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The result that Equinor, the former Statoil, presented Thursday morning was pretty much as expected. An operating profit of $ 4.3 billion in the second quarter is slightly lower than the average analyst pre-orders.
It is not surprising that Equinor earns money. Another thing would be directly sensational as a result of the significant cost savings that the company has implemented as a result of the drop in oil prices in 2014-15, coupled with the sharp rise in oil prices in the United States. stride. The general manager Eldar Sætre and his staff know of course that it is the price of oil, which is beyond the control of Equinor, which is the most important factor for the profitability of the company .
The most interesting of the accounts presented is cash. Cash flow from operating activities amounted to $ 13.2 billion in the first half of 2018. In simple terms, the business has a lot of money. The stock market will ask what Equinor plans to spend this money on.
Equinor delivers the best quarter since 2014
A company that has a lot of money can choose from several different solutions. A common solution, which shareholders often applaud, is to pay more dividends. This does not appear to be on the Equinor agenda, which states that the company will maintain the dividend of $ 0.23 per share in the second quarter.
The alternative, buy own shares in the market, thereby increasing the value of the rest, is less relevant because of the large state participation. A third option is to use the money to reduce the debt. Equinor 's debt ratio has risen slightly to just over 27%, but this is not alarming.
The most extensive option is to invest. Investments outside the Norwegian borders were mostly a double-edged sword for the company, which also reduced the value of its huge investments in the US in the second quarter, this time by 6.2 billion . But outside the United States, profitability is good in projects such as Angola and Brazil.
Statoil's change of name to Equinor was to signal a change in oil and gas in a more renewable direction. The company has decided that in the long run, 20% of the investment budget will be used for renewable energy projects. But what is the temptation when the price of oil is so high?
It will be a test of whether Equinor has really changed course, or if the name change was only rhetorical.
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