Quarterly Report • May 4, 2022
Quarterly Report
Open in ViewerOpens in native device viewer
Equinor reports adjusted earnings of USD 18.0 billion and USD 5.18 billion after tax in the first quarter of 2022. IFRS net operating income was USD 18.4 billion and the IFRS net income was USD 4.71 billion.
The first quarter of 2022 was characterised by:
"The invasion of Ukraine stands as a dark moment for Europe and our thoughts are with all suffering the consequences of the brutal war. After having been in Russia for three decades, we saw the situation as untenable and acted decisively by stopping new investments into Russia and by starting the process of exiting Equinor's Russian joint ventures. Exiting Russia will heavily impact our employees, and it leads to impairments of our assets in the country this quarter", says Anders Opedal, president and CEO of Equinor ASA.
"With an energy crisis in Europe, Equinor's top priority is securing safe and reliable deliveries. Strong operational performance and good regularity gave high production in the quarter. We have optimised the gas production to deliver higher volumes, and Hammerfest LNG is on track for a safe start-up on 17 May. Further, continued capital discipline and cost focus enabled us to deliver very strong financial results and cash flow, strengthening the balance sheet", says Opedal.
"Equinor is developing as a leading company in the energy transition with forceful industrial progress within oil and gas, renewables, as well as low-carbon portfolios. On the Norwegian continental shelf the fifth and final platform at the Johan Sverdrup field is installed and the turbines for the floating wind farm Hywind Tampen are currently being assembled. Equinor has been awarded licences and operatorships for the development of two CO2 storage sites, an important milestone in the work to make the Norwegian continental shelf a leading province in Europe for CO2 storage. In Brazil the production from the first wells for increased recovery at Roncador is on stream", says Opedal.
Energy prices increased in the quarter, as Russia's invasion of Ukraine added to the uncertainty in already tight markets, in particular for European gas. Equinor realised higher prices for liquids and gas and delivered adjusted earnings* of USD 18.0 billion in the quarter, up from USD 4.09 billion in the same period in 2021. Adjusted earnings after tax* were USD 5.18 billion, up from USD 1.29 billion in the same period last year.
On 28 February Equinor announced its decision to stop new investments into Russia and to start the process of exiting its Russian joint ventures. We have recognised net impairments of USD 1.08 billion related to assets in Russia this quarter.
The Marketing, Midstream and Processing segment results were impacted by adverse effects of fair value accounting of price risk management derivatives. The negative effects were partially offset by strong trading results including a strong result from Danske Commodities.
IFRS net operating income was USD 18.4 billion in the quarter, up from USD 5.22 billion in the same period in 2021. IFRS net income was USD 4.71 billion in the quarter, compared to USD 1.85 billion in the first quarter of 2021. The net impairment reversal of USD 0.27 billion includes impairment reversals of USD 0.82 billion in the E&P Norway segment and USD 0.53 billion in the E&P USA segments, mainly due to the short-term commodity prices.
Strong operational performance and high production, as well as optimised production to deliver more gas to Europe, supported increased value creation in the quarter.
Equinor delivered a total equity production of 2,106 mboe per day in the first quarter, down from 2,168 mboe per day in the same period in 2021.
E&P Norway increased production by 4%, including an increase of gas to Europe of 10%, supporting a gas share of Equinor's equity production of 50%. Production from Martin Linge and increased production from Gina Krog and Gullfaks partially offset the effects of expected decline and sale of Bakken in the US.
The Renewable segment delivered equity production of 511 GWh in the quarter, up from 451 GWh for the same period last year, due to the production from the Guanizuil IIA solar plant in Argentina and the offshore wind farms benefitting from higher wind speeds.
In the first quarter Equinor completed 4 exploration wells offshore with no commercial discoveries and 4 wells were ongoing at quarter end.
Cash flows provided by operating activities before taxes paid and changes in working capital amounted to USD 20.1 billion for the first quarter, compared to USD 6.62 billion for the same period in 2021. Organic capital expenditure* was USD 1.80 billion for the quarter.
At the end of the quarter adjusted net debt to capital employed* was negative 22.2%, further down from negative 0.8% in the fourth quarter of 2021. The one tax instalment of NCS taxes paid in the quarter relates to 2021 results. Including the lease liabilities according to IFRS 16, the net debt to capital employed* was negative 10.7%.
The board of directors has decided a cash dividend of USD 0.20 per share, and to continue the extraordinary cash dividend of USD 0.20 per share for the first quarter of 2022, in line with communication at the Capital markets update in February.
Based on the very strong first quarter results, the strength of the balance sheet, and the outlook, the board has decided to initiate a second tranche of the share buy-back programme of around USD 1.33 billion. This is in line with communication at the Capital markets update of executing a share buy-back programme for 2022 of up to USD 5 billion, and subject to authorisation from the Annual General Meeting on 11 May 2022. The second tranche will commence on 16 May and will end no later than 26 July 2022.
The first tranche of the share buy-back programme for 2022 was completed on 25 March 2022 with a total value of USD 1 billion.
The first quarter 2022 capital distribution is based on a continuation of high commodity prices from second half of 2021 and strong earnings into first quarter of 2022.
All share buyback amounts include shares to be redeemed by the Norwegian State.
Average CO2-emissions from Equinor's operated upstream production, on a 100% basis, were 6.7 kg per boe in the first quarter, compared to 7.0 kg per boe for the full year of 2021.
The twelve-month average serious incident frequency (SIF) was 0.5, unchanged from the first quarter in 2021.
| Quarters | Change | |||
|---|---|---|---|---|
| (in USD million, unless stated otherwise) | Q1 2022 | Q4 2021 | Q1 2021 | Q1 on Q1 |
| Net operating income/(loss) | 18,392 | 13,578 | 5,220 | >100% |
| Adjusted earnings [5] | 17,991 | 14,989 | 4,085 | >100% |
| Net income/(loss) | 4,714 | 3,370 | 1,854 | >100% |
| Adjusted earnings after tax [5] | 5,179 | 4,397 | 1,289 | >100% |
| Total equity liquids and gas production (mboe per day) [4] | 2,106 | 2,158 | 2,168 | (3%) |
| Group average liquids price (USD/bbl) [1] | 97.1 | 75.9 | 56.4 | 72% |
* This is a non-GAAP figure. Comparison numbers and reconciliation to IFRS are presented in the table Calculation of capital employed and net debt to capital employed ratio as shown under the Supplementary section in the report.
Total equity liquids and gas production [4] was 2,106 mboe per day in the first quarter of 2022, compared to 2,168 mboe per day in the first quarter of 2021. The decrease was mainly due to the divestment of an unconventional US onshore asset in the second quarter of 2021 and expected natural decline. The decrease was partially offset by positive contribution from the new field Martin Linge and effects from a change in short-term gas strategy for certain fields on the NCS.
Total entitlement liquids and gas production [3] was 1,958 mboe per day in the first quarter of 2022, compared to 2,014 mboe per day in the first quarter of 2021. The production was influenced by the factors mentioned above in addition to lower entitlement under production sharing agreements (PSA) [4] as a result of higher prices. The net effect of PSA and US royalties was in total 148 mboe per day in the first quarter of 2022 compared to 154 mboe per day in the first quarter of 2021.
| Condensed income statement under IFRS (unaudited, in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Total revenues and other income | 36,393 | 32,608 | 17,589 | >100% |
| Purchases [net of inventory variation] | (13,510) | (11,543) | (7,166) | 89% |
| Operating and administrative expenses | (2,271) | (2,504) | (2,160) | 5% |
| Depreciation, amortisation and net impairment losses | (2,017) | (4,777) | (2,797) | (28%) |
| Exploration expenses | (203) | (206) | (247) | (18%) |
| Net operating income/(loss) | 18,392 | 13,578 | 5,220 | >100% |
| Net income/(loss) | 4,714 | 3,370 | 1,854 | >100% |
Net operating income was USD 18,392 million in the first quarter of 2022, compared to USD 5,220 million in the first quarter of 2021. Revenues increased significantly compared to same quarter last year, driven by higher average prices for both gas and liquids. Net impairment reversals due to changes to short term price assumptions added to the increase in Net operating income, partially offset by higher purchases.
| Adjusted earnings (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Adjusted total revenues and other income | 36,712 | 31,836 | 15,945 | >100% |
| Adjusted purchases [6] | (13,781) | (11,201) | (7,071) | 95% |
| Adjusted operating and administrative expenses | (2,450) | (2,465) | (2,173) | 13% |
| Adjusted depreciation, amortisation and net impairment losses | (2,333) | (2,979) | (2,386) | (2%) |
| Adjusted exploration expenses | (157) | (202) | (230) | (32%) |
| Adjusted earnings [5] | 17,991 | 14,989 | 4,085 | >100% |
| Adjusted earnings after tax [5] | 5,179 | 4,397 | 1,289 | >100% |
For items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Adjusted total revenues and other income were USD 36,712 million in the first quarter of 2022, compared to USD 15,945 million in the first quarter of 2021. The increase was mainly due to significantly higher average prices for gas and liquids, partially offset by lower production rates.
Adjusted purchases [6] were USD 13,781 million in the first quarter of 2022, compared to USD 7,071 million in the first quarter of 2021. The increase was mainly due to significantly higher average prices for gas and liquids in addition to higher third party purchases.
Adjusted operating and administrative expenses were USD 2,450 million in the first quarter of 2022, compared to USD 2,173 million in the first quarter of 2021. The increase was mainly due to higher operation and maintenance cost. Higher transportation costs and selling, general and administrative expenses added to the increase. The increase was partially offset by the NOK/USD exchange rate development.
Adjusted depreciation, amortisation and net impairment losses were USD 2,333 million in the first quarter of 2022, compared to USD 2,386 million in the first quarter of 2021. The reduction was due to increased reserves and lower overall production, partially offset by ramp-up of new field.
Adjusted exploration expenses were USD 157 million in the first quarter of 2022, compared to USD 230 million in the first quarter of 2021. Adjusted exploration expenses decreased mainly due to lower field development cost and other costs, partially offset by higher drilling cost. For more information, see the table titled Adjusted exploration expenses in the Supplementary disclosures.
After total adjustments1 of USD 401 million to net operating income, Adjusted earnings [5] were USD 17,991 million in the first quarter of 2022, an increase of USD 13,906 million from the first quarter of 2021.
