Equinor (OSE:EQNR, NYSE:EQNR) delivered adjusted
earnings* of USD 8.68 billion and USD 1.88 billion after tax in the
fourth quarter of 2023. Net operating income was USD 8.75 billion
and net income was USD 2.61 billion.
The fourth quarter and full year were characterised
by:
- Strong financial performance
- 2.1% production growth in 2023
- Continued optimising of oil and gas portfolio, sanctioning
projects for future growth
- Growth in onshore renewables power production and
portfolio
- Cost focus and capital discipline
Competitive capital distribution
- Proposed increase in ordinary cash dividend to USD 0.35 per
share, set ambition to grow quarterly cash dividend by 2 cents per
year
- Proposed extraordinary cash dividend of USD 0.35 per share
- Announced two-year share buy-back programme of USD 10-12
billion, with USD 6 billion for 2024
- Expected total capital distribution in 2024 of USD 14
billion
Equinor is well positioned for profitable growth towards
2035 Key ambitions:
- Stronger cash flow and sustaining competitive returns. Growing
cash flow from operations after tax* towards 2030 and 2035 by
adding material contribution from renewables and low carbon
solutions on top of stable cash flow from oil, gas and
trading.
- Broader energy. Maintaining high oil and gas production,
significant profitable growth in renewable power, decarbonised
energy and CO2 storage.
- Lower emissions. Reducing operated emissions and increasing
production of low carbon energy and CCS to reduce carbon
intensity.
Anders Opedal, president and CEO of Equinor
ASA:
"In 2023 we continued to contribute to energy security in Europe
and delivered 2.1% production growth. Solid operational performance
and cost focus yielded strong financial results and cash flow. We
delivered competitive capital distribution, while investing in a
profitable portfolio that will contribute to future growth."
"Equinor is well positioned to deliver profitable growth. We
expect to grow our cash flow and sustain competitive returns. We
are extending the outlook for stable contribution from oil and gas
to 2035. By 2030 we expect material and rapidly growing cash flow
from our renewables and low carbon business."
"We will provide a broader energy offering with lower emissions.
We aim to grow renewables and decarbonised energy to more than 80
terawatt hours by 2035 and have increased our ambition for carbon
storage."
Strong operational performance
Equinor delivered strong production for the fourth quarter of
2,197 mboe per day, up from 2,046 in the same quarter of 2022,
driving production growth for 2023 to 2.1%, above the updated
guidance of 1.5%.
Equity liquids and gas production was up 14% and 1%
respectively, from the same quarter in 2022. The production
increase was mainly driven by strong production at the Johan
Sverdrup field and new wells in production. The production increase
was also driven by contributions from the international portfolio
with the Peregrino field reaching plateau production and strong
performance from US offshore assets.
Power production from renewable energy sources reached 694 GWh
in the quarter, up 34% from the same quarter last year. This
increase was mainly driven by onshore production from Rio Energy in
Brazil and Wento in Poland, along with production from Hywind
Tampen. In the UK, the world's largest offshore windfarm, Dogger
Bank, delivered first power in the fourth quarter and is currently
ramping up production. Including the UK gas-to-power, total power
production ended at 1,241 GWh for the quarter.
Strong financial results
Equinor delivered strong adjusted earnings* of USD 8.68 billion
and USD 1.88 billion after tax in the fourth quarter. Gas prices
are significantly down compared to the extraordinary price levels
seen in 2022, and more than offset the contribution from increased
production.
In the fourth quarter, Equinor recognised net impairments of USD
328 million, mainly related to the announced sale of assets and
exit from Azerbaijan.
Cash flow provided by operating activities, before taxes paid
and working capital items, amounted to USD 10.89 billion for the
fourth quarter. Cash flow from operations after tax* ended at USD
2.79 billion for the fourth quarter, bringing the cash flow from
operations after tax* to USD 19.7 billion for the year.
Equinor paid two ordinary NCS tax instalments in the fourth
quarter and an extra instalment in October, totalling at USD 7.9
billion. One ordinary instalment of USD 3.7 billion 1), will be
paid in the first quarter of 2024.
Organic capital expenditure* was USD 2.99 billion for the
quarter, and USD 10.2 billion for the full year. Total capital
expenditure was USD 3.77 billion for the fourth quarter and USD
14.5 billion for 2023.
