Equinor (STOHF) (OSE: EQNR, NYSE: EQNR) reports adjusted earnings of USD 4.64 billion and USD 1.58 billion after tax in the second quarter of 2021. IFRS net operating income was USD 5.30 billion and the IFRS net income was USD 1.94 billion.
The second quarter of 2021 was characterised by:
- Strong results due to higher prices, sustained value focus and strict capital discipline.
- Solid operational performance and progress in the project portfolio, some projects impacted negatively by Covid-19.
- Strong cash flow and significant improvement of adjusted net debt ratio(1) to 16.4%.
- Cash dividend of USD 0.18 per share and launch of share buy-back programme.
“We deliver a strong result in the second quarter. Solid operational performance and continued focus on value creation have enabled us to capture additional value from higher commodity prices. Strict capital discipline and a net cash flow of more than USD 4.5 billion, reduce our net debt ratio to 16.4 percent and make us robust for volatility in commodity prices going forward,” says Anders Opedal, President and CEO of Equinor ASA.
“Systematic and sustained improvements on the NCS enable us to capture additional value in the quarter. We progressed our project portfolio with the Norwegian government’s approval of the development plan for Breidablikk, start-up of Martin Linge on NCS and the final investment decision on Bacalhau Phase 1 in Brazil. Projects in execution are progressing despite the impact of Covid-19,” says Opedal.
“We continue to accelerate within renewables through strategic positions and partnerships. In Poland we made significant progress with the award of the support regime for Baltyk II & III with a potential total capacity at 1,440 megawatts. We continue our efforts to reduce emissions. In this quarter we submitted the plan for development and operation of the Troll West electrification, and we have made good progress on Hywind Tampen, the world’s first floating windfarm to power offshore oil and gas platforms,” says Opedal.
Adjusted earnings  were USD 4.64 billion in the second quarter, up from USD 0.35 billion in the same period in 2020. Adjusted earnings after tax  were USD 1.58 billion, up from USD 0.65 billion in the same period last year.
IFRS net operating income was USD 5.30 billion in the second quarter, up from negative USD 0.47 billion in the same period in 2020. IFRS net income was USD 1.94 billion in the second quarter, compared to negative USD 0.25 billion in the second quarter of 2020. Net operating income was impacted by higher prices for gas and liquids, and net reversals of impairments of USD 0.28 billion including USD 0.11 billion impairment of exploration licences in the second quarter of 2021.
The results of all E&P segments are positively impacted by the higher commodity prices. Strong operational performance, continued improvement focus and strict capital discipline supported additional value creation.
E&P Norway benefited from improved prices and solid operational performance. Combined with taxes paid based on the low 2020 results this contributed strongly to the group cash flow.
Results from the Marketing, midstream and processing segment were impacted by losses on hedges of gas forward sales, shut down of the Hammerfest LNG plant and weak refinery margins.
Compared to the same quarter last year the Renewables segment experienced lower winds for the offshore wind assets, partially offset by improved availability. The segment delivered adjusted earnings of negative USD 31 million, down from negative USD 1 million in the second quarter last year.
Equinor delivered total equity production of 1,997 mboe per day in the second quarter, down from 2,011 mboe per day in the same period in 2020. High planned maintenance, divestment of Bakken and shut down of the Hammerfest LNG plant were partially offset by higher flex gas volumes to capture higher prices and increased production from Johan Sverdrup. Equity production of renewable energy for the quarter was 282 GWh, down from 304 GWh for the same period last year, impacted by lower winds than the same quarter last year.
At the end of second quarter 2021, Equinor had completed 11 exploration wells with 5 commercial discoveries and 12 wells were ongoing. Adjusted exploration expenses in the second quarter were USD 0.21 billion, compared to USD 0.28 billion in the same quarter of 2020.
Cash flows provided by operating activities before taxes paid and changes in working capital amounted to USD 6.54 billion for the second quarter, compared to USD 2.36 billion for the same period in 2020. Organic capital expenditure  was USD 4.03 billion for the first six months of 2021. At the end of the quarter adjusted net debt to capital employed(1) was 16.4%, down from 24.6% in the first quarter of 2021. Including the lease liabilities according to IFRS 16, the net debt to capital employed was 23.2%.
The board of directors has declared a cash dividend of USD 0.18 per share for the second quarter of 2021. 28 July Equinor commences execution of the first tranche of around USD 300 million of the USD 600 million share buy-back program for 2021 announced 15 June.
The twelve-month average Serious Incident Frequency (SIF) for the period ending 30 June was 0.5 for 2021, and down from 0.6 in 2020. The twelve-month average Recordable Injury Frequency (TRIF) for the period ending at 30 June was 2.5, up from 2.2 in 2020.
On the Capital Markets Day on 15 June 2021 Equinor presented its updated strategy for accelerating its transition while growing cash flow and returns. Equinor’s ambition is to deliver a competitive capital distribution and presented an updated programme for cash dividend and share buy-back. Equinor has an ambition to reach a 40% reduction in net carbon intensity by 2035, on the way towards net zero by 2050, and interim ambitions to reduce net carbon intensity with 20% by 2030.
Equinor expects gross investments  in renewables of around USD 23 billion from 2021 to 2026, and to increase the share of gross investments for renewables and low carbon solutions from around 4% in 2020 to more than 50% by 2030. Based on early low-cost access at scale, Equinor expects to reach an installed capacity of 12 – 16 GW (Equinor share) by 2030. Early access followed by targeted farm down is an integrated part of Equinor’s value creation proposition. So far, Equinor has divested assets for USD 2.3 billion and booked a capital gain of USD 1.7 billion.
By 2035, Equinor’s ambition is to develop the capacity to store 15 -30 million tonnes CO2 per year and to provide clean hydrogen in 3-5 industrial clusters.
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(1) This is a non-GAAP figure. Comparison numbers and reconciliation to IFRS are presented in the table Calculation of capital employed and net debt to capital employed ratio as shown under the Supplementary section in the report.
 These are non-GAAP figures. See Use and reconciliation of non-GAAP financial measures in the report for more details.