Oil And Fuel Group Equinor Takes $2.9 Billion Hit In Asset Write-offs

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OSLO: Norway’s Equinor wrote off $2.93 billion from the worth of its property after chopping its long-term oil and fuel worth forecasts on Thursday, betting the pandemic and a shift away from fossil fuels can have an enduring influence on markets.

The largest hit got here from a $1.38 billion write-off in america, most of it from the corporate’s loss-making onshore shale oil and fuel enterprise, pushing Equinor to a web lack of $2.12 billion within the third quarter.

The vitality main’s adjusted revenue earlier than curiosity and tax (EBIT) fell 70% 12 months on 12 months to $780 million, lagging the $1.03 billion predicted in a ballot of 24 analysts compiled by Equinor.

“Our monetary outcomes are impacted by weak costs as areas the world over are nonetheless severely affected by the pandemic,” outgoing Chief Govt Eldar Saetre stated in an announcement.

The corporate, which is majority owned by the state, raised its dividend to $0.11 per share from $0.09 per share, nonetheless properly beneath the $0.27 paid for the fourth quarter of 2019.

Equinor stays dedicated to resuming the $5 billion share buyback programme that was postponed earlier this 12 months as soon as situations permit, stated finance chief Lars Christian Bacher.

The asset write-offs observe comparable choices by BP, Royal Dutch Shell and different oil firms which have wiped tens of billions of {dollars} off their ebook values this 12 months.

The largest writedowns stem from Equinor’s property within the Bakken shale discipline in america and the Mariner heavy oilfield off the coast of Britain, the corporate stated on an analysts name with out elaborating.

OIL PRICE OUTLOOK

Equinor stated it expects the value of the Brent crude benchmark to common $64 a barrel for the 2021-2050 interval, larger than the $55 predicted by BP in June and likewise above Shell’s long-term worth forecast of $60 from 2023.

Equinor’s expectation for Brent was set to $65 a barrel for 2025, down from $78 beforehand.

It additionally lowered its fuel worth outlook, forecasting British fuel costs at $6.50 per million British thermal items (mmBtu), or 50.26 pence per therm in 2030, down from $7.7 per mmBtu beforehand.

“Important uncertainty stays across the future commodity worth growth, underlining the significance of elevated competitiveness and monetary resilience,” stated Saetre, who stated in August that he would retire on the finish of October.

Brent crude was buying and selling down 4.6% at $37.30 a barrel on Thursday, pressured by renewed coronavirus lockdowns, whereas the British day-ahead fuel worth was down 0.8% at about 38 pence per therm ($4.90 mmbtu).[O/R]

Equinor’s shares have been down 1.8% by 1218 GMT and have misplaced 32.5% this 12 months, outperforming a mean 47% drop in European oil and fuel shares.

(Modifying by Terje Solsvik, Stephen Coates and David Goodman)

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