Equinor — Earnings Release 2019

Oct 24, 2019

Equinor third quarter 2019 results

Equinor third quarter 2019 results

Equinor (OSE: EQNR, NYSE: EQNR) reports adjusted earnings of USD 2.59 billion

and USD 1.08 billion after tax in the third quarter of 2019. IFRS net operating

income was negative USD 0.47 billion and the IFRS net income was negative USD

1.11 billion, following net impairments of USD 2.79 billion mainly due to more

cautious price assumptions.

* Financial results impacted by lower prices and deferral of gas production to

capture higher value

* High activity level with five new projects on stream since second quarter

* Strong progress in building industrial scale within renewable energy

* Clean-up operation at South Riding Point in the Bahamas following Hurricane

Dorian

* Introduction of a USD 5 billion share buy-back programme over three years

"We maintain strong cost and capital discipline, but our results are impacted by

lower commodity prices in the quarter. In addition, we have decided to use our

flexibility to defer gas production to periods with higher expected prices.

Based on our strong balance sheet and outlook for profitable growth, we have in

the quarter demonstrated our commitment to capital distribution and are

executing the first tranche of a 5-billion-dollar share buy-back programme,"

says Eldar Sætre, President and CEO of Equinor ASA.

"Since the beginning of third quarter, we have started production from Trestakk,

Mariner, Snefrid Nord, Utgard, and Johan Sverdrup. At Johan Sverdrup, the field

has already achieved a daily production above 200,000 barrels. The five new

fields are expected to deliver on average more than 200,000 high value barrels

per day net to Equinor in 2020. We are developing a portfolio of profitable

projects with low CO2 emissions, and we are on track to deliver strong

production growth in 2020 and a 3% average annual production growth from 2019 to

2025," says Sætre.

"The last few months have been a game-changer for our offshore wind business.

Together with SSE, we were the winning bidder with three projects at Dogger Bank

in the UK, making it the largest offshore wind farm development in the world. In

addition, we won the opportunity to develop Empire Wind offshore New York,

delivered development plans for Hywind Tampen and realised significant value

from the farm-down in the Arkona wind farm offshore Germany," says Sætre.

Adjusted earnings [5] were USD 2.59 billion in the third quarter, down from USD

4.84 billion in the same period in 2018. Adjusted earnings after tax [5] were

USD 1.08 billion, down from USD 1.99 billion in the same period last year. Lower

prices for both liquids and gas impacted the earnings for the quarter.

Underlying operating costs and administrative expenses are stable from the same

period last year. The Marketing, Midstream and Processing segment has delivered

strong trading results. Invoiced European gas prices were more than 50% higher

than average spot prices, based on realised gains from the longer dated gas

sales contracts.

IFRS net operating income was negative USD 0.47 billion in the third quarter,

down from USD 4.60 billion in the same period of 2018. IFRS net income was

negative USD 1.11 billion in the third quarter, down from positive USD 1.67

billion in the third quarter of 2018. Net operating income was impacted by net

impairment charges of USD 2.79 billion, of which USD 2.24 billion relates to

unconventional onshore assets in North America, mainly as a result of more

cautious price assumptions.

Equinor delivered total equity production of 1,909 mboe per day in the third

quarter, down 8% from the same period in 2018. The flexibility in the gas fields

is used to delay production to periods with higher expected gas prices. High

turnaround activity also impacted the production. Successful start-ups and ramp-

up of new fields as well as new well capacity partly offset the reduction in

production. The Johan Sverdrup field was put in production 5 October and

currently five wells are producing. All eight pre-drilled wells are expected to

be put in production by the end of November, giving a production capacity well

above 300.000 barrels per day. The field is expected to reach plateau during

summer 2020.

As of the end of third quarter 2019, Equinor has completed 32 exploration wells

with 14 commercial discoveries. Adjusted exploration expenses [5] in the quarter

were USD 0.26 billion, compared to USD 0.24 billion in the same quarter of

2018, with more wells drilled and completed.

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

working capital amounted to USD 16.60 billion for the first nine months of 2019

compared to USD 20.43 billion in the same period of 2018. Organic capital

expenditure [5] was USD 7.38 billion for the first nine months of 2019. At

quarter end, net debt to capital employed1 was 22.5%, also impacted by currency

effects and the impairments in the quarter. Following the implementation of IFRS

16, net debt to capital employed [1] was 28.4%.

The board of directors has decided on a dividend of USD 0.26 per share for the

third quarter. In the third quarter Equinor launched a share buy-back programme

of up to USD 5 billion over a period until the end of 2022. In the first tranche

shares will be purchased for up to USD 500 million in the market, and by the end

of the third quarter shares for USD 91 million have been settled and paid.

The twelve-month average Serious Incident Frequency (SIF) was 0.6 for the twelve

months ended 30 September 2019, compared to 0.5 for the same period a year ago.

In the aftermath of Hurricane Dorian, Equinor has mobilised significant

resources to safeguard people and the environment, and to clean up the spills at

and around the South Riding Point terminal in the Bahamas.

* * *

[1] 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.

[5] For adjustments to net operating income, see Use and reconciliation of non-

GAAP financial measures in the Supplementary disclosures.

* * *

Further information from:

Investor relations

Peter Hutton, senior vice president Investor relations,

+44 7881 918 792 (mobile)

Helge Hove Haldorsen, vice president Investor Relations North America,

+1 281 224 0140 (mobile)

Press

Bård Glad Pedersen, vice president Media relations,

+47 918 01 791 (mobile)

This information is subject to the disclosure requirements pursuant to Section

5-12 the Norwegian Securities Trading Act