Equinor, Norwegian energy firm, reported a slight increase in fourth-quarter profit on back of higher production at higher prices.
Adjusted earnings were US$4.4 billion in the fourth quarter, up from $4 billion in the same period in 2017, the company said in a statement.
“Strong operational performance and high production gave solid results and cash flow in a quarter with significant market volatility. We delivered growing returns for the full year and expect continued earnings growth. Following strong improvements in recent years, the board proposes an increase in quarterly dividend of 13 per cent to US$0.26 per share,” said Eldar Sætre, president and CEO of Equinor ASA.
“Our cash flow generation was strong across the business. At an overage oil price of 71 dollars per barrel, we generated an organic free cash flow well above 6 billion dollars for the full year. We have also done several value-enhancing transactions, strengthened our financial position and reduced our net debt ratio from 29 to 22.2 percent,” said Sætre.
Adjusted earnings after tax were $1.5 billion, up from $1.3 billion in the same period last year.
High production at higher prices contributed to the increase, it said adding that due to sales pricing mechanisms in the market, the significant fall in oil prices led to a negative one-off effect with a higher than normal differential between realised liquids prices and Brent Blend average.
Additionally, higher exploration activity and lower refinery and products trading margins impacted adjusted earnings negatively. For the full year, adjusted earnings were $18 billion, up 42 percent from $12.6 billion in 2017.
“In 2018 we sanctioned seven new projects, which will deliver more than 1 billion barrels of resources to Equinor at an average break-even price of 14 dollars and very low CO2 emissions. In the quarter, we started production at Aasta Hansteen, Oseberg Vestflanken and Big Foot, and at the Apodi solar plant in Brazil. We also had the winning bid in an offshore wind lease round offshore Massachusetts in the US," said Sætre.
Equinor delivered total equity production of 2,170 mboe per day in the fourth quarter, an increase from 2,134 mboe per day in the same period in 2017. The increase was mainly due to portfolio changes and new wells especially in the US onshore. New fields coming on stream added to the increase. Expected natural decline in addition to reduced gas off-take partially offset the increase. Equinor delivered all-time high production in 2018 with an underlying production growth of more than 2 per cent.
As of year-end 2018, Equinor had completed 24 exploration wells with nine commercial discoveries. Adjusted exploration expenses in the quarter were $417 million, up from $274 million in the same quarter of 2017, mainly due to higher seismic and drilling activity.
IFRS net operating income was $6.7 billion in the fourth quarter compared to $5.2 billion in the same period of 2017. IFRS net income was $3.4 billion, up from $2.6 billion in the fourth quarter of 2017. For the full year, IFRS net income was $7.5 billion, up from $4.6 billion in 2017.