Equinor Books Q1 Loss, Suspends Output Guidance

Norway's Equinor suffered a net loss of $705mn for the first quarter, it reported on May 7, after booking $2.45bn in impairments to account for a weaker oil price outlook.

The state company suspended its 2020 production guidance, as the Norwegian government moves to impose production cuts starting in June to prop up prices. It has also slashed its capex budget for this year to $8.5bn, from a $10bn spend last year.

The result was a reversal from a $1.72bn profit a year before. Equinor's production in the quarter was up 3% year on year at 2.23mn boe/d, on the back of continued gains at the Johan Sverdrup oil project in the North Sea, which came on stream in October and reached its first-phase output plateau of 470,000 b/d in late April.

However, the price the company sold its liquids at fell 21% to $44.2/b, while the price for its gas fell 41% in both Europe and North America, landing at $4.06 and $1.86/mn Btu respectively. Revenues shrank 8% to $15.1bn, while adjusted earnings before interest and tax (Ebitda) more than halved to $2.05bn.

Equinor had been projecting a 7% growth in output this year, largely due to Sverdrup.

"We will continue to prioritise value over volume and have already reduced activity, particularly in the US onshore," CEO Eldar Saetre said. "We will consider further activity reductions and use the flexibility we have in our portfolio as necessary." 

While suspending its 2020 guidance, Equinor has maintained its long-term forecast for 3% annual production growth between 2019 and 2026.  

Equinor has now reported three quarterly losses in a row. The company said on May 6 it had divested its remaining 4.88% stake in Sweden's Lundin Energy, in order to raise $336mn. In response to the Covid-19 crisis, it has also suspended its $5bn buyback scheme, raised $5bn in debt and lowered its dividend.