spur
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