Norway's Equinor Q2 operating profit down; refinery and trading unit shines

[OSLO] Energy firm Equinor on Friday reported a sharp drop in second-quarter operating profit that beat analysts' estimates, as strong performance by its refinery and trading unit countered impact of a coronavirus-led slump in oil and gas prices.

The Norwegian oil and gas explorer posted an 89 per cent slump in its adjusted earnings before interest and tax (Ebit) to US$0.35 billion in the April-June quarter, compared with US$3.15 billion in the year-ago period. A poll of 25 analysts compiled by Equinor had forecast an adjusted operating loss of US$0.2 billion.

While all three oil exploration and production units, E&P Norway, E&P International and E&P USA, posted losses, its refinery and trading unit saw a rise in profits.

"Our financial results for the second quarter were impacted by very low realised oil and gas prices due to the Covid-19 pandemic, but also by a strong trading performance in volatile markets," Chief Executive Officer Eldar Saetre said in a statement.

"We have reduced costs, maintained solid operational performance and continued to prioritise value over volume by deferring significant flexible gas production to periods with higher expected prices."

The Norwegian government has imposed limits on oil output from June to December this year, backing efforts by the Opec+ nations and others to support oil prices.

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Equinor maintained a quarterly dividend of US$0.09 per share, identical to the first quarter but down from US$0.27 in October-December.

The company reiterated its goal of increasing output by 3 per cent per year from 2019 to 2026, and kept capital spending plans for this year unchanged at US$8.5 billion.

Equinor now expects crude oil prices to average US$41 a barrel in 2020, up from a previous view of US$39 a barrel seen in May, but it kept its long-term price assumptions unchanged, unlike other European majors.

The company has previously said it planned to revise its long-term price outlook, which could impact assets values, in the third-quarter. 

REUTERS