Adjusted earnings after tax [5] were USD 5,179 million in the first quarter of 2022, which reflects an effective tax rate on adjusted earnings of 71.2%, compared to 68.4% in the first quarter of 2021. The change in the effective tax rate was mainly caused by high share of adjusted earnings from the Norwegian continental shelf and lower effect of uplift deduction.
Balance sheet information: The sum of equity accounted investments and non-current segment assets was USD 69,910 million at 31 March 2022, compared to USD 75,930 million at 31 March 2021.
Cash flows provided by operating activities were USD 15,771 million in the first quarter of 2022, compared to USD 5,984 million in the first quarter of 2021. The increase was mainly due to higher liquids and gas prices, partially offset by increased tax payments.
Cash flows used in investing activities were 4,465 million in the first quarter of 2022, compared to 613 million in the first quarter of 2021. The increase was mainly due to increased financial investments and decreased proceeds from sale of assets, partially offset by increased cash flow from derivatives.
Cash flows used in financing activities were 4,142 million in the first quarter of 2022, compared to 3,096 million in the first quarter of 2021. The increase was mainly due to increased collateral payments, an increase in repayment of current finance debt, and increased payments related to the share buy-back programme and dividends, partially offset by decreased repayment of finance debt.
Total cash flows were USD 7,165 million in the first quarter of 2022, compared to USD 2,274 million in the first quarter of 2021.
Free cash flow [5] in the first quarter of 2022 was USD 12,689 million compared to USD 5,170 million in the first quarter of 2021. The increase was mainly driven by higher operating cash flow mainly due to higher liquids and gas prices, partially offset by increased tax payments, decreased proceeds related to sale of assets and increased payments related to the share buy-back programme and dividends.
These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Deferral of production to create future value, gas off-take, timing of new capacity coming on stream, operational regularity, the ongoing impact of Covid-19, Russia's invasion of Ukraine and our subsequent decision to stop new investments into Russia and to start the process of exiting Russia represent the most significant risks related to the foregoing production guidance. Our future financial performance, including cash flow and liquidity, will be affected by the extent and duration of the current market conditions, the development in realised prices, including price differentials and other factors discussed elsewhere in the report. For further information, see section Forward-looking statements.
1 For items impacting net operating income, see Reconciliation of net operating income/(loss) to adjusted earnings, and Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
2 USD/NOK exchange rate assumption of 9.
Average daily production of liquids and gas increased by 4% to 1,436 mboe per day in the first quarter of 2022, compared to 1,384 mboe per day in the first quarter of 2021. The increase was mainly due to positive contribution from the new field Martin Linge in addition to effects from a change in short-term strategy from gas injection to gas export for Gina Krog and Gullfaks, partially offset by expected natural decline.
| Income statement under IFRS (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Total revenues and other income | 18,424 | 17,669 | 5,783 | >100% |
| Operating and administrative expenses | (838) | (1,020) | (794) | 6% |
| Depreciation, amortisation and net impairment losses | (546) | (1,722) | (1,570) | (65%) |
| Exploration expenses | (106) | (69) | (70) | 52% |
| Net operating income/(loss) | 16,934 | 14,858 | 3,350 | >100% |
Net operating income was USD 16,934 million in the first quarter of 2022 compared to USD 3,350 million in the first quarter of 2021. The increase was mainly due to higher gas transfer price and liquids price.
In the first quarter of 2022, net operating income was positively impacted by net reversal of impairments of USD 817 million and unrealised gain on derivatives of USD 154 million, partially offset by underlifted volumes of USD 295 million. In the first quarter of 2021, net operating income was negatively impacted by impairments of USD 276 million, partially offset by net overlifted volumes of USD 65 million.
Adjusted operating and administrative expenses increased mainly due to higher transportation costs and ramp-up of new fields. Increased maintenance costs in addition to higher environmental taxes and electricity prices added to the increase, partially offset by the NOK/USD exchange rate development. Adjusted depreciation, amortisation and net impairment losses increased mainly due to ramp-up of new fields, higher field specific production and higher depreciation basis due to reversal of impairment. Increased proved reserves on several fields and the NOK/USD exchange rate development partially offset the increase. Adjusted exploration expenses increased mainly due to higher drilling costs and lower portion of exploration expenditure being capitalised this quarter, partially offset by lower field development costs.
After total adjustments of USD 676 million to net operating income, Adjusted earnings[5] were USD 16,258 million in the first quarter of 2022, compared to USD 3,563 million in the first quarter of 2021.
| Adjusted earnings (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Adjusted total revenues and other income | 18,633 | 17,589 | 5,640 | >100% |
| Adjusted operating and administrative expenses | (906) | (985) | (714) | 27% |
| Adjusted depreciation, amortisation and net impairment losses | (1,367) | (1,722) | (1,293) | 6% |
| Adjusted exploration expenses | (101) | (69) | (70) | 46% |
| Adjusted earnings/(loss) [5] | 16,258 | 14,813 | 3,563 | >100% |
For items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Balance sheet information: The sum of equity accounted investments and non-current segment assets was USD 35,200 million at 31 March 2022, compared to USD 35,879 million at 31 March 2021.
Average daily equity production of liquids and gas was 341 mboe per day in the first quarter of 2022 compared to 360 mboe per day in the first quarter of 2021. The decrease was primarily due to natural decline in mature fields. Equity production from Russia in the first quarter of 2022 increased slightly compared to the first quarter of 2021 but reduced following Equinor's decision to start the process of exiting Russia.
Average daily entitlement production of liquids and gas was 239 mboe per day in the first quarter of 2022 compared to 267 mboe per day in the first quarter of 2021. The decrease was mainly due to lower equity production and higher effects from production sharing agreements (PSA) as a result of higher prices. The net effects from PSA were 102 mboe per day in the first quarter of 2022 compared to 93 mboe per day in the first quarter of 2021.
| Income statement under IFRS (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Total revenues and other income | 1,452 | 1,750 | 1,049 | 38% |
| Purchases [net of inventory variation] | 27 | (37) | (29) | >(100%) |
| Operating and administrative expenses | (399) | (410) | (252) | 58% |
| Depreciation, amortisation and net impairment losses | (1,365) | (2,262) | (400) | >100% |
| Exploration expenses | (81) | (102) | (107) | (24%) |
| Net operating income/(loss) | (366) | (1,060) | 261 | N/A |
Net operating income was negative USD 366 million in the first quarter of 2022 compared to positive USD 261 million in the first quarter of 2021. The decrease was mainly due to impairments, change in fair value of derivatives and lower entitlement production, partially offset by increased liquids and gas prices in the first quarter of 2022.
In the first quarter of 2022, net operating income was negatively impacted by impairments of USD 1,080 million and a change in fair value of derivative of USD 314 million. In the first quarter of 2021, net operating income was negatively impacted by net underlifted volumes of USD 66 million and impairments of USD 55 million.
Adjusted operating and administrative expenses increased mainly due to increased royalties and production fees primarily driven by higher prices, and higher operations and maintenance expenses. Adjusted depreciation, amortisation and net impairment losses decreased mainly due to lower entitlement production from several fields, lower investment basis caused by impairment in a previous period and portfolio change, partially offset by an increase in asset retirement obligation (ARO) estimates and change in reserve estimates. Adjusted exploration expenses decreased mainly due to lower drilling cost, field development cost and other costs, partially offset by higher exploration expenditure capitalised in previous years being expensed in the first quarter of 2022.
After total adjustments of USD 1,447 million to net operating income, Adjusted earnings [5] were positive USD 1,081 million in the first quarter of 2022, up from positive USD 382 million in the first quarter of 2021.
| Adjusted earnings (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Adjusted total revenues and other income | 1,851 | 1,700 | 1,198 | 55% |
| Adjusted purchases | 27 | (37) | (29) | >(100%) |
| Adjusted operating and administrative expenses | (432) | (388) | (335) | 29% |
| Adjusted depreciation, amortisation and net impairment losses | (326) | (484) | (349) | (7%) |
| Adjusted exploration expenses | (40) | (102) | (103) | (61%) |
| Adjusted earnings/(loss) [5] | 1,081 | 688 | 382 | >100% |
For items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Balance sheet information: The sum of equity accounted investments and non-current segment assets was USD 15,444 million at 31 March 2022, compared to USD 18,707 million at 31 March 2021.
Average daily equity production of liquids and gas was 329 mboe per day in the first quarter of 2022 compared to 423 mboe per day in the first quarter of 2021. The decrease was mainly due to a divestment of an unconventional US onshore asset in the second quarter of 2021 as well as natural decline.
Average daily entitlement production of liquids and gas decreased to 284 mboe per day in the first quarter of 2022 compared to 362 mboe per day in the first quarter of 2021. The production was influenced by the factors mentioned above in addition to lower entitlements due to US royalties which has been impacted by a divestment of an unconventional US onshore asset in the second quarter of 2021. The net effect of US royalties was in total 45 mboe per day in the first quarter of 2022 compared to 61 mboe per day in the first quarter of 2021.
| Income statement under IFRS (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Total revenues and other income | 1,269 | 1,302 | 993 | 28% |
| Operating and administrative expenses | (220) | (232) | (335) | (34%) |
| Depreciation, amortisation and net impairment losses | 212 | (486) | (436) | N/A |
| Exploration expenses | (16) | (34) | (70) | (77%) |
| Net operating income/(loss) | 1,245 | 550 | 152 | >100% |
Net operating income was USD 1,245 million in the first quarter of 2022 compared to USD 152 million in the first quarter of 2021. The increase was mainly due to higher commodity prices and reversal of impairments.
In the first quarter of 2022, net operating income was positively impacted by net impairment reversal of USD 532 million relating to assets in the Gulf of Mexico, mainly driven by higher short-term price assumptions. In the first quarter of 2021, net operating income was negatively impacted by net impairments of USD 40 million, relating to the unconventional US onshore assets.
Adjusted operating and administrative expenses decreased mainly due to the divestment of an unconventional US onshore asset in the second quarter of 2021. Adjusted depreciation, amortisation and net impairment losses decreased mainly due to lower production in the US offshore and unconventional assets as well as increased proved reserves estimates. Adjusted exploration expenses decreased mainly due to a higher portion of exploration expenditure being capitalised and a lower portion of exploration expenditure capitalised in earlier years being expensed this quarter.
