6-K 1 eqnr4q22_6k.htm EQUINOR FOURTH QUARTER 2022 REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of February 2023
Commission File Number 1-15200
Equinor ASA
(Translation of registrant’s name into English)
FORUSBEEN 50, N-4035, STAVANGER,
NORWAY
(Address of principal executive offices)
Indicate by check mark whether the registrant files or
will file annual reports under cover of Form 20-F
or Form 40-F:
Form 20-F
X
Form 40-F
This Report on Form 6-K contains a report of
the fourth quarter 2022 results of Equinor ASA.
Equinor fourth quarter 2022
2
Equinor fourth quarter and full year 2022 results
Equinor delivered adjusted earnings* of USD 15.1 billion and USD 5.80 billion
after tax in the fourth
quarter of 2022. Net operating income was USD 16.6 billion
and net income was USD 7.90 billion.
The fourth quarter and full year were characterised by:
●
Solid operational performance, contributing to energy security.
●
Strong adjusted earnings*.
●
High value creation from marketing and trading.
●
Strong cash flow, further strengthening of balance sheet.
●
Cost focus and capital discipline to address inflation.
●
Proposed 50% increase in ordinary cash dividend to
USD 0.30 per share.
●
Expected capital distribution in 2023 of USD 17 billion.
Going forward, Equinor is:
●
Well positioned to deliver strong returns through the energy transition, expecting above 15% return on average capital
employed
to 2030
1
.
●
Expecting around USD 20 billion in average annual cash flow from operations after tax towards 2030
1
.
●
Investing in a profitable and robust project portfolio, contributing to energy security and
decarbonisation.
●
Progressing on the energy transition plan.
Anders Opedal, president and CEO of Equinor ASA:
“Equinor is uniquely positioned to provide energy and contribute to decarbonisation, while delivering strong
returns. Strong earnings
and cash flow will enable continued competitive capital distribution and investments in high-value,
resilient projects within oil and gas,
renewables, and low carbon solutions.”
“In 2022, we responded to the energy crisis and contributed to energy security. With strong operational performance,
we delivered
record results and cash flow from operations. We stepped up capital distribution to shareholders, while continuing to invest
in a
balanced energy transition and contributing to society with high tax payments.
On the back of strong earnings, outlook, and balance
sheet, we step up capital distribution to expected 17 billion dollars in 2023.”
“Our ambition is to be a leading company in the energy transition.”
Quarter
Change
Financial information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
(unaudited, in USD million)
2022
2021
Change
16,584
26,103
13,578
22%
Net operating income/(loss)
78,811
33,663
>100%
15,059
24,301
14,989
0%
Adjusted earnings*
74,940
33,486
>100%
7,897
9,371
3,370
>100%
Net income/(loss)
28,744
8,576
>100%
5,796
6,715
4,397
32%
Adjusted earnings after tax*
22,691
10,042
>100%
4,267
6,578
8,151
(48%)
Cash flows provided by operating activities
35,136
28,816
22%
1,669
2,402
8,578
(81%)
Free cash flow*
23,388
24,984
(6%)
Quarter
Change
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
Operational data
2022
2021
Change
80.4
92.9
75.9
6%
Group average liquids price (USD/bbl) [1]
94.1
66.3
42%
2,046
2,021
2,158
(5%)
Total equity liquids and gas production (mboe per day) [4]
2,039
2,079
(2%)
Equinor fourth quarter 2022
3
1,332
491
526
>100%
Total power generation (Gwh) Equinor share
2,661
1,562
70%
517
294
526
(2%)
Renewable power generation (GWh) Equinor share
1,649
1,562
6%
Q4 | Full year
Full year
Health, safety and the environment
2022
2021
Serious incident frequency (SIF) Twelve-month average as at Q4 2022
0.4
0.4
Upstream CO
2
intensity (kg
CO
2
/boe)
as at full year 2022
6.9
7.0
31 December
31 December
%-point
Net debt to capital employed adjusted*
2022
2021
change
Net debt to capital employed adjusted*
(23.9%)
(0.8%)
(23.1)
Dividend
(USD per share)
Q4 2022
Q3 2022
Q4 2021
Ordinary dividend per share
0.30
0.20
0.20
Extraordinary dividend per share
0.60
0.70
0.20
*
For items marked with an asterisk throughout this report, see
Use and reconciliation of non-GAAP financial measures
in the Supplementary disclosures.
1
Based on Brent blend 70 USD/bbl, Henry Hub 3.5 USD/mmbtu
and European gas price 2023: 20 USD/mmbtu, 2024: 20 USD/mmbtu,
2025: 15 USD/mmbtu and
2026 onwards: 9 USD/mmbtu
Equinor fourth quarter 2022
4
Strong operational performance with new fields on stream
Equinor delivered a total equity production of 2,046 mboe per day for the fourth quarter, down from 2,158 mboe per day in the same
quarter of 2021, impacted by turnarounds in the US offshore, the exit from Russian assets and deferral of gas production
from the
Norwegian continental shelf (NCS)
to periods with higher demand.
During the quarter, Equinor brought on stream the Peregrino phase 2 project in Brazil and Askeladd, Johan Sverdrup Phase 2 and
Njord Future on the NCS.
The floating offshore windfarm Hywind Tampen on the NCS generated its first power in the fourth quarter and will be completed in
2023. Production from renewable energy sources was 517 GWh in the quarter, down 2% from the same quarter in 2021. Including
gas-to-power, total power production for the quarter ended at 1,332 GWh.
Equinor completed five exploration wells offshore with one commercial discovery in the quarter and four wells were
ongoing at the
quarter end.
Strong financial results
Equinor realised a European gas price of USD 29 per mmbtu and realised liquids prices where USD
80.4 per bbl in the fourth quarter.
Although prices are comparatively higher than the corresponding quarter in 2021, European gas
price weakened through the fourth
quarter of 2022.
Equinor delivered strong sales and trading results, particularly from gas and power, selling to the markets with the highest demand.
However, the Marketing, Midstream & Processing segment results were negative due to the timing impact of derivative contracts. In
the Exploration & Production USA segment deferred tax asset has been recognised at USD
2.7 billion, with a corresponding decrease
in income taxes of USD 2.8 billion resulting in a low reported effective tax rate this quarter compared to last
year.
Cash flow provided by operating activities before taxes and changes in working capital amounted to USD
21.0 billion for the fourth
quarter, compared to USD 18.0 billion for the same period in 2021. Organic capital expenditure* was USD 2.36 billion for the quarter.
Delivering on always safe, high value, low carbon through 2022
For 2022 the adjusted earnings* were USD 74.9 billion, up from USD 33.5 billion last year. Adjusted earnings after tax* were
USD 22.7 billion, up from USD 10.0 billion in 2021. Equinor reports a net operating income for 2022
of USD 78.8 billion, and a net
income of USD 28.7 billion. Strong earnings and firm capital discipline resulted in a free cash flow* of USD
23.4 billion after capital
distribution and a return on average capital employed*
of 55% for 2022. In 2022 Equinor paid USD 42.8 billion in tax related to
operations on NCS.
In 2022, seven new fields were brought on stream, adding a total capacity of around 200 mboe
per day when fully ramped up. Equinor
is progressing on a highly competitive project portfolio and 13 plans for development and operations were submitted
in 2022.
The operational and administrative costs increased through 2022 due to higher electricity prices,
CO
2
-costs, inflationary pressure, and
higher field cost, partially offset by significant currency effects when presenting in the US dollar and mitigating actions.
As a result of long-term improvement efforts and cost control, Equinor has already realised the ambition
set for 2025 to achieve
improvements with a cash flow effect of USD 4 billion
.
Equinor progressed several projects to reduce emissions from production,
and the average CO
2
-emission from the operated upstream
production, on a 100% basis, was 6.9 kg per boe for 2022.
The twelve-month average serious incident frequency (SIF) for 2022 was 0.4, stable from the previous
year.
Step-up in capital distribution
The board of directors proposes to the annual general meeting an ordinary cash dividend of USD 0.30
per share for the fourth quarter
of 2022, up from USD 0.20 per share for the third quarter of 2022. The board has decided
to continue the share buy-back programme
of USD 1.2 billion per year, introduced in 2021 as an integrated part of capital distribution.
In addition, the board proposes an extraordinary cash dividend of USD 0.60 per share for the
fourth quarter of 2022 based on strong
earnings and the robust financial position. The board has also decided to increase the USD
1.2 billion share buy-back programme
with up to USD 4.8 billion, resulting in a programme up to USD 6.0 billion in 2023.
Equinor fourth quarter 2022
5
The interim cash dividends for the first, second and third quarters of 2023 and further tranches
of the share buy-back programme will
be decided by the board of directors on a quarterly basis in line with the dividend policy, and subject to existing and renewed
authorisations from the AGM, including agreement with the Norwegian state regarding
share buy-backs. The 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
*
stays within the communicated ambition of 15-30 %, and this is supported by commodity prices.
Total capital distribution for 2023,
including share buy-back, is expected at USD 17 billion.
The fourth tranche of the share buy-back programme for 2022 was completed 17 January 2023
with a total value of USD 1.83 billion.
For 2022 total share buy-back amounts to USD 6 billion.
The first tranche of the 2023 share buy-back programme of USD 1 billion will commence on 9 February
and end no later than 24
March 2023.
All share buyback amounts include shares to be redeemed by the Norwegian State.
Equinor fourth quarter 2022
6
Capital markets update: Strong returns through the transition
Equinor is well positioned for high value creation,
providing energy security and contributing to decarbonisation. With a strong cash
flow supporting a competitive capital distribution, and continued investments in a robust high-value portfolio,
the company can deliver
strong returns through the energy transition. Equinor is developing as a broad energy company, offering energy security and
decarbonisation opportunities.
Key ambitions are to deliver:
●
strong cash flow and returns, with an expected average annual cash flow from operations after tax of around USD
20 billion and
return on average capital employed*
(ROACE) of above 15% towards 2030
1
.
●
a 50% reduction of net group-wide greenhouse gas emissions by 2030.
Based on an increasingly flexible asset portfolio, and continued volatility in the markets, the
adjusted earnings guidance for the MMP
segment is increased from USD 250-500 to 400-800 million per quarter.
Strong cash flow with longevity within oil and gas
Equinor will continue to invest and optimise its competitive oil and gas project portfolio to maintain
a long-term reliable energy supply
with low emissions from production. The portfolio of oil and gas projects coming on stream within 10 years has an
average break-even
price of around USD 35 per barrel, an internal rate of return of around 30%, an average pay-back time
of about 2.5 years and an
upstream CO
2
-intensity of below 6 kg per boe. Together with the producing assets, this is expected to generate a strong cashflow with
longevity. Equinor will continue to develop NCS as home ground and optimise in other core areas internationally.
Profitable and disciplined growth in renewables
With the first power from the world’s largest floating wind farm Hywind Tampen in 2022 and the world’s largest offshore wind farm,
Dogger Bank in the UK, to start production in 2023, Equinor is demonstrating leadership
within offshore wind. The portfolio of projects
within renewables and acreage is progressing well towards the ambition of 12-16 GW of installed capacity
accessed by 2030. The
strategy remains focused on profitable growth, demonstrating discipline and capturing value through market
cycles. Equinor expects
project base returns of 4-8 %.
Solid progress within low carbon solutions
In 2022, Equinor was awarded the Smeaheia CO
2
licence on the NCS and had in total accessed storage capacity of 30 million tonnes
CO2 per year with current equity. Equinor is well positioned as the CO
2
transport and storage market develops, and policies for low
carbon projects progresses. Several projects with industrial partners are in maturation, and Equinor is progressing
on its ambitions to
offer decarbonisation to industrial customers. The combined portfolio of projects for CO
2
storage, hydrogen, energy storage and
natural gas, provides flexibility and optionality, as well as a broad energy offering to industrial customers.
Updated outlook:
●
Equinor expects organic capex* of USD 10-11 billion in 2023, and an annual average of around USD 13 billion for 2024-2026
2
.
●
In 2023 Equinor expects a production growth of around 3% in oil and gas, compared to 2022.
1
Based on Brent blend 70 USD/bbl,
Henry Hub 3.5 USD/mmbtu and European
gas price 2023: 20 USD/mmbtu, 2024:
20 USD/mmbtu, 2025: 15
USD/mmbtu and 2026 onwards: 9 USD/mmbtu.
2
USD/NOK exchange rate assumption of
10.
Equinor fourth quarter 2022
7
GROUP REVIEW
Quarters
Change
Financial information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
(unaudited, in USD million)
2022
2021
Change
34,321
43,633
32,608
5%
Total revenues and other income
150,806
90,924
66%
33,546
43,337
31,836
5%
Adjusted total revenues and other income*
149,910
89,088
68%
(17,737)
(17,531)
(19,030)
(7%)
Total operating expenses
(71,995)
(57,261)
26%
(12,781)
(13,969)
(11,201)
14%
Adjusted purchases* [5]
(54,415)
(34,930)
56%
(3,032)
(2,657)
(2,465)
23%
Adjusted operating and administrative expenses*
(10,530)
(9,389)
12%
(2,279)
(2,118)
(2,979)
(24%)
Adjusted depreciation, amortisation and net impairments*
(8,879)
(10,431)
(15%)
(396)
(292)
(202)
96%
Adjusted exploration expenses*
(1,146)
(852)
35%
16,584
26,103
13,578
22%
Net operating income/(loss)
78,811
33,663
>100%
15,059
24,301
14,989
0%
Adjusted earnings*
74,940
33,486
>100%
2,376
2,053
2,225
7%
Capital expenditures and Investments
8,758
8,040
9%
4,267
6,578
8,151
(48%)
Cash flows provided by operating activities
35,136
28,816
22%
Quarters
Change
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
Operational information
2022
2021
Change
2,046
2,021
2,158
(5%)
Total equity liquid and gas production (mboe/day)
2,039
2,079
(2%)
1,919
1,885
2,012
(5%)
Total entitlement liquid and gas production (mboe/day)
1,901
1,931
(2%)
1,332
491
526
>100%
Total Power generation (GWh) Equinor share
2,661
1,562
70%
517
294
526
(2%)
Renewable power generation (GWh) Equinor share
1,649
1,562
6%
88.7
100.9
79.7
11%
Average Brent oil price (USD/bbl)
101.2
70.7
43%
80.4
92.9
75.9
6%
Group average liquids price (USD/bbl)
94.1
66.3
42%
27.22
42.34
28.52
(5%)
E&P Norway average internal gas price (USD/mmbtu)
31.22
14.43
>100%
4.73
7.01
4.84
(2%)
E&P USA average internal gas price (USD/mmbtu)
5.55
2.89
92%
For items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures
in Supplementary
disclosures.
Operations
Equinor’s global operations continued to deliver reliable and stable production levels.
