Equinor Cuts Output Guidance; Q3 Profit Beats Forecast

Nerijus Adomaitis and Nora Buli
Friday, October 27, 2023

Equinor on Friday cut its full-year oil and gas output guidance while posting a bigger-than-expected profit for the third quarter, boosted by the company's trading unit.

The Norwegian energy group's adjusted earnings before interest and tax for July-September fell to $8.02 billion from a revised $24.5 billion a year earlier, beating the $7.59 billion predicted in a poll of 22 analysts compiled by Equinor.

The sharp year-on-year decline in profits was driven by a plunge in the price of gas, with the European benchmark contract averaging about 34 euros per megawatt hour (MWh) in the quarter, compared with around 204 euros the year before.

"We continue to contribute to energy security by developing profitable oil and gas projects with low emissions from production," CEO Anders Opedal said in a statement.

Equinor reported an adjusted net income of $2.73 billion, down from a revised $7.19 billion in the same quarter a year ago and beating the $2.24 billion forecast by analysts.

The company is Europe's largest supplier of natural gas, having replaced Russia's Gazprom in the top ranking after Moscow's invasion of Ukraine.

It cut its full-year oil and gas production growth target to 1.5% in 2023 from 3% previously, dented by heavy maintenance at many of its offshore fields.

The lower production guidance was unlikely to hit the Equinor share price, however, as information on many field outages had been released during the summer and autumn, analysts at brokerages Jefferies and Sparebank 1 Markets said.

"We expect the solid operational delivery to drive the share price today despite some incrementally negative changes in the company's outlook," Jefferies wrote in a note to clients.

The Equinor unit, which trades oil, gas and power, posted an operating profit of $876 million for the quarter, beating analysts' average forecast of $624 million.

The company booked net impairments of $971 million in the quarter, including a $300 million impairment to offshore wind projects in the United States after local authorities rejected a request from energy firms to charge more for the power.

It also made impairments in Norway, related to reduced reserves at an offshore field and at its refining unit due to weaker margins. 

Equinor maintained its dividend and share buyback levels.

Oil and gas prices soared last year as Russia's invasion of Ukraine led to supply disruptions but the cost of energy has since fallen as fears of shortages eased amid global economic headwinds.

Majority state-owned Equinor's operating profit was up from the $7.54 billion booked in the second quarter.

Its Oslo-listed stocks have risen 4.4% year-to-date, broadly in line with European petroleum stocks .SXEP.

Equinor Q3 adjusted earnings fall https://tmsnrt.rs/3S9sLfs

(Reuters - Reporting by Nerijus Adomaitis and Nora BuliEditing by Terje Solsvik and Mark Potter)

Categories: Finance Energy Industry News Activity Europe Production

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