After total adjustments of USD 532 million to net operating income, Adjusted earnings [5] were USD 713 million in the first quarter of 2022, up from USD 192 million in the first quarter of 2021.
| Adjusted earnings (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Adjusted total revenues and other income | 1,269 | 1,302 | 993 | 28% |
| Adjusted operating and administrative expenses | (221) | (228) | (335) | (34%) |
| Adjusted depreciation, amortisation and net impairment losses | (320) | (456) | (408) | (21%) |
| Adjusted exploration expenses | (15) | (30) | (58) | (73%) |
| Adjusted earnings/(loss) [5] | 713 | 587 | 192 | >100% |
For items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Balance sheet information: The sum of equity accounted investments and non-current segment assets was USD 11,591 million at 31 March 2022, compared to USD 12,164 million at 31 March 2021.
Natural gas sales volumes amounted to 16.5 billion standard cubic meters (bcm) in the first quarter of 2022, up 0.9 bcm compared to the first quarter of 2021. Of the total gas sales in the first quarter of 2022, entitlement gas was 14.1 bcm, up 0.5 bcm from the first quarter of 2021. The increase was mainly due to higher E&P Norway volumes.
Liquids sales volumes amounted to 185.5 million barrels (mmbl) in the first quarter of 2022, down 11.8 mmbl compared to the first quarter of 2021 mainly due to decreased purchase from third party, partially offset by increased volumes from E&P Norway equity production.
Average invoiced European natural gas sales price was 345% higher compared to the first quarter of 2021 due to low gas stocks in Europe, high demand and tight supply. Average invoiced North American piped gas sales price increased by 70% in the same period mainly due to increased market price driven by colder weather that impacted both supply and demand.
| Income statement under IFRS | Quarters | Change | ||
|---|---|---|---|---|
| (in USD million) | Q1 2022 | Q4 2021 | Q1 2021 | Q1 on Q1 |
| Total revenues and other income | 35,909 | 31,811 | 15,789 | >100% |
| Purchases [net of inventory variation] [6] | (34,289) | (30,959) | (14,176) | >100% |
| Operating and administrative expenses | (1,059) | (1,106) | (1,069) | (1%) |
| Depreciation, amortisation and net impairment losses | (78) | (74) | (152) | (48%) |
| Net operating income/(loss) | 483 | (327) | 392 | 23% |
Net operating income was USD 483 million in the first quarter of 2022 compared to USD 392 million in the first quarter of 2021. The increase was mainly due to strong results from Danske Commodities and from US gas trading, partially offset by weak results from LNG trading.
In the first quarter of 2022, net operating income was positively impacted by inventory hedging effects of USD 247 million and operational storage of USD 181 million due to increase in market prices, partially offset by unrealised derivatives loss of USD 45 million. In the first quarter of 2021, net operating income was positively impacted by inventory hedging effects of USD 287 million and operational storage of USD 105 million, partially offset by impairment losses of USD 57 million related to infastructure assets.
Adjusted purchases [6] increased mainly due to higher prices for both gas and liquids in addition to higher gas volumes. Adjusted operating and administrative expenses were higher in the first quarter of 2022 compared to the first quarter of 2021, mainly due to higher operating plant and selling, general and administration cost. Adjusted depreciation, amortisation and net impairment losses were lower in the first quarter of 2022, mainly due to the sale of a refinery asset and a lower depreciation basis for some assets.
After total adjustments of USD 461 million to net operating income, Adjusted earnings [5] were USD 22 million in the first quarter of 2022, compared to USD 61 million in the first quarter of 2021.
| Adjusted earnings (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Adjusted total revenues and other income | 35,708 | 31,171 | 15,518 | >100% |
| Adjusted purchases [6] | (34,470) | (30,956) | (14,281) | >100% |
| Adjusted operating and administrative expenses | (1,137) | (1,139) | (1,081) | 5% |
| Adjusted depreciation, amortisation and net impairment losses | (78) | (82) | (95) | (17%) |
| Adjusted earnings [5] | 22 | (1,007) | 61 | (65%) |
For items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Balance sheet information: The sum of equity accounted investments and non-current segment assets was USD 2,967 million at 31 March 2022, compared to USD 4,143 million at 31 March 2021.
Power generation3 was 511 GWh in the first quarter of 2022, compared to 451 GWh in the first quarter of 2021. The increase was mainly due to start-up of production from the Guanizuil IIA solar plant in Argentina and offshore wind farms benefitting from higher wind speeds.
| Income statement under IFRS | Change | |||
|---|---|---|---|---|
| (in USD million) | Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Q1 on Q1 |
| Total revenues and other income | 119 | 21 | 1,381 | (91%) |
| Operating and administrative expenses | (41) | (58) | (40) | 2% |
| Depreciation, amortisation and net impairment losses | (1) | (1) | (0) | >100% |
| Net operating income/(loss) | 77 | (38) | 1,341 | (94%) |
Net operating income was USD 77 million in the first quarter of 2022 compared to USD 1,341 million in the first quarter of 2021. The decrease was driven by lower gain on divestments in the first quarter of 2022 compared to the first quarter of 2021. The decrease was partially offset by higher results from equity accounted investments driven by higher power prices for assets in operation, and reduced project development costs after the Empire Wind asset started capitalising expenditures in the first quarter of 2021.
In the first quarter of 2022, net operating income was impacted by a gain of USD 87 million related to the divestment of a 10% stake in the Dogger Bank C wind farm project. In the first quarter of 2021, net operating income was impacted by gains of USD 1.4 billion related to the divestments of a 10% stake in the Dogger Bank A and B wind farm projects and of a 50% stake in the Empire Wind and Beacon Wind assets.
Adjusted operating and administrative expenses remain at the same level compared to the first quarter of 2021. Increased business development costs driven by higher activity level in the US, the UK and in Asia were offset by lower costs due to changed ownership and consolidation method for the Empire Wind and Beacon Wind assets.
After total adjustments of USD 87 million to net operating income, Adjusted earnings [5] were negative USD 10 million in the first quarter of 2022 compared to negative USD 38 million in the first quarter of 2021.
| Adjusted earnings (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Adjusted total revenues and other income | 32 | 21 | 2 | >100% |
| Adjusted operating and administrative expenses | (41) | (58) | (40) | 2% |
| Adjusted depreciation, amortisation and net impairment losses | (1) | (1) | (0) | >100% |
| Adjusted earnings [5] | (10) | (38) | (38) | 74% |
For items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Balance sheet information: The sum of equity accounted investments and non-current segment assets was USD 1,249 million at 31 March 2022, compared to USD 1,116 million at 31 March 2021.
3 Equinor share.
| Quarters | Full year | |||
|---|---|---|---|---|
| (unaudited, in USD million) Note |
Q1 2022 | Q4 2021 | Q1 2021 | 2021* |
| Revenues | 36,050 | 32,125 | 16,129 | 88,744 |
| Net income/(loss) from equity accounted investments | 99 | 138 | 30 | 259 |
| Other income 3 |
244 | 345 | 1,431 | 1,921 |
| Total revenues and other income 2 |
36,393 | 32,608 | 17,589 | 90,924 |
| Purchases [net of inventory variation] | (13,510) | (11,543) | (7,166) | (35,160) |
| Operating expenses | (1,989) | (2,281) | (1,941) | (8,598) |
| Selling, general and administrative expenses | (282) | (222) | (218) | (780) |
| Depreciation, amortisation and net impairment losses 6 |
(2,017) | (4,777) | (2,797) | (11,719) |
| Exploration expenses | (203) | (206) | (247) | (1,004) |
| Total operating expenses 2 |
(18,001) | (19,030) | (12,369) | (57,261) |
| Net operating income/(loss) 2 |
18,392 | 13,578 | 5,220 | 33,663 |
| Interest expenses and other financial expenses | (266) | (299) | (312) | (1,223) |
| Other financial items | (903) | (143) | (396) | (857) |
| Net financial items 4 |
(1,169) | (443) | (707) | (2,080) |
| Income/(loss) before tax | 17,223 | 13,135 | 4,513 | 31,583 |
| Income tax 5 |
(12,509) | (9,765) | (2,659) | (23,007) |
| Net income/(loss) | 4,714 | 3,370 | 1,854 | 8,576 |
| Attributable to equity holders of the company | 4,710 | 3,368 | 1,851 | 8,563 |
| Attributable to non-controlling interests | 4 | 2 | 3 | 14 |
| Basic earnings per share (in USD) | 1.46 | 1.04 | 0.57 | 2.64 |
| Diluted earnings per share (in USD) | 1.46 | 1.04 | 0.57 | 2.63 |
| Weighted average number of ordinary shares outstanding (in millions) | 3,228 | 3,238 | 3,248 | 3,245 |
| Weighted average number of ordinary shares outstanding diluted (in millions) | 3,237 | 3,249 | 3,256 | 3,254 |
* Audited
| (unaudited, in USD million) | Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Full year 2021* |
|---|---|---|---|---|
| Net income/(loss) | 4,714 | 3,370 | 1,854 | 8,576 |
| Actuarial gains/(losses) on defined benefit pension plans | (419) | (114) | 117 | 147 |
| Income tax effect on income and expenses recognised in OCI1) | 93 | 26 | (25) | (35) |
| Items that will not be reclassified to the Consolidated statement of income | (326) | (88) | 91 | 111 |
| Foreign currency translation effects | 173 | (374) | (46) | (1,052) |
| Items that may be subsequently reclassified to the Consolidated statement of income | 173 | (374) | (46) | (1,052) |
| Other comprehensive income/(loss) | (153) | (462) | 45 | (940) |
| Total comprehensive income/(loss) | 4,561 | 2,908 | 1,899 | 7,636 |
| Attributable to the equity holders of the company | 4,557 | 2,906 | 1,896 | 7,622 |
| Attributable to non-controlling interests | 4 | 2 | 3 | 14 |
* Audited
1) Other comprehensive income (OCI).