After taxes, capital distribution to shareholders and
investments, net cash flow* ended at negative USD 3.26 billion for
the fourth quarter and at negative USD 8.34 billion for the full
year. Equinor retains a strong financial position with adjusted net
debt to capital employed ratio* at negative 21.6% by the end of the
fourth quarter, compared to negative 22.9% at the end of the third
quarter of 2023.
Progressing on strategy and enabling future
growth
As the largest energy provider to Europe, Equinor continues to
develop its broad portfolio to contribute to energy security.
On the NCS Equinor increased its ownership share to 50% in the
Linnorm discovery in the Norwegian Sea, which is the largest
undeveloped gas discovery on the NCS. The Breidablikk field ramped
up successfully towards its plateau production of around 60 mboe
per day at 100%. In a response to Europe’s need for long-term,
reliable energy supply, Germany’s state owned energy company SEFE
entered into a long-term gas sales agreement with Equinor. Under
the contract Equinor will deliver 10 bcm of gas annually at least
to 2034 and pursue large scale hydrogen supplies. Equinor made
final investment decision on the partner-operated Sparta field in
the US Gulf of Mexico, the third large investment decision in the
international upstream business of the year. The Sparta field has
estimated resources above 250 million boe and is designed for a
production capacity of 100 mboe per day. Equinor continued to focus
its international oil and gas, with the announced sale of assets in
Nigeria and Azerbaijan. These assets have delivered profitable
production to Equinor over the last decades.
In the UK, operations recently started at Blandford Road battery
asset, the company’s first commercial power storage asset. Danske
Commodities will provide market access and optimisation, providing
further value creation in a power market with a high share of
intermittent renewable power.
Equinor has announced its intention to take full ownership of
the Empire Wind projects in the US through a swap transaction with
bp, where bp takes full ownership to the Beacon Wind projects.
Equinor completed 12 exploration wells offshore with 9
commercial discoveries in the quarter. At the quarter end, 4 wells
were ongoing.
In 2023 Equinor added proved reserves mainly through sanctioning
of new field developments, resulting in an organic reserve
replacement ratio (RRR) of 104%, and an organic three-year average
of 107%, excluding purchase and sales.
Equinor progressed several projects to reduce emissions from
production, and the average CO2-emission from the operated upstream
production, on a 100% basis, was 6.7 kg per boe for 2023. Absolute
greenhouse gas emissions scope 1 and 2 was 11.6 tonnes
CO2 equivalents for the full year.
The twelve-month average serious incident frequency (SIF) for
2023 was 0.4, stable from the previous year.
Competitive capital distribution
The board of directors proposes to the annual general meeting on
14 May 2024 an ordinary cash dividend of USD 0.35 per share for the
fourth quarter 2023, an increase of USD 0.05 per share from the
third quarter of 2023, and sets an ambition to grow the quarterly
cash dividend by 2 cents per year. Based on the strong earnings in
2023 and the robust financial position of the company, the board of
directors further proposes an extraordinary cash dividend of USD
0.35 per share for the fourth quarter of 2023. Equinor share will
trade ex-dividend on Oslo Børs and New York Stock Exchange from and
including 15 May 2024.
The interim cash dividends for the first, second and third
quarter of 2024, to be decided by the board of directors on a
quarterly basis in line with the company’s dividend policy, subject
to existing and renewed authorisation from the annual general
meeting, are expected to be at the same level as for the fourth
quarter of 2023.
The fourth tranche of the share buy-back programme for 2023 was
completed on 19 January 2024 with a total value of USD 1.67
billion. Following this, the total share buy-backs under the share
buy-back programme for 2023 amounts to USD 6 billion.
The board of directors has decided to announce a two-year share
buy-back programme for 2024-2025 of USD 10-12 billion in total,
with up to USD 6 billion for 2024. The share buy-back programme
will be subject to market outlook and balance sheet strength. The
first tranche of up to USD 1.2 billion of the 2024 share buy-back
programme will commence on 8 February and end no later than 5 April
2024. Commencement of new share buy-back tranches after the first
tranche in 2024 will be decided by the board of directors on a
quarterly basis in line with the company’s dividend policy and will
be subject to existing and new board authorisations for share
buy-back from the company’s annual general meeting and agreement
with the Norwegian State regarding share buy-back.