Strong contributions from Peregrino 1 and 2 in Brazil and Snøhvit on the NCS coming onstream in
the year, benefitted production
volumes in the fourth quarter 2022 compared to the same period in the prior year. Despite these increases, Equinor’s
exit from Russia
earlier in 2022 coupled with fourth quarter 2022 turnaround activity in the US and partial
divestment in the Martin Linge field on the
NCS resulted in reduced production levels for the quarter and full year 2022 compared to
the prior year.
Gas production has increased in response to the energy security crisis in Europe. E&P Norway full year gas
production increased by
8% and liquids production declined by 6% compared to 2021.
Elevated prices and optimised product split have balanced the reduced production levels. The overall
context of 2022 was marked by
realisation of significantly higher prices which is responsible for the significant increase
in results for the full year 2022 relative to 2021.
Strong gas and power sales, trading results, high clean spark spread and refining margins
underpinned a successful quarter for the
Marketing, Midstream and Processing segment. The negative reported result for the
segment was due to significant negative mark to
market effects from derivatives used to price manage gas sales contracts and future LNG deliveries outweighing an otherwise strong
result in the fourth quarter of 2022.
Restart of Peregrino, increased well maintenance costs coupled with higher energy and environmental costs
contributed to the
Equinor fourth quarter 2022
8
increase in upstream operating and administrative expenditure. The effects of these cost increases are dampened
by the currency
impact of strengthened USD relative to the NOK.
Net impairment reversals of USD 1,094 million in the quarter and USD 2,429 million
for the full year 2022, relative to net impairment
charges reported in the corresponding periods of 2021, contributed to the increased
net operating income.
Taxes
The reported effective tax rate was 45.4% for the fourth quarter of 2022 (74.3% for the fourth quarter of 2021) and
63.4% for the full
year 2022 (72.8% for the full year 2021).
After a history of significant losses, Equinor are now recording profits in the US. Projected
future taxable income demonstrate that it is
probable that the unused tax losses carried forward could be utilised in the near future. The
tax value of the unused accumulated
losses has been recognised as a deferred tax asset of USD 2.7 billion in the fourth quarter, with a corresponding decrease in income
taxes of USD 2.8 billion resulting in a low reported effective tax rate this quarter compared to last year. The effective tax rate for the
fourth quarter also decreased due to losses on derivatives related to gas sales from the NCS
in the MMP segment.
The effective tax rate on adjusted earnings* of 61.5% for the fourth quarter of 2022 and 69.7% for the full year decreased
compared to
70.7% and 70.0% in 2021 due to lower share of NCS earnings, partially offset by lower effect of uplift deduction.
Cash flow, net debt and capital distribution
Due to strong financial results primarily driven by high commodity prices, cash flow provided by operating
activities before taxes paid
and working capital items improved by USD 3,000 million to USD 20,988 million from the
fourth quarter of 2021 and by USD 41,658
million to USD 83,608 million from the full year 2021.
Working capital increased by USD 2,532 million in the fourth quarter (USD 3,180 million in the
fourth quarter 2021) and by
USD 4,616 million for the full year 2022 (USD 4,546 million in 2021).
Taxes of USD 14,188 million, paid in the fourth quarter of 2022, continue to reflect the increased NCS earnings for the year relative to
the prior year. Two instalments of Norwegian corporation tax were paid in the quarter, totalling USD 13.6 billion (NOK 140 billion).
NCS tax instalments totalling NOK 162 billion are expected to be paid in the first half of 2023.
Despite the significant increase of USD 35,268 million in tax and USD 6,577 million shareholder
distribution payments for the year,
a robust free cash flow*
of USD 23,388 million compared to USD 24,984 million for 2021 was achieved.
An increase in short term financial investments, reduction in collaterals and a strengthening of
equity during the fourth quarter 2022
caused a decrease in the adjusted net debt to capital employed ratio* from negative
19.1% at the end of September 2022 to negative
23.9% at the end of 2022.
The board of directors proposes to the annual general meeting an ordinary cash dividend of USD 0.30 per
share for the fourth quarter
of 2022, up from USD 0.20 per share for the third quarter of 2022. The board has decided
to continue the share buy-back programme
of USD 1.2 billion per year, introduced in 2021 as an integrated part of capital distribution.
In addition, the board proposes an extraordinary cash dividend of USD 0.60 per share for the fourth quarter
of 2022 based on strong
earnings and the robust financial position. The board has also decided to increase the USD
1.2 billion share buy-back programme
with up to USD 4.8 billion, resulting in a programme up to USD 6.0 billion in 2023.
The interim cash dividends for the first, second and third quarters of 2023 and further tranches
of the share buy-back programme will
be decided by the board of directors on a quarterly basis in line with the dividend policy, and subject to existing and renewed
authorisations from the AGM, including agreement with the Norwegian state regarding
share buy-backs. The 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
*
stays within the communicated ambition of 15-30 %, and this is supported by commodity prices.
Total capital distribution for 2023,
including share buy-back, is expected at USD 17 billion.
The fourth tranche of the share buy-back programme for 2022 was completed 17 January 2023
with a total value of USD 1.83 billion.
For 2022 total share buy-back amounts to USD 6 billion.
The first tranche of the 2023 share buy-back programme of USD 1 billion will commence on 9 February
and end no later than 24
March 2023.
All share buyback amounts include shares to be redeemed by the Norwegian State.
Based on adjusted earnings after tax and average capital employed, calculated
return on average capital employed (ROACE)
* was
Equinor fourth quarter 2022
9
55.2 % for the 12-month period ended 31 December 2022 and 22.7 % for the 12-month period
ended 31 December 2021.
Organic capital expenditures
* amounted to USD 8.1 billion for the full year 2022. Total capital expenditures were USD 10.0 billion
for the full year 2022.
Estimated
Proved reserves
at the end of 2022 were 5,191 million barrels of oil equivalent (boe), a net decrease of 165
million boe
compared to 5,356 million boe at the end of 2021.
The net decrease was mainly due to less volumes being added through revisions and improved recovery
projects, with a net increase
of 344 million boe in 2022 compared to a net increase of 596 million boe in 2021. The net
effect of the purchase and sale of reserves
in 2022 is a reduction of the proved reserves by 92 million boe. This includes a reduction of
86 million boe due to exiting our Russian
joint ventures. The slight decrease in volumes added through extensions and discoveries with
278 million boe in 2022 compared to
306 million boe in 2021, added to the decrease.
The entitlement production in 2022
was 695 million boe compared to 710 million boe in 2021.
This results in a reserve replacement ratio (RRR) of
76% and an organic RRR excluding purchase and sale of 89% in 2022
compared to 113%
and 127% in 2021. The corresponding three-year average replacement ratio
was 62%, and the organic three-year
average was 70% at the end of 2022 compared to 61% and 68% at the end of 2021.
The RRR measures the estimated proved reserves added to the reserve base, including the effects of sales and purchases, relative
to
the amount of oil and gas produced.
All reserves numbers are preliminary and include
equity accounted entities.
OUTLOOK
●
Organic capital expenditures*
are estimated at USD 10-11 billion for 2023, and at an annual average of around USD 13 billion
for 2024-2026
3
.
●
Production
for 2023 is estimated to be around 3% above 2022 level [6].
●
Equinor’s ambition is to keep the
unit of production cost
in the top quartile of its peer group.
●
Scheduled maintenance activity
is estimated to reduce equity production by around 45 mboe per day for the full year of 2023.
These forward-looking statements reflect current views about future events and are, by their nature, subject
to significant risks and
uncertainties because they relate to events and depend on circumstances that will occur
in the future. Deferral of production to create
future value, gas off-take, timing of new capacity coming on stream and operational regularity and levels
of industry product supply,
demand and pricing represent the most significant risks related to the foregoing production guidance. Our
future financial
performance, including cash flow and liquidity, will be affected by the extent and duration of the current market conditions, the
development in realised prices, including price differentials and other factors discussed elsewhere in the report. For
further
information, see section Forward-looking statements.
3
USD/NOK exchange rate assumption of 10.
Equinor fourth quarter 2022
10
SUPPLEMENTARY
OPERATIONAL
DISCLOSURES
Quarters
Change
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
Operational data
2022
2021
Change
Prices
88.7
100.9
79.7
11%
Average Brent oil price (USD/bbl)
101.2
70.7
43%
83.8
96.3
77.7
8%
E&P Norway average liquids price (USD/bbl)
97.5
67.6
44%
77.2
92.0
76.1
1%
E&P International average liquids price (USD/bbl)
92.2
67.6
36%
68.6
79.3
67.5
2%
E&P USA average liquids price (USD/bbl)
81.0
58.3
39%
80.4
92.9
75.9
6%
Group average liquids price (USD/bbl) [1]
94.1
66.3
42%
819
928
663
24%
Group average liquids price (NOK/bbl) [1]
906
570
59%
27.22
42.34
28.52
(5%)
E&P Norway average internal gas price (USD/mmbtu)
[8]
31.22
14.43
>100%
4.73
7.01
4.84
(2%)
E&P USA average internal gas price (USD/mmbtu)
[8]
5.55
2.89
92%
29.80
43.65
28.76
4%
Average invoiced gas prices - Europe (USD/mmbtu)
[7]
33.44
14.60
>100%
5.40
7.24
4.97
9%
Average invoiced gas prices - North America (USD/mmbtu)
[7]
5.89
3.22
83%
15.5
14.1
6.0
>100%
Refining reference margin (USD/bbl) [2]
14.5
4.0
>100%
Entitlement production (mboe per day)
610
595
656
(7%)
E&P Norway entitlement liquids production
605
643
(6%)
228
208
200
14%
E&P International entitlement liquids production
203
207
(2%)
100
119
127
(21%)
E&P USA entitlement liquids production
114
128
(11%)
938
922
983
(5%)
Group entitlement liquids production
922
978
(6%)
791
773
813
(3%)
E&P Norway entitlement gas production
782
721
8%
31
25
38
(19%)
E&P International entitlement gas production
32
40
(19%)
160
166
179
(11%)
E&P USA entitlement gas production
165
193
(14%)
981
963
1,029
(5%)
Group entitlement gas production
980
954
3%
1,919
1,885
2,012
(5%)
Total entitlement liquids and gas production [3]
1,901
1,931
(2%)
Equity production (mboe per day)
610
595
656
(7%)
E&P Norway equity liquids production
605
643
(6%)
293
285
283
4%
E&P International equity liquids production
281
291
(4%)
112
132
137
(18%)
E&P USA equity liquids production
127
142
(11%)
1,015
1,012
1,076
(6%)
Group equity liquids production
1,013
1,076
(6%)
791
773
813
(3%)
E&P Norway equity gas production
782
721
8%
Equinor fourth quarter 2022
11
50
39
56
(11%)
E&P International equity gas production
47
51
(7%)
190
197
213
(11%)
E&P USA equity gas production
197
231
(15%)
1,031
1,009
1,082
(5%)
Group equity gas production
1,026
1,003
2%
2,046
2,021
2,158
(5%)
Total equity liquids and gas production [4]
2,039
2,079
(2%)
Power generation
1,332
491
526
>100%
Total power generation (GWh) Equinor share
2,661
1,562
70%
517
294
526
(2%)
Renewable power generation (GWh) Equinor share
1,649
1,562
6%
Equinor fourth quarter 2022
12
Health, safety and the environment
Full year
Full year
Health, safety and the environment
2022
2021
Total recordable injury frequency (TRIF)
2.5
2.4
Serious Incident Frequency (SIF)
3)
0.4
0.4
Oil and gas leakages (number of)
1)
8
12
Full year
Full year
Climate
2022
2021
Upstream CO
2
intensity (kg CO
2
/boe)
2)
6.9
7.0
1)
Number of leakages with rate above 0.1 kg/second during
the past 12 months.
2)
Total scope 1 emissions of CO
2
(kg CO
2
) from exploration and production, divided by
total production (boe).
3)
From the second quarter of 2022, work-related
illness is excluded from SIF but reported
separately at corporate level.
Equinor fourth quarter 2022
13
EXPLORATION
& PRODUCTION NORWAY
Quarter
Change
Financial information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
(unaudited, in USD million)
2022
2021
Change
16,729
24,034
17,708
(6%)
Total revenues and other income
75,930
39,386
93%
16,968
23,321
17,628
(4%)
Adjusted total revenues and other income*
75,443
39,047
93%
(2,343)
(2,220)
(2,853)
(18%)
Total operating expenses
(8,315)
(8,915)
(7%)
(1,053)
(984)
(965)
9%
Adjusted operating and administrative expenses*
(3,836)
(3,590)
7%
(1,219)
(1,143)
(1,784)
(32%)
Adjusted depreciation, amortisation and net impairments*
(4,986)
(6,002)
(17%)
(101)
(114)
(69)
46%
Adjusted exploration expenses*
(361)
(356)
2%
14,386
21,813
14,854
(3%)
Net operating income/(loss)
67,614
30,471
>100%
14,594
21,079
14,809
(1%)
Adjusted earnings/(loss)*
66,260
29,099
>100%
1,422
1,089
1,208
18%
Additions to PP&E, intangibles and equity accounted
investments
4,922
4,944
(0%)
Quarters
Change
Operational information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
E&P Norway
2022
2021
Change
1,401
1,368
1,469
(5%)
E&P entitlement liquid and gas production (mboe/day)
1,387
1,364
2%
83.8
96.3
77.7
8%
Average liquids price (USD/bbl)
97.5
67.6
44%
27.22
42.34
28.52
(5%)
Average internal gas price (USD/mmbtu)
31.22
14.43
>100%
For items impacting net operating income/(loss), see Use
and reconciliation of non-GAAP financial measures
in the Supplementary
disclosures.
Production & Revenues
During the full year of 2022, the gas volumes increased by 8% responding to the energy crisis in
Europe, while liquid volumes
decreased by 6% compared to 2021. Increased gas production coupled with the realisation of high gas
prices drove the unusual high
revenues in 2022.
During the quarter, a high production efficiency secured a solid production, while natural decline and sale of ownership in Martin Linge
were the main drivers for a decrease in production of gas volumes by 3% and liquids
by 7% compared to the fourth quarter of 2021. A
solid delivery comparing to a very strong production in fourth quarter 2021.
Johan Sverdrup Phase 2 was expected to start during the fourth quarter and came on stream with
new volumes in December 2022.
Operating expenses and financial results
The high energy prices led not only to high revenues but also to high electricity costs which in combination
with high environmental
costs and increased well maintenance costs were the main drivers for increased adjusted operating
and administrative expenses*
compared to the same period last year. The development of the USD/NOK exchange rate gave a positive currency effect to the
operating expenses of USD 177 million in the fourth quarter of 2022.
