Equinor

Earnings Release • Feb 9, 2022

Equinor fourth quarter 2021 and year end results

Equinor fourth quarter 2021 and year end results

Equinor (OSE: EQNR, NYSE: EQNR) reports record high adjusted earnings of USD

15.0 billion and USD 4.40 billion after tax in the fourth quarter of 2021. IFRS

net operating income was USD 13.6 billion and the IFRS net income was USD 3.37

billion.

2021 was characterised by:

* Adjusted earnings after tax of USD 10.0 billion for the full year 2021.

* Increase in oil prices and unprecedented European gas price in second half.

* Strong operational performance and increased annual production of oil and

gas by 3.2%(1).

* Continued cost focus and capital discipline.

* Very strong free cash flow of USD 25.0 billion(2) and net debt reduction.

* The Board proposes increasing the fourth quarter quarterly cash dividend to

20 cents per share, increasing the share buy-back programme up to USD 5

billion for 2022, and announce an extraordinary quarterly cash dividend of

20 cents per share for four quarters.

"We are capturing value from high prices for gas and liquids with excellent

performance and increased production. This resulted in very strong adjusted

earnings after tax for the quarter and the full year. In addition, continued

improvements and capital discipline contributes to the strong free cash flow of

25 billion dollars and a significant strengthening of our balance sheet," says

Anders Opedal, President and CEO of Equinor ASA.

"In 2021, there was still operational impact from the pandemic, but the markets

recovered with high prices, especially in the second half of the year. In Europe

the energy prices reached record levels impacting industries and societies.

Equinor focused on safe and stable operations as a reliable energy provider.

Together with partners and regulators, we took steps to increase the production

of piped gas to Europe significantly," says Opedal.

"We continue to invest in profitable projects supporting the energy transition.

In the quarter, we took the final investment decision on Dogger Bank C, the

third phase of the world's biggest offshore wind farm and announced a divestment

of a 10% interest in the project. The plan for development and operation (PDO)

for Troll West electrification was approved by the Norwegian authorities, which

means that oil can be produced from the prolific Troll- and Fram area with low

emissions. We also progressed our renewable project pipeline," says Opedal.

Adjusted earnings [5] were USD 15.0 billion in the fourth quarter, up from USD

0.76 billion in the same period in 2020. Adjusted earnings after tax [5] were

USD 4.40 billion, up from negative USD 0.55 billion in the same period last

year.

IFRS net operating income was USD 13.6 billion in the fourth quarter, up from

negative USD 0.99 billion in the same period in 2020. IFRS net income was USD

3.37 billion in the quarter, compared to negative USD 2.41 billion in the fourth

quarter of 2020. Net operating income was positively impacted by higher prices

and increased production of gas and liquids. Following the high results for gas

derivatives in third quarter, there has been a negative effect when the volumes

have been delivered in the European gas market in the fourth quarter. The

impairments of USD 1.80 billion in the fourth quarter includes the impairment of

USD 1.78 billion related to Mariner in the UK caused by revision of the reserve

estimates.

Strong operational performance across all segments in the quarter

All E&P segments benefitted from the higher prices for gas and liquids. Strong

operational performance, continued improvement efforts and strict capital

discipline supported additional value creation and strong cash flow. Based on

the strong financial results for the full year, taxes to be paid from the

Norwegian continental shelf in the first half of 2022, relating to the 2021

results, are expected at around USD 12.2 billion.

E&P Norway delivered record earnings based on higher prices and increased gas

production and production from new wells and fields, compared to the same

quarter last year. With tax payments in the quarter based on previously lower

price expectations, E&P Norway contributed significantly to the group cash flow.

E&P International and E&P USA delivered strong results and cash flow, both

benefitting from good operations and higher prices in 2021.

The Marketing, Midstream and Processing segment results were impacted by

negative effects from price risk management of bilateral contracts offsetting

gains from prior quarters in 2021. The negative effects were partially offset by

strong results from Danske Commodities.

The Renewable segment benefitted from a production increase compared to the same

quarter last year with higher availability from offshore wind assets and higher

power prices.

