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Equinor (EQNR) Stock Declines 4% Despite Q3 Earnings Beat

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Equinor ASA EQNR declined almost 4% since its reported third-quarter results on Oct 27. This reflects uncertainty in the energy business owing to the ongoing impact of the coronavirus pandemic.

The energy major reported third-quarter 2021 adjusted earnings per share of 85 cents, beating the Zacks Consensus Estimate for earnings of 79 cents and improving drastically from the year-ago profit of 9 cents.

Total revenues increased to $23,264 million from $11,339 million in the prior-year quarter.

The strong quarterly results were owing to higher commodity prices and ramping up of operations at the Johan Sverdrup oil field.

Equinor ASA Price, Consensus and EPS Surprise

Equinor ASA Price, Consensus and EPS Surprise
Equinor ASA Price, Consensus and EPS Surprise

Equinor ASA price-consensus-eps-surprise-chart | Equinor ASA Quote

Buyback

The energy major announced the increase in the second tranche of share repurchases to $1 billion from $300 million.

Segment Analysis

Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $6,760 million, improving drastically from a profit of $773 million in the year-ago quarter. The improvement was led by higher production and liquid prices.

The company’s average daily production of liquids and gas jumped 6% year over year to 1,345 thousand barrels of oil equivalent per day (MBoe/d) due to ramping up of operations at the Johan Sverdrup oil field.

E&P International: The segment’s adjusted operating profit was recorded at $556 million, turning around from the year-ago loss of $104 million. Improvement in liquid and gas prices attributed to the outperformance.

Average daily equity production of liquids and gas decreased marginally to 322 MBoe/d from 323 MBoe/d in the year-ago quarter. Although an increase in production from Russian fields aided the segment, this was more than offset by a natural decline in mature fields.

E&P USA: Through this segment, Equinor generated adjusted quarterly profit of $288 million against a loss of $193 million in the September 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 328 MBoe/d, down from 398 MBoe/d in the year-ago quarter due to lower offshore production in the United States.

Marketing, Midstream & Processing: The segment’s adjusted profit of $2,187 million skyrocketed from $262 million a year ago. The massive improvement was owing to contributions from commodity derivatives.

Renewables: The segment’s adjusted loss of $28 million reflecting a deterioration from $15 million in the year-ago quarter. Expenses associated with the Beacon Wind and Empire Wind properties hurt the segment.

Free Cash Flows

In the September quarter, Equinor generated free cash flows of $6,725 million, improving from $217 million in the year-ago period. The improvement was owing to increased operating cashflows backed by recovering liquids and gas prices.

Balance Sheet

As of Sep 30, 2021, Equinor reported $13,815 million in cash and cash equivalents. The company’s total debt amounted to $33,427 million at quarter-end. Total debt-to-capitalization ratio at third quarter-end was 42.9%.

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The company reaffirmed production growth expectations at 2% for 2021.

For the 2021-2022 period, it continues to expect average organic capital spending at $9-$10 billion per annum. For the 2023-2024 period, spending is expected to increase to $12 billion per annum.

Oil Discovery

On Nov 1, the company announced the discovery of oil offshore Norway. The company estimated crude discovery of up to 62 million barrels, reflecting the sixth finding on the Norwegian shelf this year.

On Nov 2, Equinor announced an agreement with Eni SpA E for divesting a 10% stake in the Dogger Bank Wind Farm C project in the UK. Along with it, Eni signed a deal with project partner SSE Renewables to buy a 10% interest in Dogger Bank C. Following the completion of the farm down transaction, expected in the first quarter of 2022, Equinor and SSE Renewables will be holding a 40% stake each in the project. Eni will hold the remaining 20% interest. Thus, with expanding partnership with Eni, Equinor is creating significant value from its renewables operations.

Zacks Rank & Other Stocks to Consider

The company sports a Zacks Rank #1 (Strong Buy). Other prospective stocks from the energy space include Whiting Petroleum Corporation WLL and APA Corporation APA. Both the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

APA Corporation has seen upward earnings estimate revisions for 2021 in the past 30 days.


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Equinor ASA (EQNR) : Free Stock Analysis Report

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