Equinor fourth quarter 2022
14
The decrease in adjusted depreciation and amortisation* in the fourth quarter of 2022 was
driven by the USD/NOK exchange rate and
increased interest rates for ARO. This was further impacted by an increase in proven reserves
during the year 2022 offset by the
impact of new fields ramping up.
Equinor fourth quarter 2022
15
EXPLORATION
& PRODUCTION INTERNATIONAL
Quarters
Change
Financial information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
(unaudited, in USD million)
2022
2021
Change
2,373
1,767
1,752
35%
Total revenues and other income
7,431
5,566
34%
1,897
1,911
1,702
11%
Adjusted total revenues and other income*
7,616
5,609
36%
(551)
(955)
(2,812)
(80%)
Total operating expenses
(4,183)
(5,237)
(20%)
(85)
(22)
(37)
>100%
Adjusted purchases*
(116)
(58)
>100%
(438)
(442)
(374)
17%
Adjusted operating and administrative expenses*
(1,675)
(1,438)
17%
(433)
(349)
(499)
(13%)
Adjusted depreciation, amortisation and net impairments*
(1,445)
(1,734)
(17%)
(266)
(157)
(102)
>100%
Adjusted exploration expenses*
(573)
(350)
64%
1,822
813
(1,060)
>(100%)
Net operating income/(loss)
3,248
329
>100%
676
942
689
(2%)
Adjusted earnings/(loss)*
3,806
2,028
88%
584
841
569
3%
Additions to PP&E, intangibles and equity accounted
investments
2,623
1,833
43%
Quarters
Change
Operational information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
E&P International
2022
2021
Change
343
324
339
1%
E&P equity liquid and gas production (mboe/day)
328
342
(4%)
258
232
238
8%
E&P entitlement liquid and gas production (mboe/day)
235
246
(5%)
85
92
101
(16%)
Production sharing agreements (PSA) effects
94
96
(3%)
77.2
92.0
76.1
1%
Average liquids price (USD/bbl)
92.2
67.6
36%
For items impacting net operating income/(loss),
see Use and reconciliation of non-GAAP financial measures
in the Supplementary
disclosures.
Production & Revenues
The restart of the production at the Peregrino field in Brazil in July and the start-up of phase 2 in
October 2022 were the main drivers
for the slight increase in equity production this quarter compared to the same period last year. Equinor’s exit from Russia and a natural
decline in several mature fields partially offset the increase and drove the decrease in production for the full
year of 2022 compared to
the full year of 2021. The lower effect from production sharing agreements (PSA) in the fourth quarter
of 2022 compared to the fourth
quarter of 2021 was mainly caused by lower production from several fields with PSAs.
The higher entitlement production was the main driver for the increased revenues in the fourth quarter
of 2022 compared to the same
period last year. Total
revenues and other income were positively impacted by a change in the fair value of derivatives
of USD 378
million in the fourth quarter of 2022. In the full year of 2022 compared to 2021, the
main driver for the increase was higher realised
liquids and gas prices, partially offset by lower entitlement production.
Operating expenses and financial results
Equinor fourth quarter 2022
16
The restart of the production at the Peregrino field was the main driver for higher operations and
maintenance expenses and
increased royalties in the fourth quarter compared to the same quarter last year. This effect in combination with higher production fees
driven by improved prices and field specific volumes drove the increase for the full year of 2022
compared to 2021. Increases in
reserve estimates, effects from an impairment in 2021 and portfolio change were the main drivers for the decrease
in depreciation in
the fourth quarter of 2022 compared to the same period last year. The new investments and increased entitlement production partially
offset this. In the full year of 2022 compared to 2021, the most significant drivers for the decrease were effects
from an impairment,
lower production from declining fields, and portfolio change.
Expensing of previously capitalised well cost drove the increase in exploration expenses in the
fourth quarter of 2022 compared to the
same period last year. This also drove the increase for the full year of 2022 compared to 2021, in addition to higher expensed drilling
costs.
In the fourth quarter of 2022, net operating income was positively impacted by an impairment
reversal of USD 747 million, compared
to impairments of USD 1,777 million reported in the fourth quarter of 2021. In the full year
of 2022, net operating income was
negatively impacted by net impairments*
of USD 351 million, with the main adverse effect from impairments related to the exit from
Russia in the first quarter of the year, amounting to USD 1,080 million.
Equinor fourth quarter 2022
17
EXPLORATION
& PRODUCTION USA
Quarters
Change
Financial information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
(unaudited, in USD million)
2022
2021
Change
1,083
1,541
1,302
(17%)
Total revenues and other income
5,523
4,149
33%
1,083
1,541
1,302
(17%)
Adjusted total revenues and other income*
5,523
4,149
33%
(262)
(457)
(752)
(65%)
Total operating expenses
(1,501)
(2,998)
(50%)
(217)
(254)
(228)
(5%)
Adjusted operating and administrative expenses*
(933)
(1,039)
(10%)
(363)
(377)
(456)
(21%)
Adjusted depreciation, amortisation and net impairments*
(1,422)
(1,665)
(15%)
(29)
(21)
(30)
(3%)
Adjusted exploration expenses*
(212)
(146)
45%
821
1,084
550
49%
Net operating income/(loss)
4,022
1,150
>100%
474
889
587
(19%)
Adjusted earnings/(loss)*
2,957
1,297
>100%
281
186
179
57%
Additions to PP&E, intangibles and equity accounted
investments
764
690
11%
Quarters
Change
Operational information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
E&P USA
2022
2021
Change
302
329
350
(14%)
E&P equity liquid and gas production (mboe/day)
324
373
(13%)
260
285
306
(15%)
E&P entitlement liquid and gas production (mboe/day)
279
321
(13%)
42
44
44
(4%)
Royalties
44
52
(14%)
68.6
79.3
67.5
2%
Average liquids price (USD/bbl)
81.0
58.3
39%
4.73
7.01
4.84
(2%)
Average internal gas price (USD/mmbtu)
5.55
2.89
92%
For items impacting net operating income/(loss),
see Use and reconciliation of non-GAAP financial measures
in the Supplementary
disclosures.
Production & Revenues
The Gulf of Mexico turnaround and a natural decline from the Appalachia Basin assets
led to a decrease in production in the fourth
quarter compared to the same period last year. The Bakken divestment in 2021, the natural decline from the Appalachia Basin, and
the turnaround of the Gulf of Mexico assets drove the decrease in production in the full
year of 2022 compared to the same period last
year.
The increase in realised liquids and gas prices for the fourth quarter and the full year of
2022 relative to the same periods last year
was the main driver for the increase in revenues and royalties.
Operating expenses and financial results
Total
operating expenses decreased in the fourth quarter and the full year
of 2022 compared to the same periods last year. The
operating and administrative expenses decreased mainly due to lower transportation related costs
resulting from lower production,
partially offset by higher operations and maintenance expenses. Year-on-year, the divestment of Bakken during 2021 further
contributed to the decrease in 2022.
Adjusted depreciation, amortization, and net impairments* decreased due to lower production
and improved reserves partially offset by effects from impairments and additional investments during 2022. Exploration expenses
Equinor fourth quarter 2022
18
increased in the full year of 2022 compared to the same periods last year, mainly due to increased expensing of previously capitalised
well costs.
Net operating income for the full year of 2022 was positively impacted by net impairment reversals
of USD 1,071 million, compared to
net impairments* and losses recognised on the divestment of the Bakken asset of USD 147 million
in the same period last year.
Equinor fourth quarter 2022
19
MARKETING, MIDSTREAM & PROCESSING
Quarters
Change
Financial information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
(unaudited, in USD million)
2022
2021
Change
33,591
42,585
31,818
6%
Total revenues and other income
148,105
87,393
69%
33,055
42,858
31,178
6%
Adjusted total revenues and other income*
147,599
87,238
69%
(33,843)
(40,669)
(32,135)
5%
Total operating expenses
(144,493)
(86,230)
68%
(31,969)
(40,081)
(30,956)
3%
Adjusted purchases* [5]
(139,949)
(81,104)
73%
(1,389)
(1,114)
(1,005)
38%
Adjusted operating and administrative expenses*
(4,516)
(3,841)
18%
(236)
(211)
(214)
10%
Adjusted depreciation, amortisation and net impairments*
(881)
(869)
1%
(252)
1,916
(316)
(20%)
Net operating income/(loss)
3,612
1,163
>100%
(540)
1,452
(997)
(46%)
Adjusted earnings*
2,253
1,424
58%
210
147
(15)
N/A
- Liquids
683
358
91%
(1,809)
761
(1,274)
42%
- Natural Gas Europe
(458)
749
N/A
44
51
(31)
N/A
- Natural Gas US
237
118
>100%
1,012
492
323
>100%
- Other
1,787
198
>100%
349
345
174
>100%
Additions to PP&E, intangibles and equity accounted
investments
1,212
517
>100%
Quarters
Change
Operational information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
2022
2021
Change
191.2
182.9
196.0
(2%)
Liquids sales volumes (mmbl)
740.1
758.4
(2%)
15.8
15.6
16.7
(5%)
Natural gas sales Equinor (bcm)
63.3
61.0
4%
14.2
14.2
14.8
(4%)
Natural gas entitlement sales Equinor (bcm)
56.1
54.0
4%
815
197
0
N/A
Power generation (GWh) Equinor share
1,012
0
N/A
29.80
43.65
28.76
4%
Average invoice gas price - Europe (USD/mmbtu)
33.44
14.60
>100%
5.40
7.24
4.97
9%
Average invoice gas price - North America (USD/mmbtu)
5.89
3.22
83%
For items impacting net operating income/(loss),
see Use and reconciliation of non-GAAP financial measures
in the Supplementary
disclosures.
Volumes, Pricing & Revenues
Equinor fourth quarter 2022
20
Restarted gas deliveries from Hammerfest LNG partially offset the reduction in gas sales volumes compared
to the fourth quarter of
2021. The gas sales were impacted by lower production and natural decline on Equinor operated
assets.
Liquids sales volumes were down compared to the fourth quarter of 2021, mainly due to a decrease
in volumes from NCS, partially
offset by the increase in sales of international equity volumes.
The average invoiced European and North American gas prices decreased from the third
to the fourth quarter of 2022 due to changes
in the underlying market prices driven by lower demand due to a lower demand and a more robust
supply.
This year, European gas prices were significantly higher compared to 2021, mainly due to high demand and tight supply and caused
by reduced gas imports from Russia. North American gas prices were also higher in 2022, driven
by low production growth, low
storage levels and strong demand mainly from power generation.
Financial Results
During the fourth quarter of 2022, adjusted earnings* for Natural Gas Europe were
positively influenced by LNG and gas sales and
trading partially offset by net negative mark to market effects from losses on derivatives used to manage risk related to bilateral gas
sales contracts and gains on derivatives used to lock in value of future LNG deliveries. Adjusted
earnings* for Natural Gas US were
driven by trading and physical sales. Adjusted earnings* for Liquids were primarily driven by
crude and products trading. Adjusted
earnings* for the Other section were dominated by strong gas and power trading results,
high clean spark spread and high refining
margin.
Compared to the fourth quarter last year, adjusted earnings* increased due to higher results from power, gas, liquids trading, refining
and acquired share in power producing entity. This was partially offset by higher mark to market losses on gas and LNG derivatives in
the fourth quarter of 2022.
Net operating income in the fourth quarter of 2022 includes a negative effect from the onerous contract provisions
and positive timing
effects related to inventory.
The increase in adjusted earnings* for the full year of 2022 compared to the same period last
year is explained by higher results
across all MMP sections, primarily driven by stronger results from European gas and power trading,
partially offset by a negative
change in derivatives.
Equinor fourth quarter 2022
21
RENEWABLES
Quarters
Change
Financial information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
(unaudited, in USD million)
2022
2021
Change
31
3
4
>100%
Revenues third party, other revenue and other income
127
1,394
(91%)
8
9
17
(54%)
Net income/(loss) from equity accounted investments
58
16
>100%
38
12
21
81%
Total revenues and other income
185
1,411
(87%)
15
13
21
(29%)
Adjusted total revenues and other income*
75
30
>100%
(101)
(69)
(59)
72%
Total operating expenses
(269)
(166)
(62%)
(100)
(58)
(58)
73%
Adjusted operating and administrative expenses*
(255)
(163)
57%
(1)
(1)
(1)
(11%)
Adjusted depreciation, amortisation and net impairments*
(4)
(3)
11%
(63)
(56)
(38)
(66%)
Net operating income/(loss)
(84)
1,245
N/A
(86)
(46)
(38)
>(100%)
Adjusted earnings*
(184)
(136)
(35%)
103
95
97
6%
Additions to PP&E, intangibles and equity accounted
investments
298
458
(35%)
Quarters
Change
Operational information
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
2022
2021
Change
509
294
526
(3%)
Renewables power generation (GWh) Equinor
share
1,641
1,562
5%
For items impacting net operating income/(loss),
see Use and reconciliation of non-GAAP financial measures
in the Supplementary disclosures.
Power generation
Power
generation
in
the
fourth
quarter
of
2022
was
slightly
lower
than
the
same
quarter
last
year
due
to
lower
availability.
The
increase in
the full
year of
2022 compared
to 2021
was mainly due
to the
start-up of
production from
the Guanizuil IIA
solar plant
in
the third quarter of 2021.
Results from equity accounted investments
Net
income
from
equity
accounted
investments
decreased
in
the
fourth
quarter
of
2022
compared
to
the
same
period
last
year.
Positive net income from producing assets was partially offset by development costs from projects under development in both periods.
The increased
result for
the full
year was
mainly due
to a
lower portion
of project
costs being
expensed because
the Empire
Wind
project in the US started capitalising project costs in the first quarter of 2022.
Operating expenses and financial results
In the fourth quarter of 2022, the decrease in net operating income and adjusted earnings* compared
to the same period last year was
driven by increased business development costs due to higher activity levels in the US, the
UK and Asia.
Adjusted earnings* in the full year of 2022 decreased compared to last year mainly
due to increased business development costs
driven by higher activity levels in the US, the UK and Asia. The decrease was partially offset by higher net
income from equity
accounted investments.
Equinor fourth quarter 2022
22
Net operating income in the full year of 2022 decreased significantly compared to last year
due to lower divestment gains of
USD 110 million in 2022 compared to USD 1,385 million last year.
Additions to PP&E, intangibles and equity accounted investments for the full year of
2022 decreased compared to last year, mainly
due to the acquisition of Wento in 2021.