Increased production

Equinor delivered a total equity production of 2,158 mboe per day in the fourth

quarter, up from 2,043 mboe per day in the same period in 2020. Production from

Troll phase 3, Martin Linge and increased production from Johan Sverdrup, as

well as solid production efficiency and optimised gas production contributed to

the growth.

Equity production of renewable energy for the quarter was 526 GWh, up from 480

GWh for the same period last year, benefitting from the production from the

Guanizuil IIA solar plant in Argentina.

In 2021 Equinor completed 21 exploration wells with 8 commercial discoveries and

4 wells were ongoing at year end. Adjusted exploration expenses in the fourth

quarter were USD 0.20 billion, compared to USD 1.25 billion in the same quarter

of 2020.

The proved reserves replacement ratio (RRR) was 113% in 2021 and a three-year

average of 61%. With 5.36 billion barrels in proved reserves, Equinor's reserves

to production ratio (R/P) was 7.5 years.

Solid cash flow

Cash flows provided by operating activities before taxes paid and changes in

working capital amounted to USD 18.0 billion for the fourth quarter, compared to

USD 3.8 billion for the same period in 2020. Organic capital expenditure [5] was

USD 8.1 billion for 2021. At the end of the quarter adjusted net debt to capital

employed(3) was negative 0.8%, down from 13.2% in the third quarter of 2021,

impacted by lower tax payments in the second half of 2021 based on previously

lower price expectations and tax payments deferred to the first half of 2022.

Including the lease liabilities according to IFRS 16, the net debt to capital

employed(3) was 7.7%.

Stepping up capital distribution

The board of directors proposes to the annual general meeting a cash dividend of

USD 0.20 per share for the fourth quarter 2021, an increase from USD 0.18 per

share announced for the previous two quarters.

The second tranche of the share buy-back programme for 2021 was completed by 31

January 2022 with a total value of USD 1 billion. For 2021 total share buy-back

amounts to USD 1.3 billion.

The board of directors has decided to increase the share buy-back programme for

2022 up to USD 5 billion. This is based on the strong results in 2021, the

strength of the balance sheet and the outlook.

The first tranche in 2022 of USD 1 billion commences on 10 February and will end

no later than 25 March 2022. Due to the narrow trading window the tranche for

the quarter is lower than the proportionate share of the announced share buy-

back for the full year of 2022.

The share buy-back programme is expected to be executed when Brent oil prices

are in or above the range of 50-60 USD/bbl and Equinor's net debt ratio(3) stays

within the communicated ambition of 15-30 % and this is supported by commodity

prices. Execution of share buy-backs after the 2022 annual general meeting is

subject to a renewed authorization, including renewal of the agreement with the

Norwegian State.

In addition, the board proposes an extraordinary cash dividend of USD 0.20 per

share, per quarter from fourth quarter 2021 to third quarter 2022. This is based

on high commodity prices in the second half of 2021, strong earnings and

supportive commodity prices.

All share buyback amounts include shares to be redeemed by the Norwegian State.

Emissions and serious incidents frequency

Average CO2-emissions from Equinor's operated upstream production, on a 100%

basis, were 7.0 kg per boe in 2021, compared to 8.0 kg per boe in 2020.

The twelve-month average Serious Incident Frequency (SIF) 2021 was 0.4, down

from 0.5 in 2020.

Capital markets update

Today, Equinor presents its update to the capital markets, focusing on key

deliveries:

* Ambition to reduce net group-wide greenhouse gas emissions with 50% by

2030, aiming for 90 percent of this to be delivered as absolute reductions

* Growing cash flow and returns, with a free cash flow before capital

distribution of around USD 25 billion in the period 2022-2026(4)

* Return on capital employed (ROACE) of around 14% in the period 2022 to

2030(4)

* Transition on track, expecting more than 50% gross investments5 in

renewables and low carbon solutions by 2030

"Today we set a new ambition and share the progress we have made in delivering

an accelerated transition with clear climate ambitions, while growing cash flow

and returns. We deliver competitive capital distribution and propose to increase

both the dividend, and the share buy-back programme. Equinor stays committed to

our focused strategy and continues to deliver in the energy transition building

on our strengths and technology leadership - creating value as an early mover

and industry shaper," says Opedal.

