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Equinor (EQNR) Q4 Earnings Miss, Decline Y/Y on Lower Prices
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Equinor ASA (EQNR - Free Report) reported fourth-quarter 2020 adjusted loss per share of 18 cents against the Zacks Consensus Estimate of earnings of 18 cents. The company reported earnings of 36 cents in the year-ago period.
Total revenues declined to $11,746 million from $15,169 million in the prior-year quarter.
The deterioration was owing to a decline in liquid prices and oil equivalent production. Moreover, the Hammerfest LNG facility shutdown and natural decline in output affected fourth-quarter results.
The energy major’s board of directors proposed a quarterly dividend of 12 cents per share, representing a hike of 9.1% from the prior dividend.
Segment Analysis
Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $1,841 million, down from $2,738 million in the year-ago quarter. The underperformance was owing to a decline in liquid prices and oil equivalent production.
The company’s average daily production of liquids and gas decreased 2% year over year to 1,314 thousand barrels of oil equivalent per day (MBoe/d) due to the Hammerfest LNG facility shutdown and natural decline in output.
E&P International: The segment’s adjusted operating loss was recorded at $1,215 million against the year-ago quarter’s earnings of $192 million. Upstream activities in the international market were hurt by weaker liquids and gas prices. Impairment charges of the Tanzania LNG project also affected the segment.
The company’s average daily equity production of liquids and gas declined to 340 MBoe/d from 415 MBoe/d in the year-ago quarter, primarily due to natural decline in mature fields.
E&P USA: Through this segment, Equinor generated adjusted quarterly loss of $172 million against earnings of $54 million in the December quarter of 2019. While lower hydrocarbon prices hurt the segment, the damage was partially offset by cost-reduction initiatives.
The integrated firm’s average equity production of liquids and gas was recorded at 390 MBoe/d, down from 437 MBoe/d in the year-ago quarter. The decrease was primarily due to the sale of Eagle Ford assets in 2019.
Marketing, Midstream & Processing: The segment’s adjusted profit of $352 million declined from $524 million a year ago. The downside was owing to low refinery margins and production shutdown at the Hammerfest LNG facility. The negatives were partially offset by strong trading of natural gas to Europe.
Free Cash Flows
In the December quarter, Equinor generated free cash flows of $1,363 million against negative free cash flow of $513 million in the year-ago period. Despite the coronavirus pandemic, the massive improvement was aided by lower tax payments and dividends paid.
Balance Sheet
As of Dec 31, 2020, Equinor reported $6,757 million in cash and cash equivalents, down from the third quarter’s $7,844 million. The company’s total debt amounted to $38,115million at quarter-end. Total debt-to-capitalization ratio at fourth quarter-end was 52.9%.
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Equinor announced expectations for compound annual production growth rate of 3% from 2020 through 2026, banking mostly on new projects. Production for 2021 is expected to rise 2% from the 2020 level despite the fact that it is divesting its entire Bakken acreage to a private entity for $900 million. Entitled production from the region in the fourth quarter was 48 MBoe/d.
At 2020-end, the company had estimated proved reserves of 5.260 billion Boe, reflecting a decrease of 744 million Boe from 2019-end. Importantly, the reserve replacement ratio was a negative 5% in 2020.
For the 2021-2022 period, it projects organic capital budget at $9-$10 billion per annum, indicating an increase from the 2020 level of $8.5 billion. The company also foresees expenditure for exploration activities through 2021 of $900 million.
Cactus’ bottom-line estimates for 2021 have witnessed two upward revisions and no downward movement in the past 30 days.
ConocoPhillips’ sales for 2021 are expected to increase 54% year over year.
Altus Midstream’s bottom line for 2021 is expected to increase 380.5% year over year.
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Equinor (EQNR) Q4 Earnings Miss, Decline Y/Y on Lower Prices
Equinor ASA (EQNR - Free Report) reported fourth-quarter 2020 adjusted loss per share of 18 cents against the Zacks Consensus Estimate of earnings of 18 cents. The company reported earnings of 36 cents in the year-ago period.