Equinor fourth quarter 2022
23
CONDENSED INTERIM FINANCIAL STATEMENTS
Fourth quarter 2022
CONSOLIDATED STATEMENT
OF INCOME
Quarters
Full year
Q4 2022
Q3 2022
Q4 2021
(unaudited, in USD million)
Note
2022
2021
33,841
42,726
32,125
Revenues
2
149,004
88,744
395
75
138
Net income/(loss) from equity accounted investments
620
259
84
833
345
Other income
3
1,182
1,921
34,321
43,633
32,608
Total revenues and other income
2
150,806
90,924
(12,853)
(13,592)
(11,543)
Purchases [net of inventory variation]
(53,806)
(35,160)
(3,026)
(2,393)
(2,281)
Operating expenses
(9,608)
(8,598)
(278)
(221)
(222)
Selling, general and administrative expenses
(986)
(780)
(1,184)
(1,049)
(4,777)
Depreciation, amortisation and net impairments
2
(6,391)
(11,719)
(396)
(275)
(206)
Exploration expenses
(1,205)
(1,004)
(17,737)
(17,531)
(19,030)
Total operating expenses
2
(71,995)
(57,261)
16,584
26,103
13,578
Net operating income/(loss)
2
78,811
33,663
(450)
(336)
(299)
Interest expenses and other financial expenses
(1,379)
(1,223)
(1,664)
1,389
(143)
Other financial items
1,172
(857)
(2,115)
1,053
(443)
Net financial items
4
(207)
(2,080)
14,469
27,156
13,135
Income/(loss) before tax
78,604
31,583
(6,572)
(17,785)
(9,765)
Income tax
5
(49,861)
(23,007)
7,897
9,371
3,370
Net income/(loss)
28,744
8,576
7,895
9,384
3,368
Attributable to equity holders of the company
28,746
8,563
Equinor fourth quarter 2022
24
2
(13)
2
Attributable to non-controlling interests
(3)
14
2.52
2.98
1.04
Basic earnings per share (in USD)
9.06
2.64
2.51
2.97
1.04
Diluted earnings per share (in USD)
9.03
2.63
3,131
3,148
3,238
Weighted average number of ordinary shares outstanding
(in millions)
3,173
3,245
3,141
3,157
3,249
Weighted average number of ordinary shares outstanding
diluted (in millions)
3,182
3,254
Equinor fourth quarter 2022
25
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Quarters
Full year
Q4 2022
Q3 2022
Q4 2021
(unaudited, in USD million)
2022
2021
7,897
9,371
3,370
Net income/(loss)
28,744
8,576
895
(42)
(114)
Actuarial gains/(losses) on defined benefit pension
plans
461
147
(208)
15
26
Income tax effect on income and expenses recognised
in OCI
1)
(105)
(35)
687
(26)
(88)
Items that will not be reclassified to the Consolidated
statement of income
356
111
4,116
(3,488)
(374)
Foreign currency translation effects
(3,609)
(1,052)
424
0
0
Share of OCI from equity accounted investments
424
0
4,540
(3,488)
(374)
Items that may be subsequently reclassified to
the Consolidated statement of
income
(3,186)
(1,052)
5,228
(3,515)
(462)
Other comprehensive income/(loss)
(2,829)
(940)
13,125
5,856
2,908
Total comprehensive income/(loss)
25,914
7,636
13,123
5,869
2,906
Attributable to the equity holders of the company
25,917
7,622
2
(13)
2
Attributable to non-controlling interests
(3)
14
1) Other comprehensive income (OCI).
Equinor fourth quarter 2022
26
CONSOLIDATED BALANCE SHEET
At 31 December
At 31 December
(unaudited, in USD million)
Note
2022
2021
1)
ASSETS
Property, plant and equipment
2
56,498
62,075
Intangible assets
5,158
6,452
Equity accounted investments
2,758
2,686
Deferred tax assets
5
8,732
6,259
Pension assets
1,219
1,449
Derivative financial instruments
691
1,265
Financial investments
2,733
3,346
Prepayments and financial receivables
6
2,063
1,087
Total non-current assets
79,851
84,618
Inventories
5,205
3,395
Trade and other receivables
2
22,452
17,927
Derivative financial instruments
4,039
5,131
Financial investments
29,876
21,246
Cash and cash equivalents
3
15,579
14,126
Total current assets
77,152
61,826
Assets classified as held for sale
3
1,018
676
Total assets
158,021
147,120
EQUITY AND LIABILITIES
Shareholders' equity
53,988
39,010
Non-controlling interests
1
14
Total equity
53,989
39,024
Equinor fourth quarter 2022
27
Finance debt
4
24,141
27,404
Lease liabilities
2,410
2,449
Deferred tax liabilities
11,996
14,037
Pension liabilities
3,671
4,403
Provisions and other liabilities
6
15,633
19,899
Derivative financial instruments
2,376
767
Total non-current liabilities
60,226
68,959
Trade, other payables and provisions
13,352
14,310
Current tax payable
5
17,655
13,119
Finance debt
4
4,359
5,273
Lease liabilities
1,258
1,113
Dividends payable
2,808
582
Derivative financial instruments
4,106
4,609
Total current liabilities
43,539
39,005
Liabilities directly associated with the assets classified
as held for sale
3
268
132
Total liabilities
104,032
108,096
Total equity and liabilities
158,021
147,120
1) Audited
2) Of which Trade receivables of USD 17,3 billion in 2022 and USD
15,2 billion in 2021
3) Includes collateral deposits of USD 6,128 billion
for 2022 related to certain requirements set out by
exchanges where Equinor is
participating. The corresponding figure for 2021 is
USD 2,069 billion.
Equinor fourth quarter 2022
28
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
(unaudited, in USD million)
Share
capital
Additional
paid-in
capital
Retained
earnings
Foreign
currency
translation
reserve
OCI from
equity
accounted
investments
Share-
holders'
equity
Non-
controlling
interests
Total equity
At 1 January 2021
1)
1,164
6,852
30,050
(4,194)
0
33,873
19
33,892
Net income/(loss)
8,563
8,563
14
8,576
Other comprehensive
income/(loss)
111
(1,052)
(940)
(940)
Total comprehensive
income/(loss)
7,636
Dividends
(2,041)
(2,041)
(2,041)
Share buy-back
(429)
(429)
(429)
Other equity transactions
(15)
(15)
(18)
(33)
At 31 December 2021
1,164
6,408
36,683
(5,245)
0
39,010
14
39,024
At 1 January 2022
1)
1,164
6,408
36,683
(5,245)
0
39,010
14
39,024
Net income/(loss)
28,746
28,746
(3)
28,744
Other comprehensive
income/(loss)
356
(3,609)
424
(2,829)
(2,829)
Total comprehensive
income/(loss)
25,914
Dividends
(7,549)
(7,549)
(7,549)
Share buy-back
2)
(22)
(3,358)
(3,380)
(3,380)
Other equity transactions
(10)
(10)
(10)
(20)
At 31 December 2022
1,142
3,041
58,236
(8,855)
424
53,988
1
53,989
1) Audited
2) For more information see note 7 Capital distribution.
Equinor fourth quarter 2022
29
CONSOLIDATED STATEMENT
OF CASH FLOWS
Quarters
Full year
Full year
Q4 2022
Q3 2022
Q4 2021
(unaudited, in USD million)
Note
2022
2021
14,469
27,156
13,135
Income/(loss) before tax
78,604
31,583
1,184
1,049
4,777
Depreciation, amortisation and net impairment
2
6,391
11,719
183
(2)
2
Exploration expenditures written off
342
171
2,140
(1,691)
68
(Gains)/losses on foreign currency transactions and
balances
4
(2,088)
(47)
(87)
(642)
(156)
(Gains)/losses on sale of assets and businesses
3
(823)
(1,519)
2,923
(1,235)
684
(Increase)/decrease in other items related to operating
activities
1)
468
106
217
(111)
(315)
(Increase)/decrease in net derivative financial instruments
1,062
539
216
113
5
Interest received
399
96
(258)
(138)
(212)
Interest paid
(747)
(698)
20,988
24,498
17,988
Cash flows provided by operating activities before
taxes paid and working
capital items
83,608
41,950
(14,188)
(16,975)
(6,658)
Taxes paid
(43,856)
(8,588)
(2,532)
(946)
(3,180)
(Increase)/decrease in working capital
(4,616)
(4,546)
4,267
6,578
8,151
Cash flows provided by operating activities
35,136
28,816
0
(21)
0
Cash used/received in business combinations
2)
3
147
(111)
(2,376)
(2,053)
(2,225)
Capital expenditures and investments
3)
(8,758)
(8,040)
(6,990)
2,821
(6,387)
(Increase)/decrease in financial investments
(10,089)
(9,951)
(374)
904
151
(Increase)/decrease in derivatives financial instruments
1,894
(1)
7
(63)
189
(Increase)/decrease in other interest-bearing items
(23)
28
47
269
72
Proceeds from sale of assets and businesses
3)
3
966
1,864
(9,687)
1,856
(8,200)
Cash flows provided by/(used in) investing activities
(15,863)
(16,211)
(250)
0
(1,250)
Repayment of finance debt
(250)
(2,675)
(365)
(341)
(319)
Repayment of lease liabilities
(1,366)
(1,238)
Equinor fourth quarter 2022
30
(2,231)
(1,256)
(565)
Dividends paid
(5,380)
(1,797)
(577)
(1,996)
(222)
Share buy-back
(3,315)
(321)
230
(278)
2,713
Net current finance debt and other financing activities
(5,102)
1,195
(3,193)
(3,871)
357
Cash flows provided by/(used in) financing activities
(15,414)
(4,836)
(8,612)
4,563
307
Net increase/(decrease) in cash and cash equivalents
3,860
7,768
844
(1,778)
(106)
Effect of exchange rate changes on cash and cash equivalents
(2,268)
(538)
23,348
20,562
13,785
Cash and cash equivalents at the beginning
of the period (net of overdraft)
13,987
6,757
15,579
23,348
13,987
Cash and cash equivalents at the end of the
period (net of overdraft)
4)
15,579
13,987
1) The line item mainly consists
of provisions, unrealised gains and losses
and items of income or expense for which
the cash effects are
included in increase/(decrease)
in working capital within operating cash flow and
investing cash flows. The line item includes
a fair value
loss related to inventory of USD 672 million at 31
December 2022 and USD 2 408 million in
the fourth quarter.
2) Net after cash and cash equivalents acquired. The
line item includes cash consideration received related
to the acquisition of Statfjord
licences in second quarter of 2022 as described in
note 3 Acquisitions and disposals.
3) Cash inflow of USD 433 million received in
the first quarter 2022 related to the disposal of
parts of the interests in the Bacalhau field in
2018 (contingent consideration) has been reclassified
from Capital expenditures and investments to
Proceeds from sale of assets and
business.
4) At 31 December 2022 cash and cash equivalents
net overdraft was zero. At 31 December 2021
cash and cash equivalents included a net
overdraft of USD 140 million.
Equinor fourth quarter 2022
31
Notes to the Condensed interim financial statements
1 Organisation and basis of preparation
Organisation and principal activities
Equinor Group (Equinor) consists of Equinor ASA and its subsidiaries. Equinor ASA is incorporated
and domiciled in Norway and
listed on the Oslo Børs (Norway) and the New York Stock Exchange (USA). The address of its registered office is Forusbeen 50, N-
4035 Stavanger, Norway.
The objective of Equinor is to develop, produce and market various forms of energy and derived
products and services, as well as
other business. The activities may also be carried out through participation in or cooperation with
other companies. Equinor Energy
AS, a 100% owned operating subsidiary of Equinor ASA and owner of all of Equinor's
oil and gas activities and net assets on the
Norwegian continental shelf, is co-obligor or guarantor of certain debt obligations of Equinor ASA.
Equinor's condensed interim financial statements for the fourth quarter of 2022 were authorised
for issue by the board of directors on
7 February 2023.
Basis of preparation
These condensed interim financial statements are prepared in accordance with International Accounting
Standard 34 Interim Financial
Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European
Union (EU). The
condensed interim financial statements do not include all the information and disclosures required
by International Financial Reporting
Standards (IFRS) for a complete set of financial statements, and these condensed interim financial statements
should be read in
conjunction with the Consolidated annual financial statements for 2021. IFRS as adopted by the EU
differs
in certain respects from
IFRS as issued by the IASB, however the differences do not impact Equinor's financial statements for the
periods presented. A
description of the significant accounting policies applied in preparing these condensed interim financial
statements is included in
Equinor's Consolidated annual financial statements for 2021.
There have been no changes to significant accounting policies during 2022 compared to the Consolidated
annual financial statements
for 2021. With effect from the second quarter 2022, due to the evolving trading business in the Group, Equinor
has determined that
fair value less cost to sell (FV) is an appropriate measurement basis for commodity inventories
held for trading purposes with
subsequent changes in FV recognised in the Consolidated statement of income. Comparative
numbers have not been restated due to
materiality.
Certain amounts in the comparable periods in the note disclosures have been reclassified
to conform to current period presentation.
The subtotals and totals in some of the tables may not equal the sum of the amounts shown due
to rounding. When determining fair
value, there have been no changes to the valuation techniques or models and Equinor applies the
same sources of input and the
same criteria for categorisation in the fair value hierarchy as disclosed in the Consolidated annual
financial statements for 2021.
The Condensed interim financial statements are unaudited.
Use of estimates
The preparation of financial statements in conformity with IFRS requires management to make judgments,
estimates and assumptions
that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The
estimates and associated
assumptions are reviewed on an on-going basis and are based on historical experience and various other
factors that are believed to
be reasonable under the circumstances, the results of which form the basis for making the
judgments about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates.
Equinor fourth quarter 2022
32
2 Segments
Equinor’s operations are managed through operating segments (business areas). The
reportable segments Exploration & Production
Norway (E&P Norway), Exploration & Production International (E&P International), Exploration
& Production USA (E&P USA),
Marketing, Midstream & Processing (MMP) and Renewables (REN) correspond to the operating
segments. The operating segments
Projects, Drilling & Procurement (PDP), Technology,
Digital & Innovation (TDI) and Corporate staff and functions are aggregated into
the reportable segment Other based on materiality. The majority of the costs in PDP and TDI are allocated to the three Exploration &
Production segments, MMP and REN.
Inter-segment sales and related unrealised profits, mainly from the sale of crude oil and products,
are eliminated in the Eliminations
column below. Inter-segment revenues are based upon estimated market prices.
The reported measure of segment profit is net operating income/(loss)
.
Deferred tax assets, pension assets and non-current financial
assets are not allocated to the segments.
The measurement basis for the segments is IFRS as applied by the group,
except for the line-item Additions to PP&E, intangibles and
equity accounted investments in which movements related to changes in asset retirement obligations
are excluded, and provisions for
onerous contracts which reflects only obligations towards group external parties. With effect from the second quarter 2022, Equinor
changed the measurement basis for the segments related to leases. Through the first quarter
of 2022, all leases were presented
within the Other segment and lease costs were allocated to the operating segments based on
underlying lease payments with a
corresponding credit in the Other segment. As from the second quarter 2022, lease contracts
are accounted for in accordance with
IFRS 16 in all segments. This change does not affect Equinor’s consolidated financial statements. Comparative
numbers in the
segments have been restated.