| (unaudited, in USD million) | Note | At 31 March 2022 |
At 31 December 2021* |
At 31 March 2021 |
|---|---|---|---|---|
| ASSETS | ||||
| Property, plant and equipment | 6 | 62,475 | 62,075 | 65,405 |
| Intangible assets | 6 | 5,725 | 6,452 | 8,151 |
| Equity accounted investments | 1,710 | 2,686 | 2,374 | |
| Deferred tax assets | 7,097 | 6,259 | 4,880 | |
| Pension assets | 1,218 | 1,449 | 1,437 | |
| Derivative financial instruments | 728 | 1,265 | 1,573 | |
| Financial investments | 3,300 | 3,346 | 3,922 | |
| Prepayments and financial receivables | 7 | 1,089 | 1,087 | 774 |
| Total non-current assets | 83,342 | 84,618 | 88,516 | |
| Inventories | 3,504 | 3,395 | 2,917 | |
| Trade and other receivables | 19,938 | 17,927 | 8,692 | |
| Derivative financial instruments | 6,776 | 5,131 | 1,096 | |
| Financial investments | 23,689 | 21,246 | 10,922 | |
| Cash and cash equivalents | 20,882 | 14,126 | 8,992 | |
| Total current assets | 74,790 | 61,826 | 32,619 | |
| Assets classified as held for sale | 3 | 788 | 676 | 1,100 |
| Total assets | 158,919 | 147,120 | 122,235 | |
| EQUITY AND LIABILITIES | ||||
| Shareholders' equity | 43,233 | 39,010 | 35,764 | |
| Non-controlling interests | 19 | 14 | 18 | |
| Total equity | 43,251 | 39,024 | 35,782 | |
| Finance debt | 4 | 24,984 | 27,404 | 27,991 |
| Lease liabilities | 2,509 | 2,449 | 3,006 | |
| Deferred tax liabilities | 14,421 | 14,037 | 11,440 | |
| Pension liabilities | 4,586 | 4,403 | 4,363 | |
| Provisions and other liabilities | 7 | 18,414 | 19,899 | 20,061 |
| Derivative financial instruments | 1,093 | 767 | 550 | |
| Total non-current liabilities | 66,007 | 68,959 | 67,411 | |
| Trade, other payables and provisions | 14,372 | 14,310 | 10,592 | |
| Current tax payable | 5 | 21,955 | 13,119 | 3,249 |
| Finance debt | 4 | 5,481 | 5,273 | 2,784 |
| Lease liabilities | 1,168 | 1,113 | 1,131 | |
| Dividends payable | 0 | 582 | 0 | |
| Derivative financial instruments | 6,236 | 4,609 | 1,014 | |
| Total current liabilities | 49,212 | 39,005 | 18,770 | |
| Liabilities directly associated with the assets classified as held for sale | 3 | 450 | 132 | 271 |
| Total liabilities | 115,668 | 108,096 | 86,453 | |
| Total equity and liabilities | 158,919 | 147,120 | 122,235 |
* Audited
| Share | Additional paid-in |
Retained | Foreign currency translation |
Share holders' |
Non controlling |
||
|---|---|---|---|---|---|---|---|
| (unaudited, in USD million) | capital | capital | earnings | reserve | equity | interests | Total equity |
| At 1 January 2021* | 1,164 | 6,852 | 30,050 | (4,194) | 33,873 | 19 | 33,892 |
| Net income/(loss) | 1,851 | 1,851 | 3 | 1,854 | |||
| Other comprehensive income/(loss) | 91 | (46) | 45 | 45 | |||
| Total comprehensive income/(loss) | 1,899 | ||||||
| Dividends | (0) | (0) | (0) | ||||
| Share buy-back | 0 | 0 | 0 | 0 | |||
| Other equity transactions | (4) | 0 | (4) | (4) | (8) | ||
| At 31 March 2021 | 1,164 | 6,848 | 31,992 | (4,240) | 35,764 | 18 | 35,782 |
| At 1 January 2022* | 1,164 | 6,408 | 36,683 | (5,245) | 39,010 | 14 | 39,024 |
| Net income/(loss) | 4,710 | 4,710 | 4 | 4,714 | |||
| Other comprehensive income/(loss) | (326) | 173 | (153) | (153) | |||
| Total comprehensive income/(loss) | 4,561 | ||||||
| Dividends | 0 | 0 | 0 | ||||
| Share buy-back1) | 0 | (330) | (330) | (330) | |||
| Other equity transactions | (4) | 0 | (3) | 0 | (3) | ||
| At 31 March 2022 | 1,164 | 6,074 | 41,068 | (5,073) | 43,233 | 19 | 43,251 |
* Audited
1) For more information see note 8 Capital distribution.
| (unaudited, in USD million) Note Q1 2022 Q4 2021 Q1 2021 2021* Income/(loss) before tax 17,223 13,135 4,513 31,583 Depreciation, amortisation and net impairment losses 6 2,017 4,777 2,797 11,719 Exploration expenditures written off 73 2 64 171 |
|---|
| (Gains)/losses on foreign currency transactions and balances 4 284 68 (70) (47) |
| (Gains)/losses on sale of assets and businesses 3 (156) (1,383) (1,519) (89) |
| (Increase)/decrease in other items related to operating activities1) (300) 684 222 106 |
| (Increase)/decrease in net derivative financial instruments 953 (315) 577 539 |
| Interest received 11 5 39 96 |
| Interest paid (118) (212) (141) (698) |
| Cash flows provided by operating activities before taxes paid and working capital |
| items 20,055 17,988 6,617 41,950 |
| Taxes paid (4,307) (6,658) (84) (8,588) |
| (Increase)/decrease in working capital 23 (3,180) (549) (4,546) |
| Cash flows provided by operating activities 15,771 8,151 5,984 28,816 |
| Cash used in business combinations2) 0 0 0 (111) |
| Capital expenditures and investments3) (2,182) (2,225) (2,151) (8,040) |
| (Increase)/decrease in financial investments (2,850) (6,387) 699 (9,951) |
| (Increase)/decrease in derivative financial instruments 424 151 (305) (1) |
| (Increase)/decrease in other interest-bearing items 189 (3) 28 4 |
| Proceeds from sale of assets and businesses 3 140 72 1,146 1,864 |
| Cash flows used in investing activities (4,465) (8,200) (613) (16,211) |
| Repayment of finance debt 0 (1,250) (1,424) (2,675) |
| Repayment of lease liabilities (317) (319) (302) (1,238) |
| Dividends paid (582) (565) (355) (1,797) |
| Share buy-back (439) (222) 0 (321) |
| Net current finance debt and other financing activities (2,804) 2,713 (1,015) 1,195 |
| Cash flows provided by/(used in) financing activities (4,142) 357 (3,096) (4,836) |
| Net increase/(decrease) in cash and cash equivalents 7,165 307 2,274 7,768 |
| Effect of exchange rate changes on cash and cash equivalents (270) (106) (174) (538) |
| Cash and cash equivalents at the beginning of the period (net of overdraft) 13,987 13,785 6,757 6,757 |
| Cash and cash equivalents at the end of the period (net of overdraft)4) 20,882 13,987 8,857 13,987 |
* Audited
1) The line Increase (decrease) in other items related to operating activities included payment of USD 189 million which represent the accretion related to the payment of the acquisition and disposal of the interests in the Bacalhau field as described below.
2) Net after cash and cash equivalents acquired.
3) The line Capital expenditures and investments for the first quarter 2022 includes USD 336 million which represents the net of an USD 769 million payment of a contingent consideration related to the acquisition of interests in the Bacalhau field in 2016 and 2017, and a corresponding receipt of USD 433 million for the simultaneous payment of contingent consideration related to disposal of parts of the acquired interests in 2018.
4) At 31 March 2022 and 31 March 2021 cash and cash equivalents net overdraft were zero. At 31 December 2021 cash and cash equivalents included a net overdraft of USD 140 million.
Equinor ASA was founded in 1972 and is incorporated and domiciled in Norway. The address of its registered office is Forusbeen 50, N-4035 Stavanger, Norway.
The Equinor group's (Equinor's) business consists principally of the exploration, production, transportation, refining and marketing of petroleum and petroleum-derived products, and other forms of energy. Equinor ASA is listed on the Oslo Børs (Norway) and the New York Stock Exchange (USA).
Equinor Energy AS, a 100% owned operating subsidiary of Equinor ASA and owner of all of Equinor's oil and gas activities and net assets on the Norwegian continental shelf, is co-obligor or guarantor of certain debt obligations of Equinor ASA.
Equinor's condensed interim financial statements for the first quarter of 2022 were authorised for issue by the board of directors on 3 May 2022.
These condensed interim financial statements are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The condensed interim financial statements do not include all the information and disclosures required by International Financial Reporting Standards (IFRS) for a complete set of financial statements, and these condensed interim financial statements should be read in conjunction with the Consolidated annual financial statements for 2021. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, but the differences do not impact Equinor's financial statements for the periods presented. A description of the significant accounting policies applied in preparing these condensed interim financial statements is included in Equinor's Consolidated annual financial statements for 2021.
There have been no changes to the significant accounting policies during 2022 compared to the Consolidated annual financial statements for 2021. When determining fair value, there have been no changes to the valuation techniques or models and Equinor applies the same sources of input and the same criteria for categorisation in the fair value hierarchy as disclosed in the Consolidated annual financial statements for 2021.
Certain amounts in the comparable periods in the note disclosures have been reclassified to conform to current period presentation. The subtotals and totals in some of the tables may not equal the sum of the amounts shown due to rounding.
The Condensed interim financial statements are unaudited.
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are reviewed on an on-going basis and are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Equinor's operations are managed through operating segments (business areas). The reportable segments Exploration & Production Norway (E&P Norway), Exploration & Production International (E&P International), Exploration & Production USA (E&P USA) Marketing, Midstream & Processing (MMP) and Renewables (REN) correspond to the operating segments. The operating segments Projects, Drilling & Procurement (PDP), Technology, Digital & Innovation (TDI) and Corporate staff and functions are aggregated into the reportable segment Other based on materiality. The majority of the costs in PDP and TDI are allocated to the three Exploration & Production segments, MMP and REN.
Inter-segment sales and related unrealised profits, mainly from the sale of crude oil and products, are eliminated in the Eliminations column below. Inter-segment revenues are based upon estimated market prices.
The reported measure of segment profit is net operating income/(loss). Deferred tax assets, pension assets and non-current financial assets are not allocated to the segments.
