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Thursday morning, Equinor presented a performance report filled with large numbers. The company posted adjusted operating income for the second quarter of $ 4.3 billion.
In advance, stock analysts posted an adjusted operating profit of $ 4.6 billion, 53% higher than in the second quarter of 2017.
It's This is a high price of stable oil and high cuts during the oil crisis. golden age in the business. Prior to Thursday's results, the Equinor price rose 59% in one year
– We create value at higher prices, generating solid results and cash flow from the market. ; operating. This quarter, we deliver very strong results from our international operations, while new fields, increased maintenance and a number of quarter-specific elements contribute to slightly higher costs on the Norwegian Continental Shelf ", explains Eldar Sætre, CEO of Equinor. billion in the United States
Equinor recorded net impairment reversals of $ 273 million in the second quarter. In international exploration and production, the company recorded further writedowns of $ 481 million, while in Norway the company canceled prior writedowns of $ 600 million. The net writedown of international exploration and production was mainly related to writedowns of $ 762 million on land in the United States, including $ 237 million in exploration expenses, "writes L & B. # 39; company.
Thus, Equinor wrote 6.2 billion US dollars.
The Great Question
Several analysts still believe that the price could have been even higher if the stock market had more clarity on what the company should use the money. Chief Analyst Anne Gjøen at Handelsbanken says that at the beginning of the year, the company said it would get a free cash flow of $ 12 billion after dividend over the 2018-2020 period if the price of oil was $ 70. Since then, the price of oil and the special price of gas have both been high.
– With such a cash flow, everyone worries of course and wonders when you see a further increase in costs again. Currently, there are few signs of cost inflation due to overcapacity in the supplier industry, and it seems that Equinor is working unsuccessfully with its improvement programs, said Gjøen.
An obvious alternative is to give money to shareholders. Shareholders generally like it. However, before the announcement of the performance on Thursday, Gjøen did not expect the company to pass a level of performance steadily increasing.
– At present, the company has stated that it favors the use of free cash flow to repay the debt. I think it will be a lot before Equinor pledges to pay a much higher dividend. Redemption of shares could have been an opportunity, but the problem is the property of the state. Then the question is, what should the company invest in. Does Equinor think that renewal is so important that the company should accelerate renewal efforts? The problem is that we know little about the possibility of getting feedback on such projects, says Gjøen.
The company has promised to devote up to 20% of its investment budget to long-term renewable energy projects, but many financial analysts question the profitability of such investments compared to traditional oil and gas activities.
Prior to the result, she recommended customers to accumulate Equinor shares and had a price target of 250 crowns.
Also Pending
Also, DNB Markets Analyst Helge André Martinsen hopes that shareholders will soon receive more money, although Equinor generally communicates such changes once a year when capital market day in London in February.
– We believe that Equinor is generating free cash flow whose balance could be open to launch a share buyback program, wrote Martins in an update to clients before quarterly figures.
DNB Markets recommended to its customers to buy Equinor shares before quarterly figures and set a price target of 234 crowns. (Terms)
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