Fourth quarter 2022
E&P
Norway
E&P
International
E&P
USA
MMP
REN
Other
Eliminations
Total
(in USD million)
Revenues third party, other revenue and
other income
77
720
69
32,965
31
65
0
33,926
Revenues inter-segment
16,652
1,623
1,014
254
0
27
(19,570)
0
Net income/(loss) from equity accounted
investments
(0)
31
0
372
8
(16)
0
395
Total revenues and other income
16,729
2,373
1,083
33,591
38
76
(19,570)
34,321
Purchases [net of inventory variation]
(0)
(85)
(0)
(31,996)
0
(0)
19,228
(12,853)
Operating, selling, general and
administrative expenses
(1,020)
(511)
(220)
(1,614)
(100)
(153)
314
(3,304)
Depreciation, amortisation and net
impairment losses
(1,222)
310
(13)
(233)
(1)
(26)
0
(1,184)
Exploration expenses
(101)
(266)
(29)
0
0
0
0
(396)
Total operating expenses
(2,343)
(551)
(262)
(33,843)
(101)
(179)
19,542
(17,737)
Net operating income/(loss)
14,386
1,822
821
(252)
(63)
(103)
(29)
16,584
Additions to PP&E, intangibles and equity
accounted investments
1,422
584
281
349
103
88
(0)
2,828
Equinor fourth quarter 2022
33
Third quarter 2022
E&P
Norway
E&P
International
E&P
USA
MMP
REN
Other
Eliminations
Total
(in USD million)
Revenues third party, other revenue and
other income
880
116
77
42,462
3
20
0
43,559
Revenues inter-segment
23,154
1,618
1,465
91
0
9
(26,336)
0
Net income/(loss) from equity accounted
investments
0
33
0
33
9
0
0
75
Total revenues and other income
24,034
1,767
1,541
42,585
12
29
(26,336)
43,633
Purchases [net of inventory variation]
(0)
(22)
0
(40,253)
0
0
26,683
(13,592)
Operating, selling, general and
administrative expenses
(963)
(427)
(254)
(1,097)
(68)
11
183
(2,614)
Depreciation, amortisation and net
impairment losses
(1,143)
(349)
(199)
680
(1)
(38)
0
(1,049)
Exploration expenses
(114)
(157)
(4)
0
0
0
0
(275)
Total operating expenses
(2,220)
(955)
(457)
(40,669)
(69)
(27)
26,866
(17,531)
Net operating income/(loss)
21,813
813
1,084
1,916
(56)
2
531
26,103
Additions to PP&E, intangibles and equity
accounted investments
1,089
841
186
345
95
17
0
2,574
Equinor fourth quarter 2022
34
Fourth quarter 2021
E&P
Norway
1)
E&P
International
1)
E&P
USA
MMP
1)
REN
1)
Other
1)
Eliminations
1)
Total
(in USD million)
Revenues third party, other revenue and
other income
1)
169
361
78
31,743
4
115
0
32,470
Revenues inter-segment
1)
17,539
1,280
1,224
72
(0)
10
(20,125)
(0)
Net income/(loss) from equity accounted
investments
0
111
0
3
17
6
0
138
Total revenues and other income
1)
17,708
1,752
1,302
31,818
21
131
(20,125)
32,608
Purchases [net of inventory variation]
(0)
(37)
0
(30,959)
(0)
(0)
19,452
(11,543)
Operating, selling, general and
administrative expenses
1)
(1,000)
(396)
(232)
(972)
(58)
(180)
333
(2,504)
Depreciation, amortisation and net
impairment losses
1)
(1,784)
(2,277)
(486)
(205)
(1)
(24)
0
(4,777)
Exploration expenses
(69)
(102)
(34)
0
0
0
0
(206)
Total operating expenses
1)
(2,853)
(2,812)
(752)
(32,135)
(59)
(204)
19,785
(19,030)
Net operating income/(loss)
1)
14,854
(1,060)
550
(316)
(38)
(73)
(340)
13,578
Additions to PP&E, intangibles and equity
accounted investments
1)
1,208
569
179
174
97
16
(0)
2,243
1) Restated due to implementation of IFRS 16 in
the segments, mainly affecting the line item Operating,
selling, general and administrative
expenses in MMP (reduction of USD 134 million) and
Other (increase of USD 178 million) and the
line item Depreciation, amortisation and net
impairments in MMP (increase of USD 131 million)
and Other (reduction of USD 209 million).
Equinor fourth quarter 2022
35
Full year 2022
E&P
Norway
E&P
Internationa
l
E&P
USA
MMP
REN
Other
Eliminations
Total
(in USD million)
Revenues third party, other revenue and
other income
1,299
1,134
305
147,173
127
149
0
150,186
Revenues inter-segment
74,631
6,124
5,217
527
0
55
(86,554)
0
Net income/(loss) from equity accounted
investments
(0)
172
0
406
58
(16)
0
620
Total revenues and other income
75,930
7,431
5,523
148,105
185
187
(86,554)
150,806
Purchases [net of inventory variation]
0
(116)
(0)
(139,916)
0
(0)
86,227
(53,806)
Operating, selling, general and
administrative expenses
(3,782)
(1,698)
(938)
(4,591)
(265)
(223)
904
(10,593)
Depreciation, amortisation and net
impairment losses
(4,167)
(1,731)
(361)
14
(4)
(142)
0
(6,391)
Exploration expenses
(366)
(638)
(201)
0
0
0
0
(1,205)
Total operating expenses
(8,315)
(4,183)
(1,501)
(144,493)
(269)
(365)
87,131
(71,995)
Net operating income/(loss)
67,614
3,248
4,022
3,612
(84)
(178)
577
78,811
Additions to PP&E, intangibles and equity
accounted investments
4,922
2,623
764
1,212
298
176
(0)
9,994
Balance sheet information
Equity accounted investments
3
550
0
688
1,452
65
(0)
2,758
Non-current segment assets
28,510
15,868
11,311
4,619
316
1,031
0
61,656
Non-current assets not allocated to
segments
15,437
Total non-current assets
79,851
Equinor fourth quarter 2022
36
Full year 2021
E&P
Norway
1)
E&P
International
1)
E&P
USA
1)
MMP
1)
REN
1)
Other
1)
Eliminations
1)
Total
(in USD million)
Revenues third party, other revenue and
other income
1)
414
1,121
377
87,050
1,394
307
0
90,665
Revenues inter-segment
1)
38,972
4,230
3,771
321
0
41
(47,335)
(0)
Net income/(loss) from equity accounted
investments
(0)
214
0
22
16
7
0
259
Total revenues and other income
1)
39,386
5,566
4,149
87,393
1,411
355
(47,335)
90,924
Purchases [net of inventory variation]
(0)
(58)
(0)
(80,873)
(0)
(1)
45,773
(35,160)
Operating, selling, general and
administrative expenses
1)
(3,652)
(1,406)
(1,074)
(3,753)
(163)
(432)
1,102
(9,378)
Depreciation, amortisation and net
impairment losses
1)
(4,900)
(3,321)
(1,734)
(1,604)
(3)
(156)
0
(11,719)
Exploration expenses
(363)
(451)
(190)
0
0
0
0
(1,004)
Total operating expenses
1)
(8,915)
(5,237)
(2,998)
(86,230)
(166)
(590)
46,875
(57,261)
Net operating income/(loss)
1)
30,471
329
1,150
1,163
1,245
(234)
(461)
33,663
Additions to PP&E, intangibles and equity
accounted investments
1)
4,944
1,833
690
517
458
65
(0)
8,506
Balance sheet information
Equity accounted investments
3
1,417
0
113
1,108
45
0
2,686
Non-current segment assets
1)
36,502
15,423
11,406
4,006
157
1,033
0
68,527
Non-current assets not allocated to
segments
13,406
Total non-current assets
84,618
1) Restated due to implementation of IFRS 16 in
the segments, mainly affecting the line item Operating,
selling, general and administrative
expenses in MMP (reduction of USD 523 million),
EPN (reduction of USD 77 million) and
Other (increase of USD 696 million) and the line
item
Depreciation, amortisation and net impairments in
MMP (increase of USD 525 million), EPN (increase
of USD 222 million) and Other (reduction
of USD 814 million).
Equinor fourth quarter 2022
37
Net impairments/reversal of impairments and changes to accounting assumptions
Management’s future commodity price assumptions and currency assumptions are used for value in use impairment testing.
While
there are inherent uncertainties in the assumptions, the commodity price assumptions as well
as currency assumptions reflect
management’s best estimate of the price and currency development over the life of the Group’s assets based on its view of relevant
current circumstances and the likely future development of such circumstances, including energy demand development,
energy and
climate change policies as well as the speed of the energy transition, population and economic growth,
geopolitical risks, technology
and cost development and other factors. Management’s best estimate also takes into consideration a range of external forecasts.
Equinor has performed a thorough and broad analysis of the expected development in drivers for
the different commodity markets and
exchange rates. Significant uncertainty exists regarding future commodity price development due to the
transition to a lower carbon
economy, future supply actions by OPEC+ and other factors. The management’s analysis of the expected development in drivers for
the different commodity markets and exchange rates resulted in changes in the long-term price assumptions with effect from the third
quarter of 2022. The main changes with effect for impairment and impairment reversal assessments are disclosed in
the table below
as price-points on price-curves. Previous price-points applied from the third quarter 2021 up to
and including the second quarter of
2022 are provided in brackets.
Year
Prices in real terms
1)
2025
2030
2040
2050
Brent Blend (USD/bbl)
75
(70)
75
(75)
70
(69)
65
(64)
European gas (USD/mmBtu) - TTF
2)
20.0
(7.3)
9.5
(6.8)
9.0
(8.2)
9.0
(7.5)
Henry Hub (USD/mmBtu)
4.0
(3.3)
3.7
(3.4)
3.7
(3.6)
3.7
(3.6)
Electricity Germany (EUR/MWh)
115
(65)
70
(62)
57
(64)
57
(64)
EU ETS (EUR/tonne)
80
(61)
80
(70)
105
(89)
130
(108)
1) Basis year 2022. The prices in the table are
price-points on price-curves.
2) As from the third quarter 2022, TTF is applied
as the main reference price for European
gas. Updated price-points for the previously applied
NBP correspond to the disclosed updated price-points
for TTF. Previously applied comparable prices for NBP are 7.4, 6.9, 8.3 and 7.6
for
2025, 2030, 2040 and 2050 respectively.
Equinor fourth quarter 2022
38
The refinery margin assumptions increased, especially in the short- and mid-term. Long-term it is
anticipated that the energy transition
will be the main driver of refinery margins. The discount rate used, derived from Equinor’s weighted
average cost of capital (WACC),
and the long-term currency rates are unchanged.
In the fourth quarter, Equinor recognised net impairment reversals of USD 1,097 million. Net impairment reversals in the E&P
International segment amounted to USD 747 million and is related to Mariner in the UK. The reversal is
mainly due to optimisation of
the production profile and higher prices, supported by a slight increase in reserves estimates. In the
E&P USA segment, the
impairment reversal was USD 350 million due to increased expected reserves in one of the offshore Gulf of Mexico
assets.
In the fourth quarter of 2021, Equinor recognised net impairments of USD 1,800 million. Impairments
of USD 1,777 million were
recognised in the E&P International segment mainly related to Mariner UK caused by downward
revision in reserve estimates.
Net impairment reversals recognised in the full year of 2022 is USD 2,428 million (net impairments
of USD 1,439 million in the full year
of 2021), of which USD 832 million is related to impairment of equity accounted investments
in the first quarter. See note 3
Acquisitions and disposals regarding the effects of the decision to exit Russia.
Recoverable amounts in the impairment assessments are normally based on value in use. Estimates of discounted
cash flows used to
determine the recoverable amounts are based on internal forecasts on cost, production profiles and commodity
prices.
Non-current assets by country
At 31 December
At 31 December
(in USD million)
2022
2021
Norway
33,242
40,564
USA
12,343
12,323
Brazil
9,400
8,751
UK
3,688
2,096
Azerbaijan
1,401
1,654
Canada
1,171
1,403
Angola
895
948
Algeria
622
708
Argentina
615
474
Denmark
497
536
Other
541
1,757
Total non-current assets
1)
64,414
71,213
1) Excluding deferred tax assets, pension assets
and non-current financial assets.
Equinor’s non-current assets in Norway have decreased by USD 7.322 billion to USD
33.242 billion at 31 December 2022 compared
to year-end 2021, mainly due to increased discount rates and strengthening of USD versus NOK.
Equinor fourth quarter 2022
39
Revenues from contracts with customers by geographical areas
When attributing the line item Revenues from contracts with customers for the fourth quarter of 2022 to the
country of the legal entity
executing the sale, Norway constitutes 81% and USA constitutes 14% of such revenues (84%
and 13% respectively for the full year of
2022). For the fourth quarter of 2021, Norway and USA constituted 84% and 10% of such revenues,
respectively (81% and 13% for
the full year of 2021).
Revenues from contracts with customers and other revenues
Quarters
Full year
Q4 2022
Q3 2022
Q4 2021
(in USD million)
2022
2021
12,994
14,098
10,784
Crude oil
58,524
38,307
15,479
21,293
15,199
Natural gas
65,232
28,050
13,326
19,106
13,990
- European gas
58,239
24,900
651
846
611
- North American gas
2,884
1,783
1,502
1,341
598
- Other incl. Liquefied natural gas
4,109
1,368
2,892
2,766
3,507
Refined products
11,093
11,473
1,896
2,239
2,675
Natural gas liquids
9,240
8,490
480
399
239
Transportation
1,470
921
1,469
1,465
425
Other sales
4,702
1,006
35,209
42,259
32,828
Revenues from contracts with customers
150,262
88,247
(1,368)
466
(703)
Total other revenues
1)
(1,258)
497
33,841
42,726
32,125
Revenues
149,004
88,744
1) Principally relates to commodity derivatives and
change in fair value less cost to sell for commodity
inventories held for trading purposes.
3 Acquisitions and disposals
Acquisitions
Acquisition of BeGreen
On 26 January 2023, Equinor closed a transaction with the Bregentved Group and members
of the executive board of BeGreen Solar
Aps to acquire 100 % of BeGreen Solar Aps for a cash consideration of USD 277 million
(EUR 260 million) and a consideration
contingent on successful delivery of future solar projects above an agreed MW threshold. BeGreen Solar Aps
is a Danish solar
developer. At closing USD 226 million (EUR 213 million) of the cash consideration was paid and recognised in the REN
segment.
