Equinor forecast steady despite gas sales fall
Equinor, the Norwegian oil company, today reiterated flat forecasts for 2019 production, despite a significant decline in the volume of natural gas sold to Europe.
Commenting on the third-quarter update, chief executive Eldar Saetre said: “We maintain strong cost and capital discipline, but our results are affected by lower commodity prices in the quarter.”
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The decline was offset by confirmation from the company that its Johan Sverdrup oil field, the third largest resource in the North Sea, was on track to meet Phase 1 targets of 440,000 barrels by summer 2020.
Despite operations only starting this month, daily production at the field has already risen above 200,000 barrels. By the end of November, it is expected to reach 300,000.
Teodor Sveen-Nilsen, analyst at Sparebank 1 Markets, said that the news implied 2-4 per cent earnings-per-share potential on 2019-2020 estimates. Shares this morning were up 2.2 per cent.
Total oil and gas production at Equinor in the third quarter was 1.9m barrels of oil per day, 8 per cent below the same period in 2018. Gas production off Norway alone fell by 17 per cent, while average invoiced European gas prices were down 26 per cent.
Norway is Europe’s second largest gas supplier, after Russia. Equinor accounts for the majority of Norway’s sales.
Equinor also made impairment charges of $2.8bn (£2.2bn), with $2.2bn related to its onshore shale oil and gas assets in North America on “more cautious price assumptions”.
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In addition, clean up and repair costs from September’s Hurricane Dorian, which damaged Equinor’s Bahamas oil terminal, totalled $537m.
The company said it had managed to recover about a third of 119,000 oil barrels spilled when the hurricane ripped the roofs of a number of the terminal’s oil tanks.