Summary
- Operating profit more than doubled to $74.9 bln
- Q4 $15.1 bln vs estimate $14.4 bln
- Increases regular quarterly dividend
- Shares surge 7.3%
Equinor reported a record $74.9 billion adjusted operating profit on Wednesday, more than doubling its previous peak and pushing the Norwegian oil and gas producer’s shares up more than 7%.
With net profit for the year of $28.7 billion, a rise from $8.6 billion a year ago, Equinor joined global oil and gas majors such as Shell (SHEL.L), ExxonMobil (XOM.N), and BP (BP.L) in posting record returns for 2022.
Majority state-owned Equinor (EQNR.OL) became Europe’s biggest supplier of natural gas in 2022 as Russia’s Gazprom (GAZP.MM) reduced supplies over the West’s support for Ukraine, pushing European gas prices to all-time highs.
But gas prices have fallen this year and Equinor’s Oslo-listed stocks have tumbled 9% year-to-date, under-performing a 3.3% gain in European petroleum stocks (.SXEP). Adjusted earnings before tax and interest for the fourth quarter reached $15.1 billion, from $15 billion the previous year and above the $14.4 billion estimate in an Equinor poll of analysts.
RBC analyst Biraj Borkhataria said in a note this was because of better-than-anticipated results in Equinor’s refining and trading operation, which was improved by LNG and gas sales. Equinor also hiked its regular quarterly dividend and said it wanted to see annual cash flow from operations after tax of nearly $20 billion per year for the rest of the decade.
“On the back of strong earnings, outlook, and balance sheet, we step up capital distribution to (an) expected $17 billion in 2023,” Equinor CEO Anders Opedal said in a statement.
Equinor said it would pay a regular quarterly dividend of $0.30 per share, an increase from $0.20, and offer an additional, extraordinary payment of $0.60 per share for four successive quarters, amounting to about $11 billion in dividends this year.
The board upheld a regular share buyback plan of $1.2 billion per year and said it would make a substantial buyback this year of $4.8 billion, for a total of $6 billion. Equinor said its overall oil and gas output declined by 2% year-on-year to 2.04 million barrels of oil equivalent per day (boed) last year, but it expected this to increase by 3% this year.
Buy Bitcoin NowA senior executive said it is looking into the possibility of increasing output from Western Europe’s biggest oilfield, Johan Sverdrup, to 755,000 barrels per day (bpd) from 720,000 bpd.
Gas output from its Norwegian fields rose by 8% on a year earlier as the company concentrated on replacing lost Russian supplies to Europe, while oil output fell by 6%, it added. Equinor’s previous adjusted earnings record was $36.2 billion in 2008, when North Sea oil prices reached all-time highs.
The company, which earns most of its profit in Norway, where oil companies are subject to a tax rate of 78%, said it expected to pay a record $49.9 billion in taxes for 2022.
“The combination of this (of dividend and share buybacks) is likely to be well ahead of market expectations, and signals a strong message to the market on intentions to pay out to shareholders,” RBC’s Borkhataria said.
