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Equinor in US$2.93b asset write-off as oil price hit
[OSLO] Norway's Equinor wrote off US$2.93 billion from the value of its assets after cutting its long-term oil price forecast on Thursday, betting the pandemic and a shift away from fossil fuels will have a lasting impact on markets.
Including the asset write-off, Equinor posted a net loss of US$2.12 billion in the third quarter.
The energy major's adjusted profit before interest and tax (EBIT) fell to US$780 million in July-September from US$2.59 billion in the same period of 2019, lagging the US$1.03 billion predicted in a poll of 24 analysts compiled by Equinor.
"Our financial results are impacted by weak prices as regions across the world are still severely affected by the pandemic," outgoing chief executive Eldar Saetre said in a statement.
The write-off follows similar decisions by BP, Royal Dutch Shell and other oil firms that have wiped tens of billions of dollars off their book values this year.
Equinor said it expected the price of the Brent global crude benchmark to average US$64 a barrel for the period of 2021-2050, higher than the US$50 predicted by BP in June and also above Shell's long-term price forecast of US$60 from 2023.
Equinor said its expectation for Brent will be set to US$65 a barrel for 2025, down from US$78 earlier. It will rise towards 2030, the company predicted, but will then decline to US$64 by 2040, down from an earlier forecast of US$82.
"Significant uncertainty remains around the future commodity price development underlining the importance of increased competitiveness and financial resilience," said Mr Saetre, who said in August he would retire at the end of October.
Separately, the company also announced two oil discoveries off the coast of Canada, although it was too early to provide estimates for the size of potential reserves.
Equinor holds 60 per cent stakes in the discoveries while BP Canada owns the remaining 40 per cent.