Equinor releases 1Q21 results
Published by Nicholas Woodroof,
IFRS net operating income was US$5.22 billion, up from US$0.06 billion in the same period in 2020. The IFRS net income was US$1.85 billion, compared to negative US$0.71 billion in 1Q20. Net operating income was impacted by higher prices for gas and liquids, gains from transactions, and lower impairments of US$0.43 billion in 1Q21.
“With sustained improvements and capital discipline, we are able to capture value from recovering oil and gas prices and achieve our best quarterly results since 2014. We deliver a net cash flow above 5 billion dollars and reduce our adjusted net debt ratio to below 25 percent. The forceful response and solid operational performance delivered by our organisation during the pandemic is providing for a strong position for safe operations, value creation and cash flow generation in 2021 and going forward,” said Anders Opedal, President and CEO of Equinor ASA.
“Equinor aims to be a leader in the energy transition and during the quarter we strengthened our position within offshore wind with the awarded offtake contracts from New York State for Empire Wind 2 and Beacon Wind 1. We also booked capital gains of around 1.4 billion dollars from farm downs, demonstrating our ability to create value from accessing and maturing renewable projects. Within low carbon solutions we have started construction of the Northern Lights terminal and secured funding for three low carbon projects in the UK”, said Opedal.
Adjusted earnings were US$5.47 billion in the first quarter, up from US$2.05 billion in the same period in 2020. Adjusted earnings after tax were US$2.66 billion, up from US$0.56 billion in the same period last year.
Higher realised prices for gas and liquids positively impacted the results from all upstream segments, further supported by sustained costs improvements and strict capital discipline.
Results from the marketing, midstream and processing segment were impacted by losses on derivatives for gas forward sales, shut down of the Hammerfest LNG plant and weak refinery margins.
The renewables segment delivered strong financial results with a capital gain from farm downs of around US$1.4 billion, included in both IFRS and adjusted results, from the divestments of a 50% non-operated interest in the offshore wind projects Empire Wind and Beacon Wind in the US and a 10% equity interest in the Dogger Bank A and B in the UK.
Equinor delivered total equity production of 2.16 million boe/d in 1Q21, down from 2.23 million boe/d in 1Q20. Shut down of the Hammerfest LNG plant and maintenance at Peregrino were partially offset by higher flex gas volumes, increased gas volumes from the US onshore and increased production from Johan Sverdrup and Snorre Expansion. Equity production of renewable energy for the quarter was 450 GWh, down from 558 GWh for the same period last year, impacted by lower winds than expected for the season.
At the end of 1Q21, Equinor has completed 5 exploration wells with 4 commercial discoveries and 11 wells were ongoing. The 4 discoveries at the Norwegian continental shelf have added around 60 million boe net to Equinor near existing infrastructure. Adjusted exploration expenses in 1Q21 were US$0.23 billion, compared to US$0.30 billion in 1Q20.
Cash flows provided by operating activities before taxes paid and changes in working capital amounted to US$6.62 billion for the first quarter, compared to US$4.50 billion for the same period in 2020. Organic capital expenditure was US$1.96 billion for the first three months of 2021. At quarters end, net debt to capital employed was 24.6%, down from 31.7% last quarter. Including the lease liabilities according to IFRS 16, the net debt to capital employed was 30.6%.
The board of directors has decided a cash dividend of US$0.15 per share for 1Q21.
The safety statistics for the first quarter of 2021 indicate fewer serious incidents and personal injuries in Equinor compared to the same period last year. The twelve-month average Serious Incident Frequency (SIF) for the period ending at 31 March was 0.5 for 2021, down from 0.6 in 2020. The twelve-month average Recordable Injury Frequency (TRIF) for the period ending at 31 March was 2.3 for 2021, down from 2.4 in 2020.
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