"We are strengthening our position as a leading company in the energy transition

with an ambition of net 50% emission reduction in scope 1 and 2 in our operated

assets by 2030. The new ambition is aligned with the Paris agreement and a

pathway to limit global warming to 1.5 degree Celsius. This is a significant

step that will demand a great effort," says Opedal.

"Equinor has progressed on the focused strategy to optimise within oil and gas,

high value growth in renewables and develop new markets in low carbon solutions.

We believe our oil and gas portfolio can deliver above USD 40 billion in free

cash flow towards 2026(4). We are on path developing a profitable renewable

business. Within low carbon solutions we are developing a broad portfolio, with

Northern Lights on track for commercial operations in 2024," says Opedal.

Optimised oil and gas portfolio

Equinor will maintain stable investments in a competitive project portfolio.

Major projects coming on stream by the end of 2030 have an average break even

below 35 USD/bbl (6) and a pay-back time of around 2.5 years (7,4). The

Norwegian Continental Shelf will continue to be Equinor's backbone, maintaining

production and generating significant cash flow towards 2030, building on

technology leadership and utilising existing infrastructure. Internationally we

are progressing well on our Brazilian portfolio and we expect start-up of the

Bacalhau project in 2024.

High value growths within renewables

The project pipeline within renewables is competitive and in line with the

ambitions of an installed capacity of 12 - 16 GW(8) by 2030. Equinor's installed

equity capacity is 0.7 GW. In 2021 we have farmed down and secured financing on

Dogger Bank C, the last phase of the world's largest offshore wind farm in the

UK. Equinor has also signed a cooperation agreement with Korean East-West Power

for 3 GW of offshore wind projects in South-Korea. Equinor expect project base

returns of 4-8% real and remains determined to capture higher equity returns

through project financing and farm downs. In 2021 Equinor booked capital gains

of USD 1.4 billion from renewables.

New market opportunities in low carbon solutions

The energy transition represents an opportunity for Equinor to leverage its

leading position within carbon management and hydrogen, and to develop and grow

new value chains and markets. In the first third party carbon transport and

storage project Northern Lights, the capabilities, technology and relations with

customers, governments and partners are leveraged. By 2035, Equinor's ambition

is to develop the capacity to store 15 - 30 million tonnes CO2 per year and to

provide clean hydrogen in 3 - 5 industrial clusters.

Finally, Equinor announces its updated outlook:

* Equinor expects average annual organic capex [5] of around USD 10 billion in

2022 and 2023, and around USD 12 billion for 2024 and 2025

* Equinor expects to deliver around 2% growth in production in 2022

* * *

(1) Adjusted for portfolio measures.

(2) This is a non-GAAP figure. For more information, see Use and reconciliation

of non-GAAP financial measures in the Supplementary section in the report.

(3) 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.

(4) Based on Brent blend 65 USD/bbl, Henry Hub 3.5 USD/mmbtu and European gas

price 2022: 22 USD/mmbtu, 2023: 12 USD/mmbtu and 2024 onwards: 7 USD/mmbtu.

(5) Gross capex defined as capex before project financing.

(6) Volume weighted.

(7) Volume weighted average, from production start.

(8) Equinor share, including ownership share in Scatec ASA.

[5] These are non-GAAP figures. See Use and reconciliation of non-GAAP financial

measures in the report for more details. For ROACE, see table Calculated ROACE

in the Supplementary disclosures for more details.

See Forward Looking Statements on our webpages:

https://www.equinor.com/en/investors/quarterly-results/cmu2022-forward-looking-

statement.html

* * *

Further information from:

Investor relations

Peter Hutton, Senior vice president Investor relations,

+44 7881 918 792 (mobile)

Press

Sissel Rinde, vice president Media relations,

+47 412 60 584 (mobile)

This information is subject to the disclosure requirements pursuant to Section

5-12 of the Norwegian Securities Trading Act