Equinor posts increase in 2Q net income, cuts Johan Sverdrup costs

Norwegian oil and gas company Equinor recorded an increase in its second quarter 2019 net income while its earnings were down compared to the last year’s quarter. The company expects to spend less this year, partly due to further savings on the Johan Sverdrup offshore project. 

Equinor said in its 2Q 2019 report on Thursday it expects to spend somewhere between $10 billion and $11 billion in capital expenditure this year, instead of previously expected $11 billion.

Equinor’s adjusted earnings were $3.15 billion in the second quarter 2019, down from $4.31 billion in the same period in 2018. Adjusted earnings after tax were $1.13 billion, down from $1.7 billion in the same period last year.

According to the company, production was maintained at a high level, but lower prices, high turnaround activity and some quarter specific items impacted the result. The liquids share of the production mix was low in the quarter and will increase going forward.

Underlying operating costs and administrative expenses per barrel increased somewhat from the same quarter last year, mainly due to new fields coming on stream.

Equinor’s IFRS net operating income was $3.52 billion in the second quarter, down from $3.84 billion in the same period of 2018. The decrease was mainly due to lower average prices for liquids and gas, lower liquids volumes, higher depreciation expenses mainly due to net impairment reversals in the second quarter of 2018, and some quarter specific items decreasing net operating income, the company explained.

The decrease was partially offset by reduced exploration expenses in the second quarter of 2019 as an effect of impairments in the second quarter of 2018 related to North America.

The company’s IFRS net income in 2Q 2019 was $1.48 billion, up from $1.22 billion in the second quarter of 2018.

Equinor delivered total equity production of 2,012 mboe per day in the second quarter, on par with the same period in 2018 when it was 2,028 mboe per day. Expected natural decline on the NCS and in the E&P International reporting segment was partially offset by ramp-up of new fields on the NCS and portfolio changes in the E&P International reporting segment.

Eldar Sætre, President and CEO of Equinor, said: “We deliver overall solid operational performance and maintain high production in a quarter with lower commodity prices and high maintenance activity. I am pleased that we demonstrate continued strong cost focus and capital discipline. Combined with efficient project execution, this enables us to reduce our organic capex guiding for 2019 to 10-11 billion dollars.”

“We continue to progress our highly competitive projects delivering production growth towards 2025. Today we announce that we have improved the world-class Johan Sverdrup project even further. Investment costs for phase 1 have been reduced by an additional 3 billion kroner, bringing total reductions to 40 billion kroner since submission of the plan for development and operations.

“With a planned start up later this year, and faster ramp up to reach plateau production during summer next year, the project will produce and create substantial value for decades to come. Earlier this month we announced that we are capitalizing on our investment in Lundin and increasing our direct ownership in Johan Sverdrup to 42.6%,” said Sætre.

Offshore Energy Today Staff

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