The measurement basis for segments is IFRS as applied by the group with the exception of IFRS 16 Leases and the line item Additions to PP&E, intangibles and equity accounted investments. All IFRS 16 leases are presented within the Other segment. The lease costs for the period are allocated to the different segments based on underlying lease payments, with a corresponding credit in the Other segment. Lease costs allocated to licence partners are recognised as other revenues in the Other segment. Additions to PP&E, intangible assets and equity accounted investments in the E&P and MMP segments include the period's allocated lease costs related to activity being capitalised with a corresponding negative addition in the Other segment. The line item Additions to PP&E, intangibles and equity accounted investments excludes movements related to changes in asset retirement obligations.
| First quarter 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in USD million) | E&P Norway |
E&P International |
E&P USA |
MMP | REN | Other | Eliminations | Total |
| Revenues third party, other revenue and other income |
179 | 61 | 78 | 35,818 | 90 | 69 | 0 | 36,294 |
| Revenues inter-segment | 18,245 | 1,324 | 1,191 | 89 | 0 | 1 | (20,849) | 0 |
| Net income/(loss) from equity accounted investments |
0 | 67 | 0 | 3 | 29 | 0 | 0 | 99 |
| Total revenues and other income | 18,424 | 1,452 | 1,269 | 35,909 | 119 | 70 | (20,849) | 36,393 |
| Purchases [net of inventory variation] | 0 | 27 | 0 | (34,289) | 0 | 0 | 20,752 | (13,510) |
| Operating, selling, general and administrative expenses |
(838) | (399) | (220) | (1,059) | (41) | 99 | 188 | (2,271) |
| Depreciation, amortisation and net impairment losses |
(546) | (1,365) | 212 | (78) | (1) | (240) | 0 | (2,017) |
| Exploration expenses | (106) | (81) | (16) | 0 | 0 | 0 | 0 | (203) |
| Total operating expenses | (1,490) | (1,818) | (24) | (35,427) | (41) | (141) | 20,940 | (18,001) |
| Net operating income/(loss) | 16,934 | (366) | 1,245 | 483 | 77 | (71) | 90 | 18,392 |
| Additions to PP&E, intangibles and equity accounted investments |
1,132 | 478 | 126 | 51 | 43 | 358 | (0) | 2,188 |
| Balance sheet information | ||||||||
| Equity accounted investments | 3 | 458 | 0 | 115 | 1,086 | 47 | (0) | 1,710 |
| Non-current segment assets | 35,197 | 14,986 | 11,591 | 2,852 | 163 | 3,411 | 0 | 68,200 |
| Non-current assets not allocated to segments | 13,432 | |||||||
| Total non-current assets | 83,342 |
| Total 32,470 (0) |
|---|
| 138 |
| 32,608 |
| (11,543) |
| (2,504) |
| (4,777) |
| (206) |
| (19,030) |
| 13,578 |
| 2,243 |
| First quarter 2021 | E&P | E&P | E&P | |||||
|---|---|---|---|---|---|---|---|---|
| (in USD million) | Norway | International | USA | MMP | REN | Other | Eliminations | Total |
| Revenues third party, other revenue and | ||||||||
| other income | 28 | 221 | 121 | 15,697 | 1,382 | 111 | 0 | 17,559 |
| Revenues inter-segment | 5,755 | 805 | 872 | 84 | 0 | 1 | (7,517) | 0 |
| Net income/(loss) from equity accounted investments |
0 | 23 | 0 | 8 | (1) | 0 | 0 | 30 |
| Total revenues and other income | 5,783 | 1,049 | 993 | 15,789 | 1,381 | 111 | (7,517) | 17,589 |
| Purchases [net of inventory variation] | 0 | (29) | (0) | (14,176) | 0 | (0) | 7,040 | (7,166) |
| Operating, selling, general and administrative expenses |
(794) | (252) | (335) | (1,069) | (40) | 54 | 277 | (2,160) |
| Depreciation, amortisation and net | ||||||||
| impairment losses | (1,570) | (400) | (436) | (152) | (0) | (240) | 0 | (2,797) |
| Exploration expenses | (70) | (107) | (70) | 0 | 0 | 0 | 0 | (247) |
| Total operating expenses | (2,433) | (788) | (841) | (15,397) | (40) | (187) | 7,317 | (12,369) |
| Net operating income/(loss) | 3,350 | 261 | 152 | 392 | 1,341 | (76) | (200) | 5,220 |
| Additions to PP&E, intangibles and equity accounted investments |
1,308 | 396 | 157 | 38 | 128 | (13) | (0) | 2,014 |
| Balance sheet information | ||||||||
| Equity accounted investments | 3 | 1,154 | 0 | 91 | 1,097 | 30 | (0) | 2,374 |
| Non-current segment assets | 35,876 | 17,553 | 12,164 | 4,053 | 18 | 3,892 | 0 | 73,556 |
| Non-current assets not allocated to segments | 12,586 | |||||||
| Total non-current assets | 88,516 |
In the first quarter of 2022 Equinor recognised net impairment reversal of USD 266 million of which USD 832 million was impairment of equity accounted investments and USD 46 million was impairment of acquisition cost and signature bonuses classified as exploration expenses. The line-item Exploration expenses in the Consolidated statement of income also includes impairment of capitalised exploration well cost. For information regarding impairment of capitalised exploration well cost, see note 6 Property, plant and equipment and intangible assets.
In the E&P Norway segment the impairment reversal were USD 817 million mainly caused by increased short term commodity prices and changed gas export strategy.
In the E&P International segment the impairments of USD 1,083 million were related to Equinor's decision to exit Russia. See note 3 Acquisitions and disposals.
In the E&P USA segment the net impairment reversal was USD 532 million in the E&P USA – offshore Gulf of Mexico. The impairment reversals were mainly caused by increased short term commodity prices.
For information on group impairment losses and reversals, see note 6 Property, plant and equipment and intangible assets.
| At 31 March | At 31 December | At 31 March | |
|---|---|---|---|
| (in USD million) | 2022 | 2021 | 2021 |
| Norway | 40,244 | 40,564 | 42,280 |
| USA | 12,564 | 12,323 | 13,047 |
| Brazil | 8,890 | 8,751 | 8,359 |
| UK | 2,022 | 2,096 | 4,331 |
| Azerbaijan | 1,633 | 1,654 | 1,692 |
| Canada | 1,385 | 1,403 | 1,480 |
| Angola | 954 | 948 | 942 |
| Algeria | 678 | 708 | 794 |
| Denmark | 522 | 536 | 918 |
| Argentina | 512 | 474 | 420 |
| Other | 505 | 1,757 | 1,667 |
| Total non-current assets1) | 69,910 | 71,213 | 75,930 |
1) Excluding deferred tax assets, pension assets and non-current financial assets
When attributing the line item Revenues third party, other revenues and other income to the country of the legal entity executing the sale for the first quarter of 2022, Norway constitutes 86% and USA constitutes 10% of such revenues. For the first quarter of 2021, Norway and USA constituted 79% and 16% of such revenues, respectively.
| Quarters | Full year | |||
|---|---|---|---|---|
| (in USD million) | Q1 2022 | Q4 2021 | Q1 2021 | 2021 |
| Crude oil | 15,034 | 10,784 | 8,714 | 38,307 |
| Natural gas | 15,538 | 15,199 | 3,298 | 28,050 |
| - European gas | 14,350 | 13,990 | 2,661 | 24,900 |
| - North American gas | 621 | 611 | 422 | 1,783 |
| - Other incl. Liquefied natural gas | 567 | 598 | 216 | 1,368 |
| Refined products | 2,904 | 3,507 | 2,373 | 11,473 |
| Natural gas liquids | 2,576 | 2,675 | 1,910 | 8,490 |
| Transportation | 282 | 239 | 256 | 921 |
| Other sales | 1,117 | 425 | 112 | 1,006 |
| Revenues from contracts with customers | 37,451 | 32,828 | 16,664 | 88,247 |
| Taxes paid in-kind | 105 | 105 | 78 | 345 |
| Physically settled commodity derivatives | (1,348) | (1,453) | (159) | (1,075) |
| Gain/(loss) on commodity derivatives | (220) | 584 | (523) | 951 |
| Other revenues | 61 | 61 | 69 | 276 |
| Total other revenues | (1,401) | (703) | (536) | 497 |
| Revenues | 36,050 | 32,125 | 16,129 | 88,744 |
On 10 February 2022, Equinor closed the transaction with Eni to sell a 10% equity interest in the Dogger Bank C project in the UK for a total consideration of GBP 68 million (USD 91 million), resulting in a gain of GBP 65 million (USD 87 million). After closing, the new overall shareholdings in Dogger Bank C are SSE Renewables (40%), Equinor (40%), and Eni (20%). Equinor will continue to equity account for the remaining investment as a joint venture. The gain is presented in the line item Other income in the Consolidated statement of income in the REN segment.
In the fourth quarter of 2021, Equinor entered into an agreement with Vermilion Energy Inc (Vermilion) to sell Equinor's non-operated equity position in the Corrib gas project in Ireland. The transaction covers a sale of 100% of the shares in Equinor Energy Ireland Limited (EEIL). EEIL owns 36.5% of the Corrib field alongside the operator Vermilion (20%) and Nephin Energy (43.5%). Equinor and Vermilion have agreed a consideration of USD 434 million before closing adjustments and contingent consideration linked to 2022 production level and gas prices. The effective date for the transaction is 1 January 2022. Closing is expected during 2022.
Equinor has certain investments in Russia. Following Russia's invasion of Ukraine, Equinor has announced that it has decided to stop new investments in Russia and start the process of exiting Equinor's joint arrangements. Based on this decision, Equinor has evaluated its assets in Russia and recognised net impairments of USD 1,083 million in the first quarter, of which USD 251 million is related to property, plant and equipment and intangible assets and USD 832 million is related to investments accounted for using the equity method. The impairments are net of contingent consideration from the time of acquiring the assets. The impairments are recognised in the line items Depreciation, amortisation and net impairment losses and Exploration expenses in the Consolidated statement of income based on the nature of the impaired assets and are reflected in the E&P International segment.