Acquisition of Triton Power
On 1 September 2022, Equinor and SSE Thermal Generation Holdings Limited (SSE Thermal)
closed a transaction to acquire the UK
power company Triton Power Holdings Ltd (Triton Power) from Triton Power Partners LP owned by Energy Capital Partners (ECP).
Equinor’s share of the consideration was USD 141 million (GBP 120 million), after adjustments
that mainly related to net debt and
working capital. The key plant included in the purchase of Triton Power is the Saltend Power Station with an installed
capacity of 1.2
GW. Equinor and SSE Thermal own 50% each of Trition Power, and Equinor is accounting for the investment under the equity
method as a joint venture in the MMP segment.
Acquisition of Statfjord
On 31 May 2022, Equinor closed a transaction to acquire all of Spirit Energy’s interests in production
licenses in the Statfjord area
which covers the Norwegian and UK Continental Shelves and consists of three integrated
production platforms and satellite subsea
installations. All licenses are operated by Equinor. Spirit Energy’s ownership shares in the licenses covered by the transaction range
from 11.56% to 48.78%. The cash consideration received was USD 193 million, whereof USD 25 million related to Spirit’s lifting of
volumes on Equinor’s behalf in June 2022. The assets and liabilities acquired have been reflected
in accordance with the principles in
IFRS 3 Business Combinations. The transaction is reflected in the E&P Norway and E&P International
segments with a cash
consideration of USD 96 million and USD 72 million respectively.
Equinor fourth quarter 2022
40
In the segment E&P Norway, the acquisition resulted in an increase of USD 98 million in property, plant and equipment, an increase of
USD 390 million in asset retirement obligation, a reduction of deferred tax liability of USD 298 million
and an increase in taxes payable
of USD 98 million. In the segment E&P International, the acquisition resulted in an increase of USD
98 million in property, plant and
equipment, an increase of USD 241 million in asset retirement obligation and an increase of deferred
tax asset of USD 86 million.
In the fourth quarter,
cash considerations and purchase price allocations were concluded with no significant changes compared
to
initial recognition.
Disposals
Ekofisk and Martin Linge on the Norwegian Continental Shelf
On 30 September 2022, Equinor closed a transaction with Sval Energi AS to divest Equinor’s
entire ownership share in the Greater
Ekofisk Area including its share in Norpipe Oil AS, and a 19% ownership share in Martin Linge.
The cash consideration paid upon
closing of the transaction amounted to USD 293 million after interim period settlement. In addition,
an estimated contingent
consideration of USD 169 million linked to realised oil and gas prices for 2022 and 2023 was
recognised. Equinor retained a 51%
ownership share in Martin Linge and continues
as operator of the field. Transactions on the NCS are made on a post-tax basis where
gains include the release of tax liabilities previously computed and recognised. The disposal
resulted in a decrease in property, plant
and equipment of USD 1,493 million, a decrease in asset retirement obligation of USD
376 million, a decrease in deferred tax liability
of USD 597 million and a decrease in taxes payable of USD 686 million. A
post-tax gain of USD 655 million is presented in the line
item Other income in the Consolidated statement of income in the EPN segment.
Exit Russia
Following Russia’s invasion of Ukraine, Equinor announced that it had decided to stop new investments in
Russia and start the
process of exiting Equinor’s joint arrangements. Based on this decision, Equinor
evaluated its assets in Russia and recognised net
impairments of USD 1.083 billion in the first quarter, of which USD 251 million was related to property, plant and equipment and
intangible assets and USD 832 million was related to investments accounted for using the equity
method. The impairments were net
of contingent consideration from the time of acquiring the assets. The impairments were recognised
in the line items Depreciation,
amortisation and net impairment losses and Exploration expenses in the Consolidated statement
of income based on the nature of the
impaired assets and reflected in the E&P International segment. During the second quarter, Equinor transferred its participating
interests in four Russian entities to Rosneft and was released from all future commitments
and obligations with no material impact
on
the financial statements. The ownership interests in Kharyaga were transferred to the operator.
Equinor has stopped trading in Russian oil. This means that Equinor will not enter into any new
trades or engage in new transport of
oil and oil products from Russia. Equinor has assessed the accounting impact of certain commitments
arising from such contracts
entered into prior to the invasion and deem the impact to be immaterial.
10% of Dogger Bank C
On 10 February 2022, Equinor closed the transaction with Eni to sell a 10% equity interest in the
Dogger Bank C project in the UK for
a total consideration of USD 91 million (GBP 68 million), resulting in a gain of USD 87 million
(GBP 65 million). After closing, Equinor’s
ownership share is 40%. Equinor continues to equity account for the remaining investment as a joint
venture. The gain is presented in
the line item Other income in the Consolidated statement of income in the REN segment.
Held for sale
Equinor Energy Ireland Limited
In the fourth quarter of 2021, Equinor entered into an agreement with Vermilion Energy Inc (Vermilion) to sell Equinor’s non-operated
equity position in the Corrib gas project in Ireland. The transaction covers a sale of 100% of
the shares in Equinor Energy
Ireland
Limited (EEIL). EEIL owns 36.5% of the Corrib field alongside the operator Vermilion (20%) and Nephin Energy (43.5%). Equinor
and
Vermilion have agreed a consideration of USD 434 million before closing adjustments and contingent consideration linked to 2022
production level and gas prices. The effective date for the transaction is 1 January 2022. Closing is dependent
on governmental
approval and is expected to take place during the first quarter 2023.
Equinor fourth quarter 2022
41
4 Financial items
Quarters
Full year
Q4 2022
Q3 2022
Q4 2021
(in USD million)
2022
2021
(2,140)
1,691
(68)
Net foreign currency exchange gains/(losses)
2,088
47
482
346
37
Interest income and other financial items
1,222
152
8
(44)
(16)
Gains/(losses) on financial investments
(394)
(348)
(15)
(604)
(96)
Gains/(losses) other derivative financial instruments
(1,745)
(708)
(450)
(336)
(299)
Interest and other finance expenses
(1,379)
(1,223)
(2,115)
1,053
(443)
Net financial items
(207)
(2,080)
Equinor reports significant unrealised foreign currency losses in the fourth quarter, mainly related to weakening of USD versus NOK.
For the full year 2022, the USD has strengthened versus NOK, resulting in a significant unrealised
positive foreign currency effect.
These effects are mainly due to a large part of Equinor’s operations having NOK as functional
currency, and the effects are offset
within equity as OCI effects arising on translation from functional currency to presentation currency USD.
The increase in Interest income and other financial items for 2022 compared to the previous year mainly relates
to higher interest
rates and increased Cash and cash equivalents and financial investments.
Losses on derivative financial instruments in the fourth quarter and full year 2022 are mainly
due to increased discount rates.
Equinor has a US Commercial paper programme available with a limit of USD 5 billion. As of
31 December 2022, USD 0.2 billion were
utilised compared to USD 2.6 billion utilised as of 31 December 2021.
5 Income taxes
Quarters
Full year
Q4 2022
Q3 2022
Q4 2021
(in USD million)
2022
2021
14,469
27,156
13,135
Income/(loss) before tax
78,604
31,583
(6,572)
(17,785)
(9,765)
Income tax
(49,861)
(23,007)
45.4%
65.5%
74.3%
Effective tax rate
63.4%
72.8%
The effective tax rate for the fourth quarter of 2022 and for the full year 2022 was significantly influenced
by recognition of previously
unrecognised deferred tax assets in the US. The effective tax rate for the fourth quarter of 2022 was also influenced
by low share of
income from the Norwegian continental shelf due to derivate losses.
After a history of significant losses, Equinor is now recording profits in the US and projected
future taxable income demonstrates that it
is probable that the unused tax losses carried forward can be utilised in the nearest future. The tax
value of the unused accumulated
losses has been recognised as a deferred tax asset of USD 2.7 billion in the fourth quarter, with a corresponding decrease in income
taxes of USD 2.8 billion resulting in a low effective tax rate this quarter compared to last year.
The effective tax rate for the fourth quarter of 2021 and for the full year 2021 was primarily influenced by
high share of operating
income from the Norwegian continental shelf with higher-than-average effective tax rate and losses recognised
in countries with lower-
than-average effective tax rates, partially offset by positive income in countries with unrecognised deferred tax assets. The effective
tax rate was also influenced by currency effects in entities taxable in other currencies than the functional currency.
Equinor fourth quarter 2022
42
6 Provisions, commitments, contingent items and related parties
Asset retirement obligation
Equinor's estimated asset retirement obligations (ARO) have decreased by USD 5.683 billion to USD
11.734 billion at 31 December
2022 compared to year-end 2021, mainly due to increased discount rates and strengthening of USD
versus NOK. Changes in ARO
are reflected within Property, plant and equipment and Provisions and other liabilities in the Consolidated balance sheet.
Agbami dispute settlement agreement and licence extension
In the third quarter of 2022, an agreement was reached in a three-year long
negotiation between the parties Nigerian National
Petroleum Company Limited (NNPC), Chevron and Equinor. The parties have agreed to an extension of the operating licence period
and the related Production Sharing Contract (PSC) for Oil Mining Lease (OML) 128 of the
unitised Agbami field until 2042. At the
same time, the parties agreed outstanding legal disputes related to the allocation between the parties
of cost oil, tax oil and profit oil
volumes. The settlement agreement awards Equinor with an amicable compensation for overlifted volumes, which
will be payable over
the 20-year licence extension. The amounts and timing of payments to be received depend
on a number of factors related to
operation of the field, as well as future oil prices and production volumes. Equinor will
consequently recognise settlement payments
when received, and no amounts have been recognised in the Consolidated statement of income
or Balance sheet for 2022. The
parties are currently undertaking necessary legal actions in order to formally close the legal
disputes.
Resolved dispute with Norwegian tax authorities related to Equinor Service Center Belgium
N.V
In the fourth quarter of 2020, Equinor received a decision from the Norwegian tax authorities related
to the capital structure of the
subsidiary Equinor Service Center Belgium N.V., concluding that the capital structure had to be based on the arm length’s principle,
affecting the fiscal years 2012 to 2016. Equinor received a claim of USD 182 million that was paid in
2021. During the second quarter
of 2022, the tax authorities reversed their decision and accepted Equinor’s initial position. During
the third quarter, the tax payment
was reimbursed to Equinor, adjusted for changes in tax rates. The adjustment, which has been recognised as tax expense in the
Consolidated statement of income in 2022, is considered immaterial.
Dispute with Norwegian tax authorities regarding R&D costs in the offshore tax regime
Equinor has an ongoing dispute regarding the level of Research & Development cost to be allocated
to the offshore tax regime.
During the second quarter of 2022, the Oil Taxation Office (OTO) informed Equinor that it had decided to accept Equinor’s position
regarding certain disputed items, resulting in a reduction in Equinor’s maximum
exposure. During the fourth quarter, Equinor has
accepted an increase in taxable income for both onshore and offshore tax. A previously recognised provision
of USD 95 million has
been reclassified to current tax payable. Equinor’s Income tax expense was
not affected by this development, and the remaining
expected maximum exposure related to R&D costs in the offshore tax regime is considered immaterial.
Dispute with Norwegian tax authorities regarding internal pricing of natural gas liquids
The Oil Taxation Office has challenged the internal pricing of certain products of natural gas liquids sold from Equinor Energy AS to
Equinor ASA in the years 2011-2020. During 2022, there has been a development in various elements of these cases, where parts
of
the previous exposure have been resolved or have reached the end of available appeal processes,
and other parts have been
appealed. Following these developments, which did not impact the Consolidated statement of income
significantly, the maximum
exposure regarding the gas liquid pricing remains at an estimated USD 71 million. Equinor
has provided for its best estimate in the
matter.
During the normal course of its business, Equinor is involved in legal and other proceedings,
and several unresolved claims are
currently outstanding. The ultimate liability or asset in respect of such litigation and claims
cannot be determined at this time. Equinor
has provided in its Condensed interim financial statements for probable liabilities related to
litigation and claims based on the
company’s best judgement. Equinor does not expect that its financial position, results of operations or cash
flows will be materially
affected by the resolution of these legal proceedings.
Related parties
The line item Prepayments and Financial Receivables includes USD 1,461 million which represent a
gross receivable from the
Norwegian state under the Marketing Instruction in relation to the state’s (SDFI) expected participation in the gas sales
activities of a
foreign subsidiary of Equinor. At year-end 2021, the corresponding amount was USD 435 million. The increase is mainly related to
increased volumes, as well as higher cost price, on the gas storage. A corresponding non-current liability
of USD 1462 million has
been recognised, representing SDFI's estimated interest in the gas sales activities in the foreign subsidiary.
7 Capital distribution
Dividend for the fourth quarter of 2022 and share buy-back programme for 2023
On 7 February 2023, the board of directors proposed an ordinary cash dividend for the fourth
quarter of 2022 of USD 0.30 per share,
in addition to an extraordinary cash dividend of USD 0.60 per share for the fourth quarter of 2022.
The Equinor shares will be traded
Equinor fourth quarter 2022
43
ex-dividend on 11 May 2023 on the Oslo Børs and for ADR holders on the New York Stock Exchange. The record date will be 12 May
2023 and the payment date will be 25 May 2023.
On 7 February 2023, the Board proposed an annual share buy-back programme for 2023 with
up to USD 6.0 billion, including shares
to be redeemed from the Norwegian State, subject to authorisation from the annual general
meeting. The annual share buy-back
programme is expected to be executed when the Brent Blend oil price is in or above the range
of 50-60 USD/bbl, Equinor’s net debt to
capital employed adjusted stays within the communicated ambition of 15-30 % and this is supported by
commodity prices.
On 7 February 2023, the board of directors resolved on the commencement of the first tranche
of the share buy-back programme for
2023 of a total of USD 1.0 billion, including shares to be redeemed from the Norwegian State.
The first tranche will end no later than
24 March 2023.
Share buy- back programme for 2022
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, ensuring that its ownership interest
in Equinor remains unchanged at 67%.
Equity impact of share buy back programmes
(in USD million)
2022
2021
First tranche
330
99
Second tranche
440
330
Third tranche
605
-
Fourth tranche
605
-
Norwegian state share
1)
1,399
-
Total
3,380
429
1) Relates to the 2021 programme and first
tranche of 2022 programme
In February 2022, Equinor launched a share buy-back programme for 2022 of up to USD 5,000 million, where
the first tranche of
around USD 1,000 million was finalised in March 2022. USD 330 million of the first tranche
was acquired in the open market. The
redemption of the proportionate share of 67% from the Norwegian State was approved by the annual general
meeting 11 May 2022
and settled in July 2022 as described below.
In May 2022, Equinor launched the second tranche of USD 1,333 million of the 2022 share
buy-back programme of which USD 440
million was purchased in the open market. The acquisition of the second tranche in the open
market was finalised in July 2022.