Capital markets update: Profitable growth towards
2035
With a firm strategy and strong portfolio of projects, Equinor
is well positioned for profitable growth with a stronger cash flow,
a broader energy offering and lower emissions towards 2035 (1).
Key ambitions:
- Stronger cash flow:Grow cash flow from operations after tax* to
around USD 23 billion by 2030 and to more than USD 26 billion by
2035. Deliver high returns while transitioning with a ROACE* above
15% towards 2030 and target to sustain a level of around 15%
through 2035.
- Broader energy:Produce more than 80 TWh from renewables and
decarbonised energy and deliver transport and storage of 30-50
million tonnes CO2 annually by 2035. Maintain oil and gas
production of around 2 million barrels per day through 2030 and
produce around 1.2 million barrels per day from the Norwegian
Continental Shelf in 2035.
- Lower emissions:50% net reduction of operated emissions by
2030, and 40% reduction in net carbon intensity by 2035, in line
with our Energy transition plan (2).
Equinor is contributing to energy security, while driving
decarbonisation and energy transition.
Stronger cash flow
Equinor expects to sustain an annual average cash flow from
operations after tax* from oil, gas and trading of around USD 20
billion through 2035. Renewables and low carbon solutions are
expected to deliver a material contribution with around USD 3
billion in 2030 and above USD 6 billion in 2035.
Equinor will continue to optimise the oil and gas portfolio and
invest in a profitable project portfolio coming on stream the next
ten years, with an average breakeven price of around USD 35 per
boe, 30% internal rate of return, 2.5 years payback time and an
upstream operated scope 1 CO2 intensity below 6 kg per boe.
Equinor expects to deliver above 5% production growth for oil and
gas from 2023 – 2026 and maintain production of around 2 million
barrels per day in 2030.
Broader energy offering
Equinor is set to broaden the energy offering and aims to
deliver above 80 TWh from renewables and decarbonised energy by
2035. Based on extensive experience from CCS and project pipeline
progress, Equinor also increases the ambition for annual
CO2 storage to 30-50 million tonnes in 2035.
For the renewables portfolio, Equinor expects real base project
returns of 4-8%. CCS projects are also expected to deliver real
base project returns of 4-8%, with potential for higher returns as
markets mature.
Lower emissions
Equinor continue to progress according to the Energy transition
plan. Gross investments in renewables and low carbon solutions
increased to 20% in 2023 and Equinor is on the path to reach the
ambition of above 50% by 2030. Equinor’s operated emissions are 30%
lower in 2023 compared to 2015. The company is on track to deliver
on the 2030 ambition of net 50 percent reduction in operated scope
1 & 2 CO2 emissions. Reduced emissions, growth in
renewables, decarbonised energy and CCS, underpins the ambition to
reduce net carbon intensity by 20% by 2030 and 40% by 2035.
- Organic capex* of around USD 13 billion (3).
- Stable oil and gas production from 2023.
- Doubling of annual power production from renewable sources
compared to 2023.
This press release contains Forward Looking Statements. Please
see the Forward Looking Statement disclaimer published on
Equinor.com/investors/cmu-2024-forward-looking-statements
* * *
* For items marked with an asterisk throughout this report, see
Use and reconciliation of non-GAAP financial measures in the
Supplementary disclosures
1) NOK 37 billion, USD estimate based on a USD/NOK exchange rate
assumption of 10.
(1) All forward looking financial numbers are based on Brent
blend 75 USD/bbl, Henry Hub 3.5 USD/mmbtu and European gas price
2024/25: 13 USD/mmbtu, and 2026 onwards: 9 USD/mmbtu
(2) See Equinor Energy transition plan at
https://www.equinor.com/magazine/our-plan-the-energy-transition
(3) USD/NOK exchange rate assumption of 10.
* * *
Further information from:
Investor relationsBård Glad Pedersen, Senior vice president
Investor relations,+47 918 01 791 (mobile)
PressSissel 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
- Financial statements and review Equinor Q4 2023 - CMU 2024
- CEO and CFO presentation Equinor Q4 2023 - CMU 2024
- Press release Equinor Q4 2023 - CMU 2024
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