Equinor

M&A Activity • Jan 25, 2024

Equinor to take full ownership in Empire Wind through a swap transaction with bp in the US

Equinor to take full ownership in Empire Wind through a swap transaction with bp in the US

Equinor (OSE: EQNR, NYSE: EQNR) has entered into a swap transaction with bp,

under which Equinor will take full ownership of the Empire Wind lease and

projects and bp will take full ownership of the Beacon Wind lease and projects.

Under the agreement, Equinor will take 100% ownership of Empire Offshore Wind

Holdings LLC. Subject to certain conditions, Equinor will also take over bp's

50% share of the South Brooklyn Marine Terminal (SBMT) lease. Bp will take over

Beacon Wind Holdings LLC and the associated project company that holds the

Astoria Gateway for Renewable Energy site and will become the operator of the

Beacon Wind projects. The transaction will be cash neutral, except for standard

settlements of cash and working capital items.

The agreement provides Equinor and bp with the flexibility to pursue their

respective priorities under their corporate strategies. Equinor has more than

20 years' experience with offshore wind and entered the US offshore wind market

already in 2017 - and has also built a strong offshore wind portfolio with

assets in key markets like UK, Poland, Germany, and South Korea.

Following the signing of the agreement, a bid was submitted for the Empire Wind

1 project in New York's fourth offshore wind solicitation round, which closed at

3pm ET today 25 January 2024. It has also been agreed with the New York State

Energy Research and Development Authority (NYSERDA) to terminate the Offshore

Wind Renewable Energy Certificate (OREC) Purchase and Sale Agreement for the

Beacon Wind 1 project. Subject to closing the transaction, Equinor will take the

Empire Wind projects forward on a 100% ownership basis and will continue to

develop its strong offshore wind organization in the US. Bp will take the Beacon

projects forward on a 100% ownership basis.

"We aspire to be a leading company in the energy transition. Building on our

experience as a leading player in US offshore wind, we now take full ownership

of a mature, large-scale offshore wind project in a key energy market, where we

have built a strong local organization," says Pål Eitrheim, executive vice

president of Renewables in Equinor.

"Empire Wind 1 is ready to deliver on New York's climate and energy goals, with

numerous permits and supplier contracts secured. The strong commitment by the

state to develop this industry is reflected in the NY4 rapid rebid offering,

providing an opportunity to improve value creation for the project," says Molly

Morris, senior vice president for Renewables in the Americas in Equinor.

Both Empire Wind 1 and 2 have been impacted by industry-wide macroeconomic

effects, and while Empire Wind 1 is bidding into the NY4 solicitation, Empire

Wind 2 will be matured for future solicitation rounds. Subject to the award of a

new OREC contract in the NY4 solicitation, the project is expected to deliver a

real base project return towards the lower end of the guided range for renewable

projects of 4-8% on a forward-looking basis.

Upon closing, the assets will be fully consolidated into Equinor's balance

sheet. Taking 100% ownership in the Empire Wind projects and SBMT lease is

expected to increase near term reported capital expenditure for Equinor. The

increase is around USD 1.2 billion for 2024 and around USD 1.5 billion for

2025, before any project financing. Development of Empire Wind 1 is contingent

upon a positive result in the NY4 solicitation, and a final investment decision

is expected mid-2024. Equinor intends to use project financing and to bring in a

partner at the right time to enhance value and reduce ownership share and

exposure. The reset for Empire Wind 2 and the exit from Beacon Wind reduces

expected capital expenditure from 2027 to 2030.

The transaction is subject to regulatory approval. The agreed effective date is

1 January 2024 and closing is expected in Q2 or Q3 2024. The transaction is

expected to result in a combined reported loss estimated to around USD 200

million for Equinor, assuming a positive outcome of the NY4 solicitation. This

has no cash effect and will not impact adjusted earnings.

About Empire & Beacon Wind

* The Empire Wind lease was awarded to Equinor in 2017. It is being developed

in two projects, Empire Wind 1, with a potential capacity of 810 MW, and

Empire wind 2, with a potential capacity of above 1,200 MW.

* The Beacon Wind lease was awarded to Equinor in 2019. It is being developed

in two projects, Beacon Wind 1 1,230 MW with a potential capacity of and

Beacon Wind 2 with a potential capacity of 1,360 MW.

* In 2020, bp farmed into a 50% share of the Empire Wind and Beacon Wind

assets for a total consideration of USD 1.1 bn.

* Equinor won an offtake contract with the state of New York for Empire Wind

1 in 2019 and in 2021 Equinor and bp were awarded offtake contracts for the

Empire Wind 2 and Beacon Wind 1 projects in New York's second solicitation

round.

Recent developments

* In 2022, an agreement was signed to transform the South Brooklyn Marine

Terminal (SBMT) into a world-class offshore wind hub.

* In 2023 Beacon Wind purchased the site of the Astoria Gas Turbines, with the

potential to transform the site into The Astoria Gateway for Renewable

Energy.

* In 2023, Equinor and bp were among more than 100 renewables project

developers that filed petitions with the State of New York to provide

additional price support for their projects, due to industry-wide impacts

from extraordinary macroeconomic effects. The petition was denied.

* After the announcement of the denied petitions, the Governor of New York

released a 10-point action plan which included an expedited renewable energy

procurement process - New York's fourth offshore wind solicitation round,

NY4.

* The Empire Wind 1 and Empire Wind 2 projects recently reached a key federal

permitting milestone, having received the federal Record of Decision from

BOEM. Last month, Empire Wind 1 also received its Article VII Certificate of

Environmental Compatibility and Public Need in New York.

Further information from:

Investor relations:

Bård Glad Pedersen, Senior vice president, Head of Investor Relations

bgp@equinor.com

+47 918 01 791

Media:

Magnus Frantzen Eidsvold, Media spokesperson, Renewables, marketing and

midstream

mfei@equinor.com

+47 975 28 604

This information is subject to the disclosure requirements pursuant to Section

5-12 the Norwegian Securities Trading Act.