Equinor Q3 Profit Drops, Hit by Lower Prices
Norway's state-backed energy company Equinor third-quarter profit fell by more than expected on account of the significant decline in the volume and price of natural gas sold to Europe.
Adjusted earnings before interest and tax were down 46 per cent year-on-year to $2.59bn, from $4.8bn, missing consensus forecasts of $2.69bn.
“We maintain strong cost and capital discipline, but our results are impacted by lower commodity prices in the quarter. In addition, we have decided to use our flexibility to defer gas production to periods with higher expected prices. Based on our strong balance sheet and outlook for profitable growth, we have in the quarter demonstrated our commitment to capital distribution and are executing the first tranche of a 5-billion-dollar share buy-back program.” says Eldar Sætre, President and CEO of Equinor ASA.
“Since the beginning of third quarter, we have started production from Trestakk, Mariner, Snefrid Nord, Utgard, and Johan Sverdrup. At Johan Sverdrup, the field has already achieved a daily production above 200,000 barrels. The five new fields are expected to deliver on average more than 200,000 high value barrels per day net to Equinor in 2020. We are developing a portfolio of profitable projects with low CO2 emissions, and we are on track to deliver strong production growth in 2020 and a 3% average annual production growth from 2019 to 2025,” says Sætre.
“The last few months have been a game-changer for our offshore wind business. Together with SSE, we were the winning bidder with three projects at Dogger Bank in the UK, making it the largest offshore wind farm development in the world. In addition, we won the opportunity to develop Empire Wind offshore New York, delivered development plans for Hywind Tampen and realized significant value from the farm-down in the Arkona wind farm offshore Germany,” says Sætre.
Underlying operating costs and administrative expenses are stable from the same period last year. The Marketing, Midstream and Processing segment has delivered strong trading results. Invoiced European gas prices were more than 50% higher than average spot prices, based on realized gains from the longer dated gas sales contracts.