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Equinor announces 1Q20 results

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Oilfield Technology,

Equinor has reported adjusted earnings of US$2.05 billion, down from US$4.19 billion in the same period in 2019,  and US$0.56 billion after tax in 1Q20, down from US$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 US$0.06 billion and the IFRS net income was negative US$0.71 billion, following net impairments of US$2.45 billion.

In 1Q20, Equinor announced a plan for reducing costs for 2020 by around US$700 million compared to original estimates. Operating costs in 1Q20, were improved from last quarter and the company sees lower unit production costs. For E&P Norway Equinor saw lower prices with increased production and high regularity. Results in the E&P International segment were impacted by the low prices on both gas and liquids, despite a slight reduction of operating costs and increase in production. The Marketing, Midstream and Processing segment reported strong results from European natural gas offset by the effects of weak refinery margins and product trading in a demanding volatile market. Equinor delivered record high electricity production from the renewable business.

IFRS net operating income was US$0.06 billion in 1Q20, down from US$4.73 billion in 1Q19. IFRS net income was negative US$0.71 billion in 1Q20, down from positive US$1.71 billion in 1Q19. Net operating income was impacted by net impairment charges of US$2.45 billion, of which US$0.86 billion relates to assets at the Norwegian continental shelf and US$1.40 billion to the international portfolio. Impairments are mainly triggered by reduction in short-term price assumptions.

Equinor delivered record high total equity production of 2.23 million boe/d in 1Q20, up 3% from the same period in 2019. The flexibility in the gas fields was used to defer production into periods with higher expected gas prices. Successful rampup of new fields as well as new well capacity, contributed to growth in production. The ramp- up of Johan Sverdrup contributes significantly to the increased production in the quarter, and the field reached a higher plateau production level at 470 000 boe per day in late April. Equinor expects to deliver an average annual production growth of around 3% from 2019 to 2026. Due to market uncertainties, government-imposed production curtailments and Equinor’s value over volume approach, Equinor has suspended further production guidance for 2020.

At the end of 1Q20 Equinor has completed 5 exploration wells with 3 commercial discoveries, and 17 wells were ongoing. Adjusted exploration expenses in the quarter were US$0.30 billion, compared to US$0.27 billion in 1Q19.

Cash flows provided by operating activities before taxes paid and changes in working capital amounted to US$4.50 billion in 1Q20, compared to US$6.45 billion in 2019. Organic CAPEX was US$2.3 billion for the three first months of 2020. Equinor expects an organic CAPEX of around US$8.5 billion for 2020 and is updating its organic CAPEX expectation for 2021 to around US$10 billion. At the closing of the quarter net debt to capital employed was 25.8%, up two percentage points mainly as a result of currency impact on equity. Following the implementation of IFRS 16, net debt to capital employed was 31.3%.

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