Equinor has stopped trading in Russian oil. This means that Equinor will not enter into any new trades or engage in new transport of oil and oil products from Russia. Equinor has assessed the accounting impact of certain commitments arising from such contracts entered into prior to the invasion and deem the impact to be immaterial.
| Quarters | Full year | |||
|---|---|---|---|---|
| (in USD million) | Q1 2022 | Q4 2021 | Q1 2021 | 2021 |
| Net foreign currency exchange gains/(losses) | (284) | (68) | 70 | 47 |
| Interest income and other financial items | 114 | 37 | 45 | 152 |
| Gains/(losses) on financial investments | (134) | (16) | (150) | (348) |
| Gains/(losses) other derivative financial instruments | (599) | (96) | (360) | (708) |
| Interest and other finance expenses | (266) | (299) | (312) | (1,223) |
| Net financial items | (1,169) | (443) | (707) | (2,080) |
Equinor has a US Commercial paper programme available with a limit of USD 5 billion. USD 1,305 million has been utilised as of 31 March 2022, compared to USD 2,600 million utilised as of 31 December 2021.
| Quarters | Full year | |||
|---|---|---|---|---|
| (in USD million) | Q1 2022 | Q4 2021 | Q1 2021 | 2021 |
| Income/(loss) before tax | 17,223 | 13,135 | 4,513 | 31,583 |
| Income tax | (12,509) | (9,765) | (2,659) | (23,007) |
| Effective tax rate | 72.6% | 74.3% | 58.9% | 72.8% |
The tax rate for the first quarter of 2022 was primarily influenced by high share of operating income from the Norwegian continental shelf and losses including impairments recognised in countries with lower effective tax rates, partially offset by positive income in countries with unrecognised deferred tax assets. The tax rate is also influenced by currency effects in entities that are taxable in other currencies than the functional currency.
The tax rate for the first quarter of 2021 was primarily influenced by positive operating income in countries with unrecognised deferred tax assets.
| (in USD million) | Property, plant and equipment |
Intangible assets |
|---|---|---|
| Carrying amount at 31 December 2021 | 62,075 | 6,452 |
| Additions | 571 | 79 |
| Transfers | 731 | (731) |
| Disposals and reclassifications | 0 | (1) |
| Transferred to assets classified as held for sale | 6 | 0 |
| Expensed exploration expenditures and net impairment losses | - | (73) |
| Depreciation, amortisation and net impairment losses | (1,180) | (6) |
| Foreign currency translation effects | 272 | 3 |
| Carrying amount at 31 March 2022 | 62,475 | 5,725 |
For information on impairment losses and reversals per reporting segment, see note 2 Segments and note 3 Acquisitions and disposals.
| First quarter | Property, plant and | |||||
|---|---|---|---|---|---|---|
| equipment | Intangible assets | Total | ||||
| (in USD million) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Producing and development assets | (1,144) | 410 | 0 | 12 | (1,144) | 423 |
| Goodwill | - | - | 0 | 1 | 0 | 1 |
| Acquisition costs related to oil and gas prospects | - | - | 46 | 4 | 46 | 4 |
| Total net impairment loss/(reversal) recognised | (1,144) | 410 | 46 | 18 | (1,098) | 428 |
The net impairments have been recognised in the Consolidated statement of income as Depreciation, amortisation and net impairment losses and Exploration expenses based on the impaired assets' nature of property, plant and equipment and intangible assets, respectively.
The recoverable amounts in the first quarter of 2022 were based on value in use except for the Russian assets, see note 3 Acquisitions and disposals.
Value in use estimates and discounted cash flows used to determine the recoverable amount of assets tested for impairment are based on internal forecasts on costs, production profiles and commodity prices.
Equinor's estimated asset retirement obligations (ARO) have decreased by USD 1,407 million to USD 16,010 million compared to yearend 2021, mainly due to increased discount rates. Changes in ARO are reflected within Property, plant and equipment and Provisions and other liabilities in the Consolidated balance sheet.
During the normal course of its business, Equinor is involved in legal and other proceedings, and several unresolved claims are currently outstanding. The ultimate liability or asset in respect of such litigation and claims cannot be determined at this time. Equinor has provided in its Condensed interim financial statements for probable liabilities related to litigation and claims based on the company's best judgement. Equinor does not expect that its financial position, results of operations or cash flows will be materially affected by the resolution of these legal proceedings.
In February 2022, Equinor launched the first tranche of USD 1 billion of the share buy-back programme for 2022, totaling up to USD 5 billion. For the first tranche Equinor entered into an irrevocable agreement with a third party for up to USD 330 million of shares to be purchased in the market, while up to USD 670 million of shares from the Norwegian State will in accordance with an agreement with the Ministry of Petroleum and Energy be redeemed at the annual general meeting in May 2022 in order for the Norwegian State to maintain its ownership percentage in Equinor. As of 31 March 2022, the USD 330 million order has been acquired in the open market and the full amount has been settled.
On 3 May 2022, the board of directors resolved to declare a cash dividend for the first quarter of 2022 of USD 0.20 per share and an extraordinary cash dividend of USD 0.20 per share. The Equinor shares will be traded ex-dividend 11 August 2022 on the Oslo Børs and for ADR holders on the New York Stock Exchange. Record date will be 12 August 2022 and payment date will be 26 August 2022.
On 3 May 2022, the board of directors resolved the commencement of the second tranche of the share buy-back programme for 2022 of a total of around USD 1.33 billion, including shares to be redeemed from the Norwegian State (subject to annual general meeting approval). The second tranche will end no later than 26 July 2022.
As part of the ongoing management of Equinor's portfolio on the Norwegian Continental Shelf (NCS), Equinor has minor interests that have met the requirements for held for sale after the reporting period. During the period from the end of March and up to the date when these financial statements were authorised for issue, the uncertainty related to an ongoing process of divesting these interests through a sales transaction has been significantly reduced. The interests are included in the E&P Norway segment.
Operational data
| Quarters | Change | |||
|---|---|---|---|---|
| Operational data | Q1 2022 | Q4 2021 | Q1 2021 | Q1 on Q1 |
| Prices | ||||
| Average Brent oil price (USD/bbl) | 101.4 | 79.7 | 60.9 | 67% |
| E&P Norway average liquids price (USD/bbl) | 100.3 | 77.7 | 57.3 | 75% |
| E&P International average liquids price (USD/bbl) | 96.3 | 76.1 | 58.6 | 64% |
| E&P USA average liquids price (USD/bbl) | 82.5 | 67.5 | 50.5 | 63% |
| Group average liquids price (USD/bbl) [1] | 97.1 | 75.9 | 56.4 | 72% |
| Group average liquids price (NOK/bbl) [1] | 859 | 663 | 480 | 79% |
| E&P Norway average internal gas price (USD/mmbtu) [9] | 29.77 | 28.52 | 5.46 | >100% |
| E&P USA average internal gas price (USD/mmbtu) [9] | 4.18 | 4.84 | 2.28 | 83% |
| Average invoiced gas prices - Europe (USD/mmbtu) [8] | 29.60 | 28.76 | 6.65 | >100% |
| Average invoiced gas prices - North America (USD/mmbtu) [8] | 4.62 | 4.97 | 2.71 | 70% |
| Refining reference margin (USD/bbl) [2] | 5.8 | 6.0 | 1.5 | >100% |
| Entitlement production (mboe per day) | ||||
| E&P Norway entitlement liquids production | 638 | 656 | 662 | (4%) |
| E&P International entitlement liquids production | 201 | 200 | 212 | (5%) |
| E&P USA entitlement liquids production | 114 | 127 | 150 | (24%) |
| Group entitlement liquids production | 953 | 983 | 1,024 | (7%) |
| E&P Norway entitlement gas production | 798 | 813 | 723 | 10% |
| E&P International entitlement gas production | 37 | 38 | 55 | (33%) |
| E&P USA entitlement gas production | 170 | 179 | 212 | (20%) |
| Group entitlement gas production | 1,005 | 1,029 | 990 | 2% |
| Total entitlement liquids and gas production [3] | 1,958 | 2,012 | 2,014 | (3%) |
| Equity production (mboe per day) | ||||
| E&P Norway equity liquids production | 638 | 656 | 662 | (4%) |
| E&P International equity liquids production | 287 | 283 | 299 | (4%) |
| E&P USA equity liquids production | 127 | 137 | 169 | (25%) |
| Group equity liquids production | 1,051 | 1,076 | 1,130 | (7%) |
| E&P Norway equity gas production | 798 | 813 | 723 | 10% |
| E&P International equity gas production | 54 | 56 | 61 | (12%) |
| E&P USA equity gas production | 203 | 213 | 254 | (20%) |
| Group equity gas production | 1,055 | 1,082 | 1,037 | 2% |
| Total equity liquids and gas production [4] | 2,106 | 2,158 | 2,168 | (3%) |
| REN power generation | ||||
| Power generation (GWh) Equinor share | 511 | 526 | 451 | 13% |
| Quarters | Change | |||
|---|---|---|---|---|
| Exchange rates | Q1 2022 | Q4 2021 | Q1 2021 | Q1 on Q1 |
| NOK/USD average daily exchange rate | 0.1130 | 0.1146 | 0.1174 | (4%) |
| NOK/USD period-end exchange rate | 0.1143 | 0.1134 | 0.1173 | (3%) |
| USD/NOK average daily exchange rate | 8.8483 | 8.7245 | 8.5146 | 4% |
| USD/NOK period-end exchange rate | 8.7479 | 8.8194 | 8.5249 | 3% |
| EUR/USD average daily exchange rate | 1.1216 | 1.1433 | 1.2048 | (7%) |
| EUR/USD period-end exchange rate | 1.1101 | 1.1326 | 1.1725 | (5%) |
| Health, safety and the environment | Twelve months average per Q1 2022 |
Full year 2021 |
|---|---|---|
| Total recordable injury frequency (TRIF) | 2.4 | 2.4 |
| Serious Incident Frequency (SIF) | 0.5 | 0.4 |
| Oil and gas leakages (number of)1) | 9 | 12 |
| Climate | First quarter 2022 |
Full year 2021 |
|---|---|---|
| Upstream CO2 intensity (kg CO2/boe)2) | 6.7 | 7.0 |
1) Number of leakages with rate above 0.1 kg/second during the past 12 months.
2) Total scope 1 emissions of CO2 (kg CO2) from exploration and production, divided by total production (boe).