Total revenues declined to $11,746 million from $15,169 million in the prior-year quarter.
The deterioration was owing to a decline in liquid prices and oil equivalent production. Moreover, the Hammerfest LNG facility shutdown and natural decline in output affected fourth-quarter results.
Equinor ASA Price, Consensus and EPS Surprise
Equinor ASA price-consensus-eps-surprise-chart | Equinor ASA Quote
Dividend Hike
The energy major’s board of directors proposed a quarterly dividend of 12 cents per share, representing a hike of 9.1% from the prior dividend.
Segment Analysis
Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $1,841 million, down from $2,738 million in the year-ago quarter. The underperformance was owing to a decline in liquid prices and oil equivalent production.
The company’s average daily production of liquids and gas decreased 2% year over year to 1,314 thousand barrels of oil equivalent per day (MBoe/d) due to the Hammerfest LNG facility shutdown and natural decline in output.
E&P International: The segment’s adjusted operating loss was recorded at $1,215 million against the year-ago quarter’s earnings of $192 million. Upstream activities in the international market were hurt by weaker liquids and gas prices. Impairment charges of the Tanzania LNG project also affected the segment.
The company’s average daily equity production of liquids and gas declined to 340 MBoe/d from 415 MBoe/d in the year-ago quarter, primarily due to natural decline in mature fields.
E&P USA: Through this segment, Equinor generated adjusted quarterly loss of $172 million against earnings of $54 million in the December quarter of 2019. While lower hydrocarbon prices hurt the segment, the damage was partially offset by cost-reduction initiatives.
The integrated firm’s average equity production of liquids and gas was recorded at 390 MBoe/d, down from 437 MBoe/d in the year-ago quarter. The decrease was primarily due to the sale of Eagle Ford assets in 2019.
Marketing, Midstream & Processing: The segment’s adjusted profit of $352 million declined from $524 million a year ago. The downside was owing to low refinery margins and production shutdown at the Hammerfest LNG facility. The negatives were partially offset by strong trading of natural gas to Europe.
Free Cash Flows
In the December quarter, Equinor generated free cash flows of $1,363 million against negative free cash flow of $513 million in the year-ago period. Despite the coronavirus pandemic, the massive improvement was aided by lower tax payments and dividends paid.
Balance Sheet
As of Dec 31, 2020, Equinor reported $6,757 million in cash and cash equivalents, down from the third quarter’s $7,844 million. The company’s total debt amounted to $38,115million at quarter-end. Total debt-to-capitalization ratio at fourth quarter-end was 52.9%.
View
Equinor announced expectations for compound annual production growth rate of 3% from 2020 through 2026, banking mostly on new projects. Production for 2021 is expected to rise 2% from the 2020 level despite the fact that it is divesting its entire Bakken acreage to a private entity for $900 million. Entitled production from the region in the fourth quarter was 48 MBoe/d.
At 2020-end, the company had estimated proved reserves of 5.260 billion Boe, reflecting a decrease of 744 million Boe from 2019-end. Importantly, the reserve replacement ratio was a negative 5% in 2020.
For the 2021-2022 period, it projects organic capital budget at $9-$10 billion per annum, indicating an increase from the 2020 level of $8.5 billion. The company also foresees expenditure for exploration activities through 2021 of $900 million.
Zacks Rank & Key Picks
The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Cactus, Inc. (WHD - Free Report) , ConocoPhillips (COP - Free Report) and Altus Midstream Company (ALTM - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cactus’ bottom-line estimates for 2021 have witnessed two upward revisions and no downward movement in the past 30 days.
ConocoPhillips’ sales for 2021 are expected to increase 54% year over year.
Altus Midstream’s bottom line for 2021 is expected to increase 380.5% year over year.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>