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Equinor (EQNR) Beats Q1 Earnings Estimates, Hikes Dividend

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Equinor ASA (EQNR - Free Report) reported first-quarter 2021 adjusted earnings per share of 82 cents, beating the Zacks Consensus Estimate of earnings of 49 cents and improving from the year-ago quarter profit of 17 cents.

Total revenues increased to $16,129 million from $15,065 million in the prior-year quarter.

The strong quarterly earnings were owing to higher commodity prices and significant contributions from renewables.

Dividend Hike

The energy major’s board of directors proposed a quarterly dividend of 15 cents per share, representing a hike of 25% from the prior dividend.

Segment Analysis

Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $3,563 million, up from $1,863 million in the year-ago quarter on an increase in liquid prices.

The company’s average daily production of liquids and gas decreased 1% year over year to 1,384 thousand barrels of oil equivalent per day (MBoe/d) due to the Hammerfest LNG facility shutdown and a natural decline in output.

E&P International: The segment’s adjusted operating profit was recorded at $382 million, jumping from year-ago quarter’s earnings of $4 million. Upstream activities in the international market were aided by stronger liquids and gas prices.

The company’s average daily equity production of liquids and gas declined to 360 MBoe/d from 421 MBoe/d in the year-ago quarter, mostly owing to a natural decline in mature fields.

E&P USA: Through this segment, Equinor generated adjusted quarterly profit of $192 million, up from earnings of $11 million in the March quarter of 2020. The outperformance was led by higher commodity prices and production.

The integrated firm’s average equity production of liquids and gas was recorded at 423 MBoe/d, up from 418 MBoe/d in the year-ago quarter on a higher number of wells brought online.

Marketing, Midstream & Processing: The segment’s adjusted profit of $61 million declined drastically from $229 million a year ago. The massive decline was owing to low refinery margins and production shutdown at the Hammerfest LNG facility.

Renewables: The segment’s adjusted profit of $1,344 million increased significantly from $13 million a year ago, thanks to considerable divestment gains.

Free Cash Flows

In the March quarter, Equinor generated free cash flows of $5,170 million, increasing massively from $362 million in the year-ago period. Despite the coronavirus pandemic, the massive improvement was aided by cashflow generated from increased liquids and gas prices.

Balance Sheet

As of Mar 31, 2021, Equinor reported $8,992 million in cash and cash equivalents. The company’s total debt amounted to $30,775 million at quarter-end. Total debt-to-capitalization ratio at the first quarter-end was 46.2%.

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Equinor continues to expect compound annual production growth rate of 3% from 2020 to 2026, banking mostly on new projects. The company reaffirmed its production growth at 2% for 2021.

For the 2021-2022 period, it still expects organic capital spending at $9-$10 billion per annum.

Zacks Rank & Other Stocks to Consider

Equinor currently sports a Zacks Rank #1 (Strong Buy). Other prospective players in the energy space include EOG Resources, Inc. (EOG - Free Report) , Diamondback Energy, Inc. (FANG - Free Report) and Matador Resources Company (MTDR - Free Report) . While EOG Resources and Matador carry a Zacks Rank #2 (Buy), Diamondback sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources is likely to see earnings growth of 272.6% in 2021.

Diamondback is expected to witness earnings growth of 112.5% in 2021.

Matador is likely to see earnings growth of 300% in 2021.

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