In July 2022, Equinor increased the target level of share buy-back for 2022 from USD 5,000
million up to USD 6,000 million and
launched the third tranche of USD 1,833 million. USD 605 million was purchased in the
open market. The acquisition of the third
tranche in the open market was finalised in October 2022.
In October 2022, Equinor launched the fourth and final tranche of the share buy-back programme
for 2022 of USD 1,833 million. The
fourth tranche of USD 605 million (both acquired and remaining order) has been recognised as a reduction in
equity as treasury
shares due to an irrevocable agreement with the third party. As of 31 December 2022, USD 495
million of the fourth tranche has been
purchased in the open market, of which USD 475 million has been settled. The remaining order of
the fourth tranche is accrued for
and classified as Trade, other payables and provisions. The acquisition of the fourth tranche in the open market was
finalised in
January 2023.
After having finalised the 2021 share buy-back programme as well as the first tranche of the 2022
share buy-back programme in the
market in the period 28 July 2021 to 25 March 2022, a proportionate share of 67% from the Norwegian
State was redeemed in
accordance with an agreement with the Ministry of Trade, Industry and Fisheries for the Norwegian State to maintain their
ownership
percentage in Equinor. The redemption was approved by the annual general meeting held on 11 May 2022. The shares were
cancelled on 29 June 2022 and the liability of USD 1,399 million (NOK 13,496 million) to the
Norwegian State was settled on 20 July
2022.
For the second, third and fourth tranche of the share buy-back programme of 2022, USD 3,350 million of shares
from the Norwegian
State will, in accordance with an agreement with the Ministry of Trade, Industry and Fisheries, be redeemed at the annual general
meeting in May 2023 in order for the Norwegian State to maintain its ownership share
of 67% in Equinor.
Equinor fourth quarter 2022
44
SUPPLEMENTARY
DISCLOSURES
Exchange rates
Quarters
Change
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
Exchange rates
2022
2021
Change
0.0981
0.1001
0.1146
(14%)
NOK/USD average daily exchange rate
0.1039
0.1163
(11%)
0.1014
0.0921
0.1134
(11%)
NOK/USD period-end exchange rate
0.1014
0.1134
(11%)
10.1925
9.9903
8.7245
17%
USD/NOK average daily exchange rate
9.6245
8.5991
12%
9.8573
10.8574
8.8194
12%
USD/NOK period-end exchange rate
9.8573
8.8194
12%
1.0195
1.0065
1.1433
(11%)
EUR/USD average daily exchange rate
1.0498
1.1821
(11%)
1.0666
0.9748
1.1326
(6%)
EUR/USD period-end exchange rate
1.0666
1.1326
(6%)
USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures are defined as numerical measures that either exclude
or include amounts or certain accounting items
that are not excluded or included in the comparable measures calculated and presented in
accordance with GAAP (i.e., IFRS).
Management considers adjusted earnings and adjusted earnings after tax together with other non-GAAP
financial measures as
defined below, to provide a better indication of the underlying operational and financial performance in the period (excluding
financing), and therefore better facilitate comparisons between periods.
The following financial measures may be considered non-GAAP financial measures:
●
Adjusted earnings
are based on net operating income/(loss) and adjusts for certain items affecting the income for the period in
order to separate out effects that management considers may not be well correlated to Equinor’s
underlying operational
performance in the individual reporting period. Management considers adjusted earnings to be
a supplemental measure to
Equinor’s IFRS measures, which provides an indication of Equinor’s underlying
operational performance in the period and
facilitates an alternative understanding of operational trends between the periods. Adjusted earnings
include adjusted revenues
and other income, adjusted purchases, adjusted operating expenses and selling, general and administrative
expenses, adjusted
depreciation expenses and adjusted exploration expenses.
●
Adjusted earnings after tax
– equals the sum of net operating income/(loss) less income tax in business areas and adjustments
to operating income taking the applicable marginal tax into consideration. Adjusted earnings after
tax excludes net financial items
and the associated tax effects on net financial items. It is based on adjusted earnings less the tax
effects on all elements included
in adjusted earnings (or calculated tax on operating income and on each of the adjusting items
using an estimated marginal tax
rate). In addition, tax effect related to tax exposure items not related to the individual reporting period
is excluded from adjusted
earnings after tax. Management considers adjusted earnings after tax, which reflects a normalised tax
charge associated with its
operational performance excluding the impact of financing, to be a supplemental measure to Equinor’s
net income. Certain net
USD denominated financial positions are held by group companies that have a USD functional
currency that is different from the
currency in which the taxable income is measured. As currency exchange rates change between
periods, the basis for measuring
net financial items for IFRS will change disproportionally with taxable income which includes
exchange gains and losses from
translating the net USD denominated financial positions into the currency of the applicable tax return.
Therefore, the effective tax
rate may be significantly higher or lower than the statutory tax rate for any given period. Adjusted
taxes included in adjusted
earnings after tax should not be considered indicative of the amount of current or total tax
expense (or taxes payable) for the
period.
Adjusted earnings and adjusted earnings after tax should be considered additional measures rather than
substitutes for net operating
income/(loss) and net income/(loss), which are the most directly comparable IFRS measures. There
are material limitations
associated with the use of adjusted earnings and adjusted earnings after tax compared with the
IFRS measures as such non-GAAP
measures do not include all the items of revenues/gains or expenses/losses of Equinor that
are needed to evaluate its profitability on
an overall basis. Adjusted earnings and adjusted earnings after tax are only intended to be
indicative of the underlying developments
in trends of our on-going operations for the production, manufacturing and marketing of our
products and exclude pre-and post-tax
impacts of net financial items. Equinor reflects such underlying development in our operations by eliminating the
effects of certain
items that may not be directly associated with the period's operations or financing. However, for that reason, adjusted earnings and
adjusted earnings after tax are not complete measures of profitability. These measures should therefore not be used in isolation.
Equinor fourth quarter 2022
45
●
Capital employed adjusted –
this measure is defined as Equinor's total equity (including non-controlling interests) and
net
interest-bearing debt adjusted.
●
Net interest-bearing debt adjusted
– this measure is defined as Equinor's interest bearing financial liabilities less cash
and cash
equivalents and current financial investments, adjusted for collateral deposits and balances held by Equinor's
captive insurance
company and balances related to the SDFI.
●
Net debt to capital employed
,
Net debt to capital employed adjusted, including lease liabilities
and
Net debt to capital
employed ratio adjusted
– Following implementation of IFRS 16 Equinor presents a “net debt to capital employed adjusted”
excluding lease liabilities from the gross interest-bearing debt. Comparable numbers are presented
in the table Calculation of
capital employed and net debt to capital employed ratio in the report include Finance lease
according to IAS17, adjusted for
marketing instruction agreement.
In Equinor’s view, net debt ratio provides useful information about Equinor’s capital structure
and
financial strength.
●
Organic investments/capex
– Capital expenditures, defined as Additions to PP&E, intangibles and equity accounted investments
in note 2 Segments to the Condensed interim financial statements, amounted to USD 2.8
billion in Q4 2022
(Q4 2021: USD 2.2
billion) and USD 10.0 billion for YTD 2022 (2021: USD 8.5 billion). Organic capital expenditures
are capital expenditures excluding
acquisitions, recognised lease assets (RoU assets) and other investments with significant different cash flow pattern. In Q4 2022,
a total of USD 0.5 billion (Q4 2021: USD 0.1 billion) is excluded in the organic capital
expenditures (YTD 2022: USD 1.9 billion |
YTD 2021: USD 0.4 billion). Forward-looking organic capital expenditures included in this report
are not reconcilable to its most
directly comparable IFRS measure without unreasonable efforts, because the amounts excluded from
such IFRS measure to
determine organic capital expenditures cannot be predicted with reasonable certainty. Organic capital expenditure is a measure
which Equinor believes gives relevant information about Equinor’s investments in maintenance
and development of the company’s
assets.
●
Gross investments/capex
– Capital expenditures, defined as Additions to PP&E, intangibles and equity accounted investments
in the financial statements, including Equinor’s proportionate share of capital expenditures
in equity accounted investments not
included in additions to equity accounted investments. Forward-looking gross capital expenditures
included in this report are not
reconcilable to its most directly comparable IFRS measure without unreasonable efforts, because the amounts
excluded from
such IFRS measure to determine gross capital expenditures cannot be predicted with reasonable
certainty.
●
Return on average capital employed after tax (ROACE)
– this measure provides useful information for both the group and
investors about performance during the period under evaluation. Equinor uses ROACE to measure the
return on capital employed,
regardless of whether the financing is through equity or debt. The use of ROACE should
not be viewed as an alternative to income
before financial items, income taxes and minority interest, or to net income, which are measures
calculated in accordance with
GAAP or ratios based on these figures. Average capital employed adjusted at 31 December 2022 is
calculated as the average of
the capital employed adjusted at 31 December 2022 and at 31 December 2021 as presented in
the table Calculation of capital
employed and net debt to capital employed ratio later in this report. For a reconciliation for
adjusted earnings after tax, see
Reconciliation of net operating income/(loss) to adjusted earnings as presented later in this report.
Forward-looking ROACE
included in this report is not reconcilable to its most directly comparable IFRS measure without
unreasonable efforts, because the
amounts excluded from IFRS measures used to determine ROACE cannot be predicted with
reasonable certainty.
●
Free cash flow for the fourth quarter of 2022 and 2021
includes the following line items in the Consolidated statement of cash
flows: Cash flows provided by operating activities before taxes paid and working capital items (2022: USD
21.0 billion | 2021: USD
18.0 billion), taxes paid (2022: negative USD 14.2 billion | 2021: negative USD 6.7 billion), cash used/received
in business
combinations (2022: USD 0.0 billion | 2021: USD 0.0 billion), capital expenditures and investments (2022:
negative USD 2.4 billion
| 2021: negative USD 2.2 billion), increase/decrease in other items interest-bearing (2022: USD 0.0 billion |
2021: USD 0.2 billion),
proceeds from sale of assets and businesses (2022: USD 0.0 billion | 2021: USD 0.1 billion), dividend
paid (2022: negative USD
2.2 billion | 2021: negative USD 0.6 billion) and share buy-back (2022: negative USD 0.6 billion |
2021: negative USD 0.2 billion),
resulting in a free cash flow of USD 1.7 billion in the fourth quarter of 2022 (2021:
8.6 billion). Free cash flow represents, and is
used by management to evaluate, cash generated from operational and investing activities
available for debt servicing and
distribution to shareholders.
●
Free cash flow for the full year of 2022 and 2021
includes the following line items in the Consolidated statement of cash flows:
Cash flows provided by operating activities before taxes paid and working capital items (2022: USD
83.6 billion | 2021: USD 42.0
billion), taxes paid (2022: negative USD 43.9 billion | 2021: negative USD 8.6 billion), cash
used/received in business
combinations (2022: USD 0.1 billion | 2021: negative USD 0.1 billion), capital expenditures and investments (2022:
negative USD
8.8 billion | 2021: negative USD 8.0 billion), increase/decrease in other items interest-bearing (2022: negative USD
0.0 billion |
2021: USD 0.0 billion), proceeds from sale of assets and businesses (2022: USD 1.0 billion | 2021: USD
1.9 billion), dividend paid
(2022: negative USD 5.4 billion | 2021: negative USD 1.8 billion) and share buy-back (2022: negative USD 3.3
billion | 2021:
negative USD 0.3 billion), resulting in a free cash flow of USD 23.4 billion in the full year
of 2022 (2021: USD 25.0 billion).
Adjusted earnings
adjust for the following items:
●
Changes in fair value of derivatives:
Certain gas contracts are, due to pricing or delivery conditions, deemed to contain
embedded derivatives, required to be carried at fair value. Also, certain transactions related
to historical divestments include
contingent consideration, are carried at fair value. The accounting impacts of changes in fair
value of the aforementioned are
excluded from adjusted earnings. In addition, adjustments are also made for changes in the unrealised
fair value of derivatives
related to some natural gas trading contracts. Due to the nature of these gas sales contracts, these
are classified as financial
derivatives to be measured at fair value at the balance sheet date. Unrealised gains and losses
on these contracts reflect the
Equinor fourth quarter 2022
46
value of the difference between current market gas prices and the actual prices to be realised under the gas sales
contracts. Only
realised gains and losses on these contracts are reflected in adjusted earnings. This presentation best reflects
the underlying
performance of the business as it replaces the effect of temporary timing differences associated with the re-measurements of the
derivatives to fair value at the balance sheet date with actual realised gains and losses for the
period.
Equinor fourth quarter 2022
47
●
Periodisation of inventory hedging effect:
Commercial storage is hedged in the derivatives market and is accounted for using
the lower of cost or market price. If market prices increase above cost price, the inventory will
not reflect this increase in value.
There will be a loss on the derivative hedging the inventory since the derivatives
always reflect changes in the market price. An
adjustment is made to reflect the unrealised market increase of the commercial storage. As
a result, loss on derivatives is
matched by a similar adjustment for the exposure being managed. If market prices decrease
below cost price, the write-down of
the inventory and the derivative effect in the IFRS income statement will offset each other and no adjustment is made.
●
Over/underlift
: Over/underlift is accounted for using the sales method and therefore revenues were reflected
in the period the
product was sold rather than in the period it was produced. The over/underlift position
depended on several factors related to our
lifting programme and the way it corresponded to our entitlement share of production. The effect on income for the
period is
therefore adjusted, to show estimated revenues and associated costs based upon the production
for the period to reflect
operational performance and comparability with peers.
●
The
operational storage
is not hedged and is not part of the trading portfolio. Cost of goods sold is measured
based on the
FIFO (first-in, first-out) method, and includes realised gains or losses that arise due to
changes in market prices. These gains or
losses will fluctuate from one period to another and are not considered part of the underlying operations
for the period.
●
Impairment and reversal of impairment
are excluded from adjusted earnings since they affect the economics of an asset for
the lifetime of that asset, not only the period in which it is impaired, or the impairment
is reversed. Impairment and reversal of
impairment can impact both the exploration expenses and the depreciation, amortisation and impairment
line items.
●
Gain or loss from sales of assets
is eliminated from the measure since the gain or loss does not give an indication
of future
performance or periodic performance; such a gain or loss is related to the cumulative value creation
from the time the asset is
acquired until it is sold.
●
Eliminations (Internal unrealised profit on inventories)
:
Volumes derived from equity oil inventory will vary depending on
several factors and inventory strategies, i.e., level of crude oil in inventory, equity oil used in the refining process and level of in-
transit cargoes. Internal profit related to volumes sold between entities within the group, and still
in inventory at period end, is
eliminated according to IFRS (write down to production cost). The proportion of realised versus unrealised
gain will fluctuate from
one period to another due to inventory strategies and consequently impact net
operating income/(loss). Write-down to production
cost is not assessed to be a part of the underlying operational performance, and elimination
of internal profit related to equity
volumes is excluded in adjusted earnings.