The table specifies the adjustments made to each of the profit and loss line item included in the net operating income/(loss) subtotal.
| Items impacting net operating income/(loss) in the first quarter of 2022 (in USD million) |
Equinor group |
Exploration & Production Norway |
Exploration & Production International |
Exploration & Production USA |
Marketing, Midstream & Processing |
Renewables | Other |
|---|---|---|---|---|---|---|---|
| Net operating income/(loss) | 18,392 | 16,934 | (366) | 1,245 | 483 | 77 | 19 |
| Total revenues and other income | 319 | 209 | 400 | - | (202) | (87) | (1) |
| Changes in fair value of derivatives | 205 | (154) | 314 | - | 45 | - | - |
| Periodisation of inventory hedging effect | (247) | - | - | - | (247) | - | - |
| Over-/underlift | 449 | 363 | 86 | - | - | - | - |
| Gain/loss on sale of assets | (88) | - | - | - | - | (87) | (1) |
| Purchases [net of inventory variation] | (272) | - | - | - | (181) | - | (90) |
| Operational storage effects | (181) | - | - | - | (181) | - | - |
| Eliminations | (90) | - | - | - | - | - | (90) |
| Operating and administrative expenses | (179) | (68) | (33) | (0) | (78) | - | - |
| Over-/underlift | (101) | (68) | (33) | - | - | - | - |
| Provisions | (78) | - | - | - | (78) | - | - |
| Depreciation, amortisation and net | |||||||
| impairment losses | (315) | (821) | 1,039 | (533) | - | - | - |
| Impairment | 1,039 | - | 1,039 | - | - | - | - |
| Reversal of Impairment | (1,354) | (821) | - | (533) | - | - | - |
| Exploration expenses | 46 | 4 | 41 | 1 | - | - | - |
| Impairment | 46 | 4 | 41 | 1 | - | - | - |
| Sum of adjustments to net operating income/(loss) |
(401) | (676) | 1,447 | (532) | (461) | (87) | (91) |
| Adjusted earnings/(loss) [5] | 17,991 | 16,258 | 1,081 | 713 | 22 | (10) | (72) |
| Tax on adjusted earnings | (12,812) | (12,602) | (234) | (13) | 6 | 3 | 29 |
| Adjusted earnings/(loss) after tax [5] | 5,179 | 3,656 | 846 | 700 | 27 | (7) | (43) |
| Items impacting net operating income/(loss) in the first quarter of 2021 (in USD million) |
Equinor group |
Exploration & Production Norway |
Exploration & Production International |
Exploration & Production USA |
Marketing, Midstream & Processing |
Renewables | Other |
|---|---|---|---|---|---|---|---|
| Net operating income/(loss) | 5,220 | 3,350 | 261 | 152 | 392 | 1,341 | (276) |
| Total revenues and other income | (1,645) | (143) | 149 | - | (271) | (1,379) | - |
| Changes in fair value of derivatives | 16 | - | - | - | 16 | - | - |
| Periodisation of inventory hedging effect | (287) | - | - | - | (287) | - | - |
| Impairment from associated companies | 3 | - | - | - | - | 3 | - |
| Over-/underlift | 6 | (143) | 149 | - | - | - | - |
| Gain/loss on sale of assets | (1,382) | - | - | - | - | (1,382) | - |
| Purchases [net of inventory variation] | 95 | - | - | - | (105) | - | 200 |
| Operational storage effects | (105) | - | - | - | (105) | - | - |
| Eliminations | 200 | - | - | - | - | - | 200 |
| Operating and administrative expenses | (14) | 80 | (82) | - | (11) | - | - |
| Over-/underlift | (5) | 78 | (82) | - | - | - | - |
| Other adjustments | 2 | 2 | - | - | - | - | - |
| Provisions | (11) | - | - | - | (11) | - | - |
| Depreciation, amortisation and net impairment losses |
411 | 276 | 50 | 28 | 57 | - | - |
| Impairment | 411 | 276 | 50 | 28 | 57 | - | - |
| Exploration expenses | 17 | - | 4 | 12 | - | - | - |
| Impairment | 17 | - | 4 | 12 | - | - | - |
| Sum of adjustments to net operating income/(loss) |
(1,135) | 213 | 121 | 40 | (330) | (1,379) | 200 |
| Adjusted earnings/(loss) [5] | 4,085 | 3,563 | 382 | 192 | 61 | (38) | (76) |
| Tax on adjusted earnings | (2,796) | (2,586) | (206) | (0) | (31) | 4 | 23 |
| Adjusted earnings/(loss) after tax [5] | 1,289 | 977 | 176 | 192 | 30 | (34) | (53) |
| Items impacting net operating income/(loss) in the fourth quarter of 2021 (in USD million) |
Equinor group |
Exploration & Production Norway |
Exploration & Production International |
Exploration & Production USA |
Marketing, Midstream & Processing |
Renewables | Other |
|---|---|---|---|---|---|---|---|
| Net operating income/(loss) | 13,578 | 14,858 | (1,060) | 550 | (327) | (38) | (405) |
| Total revenues and other income | (772) | (80) | (50) | - | (640) | (0) | (1) |
| Changes in fair value of derivatives | (173) | (81) | 36 | - | (128) | - | - |
| Periodisation of inventory hedging effect | (346) | - | - | - | (346) | - | - |
| Impairment from associated companies | (0) | - | - | - | - | (0) | - |
| Over-/underlift | (85) | 1 | (86) | - | - | - | - |
| Gain/loss on sale of assets | (168) | - | 0 | - | (167) | - | (1) |
| Purchases [net of inventory variation] | 342 | - | - | - | 2 | - | 340 |
| Operational storage effects | 2 | - | - | - | 2 | - | - |
| Eliminations | 340 | - | - | - | - | - | 340 |
| Operating and administrative expenses | 39 | 35 | 21 | 4 | (33) | - | 12 |
| Over-/underlift | 52 | 31 | 21 | - | - | - | - |
| Other adjustments | (21) | 4 | - | - | (25) | - | - |
| Gain/loss on sale of assets | 16 | - | - | 4 | - | - | 12 |
| Provisions | (8) | - | - | - | (8) | - | - |
| Depreciation, amortisation and net impairment losses |
1,798 | - | 1,777 | 29 | (9) | - | (0) |
| Impairment | 1,798 | - | 1,777 | 29 | (9) | - | (0) |
| Exploration expenses | 4 | - | 0 | 4 | - | - | - |
| Impairment | 4 | - | 0 | 4 | - | - | - |
| Sum of adjustments to net operating income/(loss) |
1,411 | (45) | 1,749 | 37 | (680) | (0) | 350 |
| Adjusted earnings/(loss) [5] | 14,989 | 14,813 | 688 | 587 | (1,007) | (38) | (54) |
| Tax on adjusted earnings | (10,592) | (11,315) | (180) | (14) | 911 | 8 | (2) |
| Adjusted earnings/(loss) after tax [5] | 4,397 | 3,498 | 508 | 574 | (96) | (30) | (57) |
| Quarters | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Q1 2022 | Q4 2021 | Q1 2021 | |||||||
| (in USD million) | Adjusted earnings |
Tax on adjusted earnings |
Adjusted earnings after tax |
Adjusted earnings |
Tax on adjusted earnings |
Adjusted earnings after tax |
Adjusted earnings |
Tax on adjusted earnings |
Adjusted earnings after tax |
| E&P Norway | 16,258 | (12,602) | 3,656 | 14,813 | (11,315) | 3,498 | 3,563 | (2,586) | 977 |
| E&P International | 1,081 | (234) | 846 | 688 | (180) | 508 | 382 | (206) | 176 |
| E&P USA | 713 | (13) | 700 | 587 | (14) | 574 | 192 | (0) | 192 |
| MMP | 22 | 6 | 27 | (1,007) | 911 | (96) | 61 | (31) | 30 |
| REN | (10) | 3 | (7) | (38) | 8 | (30) | (38) | 4 | (34) |
| Other | (72) | 29 | (43) | (54) | (2) | (57) | (76) | 23 | (53) |
| Total Equinor consolidation | 17,991 | (12,812) | 5,179 | 14,989 | (10,592) | 4,397 | 4,085 | (2,796) | 1,289 |
| Effective tax rates on adjusted earnings |
71.2% | 70.7% | 68.4% |
| Reconciliation of adjusted earnings after tax to net income | Quarters | |||
|---|---|---|---|---|
| (in USD million) | Q1 2022 | Q4 2021 | Q1 2021 | |
| Net operating income/(loss) | A | 18,392 | 13,578 | 5,220 |
| Income tax less tax on net financial items | B | 12,572 | 10,033 | 2,863 |
| Net operating income after tax | C = A-B | 5,820 | 3,545 | 2,358 |
| Items impacting net operating income1) | D | (401) | 1,411 | (1,135) |
| Tax on items impacting net operating income | E | 239 | 559 | (67) |
| Adjusted earnings after tax [5] | F = C+D-E | 5,179 | 4,397 | 1,289 |
| Net financial items | G | (1,169) | (443) | (707) |
| Tax on net financial items | H | 64 | 267 | 204 |
| Net income/(loss) | I = C+G+H | 4,714 | 3,370 | 1,854 |
1) Represents the total adjustments to net operating income made to arrive at adjusted earnings (i.e., adjusted purchases, adjusted operating and administrative expenses, adjusted depreciation, amortisation and impairment expenses and adjusted exploration expenses, each of which are presented and reconciled to the relevant related IFRS figure for the periods presented in this report).
| Adjusted earnings break down (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| Natural Gas Europe | (383) | (1,274) | (30) | >(100%) |
| Natural Gas US | 123 | (31) | 2 | >100% |
| Liquids | 235 | (15) | 156 | 51% |
| Other | 46 | 313 | (66) | N/A |
| Adjusted earnings MMP | 22 | (1,007) | 61 | (65%) |
| Adjusted exploration expenses (in USD million) |
Q1 2022 | Quarters Q4 2021 |
Q1 2021 | Change Q1 on Q1 |
|---|---|---|---|---|
| E&P Norway exploration expenditures | 127 | 114 | 114 | 11% |
| E&P International exploration expenditures | 44 | 97 | 133 | (67%) |
| E&P USA exploration expenditures | 51 | 59 | 17 | >100% |
| Group exploration expenditures | 222 | 269 | 264 | (16%)1) |
| Expensed, previously capitalised exploration expenditures | 26 | (2) | 47 | (44%) |
| Capitalised share of current period's exploration activity | (91) | (65) | (81) | 13% |
| Impairment (reversal of impairment) | 46 | 4 | 17 | >100% |
| Exploration expenses according to IFRS | 203 | 206 | 247 | (18%) |
| Items impacting net operating income/(loss)2) | (46) | (4) | (17) | >100% |
| Adjusted exploration expenses | 157 | 202 | 230 | (32%) |
1) Activity on 15 wells in the first quarter of 2022 where 11 were completed, compared to activity on 16 wells in the first quarter of 2021 where 5 were completed.
