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Equinor ASA’s EQNR shares climbed 2% since it reported strong quarterly earnings on Jul 28. Investors welcomed its share repurchase plan. On a further encouraging note, the company claims to be prepared for volatile commodity prices ahead.
It reported second-quarter 2021 adjusted earnings per share of 49 cents, beating the Zacks Consensus Estimate by a penny and improving from the year-ago profit of 19 cents.
Total revenues increased to $17,462 million from $7,603 million in the prior-year quarter.
The strong quarterly earnings were owing to higher commodity prices and international production volumes.
Equinor ASA Price, Consensus and EPS Surprise
Equinor ASA price-consensus-eps-surprise-chart | Equinor ASA Quote
The energy major’s board of directors declared a quarterly dividend of 18 cents per share, representing a hike of 20% from the prior dividend.
Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $3,964 million against the year-ago loss of $85 million on increase in liquid prices.
The company’s average daily production of liquids and gas decreased 2% year over year to 1,257 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 $399 million, turning around from the year-ago loss of $379 million. Upstream activities in the international market were aided by stronger liquids and gas prices along with higher production volumes.
Average daily equity production of liquids and gas increased to 349 MBoe/d from 325 MBoe/d in the year-ago quarter, mostly owing to higher gas nominations and U.K. continental shelf production.
E&P USA: Through this segment, Equinor generated adjusted quarterly profit of $230 million against a loss of $341 million in the June quarter of 2020. The outperformance was led by higher commodity prices.
The integrated firm’s average equity production of liquids and gas was recorded at 391 MBoe/d, down from 405 MBoe/d in the year-ago quarter due to lower offshore production and divestment of certain onshore unconventional assets.
Marketing, Midstream & Processing: The segment’s adjusted profit of $144 million declined drastically from $1,161 million a year ago. The massive decline was owing to low liquids trading performance, refinery margins and production shutdown at the Hammerfest LNG facility.
Renewables: The segment’s adjusted loss of $31 million widened significantly from a loss of $1 million a year ago due to considerably higher project costs and activity levels in the United States, United Kingdom as well as Asia.
Free Cash Flows
In the June quarter, Equinor generated free cash flows of $4,510 million, reversing from free cash outflow $1,853 million in the year-ago period. Despite the coronavirus pandemic, the massive improvement was aided by cash flow generated from increased liquids and gas prices.
As of Jun 30, 2021, Equinor reported $9,912 million in cash and cash equivalents, sequentially up from $8,992 million. The company’s total debt amounted to $31,575 million at quarter-end. Total debt-to-capitalization ratio at second quarter-end was 45.5%.
The company reaffirmed production growth expectation at 2% for 2021. Nevertheless, due to scheduled maintenance activities, 2021 equity production is expected to take a 50 MBoe/d hit.
For the 2021-2022 period, it still expects organic capital spending at $9-$10 billion per annum. For the 2023-2024 period, spending is expected to increase to $12 billion per annum.
Of its total $600-million share repurchase program for 2021, a $300 million tranche commenced on Jul 28.
Zacks Rank & Other Stocks to Consider
The company currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks from the energy space include Range Resources Corporation RRC, NOW Inc. DNOW and Braskem S.A. BAK, each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Range Resources’ earnings for 2021 is pegged at $1.53 per share, indicating a massive improvement from the year-ago loss of 9 cents.
NOW’s profits for 2021 are expected to jump 100% year over year.
Braskem’s bottom line for 2021 is expected to surge 326.7% year over year.
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