Norway's Equinor enjoys bumper quarter

Pre-tax profits at Norwegian oil and gas producer Equinor soared to $4.64bn in the three months ending June 30, versus a mere $354mn in the corresponding quarter of last year, on the back of higher oil and gas prices.

The company generated a net income of $1.94bn in Q2 2021, compared with a $251mn loss a year earlier, thanks to the reversal of impairments and significantly higher oil and gas prices, supported by a tightening market globally. These factors more than offset a decline in Equinor's production to 1.997mn barrels of oil equivalent/day, from 2.011mn boe/d in Q2 2020.

The drop in production was the result of scheduled maintenance, the company's sale in April of its US Bakken operations, and the closure last autumn of the Hammerfest LNG plant following a fire. But Equinor also benefited from higher flex gas volumes and further growth at the Johan Sverdrup oil project.

Equinor earned $4.51bn in free cash flow during the quarter, versus negative $1.853bn a year earlier, thanks to higher prices, decreased tax payments, increased proceeds from divestments and reduced dividend payments. The company spent $1.75bn in capital expenditure in the three months, compared with $2.15bn in the same period last year. It was therefore able to reduce its net debt to capital ratio to 16.4% at the end of June from 29.3% a year earlier and 24.6% at the end of March.

"Strict capital discipline and a net cash flow of more than $4.5bn ... make us robust for volatility in commodity prices going forward," CEO Anders Opedal said in a statement.

Amid mounting pressure from its shareholders, Equinor vowed last month to fast-track an expansion of its renewable energy and low-carbon business, even while envisaging a further growth in its oil and gas production in the coming years to support these investments. The company said it expected to devote $23bn in capital spending towards renewables between 2021 and 2026, and increase the share of investments in renewables and low-carbon solutions to 50% of the total by 2030 versus 4% last year.