Today, Equinor ASA (OSE:EQNR, NYSE:EQNR) presents its strategy to accelerate the
company's transition while growing cash flow and returns.
Key highlights from the strategy update:
* Accelerating the transition and setting an ambition to reach a 40% reduction
in net carbon intensity by 2035, on the way towards net zero by 2050.
* Stepping up investments in renewables and low carbon solutions to more than
50% of gross annual(1) investments by 2030.
* Growing cash flow and returns, expecting a free cash flow(2) of around USD
35 billion(3) before capital distribution in 2021 - 2026 and around 12%(3)
return on average capital employed(2) in 2021 - 2030.
* Increasing the quarterly cash dividend to 18 cents per share and introducing
new share buy-back programme.
"Our strategy is backed up by clear actions to accelerate our transition while
growing cash flow and returns. We are optimising our oil and gas portfolio to
deliver even stronger cash flow and returns with reduced emissions from
production, and we expect significant profitable growth within renewables and
low carbon solutions. This is a strategy to create value as a leader in the
energy transition", says Anders Opedal, president and CEO of Equinor.
Equinor has set a clear ambition to become a net zero energy company by 2050,
including emissions from production and final consumption. Today, Equinor also
sets interim ambitions, aiming to reduce net carbon intensity with 20% by 2030
and 40% by 2035.
"This is a business strategy to ensure long-term competitiveness during a period
with profound changes in the energy systems, as society moves towards net zero.
We are building on our position as a global leader within carbon efficient
production of oil and gas. We will continue to cut emissions, and in the longer
term, Equinor expects to produce less oil and gas than today recognising
reducing demand. Significant growth within renewables and low carbon solutions
will increase the pace of change towards 2030 and 2035," says Opedal.
Optimised oil and gas portfolio
Equinor's oil and gas portfolio can deliver a free cashflow after tax and
investments(2) of USD 45 billion(3) from 2021 to 2026. New projects coming on
stream by 2030 have an average break even below 35 USD/bbl and a short payback
time of less than 2.5 years(3).
On the Norwegian continental shelf, Equinor is optimising its operations to
deliver strong value creation and an average annual free cash flow of around USD
4.5 billion(3) in 2021 - 2030. Further improvements at the world class Johan
Sverdrup field reduces the break-even price for the full field with 25% to 15
USD/bbl. Internationally, Equinor is focusing its portfolio, exiting operated
positions in unconventionals, prioritizing offshore operations where the company
can utilize its core competence. The international portfolio is set to deliver
strong cash flow, become more robust towards lower prices, and shows a
significant upside at higher prices.
High value growth within renewables
Equinor expects gross investments(1) in renewables of around USD 23 billion from
2021 to 2026, and to increase the share of gross capex for renewables and low
carbon solutions from around 4% in 2020 to more than 50% by 2030. Based on early
low-cost access at scale, Equinor expects to reach a installed capacity of 12 -
16 GW (Equinor share) by 2030. Reflecting current markets levels, Equinor is
adjusting expected project base real returns to 4 - 8% and remains determined to
capturing higher equity returns through project financing and farm downs. Early
access followed by targeted farm down is an integrated part of the value
creation proposition. So far, Equinor has divested assets for 2.3 billion USD,
booked a capital gain of USD 1.7 billion and expects to deliver nominal equity
returns in the range of 12 - 16% from the offshore wind projects with offtake
contracts in the UK and US.
New market opportunities in low carbon solutions
The energy transition represents an opportunity for Equinor to leverage its
leading position within carbon management and hydrogen, and to develop and grow
new value chains and markets. By 2035, Equinor's ambition is to develop the
capacity to store 15 -30 million tonnes CO2 per year and to provide clean
hydrogen in 3-5 industrial clusters.
Competitive capital distribution
The Board of Directors of Equinor has decided on a quarterly cash dividend of
18 cents per share for second quarter 2021, an increase of 3 cents from first
quarter. The second quarter 2021 cash dividend will formally be declared and
announced in connection with the announcement of the second quarter results,
including key information relating to the dividend.
The Board has also decided to introduce a new annual share buy-back programme of
around USD 1.2 billion starting from 2022. In addition, Equinor expects to
execute two tranches of share buy-backs in 2021, with a first tranche of USD
300 million to be launched after announcement of second quarter results, and an
indicative second tranche of USD 300 million to be launched after announcement
of third quarter results.
The new share buy-back programme is expected to be executed when Brent oil
prices are in or above the range of 50-60 USD/bbl and Equinor's net debt
ratio(1) stays within the communicated ambition of 15-30% and this is supported
by commodity prices.
The USD 5 billion share buy-back programme launched on 5 September 2019, and
suspended as of 22 March 2020, is cancelled.
All share buyback amounts include shares to be redeemed by the Norwegian State.
The purpose of the share buy-back programme is to reduce the issued share
capital of the company. All shares repurchased as part of the programme will be
cancelled. According to an agreement between Equinor and the Norwegian State,
the Norwegian State will participate in share buy-backs on a proportionate
basis. Execution of share buy-backs after the 2022 annual general meeting is
subject to a renewed authorization, including renewal of the agreement with the
Norwegian State. Share buy backs will be executed within applicable safe harbour
provisions. Key information related to the first tranche of the share buy-back
programme will be announced and executed following announcement of the second
quarter 2021 financial report.
Outlook:
* Organic capital expenditures(2) are estimated at an annual average of USD
9-10 billion for 2021-2022 and at around USD 12 billion for 2023 - 2024(4).
* Production growth(5) from 2020 to 2021 is estimated to be around 2 %.
See Forward Looking Statements on our webpages:
https://www.equinor.com/en/investors/quarterly-results/cmu2021-forward-looking-
statement.html
Footnotes:
1: Gross capex defined as capital expenditures before project financing
2: Non GAPP measure
3: Based on 60 USD per bbl
4: Annual average organic capital expenditures based on USD/NOK of 9
5: The growth percentage is based on historical production numbers, adjusted for
portfolio measures
Further information from:
Investor relations
Peter Hutton, senior vice president Investor Relations,
+44 7881 918 792 (mobile)
Press
Sissel Rinde, vice president Media Relations,
+ 47 412 60 584 (mobile)
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act