2) For items impacting net operating income/(loss), see Reconciliation of net operating income/(loss) to adjusted earnings in the Supplementary disclosures.
The table below reconciles the net interest-bearing debt adjusted, the capital employed, the net debt to capital employed ratio adjusted including lease liabilities and the net debt to capital employed adjusted ratio with the most directly comparable financial measure or measures calculated in accordance with IFRS.
| Calculation of capital employed and net debt to capital employed ratio (in USD million) |
At 31 March 2022 |
At 31 December 2021 |
At 31 March 2021 |
|
|---|---|---|---|---|
| Shareholders' equity | 43,233 | 39,010 | 35,764 | |
| Non-controlling interests | 19 | 14 | 18 | |
| Total equity | A | 43,251 | 39,024 | 35,782 |
| Current finance debt and lease liabilities | 6,649 | 6,386 | 3,915 | |
| Non-current finance debt and lease liabilities | 27,493 | 29,854 | 30,997 | |
| Gross interest-bearing debt | B | 34,142 | 36,239 | 34,913 |
| Cash and cash equivalents | 20,882 | 14,126 | 8,992 | |
| Current financial investments | 23,689 | 21,246 | 10,922 | |
| Cash and cash equivalents and financial investment | C | 44,571 | 35,372 | 19,914 |
| Net interest-bearing debt [10] | B1 = B-C | (10,429) | 867 | 14,998 |
| Other interest-bearing elements 1) | 4,152 | 2,369 | 773 | |
| Normalisation for cash-build up before tax payment (50% of Tax Payment) 2) | 2,087 | - | 39 | |
| Net interest-bearing debt adjusted normalised for tax payment, including lease liabilities [5] | B2 | (4,190) | 3,236 | 15,811 |
| Lease liabilities | 3,677 | 3,562 | 4,137 | |
| Net interest-bearing debt adjusted [5] | B3 | (7,867) | (326) | 11,674 |
| Calculation of capital employed [5] | ||||
| Capital employed | A+B1 | 32,823 | 39,891 | 50,781 |
| Capital employed adjusted, including lease liabilities | A+B2 | 39,062 | 42,259 | 51,593 |
| Capital employed adjusted | A+B3 | 35,384 | 38,697 | 47,456 |
| Calculated net debt to capital employed [5] | ||||
| Net debt to capital employed | (B1)/(A+B1) | (31.8%) | 2.2% | 29.5% |
| Net debt to capital employed adjusted, including lease liabilities | (B2)/(A+B2) | (10.7%) | 7.7% | 30.6% |
| Net debt to capital employed adjusted | (B3)/(A+B3) | (22.2%) | (0.8%) | 24.6% |
1) Cash and cash equivalents adjustments regarding collateral deposits classified as cash and cash equivalents in the Consolidated balance sheet but considered as non-cash in the non-GAAP calculations as well as financial investments in Equinor Insurance AS classified as current financial investments.
2) Adjustment to net interest-bearing debt for cash build-up in the first quarter and the third quarter before tax payment on 1 April and 1 October. This is to exclude 50% of the cash build-up to have a more even allocation of tax payments between the four quarters and hence a more representative net interest-bearing debt.
Non-GAAP financial measures are defined as numerical measures that either exclude or include amounts or certain accounting items that are not excluded or included in the comparable measures calculated and presented in accordance with GAAP (i.e., IFRS).
Management considers adjusted earnings and adjusted earnings after tax together with other non-GAAP financial measures as defined below, to provide a better indication of the underlying operational and financial performance in the period (excluding financing), and therefore better facilitate comparisons between periods.
The following financial measures may be considered non-GAAP financial measures:
Adjusted earnings and adjusted earnings after tax should be considered additional measures rather than substitutes for net operating income/(loss) and net income/(loss), which are the most directly comparable IFRS measures. There are material limitations associated with the use of adjusted earnings and adjusted earnings after tax compared with the IFRS measures as such non-GAAP measures do not include all the items of revenues/gains or expenses/losses of Equinor that are needed to evaluate its profitability on an overall basis. Adjusted earnings and adjusted earnings after tax are only intended to be indicative of the underlying developments in trends of our ongoing operations for the production, manufacturing and marketing of our products and exclude pre-and post-tax impacts of net financial items. Equinor reflects such underlying development in our operations by eliminating the effects of certain items that may not be directly associated with the period's operations or financing. However, for that reason, adjusted earnings and adjusted earnings after tax are not complete measures of profitability. These measures should therefore not be used in isolation.
Organic capital expenditures Capital expenditures, defined as Additions to PP&E, intangibles and equity accounted investments in note 2 Segments to the Condensed interim financial statements, amounted to USD 2.2 billion in the first quarter of 2022. Organic capital expenditures are capital expenditures excluding acquisitions, recognised lease assets (RoU assets) and other investments with significant different cash flow pattern. In the first quarter of 2022, a total of USD 0.4 billion is excluded in the organic capital expenditures. Forward-looking organic capital expenditures included in this report are not reconcilable to its most directly comparable IFRS measure without unreasonable efforts, because the amounts excluded from such IFRS measure to determine organic capital expenditures cannot be predicted with reasonable certainty.
Gross capital expenditures Capital expenditures, defined as Additions to PP&E, intangibles and equity accounted investments in the financial statements, including Equinor's proportionate share of capital expenditures in equity accounted investments not included in additions to equity accounted investments. Forward-looking gross capital expenditures included in this report are not reconcilable to its most directly comparable IFRS measure without unreasonable efforts, because the amounts excluded from such IFRS measure to determine gross capital expenditures cannot be predicted with reasonable certainty.
For more information on our use of non-GAAP financial measures, see section 5.2 Use and reconciliation of non-GAAP financial measures in Equinor's 2021 Annual Report and Form 20-F.
This report contains certain forward-looking statements that involve risks and uncertainties. In some cases, we use words such as "ambition", "continue", "could", "estimate", "intend", "expect", "believe", "likely", "may", "outlook", "plan", "strategy", "will", "guidance", "targets", and similar expressions to identify forward-looking statements. Forward-looking statements include all statements other than statements of historical fact, including, among others, statements regarding Equinor's plans, intentions, aims, ambitions and expectations, including with respect to the Covid-19 pandemic, its impacts, consequences and risks and Equinor's response to it; the decision to stop new investments into Russia and trading in Russian oil, and start the process of exiting Equinor's Russian joint ventures; the commitment to develop as a broad energy company; the ambition to be a leader in the energy transition and reduce net group-wide greenhouse gas emissions by 50% by 2030; future financial performance, including cash flow and liquidity; accounting policies; the ambition to grow cash flow and returns; plans to improve return on average capital employed (ROACE) and competitive capital distribution; expectations regarding returns from Equinor's oil and gas portfolio; plans to develop fields and increase gas exports; plans for renewables production capacity and investments in renewables; expectations regarding development of renewables projects, CCUS and hydrogen businesses; market outlook and future economic projections and assumptions, including commodity price assumptions; organic capital expenditures through 2025; estimates regarding production; the ambition to keep unit of production cost in the top quartile of our peer group; scheduled maintenance activity and the effects thereof on equity production; completion and results of acquisitions and disposals; expected amount and timing of dividend payments and the implementation of our share buy-back programme; and provisions and contingent liabilities. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons.
These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including levels of industry product supply, demand and pricing, in particular in light of recent significant oil price volatility triggered, among other things, by the changing dynamic among OPEC+ members, the pressure on US shale oil companies from their shareholders to use their higher cashflow to pay debt and dividends rather than increase drilling and production and the uncertainty regarding demand created by the Covid-19 pandemic; Russia's invasion of Ukraine and our subsequent decision to stop new investments into Russia and start the process of exiting our Russian joint ventures; levels and calculations of reserves and material differences from reserves estimates; natural disasters, adverse weather conditions, climate change, and other changes to business conditions; regulatory stability and access to attractive renewable opportunities; unsuccessful drilling; operational problems, in particular in light of quarantine rules, travel restrictions, manpower shortage, supply chain disruptions and social distancing requirements triggered by the Covid-19 pandemic; health, safety and environmental risks; impact of the Covid-19 pandemic; the effects of climate change; regulations on hydraulic fracturing; security breaches, including breaches of our digital infrastructure (cybersecurity); ineffectiveness of crisis management systems; the actions of competitors; the development and use of new technology, particularly in the renewable energy sector; inability to meet strategic objectives; the difficulties involving transportation infrastructure; political and social stability and economic growth in relevant areas of the world; reputational damage; exercise of ownership by the Norwegian state; an inability to attract and retain personnel; risks related to implementing a new corporate structure; inadequate insurance coverage; changes or uncertainty in or non-compliance with laws and governmental regulations; the actions of the Norwegian state as majority shareholder; failure to meet our ethical and social standards; the political and economic policies of Norway and other oil-producing countries; noncompliance with international trade sanctions; the actions of field partners; adverse changes in tax regimes; exchange rate and interest rate fluctuations; factors relating to trading, supply and financial risk; general economic conditions; and other factors discussed elsewhere in this report. Additional information, including information on factors that may affect Equinor's business, is contained in Equinor's Annual Report on Form 20-F for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (including section 2.13 Risk review - Risk factors thereof). Equinor's 2021 Annual Report and Form 20-F is available at Equinor's website www.equinor.com.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, we undertake no obligation to update any of these statements after the date of this report, either to make them conform to actual results or changes in our expectations.
We use certain terms in this document, such as "resource" and "resources" that the SEC's rules prohibit us from including in our filings with the SEC. U.S. investors are urged to closely consider the disclosures in our Form 20-F, SEC File No. 1-15200. This form is available on our website or by calling 1-800-SEC-0330 or logging on to www.sec.gov.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.