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Equinor’s Q2 Earnings Surge on Higher Prices While Leverage Falls; Repurchases Commence

Allen Good, CFA Sector Strategist

Analyst Note

| Allen Good, CFA |

Equinor’s second-quarter earnings improved considerably from the year before as its upstream operations benefited from the increase in oil and gas prices, offsetting weakness in its other segments. For the quarter, adjusted after-tax earnings were $1.6 billion compared with $646 million the year before. All three upstream segments--Norway, International, and U.S.--swung from a loss last year to earnings this year primarily due to higher prices that more than offset lower volumes. Entitlement production fell 3% to 1,845 mboed from 1,897 mboed a year before on planned turnarounds, natural decline, divestments, and lower volumes from production sharing agreements. Full-year guidance remains for 2% growth adjusted for divestments. Marketing segment earnings dropped to $144 million from $1.2 billion the year before largely on lower trading results. The renewables segment posted a loss of $31 million compared with a $1 million loss last year. This segment remains in investment mode and is unlikely to generate meaningful earnings for several years outside of gains from project farm downs as it did in the first quarter. Equinor is targeting installed capacity of 12-16 GW by 2030.  

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Company Profile

Business Description

Equinor is a Norway-based integrated oil and gas company. It has been publicly listed since 2001, but the government retains a 67% stake. Operating primarily on the Norwegian Continental Shelf, the firm produced 2.1 million barrels of oil equivalent per day in 2020 (54% oil) and ended the year with 5.3 billion barrels of proven reserves (51% oil). Operations also include offshore wind, oil refineries and natural gas processing, marketing, and trading.

Forusbeen 50
Stavanger, N-4035, Norway
T +47 51990000
Sector Energy
Industry Oil & Gas Integrated
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 21,245