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Equinor (EQNR) Signs Agreement to Acquire Stakes in Noriker

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Equinor ASA (EQNR - Free Report) entered an agreement to acquire a 45% ownership stake in Noriker Power Limited to set up profitable businesses by deploying battery-storage assets amid the growing urgency to stabilize power markets.

The U.K.-based Noriker is a leading battery storage developer that focuses on the engineering and project development of utility-scale storage and stability services. As of today, Noriker developed more than 250 megawatts of battery storage across the U.K.

The agreement provides an option to obtain complete ownership in Noriker at a later stage. The companies have agreed on strategic cooperation, which will enable Equinor to involve directly in projects that are being developed by Noriker.

Equinor will also acquire Noriker’s 15% shares that equity companies Gresham House and Gresham House Energy Storage Fund currently own. Noriker will use the transaction proceeds to enhance its project development platform, which includes engineering development, algorithmic optimization and control system innovation.

The high level of renewables in the U.K. makes it an attractive investment for battery storage businesses. Equinor could complement its existing renewable portfolio by deploying batteries in the vicinity of its offshore wind farms to increase returns. This would bring the opportunity to store electricity when prices are low and sell it to the power grid when prices are higher, thereby improving returns from renewable projects.

Battery storage will be a crucial part of clean energy transitions as the world increases the share of intermittent renewable power. Large-scale batteries can be charged if there is proper access to low-cost electricity. This will enable businesses to create profitable services to balance markets, stabilize the electricity network and improve the security of supply.

Company Profile & Price Performance

Headquartered in Stavanger, Norway, Equinor is one of the leading integrated energy companies in the world.

Shares of EQNR have outperformed the industry in the past six months. The stock has gained 18.5% compared with the industry’s 9.1% growth.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

Equinor currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum Corporation (OXY - Free Report) is an integrated oil and gas company, with significant exploration and production exposure. OXY is also a producer of a variety of basic chemicals, petrochemicals, polymers and specialty chemicals. As of 2020-end, Occidental’s preliminary worldwide proved reserves totaled 2.91 billion BOE compared with 3.9 billion BOE at the end of 2019.

OXY’s earnings for 2021 are expected to surge 153.5% year over year. OXY has also witnessed six upward revisions in the past 60 days. In the third quarter, OXY achieved its planned divestiture target of $10 billion by entering into a deal to divest its interest in two offshore Ghana assets for $750 million. OXY beat the Zacks Consensus Estimate thrice in the last four quarters and missed once, with an earnings surprise of 13.7%, on average.

SM Energy (SM - Free Report) is one of the most attractive players in the exploration and production space. It engages in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America. SM’s operations are focused in the Permian basin and the South Texas & Gulf Coast region. It has total of 443,188 net acres under its possession, of which 33.5% is developed.

In the past year, shares of SM Energy have increased 394.9% compared with industry’s growth of 92.2%. Moreover, SM’s earnings for 2021 are expected to surge 708.7% year over year. SM currently sports a Zacks Style Score of A for both Growth and Momentum. The upstream energy player beat the Zacks Consensus Estimate thrice in the last four quarters and missed once, with an earnings surprise of 126.3%, on average.

Devon Energy Corporation (DVN - Free Report) is an independent energy company engaged in the exploration, development and production of oil and natural gas. Devon’s strong U.S. operations are spread across the key oil assets of Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin. At 2020-end, Devon had proved reserves of approximately 752 million barrels of oil equivalent.

In the past year, the stocks has soared 182.4% compared with the industry's growth of 92.2% Devon is projected to see a year-over-year earnings surge of 3888.9% in 2021. DVN’s free cash flow at the end of third-quarter 2021 was $1.1 billion, up eight-fold from fourth-quarter 2020 levels. The company will continue to prioritize free cash flow generation in 2022 and deploy a major portion of the same to dividends and share buybacks.

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