●
Other items of income and expense
are adjusted when the impacts on income in the period are not reflective of Equinor’s
underlying operational performance in the reporting period. Such items may be unusual or infrequent
transactions, but they may
also include transactions that are significant which would not necessarily qualify as either
unusual or infrequent. Other items are
carefully assessed and can include transactions such as provisions related to reorganisation, early retirement,
etc.
●
Change in accounting policy
are adjusted when the impacts on income in the period are unusual or infrequent, and not
reflective of Equinor’s underlying operational performance in the reporting
period.
For more information on our use of non-GAAP financial measures, see section 5.2 Use and reconciliation
of non-GAAP financial
measures in Equinor's 2021 Annual Report and Form 20-F.
Equinor fourth quarter 2022
48
Reconciliation of adjusted earnings
The table specifies the adjustments made to each of the profit and loss line item included
in the net operating income/(loss) subtotal.
Items impacting net operating income/(loss) in the
fourth quarter of 2022
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Rene-
wables
Other
(in USD million)
Total revenues and other income
34,321
16,729
2,373
1,083
33,591
38
(19,495)
Adjusting items
(774)
239
(476)
-
(536)
(23)
23
Changes in fair value of derivatives
(462)
58
(378)
-
(142)
-
-
Periodisation of inventory hedging effect
(395)
-
-
-
(395)
-
-
Over-/underlift
181
257
(75)
-
-
-
-
Other adjustments
(0)
-
(22)
-
-
-
22
Gain/loss on sale of assets
(98)
(75)
-
-
-
(23)
0
Adjusted total revenues and other income
33,546
16,968
1,897
1,083
33,055
15
(19,472)
Purchases [net of inventory variation]
(12,853)
(0)
(85)
(0)
(31,996)
-
19,228
Adjusting items
72
-
-
-
27
-
46
Operational storage effects
27
-
-
-
27
-
-
Eliminations
46
-
-
-
-
-
46
Adjusted purchases [net of inventory variation]
(12,781)
(0)
(85)
(0)
(31,969)
-
19,273
Operating and administrative expenses
(3,304)
(1,020)
(511)
(220)
(1,614)
(100)
161
Adjusting items
272
(34)
73
2
225
-
5
Over-/underlift
36
(34)
70
-
-
-
-
Other adjustments
1
-
(4)
-
-
-
5
Gain/loss on sale of assets
9
-
7
2
-
-
-
Provisions
225
-
-
-
225
-
-
Adjusted operating and administrative expenses
(3,032)
(1,053)
(438)
(217)
(1,389)
(100)
166
Depreciation, amortisation and net impairments
(1,184)
(1,222)
310
(13)
(233)
(1)
(26)
Adjusting items
(1,094)
3
(744)
(350)
(3)
-
-
Impairment
2
3
3
-
(3)
-
-
Reversal of Impairment
(1,097)
-
(747)
(350)
-
-
-
Adjusted depreciation, amortisation and net
impairments
(2,279)
(1,219)
(433)
(363)
(236)
(1)
(26)
Exploration expenses
(396)
(101)
(266)
(29)
-
-
-
Adjusting items
0
0
0
(0)
-
-
-
Adjusted exploration expenses
(396)
(101)
(266)
(29)
-
-
-
Net operating income/(loss)
16,584
14,386
1,822
821
(252)
(63)
(132)
Sum of adjusting items
(1,525)
208
(1,147)
(348)
(288)
(23)
73
Adjusted earnings/(loss)
15,059
14,594
676
474
(540)
(86)
(59)
Tax on adjusted earnings
(9,263)
(11,294)
(308)
(24)
2,447
(10)
(73)
Adjusted earnings/(loss) after tax
5,796
3,300
367
450
1,907
(96)
(132)
Equinor fourth quarter 2022
49
Items impacting net operating income/(loss) in the
fourth quarter of 2021
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Rene-
wables
Other
(in USD million)
Total revenues and other income
1)
32,608
17,708
1,752
1,302
31,818
21
(19,993
Adjusting items
(772)
(80)
(50)
-
(640)
(0)
(1)
Changes in fair value of derivatives
(173)
(81)
36
-
(128)
-
-
Periodisation of inventory hedging effect
(346)
-
-
-
(346)
-
-
Operating and administrative expenses
(0)
-
-
-
-
(0)
-
Over-/underlift
(85)
1
(86)
-
-
-
-
Gain/loss on sale of assets
(168)
-
0
-
(167)
-
(1)
Adjusted total revenues and other income
1)
31,836
17,628
1,702
1,302
31,178
21
(19,994
Purchases [net of inventory variation]
(11,543)
(0)
(37)
-
(30,959)
(0)
19,452
Adjusting items
342
-
-
-
2
-
340
Operational storage effects
2
-
-
-
2
-
-
Eliminations
340
-
-
-
-
-
340
Adjusted purchases [net of inventory variation]
(11,201)
(0)
(37)
-
(30,956)
(0)
19,791
Operating and administrative expenses
1)
(2,504)
(1,000)
(396)
(232)
(972)
(58)
153
Adjusting items
39
35
21
4
(33)
-
12
Over-/underlift
52
31
21
-
-
-
-
Other adjustments
(21)
4
-
-
(25)
-
-
Gain/loss on sale of assets
16
-
-
4
-
-
12
Provisions
(8)
-
-
-
(8)
-
-
Adjusted operating and administrative expenses
1)
(2,465)
(965)
(374)
(228)
(1,005)
(58)
165
Depreciation, amortisation and net impairments
1)
(4,777)
(1,784)
(2,277)
(486)
(205)
(1)
(24)
Adjusting items
1,798
-
1,777
29
(9)
-
-
Impairment
1,798
-
1,777
29
(9)
-
-
Adjusted depreciation, amortisation and net
impairments
1)
(2,979)
(1,784)
(499)
(456)
(214)
(1)
(24)
Exploration expenses
(206)
(69)
(102)
(34)
-
-
-
Adjusting items
4
-
0
4
-
-
-
Impairment
4
-
0
4
-
-
-
Adjusted exploration expenses
(202)
(69)
(102)
(30)
-
-
0
Net operating income/(loss)
1)
13,578
14,854
(1,060)
550
(316)
(38)
(413)
Sum of adjusting items
1,411
(45)
1,749
37
(680)
(0)
351
Adjusted earnings/(loss)
1)
14,989
14,809
689
587
(997)
(38)
(62)
Tax on adjusted earnings
(10,592)
(11,314)
(180)
(14)
913
8
(5)
Adjusted earnings/(loss) after tax
1)
4,397
3,495
508
574
(84)
(30)
(67)
1) E&P Norway, E&P International, MMP and Other segments are restated due
to implementation of IFRS 16 in the segments.
Equinor fourth quarter 2022
50
Items impacting net operating income/(loss) in the
third quarter of 2022
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Rene-
wables
Other
(in USD million)
Total revenues and other income
43,633
24,034
1,767
1,541
42,585
12
(26,307)
Adjusting Items
(296)
(713)
144
-
273
0
(0)
Changes in fair value of derivatives
85
(167)
229
-
22
-
-
Periodisation of inventory hedging effect
251
-
-
-
251
-
-
Over-/underlift
24
109
(85)
-
-
-
-
Gain/loss on sale of assets
(655)
(655)
-
-
-
-
(0)
Adjusted total revenues and other income
43,337
23,321
1,911
1,541
42,858
13
(26,307)
Purchases [net of inventory variation]
(13,592)
(0)
(22)
-
(40,253)
-
26,683
Adjusting Items
(377)
-
-
-
171
-
(548)
Operational storage effects
171
-
-
-
171
-
-
Eliminations
(548)
-
-
-
-
-
(548)
Adjusted purchases [net of inventory variation]
(13,969)
(0)
(22)
-
(40,081)
-
26,135
Operating and administrative expenses
(2,614)
(963)
(427)
(254)
(1,097)
(68)
194
Adjusting Items
(43)
(22)
(15)
(0)
(17)
10
-
Over-/underlift
(36)
(22)
(15)
-
-
-
-
Gain/loss on sale of assets
10
-
-
(0)
-
10
-
Provisions
(17)
-
-
-
(17)
-
-
Adjusted operating and administrative expenses
(2,657)
(984)
(442)
(254)
(1,114)
(58)
194
Depreciation, amortisation and net impairments
(1,049)
(1,143)
(349)
(199)
680
(1)
(38)
Adjusting Items
(1,069)
-
(0)
(178)
(891)
-
-
Impairment
79
-
(0)
-
79
-
-
Reversal of Impairment
(1,148)
-
-
(178)
(970)
-
-
Adjusted depreciation, amortisation and net
impairments
(2,118)
(1,143)
(349)
(377)
(211)
(1)
(38)
Exploration expenses
(275)
(114)
(157)
(4)
-
-
(0)
Adjusting Items
(17)
-
(0)
(17)
-
-
-
Impairment
9
-
(0)
9
-
-
-
Reversal of Impairment
(26)
-
-
(26)
-
-
-
Adjusted exploration expenses
(292)
(114)
(157)
(21)
-
-
-
Net operating income/(loss)
26,103
21,813
813
1,084
1,916
(56)
533
Sum of adjusting items
(1,802)
(735)
129
(195)
(464)
10
(548)
Adjusted earnings/(loss)
24,301
21,079
942
889
1,452
(46)
(15)
Tax on adjusted earnings
(17,585)
(16,356)
(301)
(21)
(929)
14
9
Adjusted earnings/(loss) after tax
6,715
4,723
641
868
523
(32)
(6)
Equinor fourth quarter 2022
51
Items impacting net operating income/(loss) in the
full year of 2022
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Rene-
wables
Other
(in USD million)
Total revenues and other income
150,806
75,930
7,431
5,523
148,105
185
(86,367)
Adjusting items
(896)
(487)
185
-
(506)
(110)
22
Changes in fair value of derivatives
(207)
(263)
205
-
(149)
-
-
Periodisation of inventory hedging effect
(349)
-
-
-
(349)
-
-
Impairment from associated companies
1
-
-
-
-
1
-
Over-/underlift
510
507
3
-
-
-
-
Other adjustments
(0)
-
(22)
-
-
-
22
Gain/loss on sale of assets
(850)
(731)
-
-
(9)
(111)
(0)
Adjusted total revenues and other income
149,910
75,443
7,616
5,523
147,599
75
(86,345)
Purchases [net of inventory variation]
(53,806)
0
(116)
(0)
(139,916)
-
86,227
Adjusting items
(610)
-
-
-
(33)
-
(577)
Operational storage effects
(33)
-
-
-
(33)
-
-
Eliminations
(577)
-
-
-
-
-
(577)
Adjusted purchases [net of inventory variation]
(54,415)
0
(116)
(0)
(139,949)
-
85,650
Operating and administrative expenses
(10,593)
(3,782)
(1,698)
(938)
(4,591)
(265)
681
Adjusting items
64
(54)
22
6
75
10
5
Over-/underlift
(41)
(54)
13
-
-
-
-
Other adjustments
7
-
2
-
-
-
5
Gain/loss on sale of assets
23
-
7
6
-
10
-
Provisions
75
-
-
-
75
-
-
Adjusted operating and administrative expenses
(10,530)
(3,836)
(1,675)
(933)
(4,516)
(255)
686
Depreciation, amortisation and net impairments
(6,391)
(4,167)
(1,731)
(361)
14
(4)
(142)
Adjusting items
(2,488)
(819)
286
(1,060)
(895)
-
-
Impairment
1,111
3
1,033
-
75
-
-
Reversal of impairment
(3,598)
(821)
(747)
(1,060)
(970)
-
-
Adjusted depreciation, amortisation and net
impairments
(8,879)
(4,986)
(1,445)
(1,422)
(881)
(4)
(142)
Exploration expenses
(1,205)
(366)
(638)
(201)
-
-
-
Adjusting items
59
4
65
(11)
-
-
-
Impairment
85
4
65
15
-
-
-
Reversal of impairment
(26)
-
-
(26)
-
-
-
Adjusted exploration expenses
(1,146)
(361)
(573)
(212)
-
-
-
Net operating income/(loss)
78,811
67,614
3,248
4,022
3,612
(84)
399
Sum of adjusting items
(3,871)
(1,355)
559
(1,065)
(1,360)
(100)
(550)
Adjusted earnings/(loss)
74,940
66,260
3,806
2,957
2,253
(184)
(151)
Tax on adjusted earnings
(52,250)
(51,373)
(1,248)
(79)
474
14
(38)
Adjusted earnings/(loss) after tax
22,691
14,887
2,558
2,878
2,727
(170)
(189)
Equinor fourth quarter 2022
52
Items impacting net operating income/(loss) in the
full year of 2021
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Rene-
wables
Other
(in USD million)
Total revenues and other income
1)
90,924
39,386
5,566
4,149
87,393
1,411
(46,980)
Adjusting Items
(1,836)
(339)
43
-
(155)
(1,381)
(4)
Changes in fair value of derivatives
(146)
(145)
36
-
(37)
-
-
Periodisation of inventory hedging effect
49
-
-
-
49
-
-
Impairment from associated companies
4
-
-
-
-
4
-
Over-/underlift
(125)
(194)
69
-
-
-
-
Gain/loss on sale of assets
(1,561)
-
(5)
-
(167)
(1,385)
(4)
Provisions
(57)
-
(57)
-
-
-
-
Adjusted total revenues and other income
1)
89,088
39,047
5,609
4,149
87,238
30
(46,984)
Purchases [net of inventory variation]
(35,160)
(0)
(58)
(0)
(80,873)
(0)
45,771
Adjusting Items
230
-
-
-
(231)
-
461
Operational storage effects
(231)
-
-
-
(231)
-
-
Eliminations
461
-
-
-
-
-
461
Adjusted purchases [net of inventory variation]
(34,930)
(0)
(58)
(0)
(81,104)
(0)
46,232
Operating and administrative expenses
1)
(9,378)
(3,652)
(1,406)
(1,074)
(3,753)
(163)
670
Adjusting Items
(11)
62
(32)
35
(87)
-
12
Over-/underlift
23
55
(32)
-
-
-
-
Change in accounting policy
(43)
7
-
-
(50)
-
-
Gain/loss on sale of assets
47
-
-
35
-
-
12
Provisions
(37)
-
-
-
(37)
-
-
Adjusted operating and administrative expenses
1)
(9,389)
(3,590)
(1,438)
(1,039)
(3,841)
(163)
682
Depreciation, amortisation and net impairments
1)
(11,719)
(4,900)
(3,321)
(1,734)
(1,604)
(3)
(156)
Adjusting Items
1,288
(1,102)
1,587
69
735
-
-
Impairment
2,963
276
1,836
116
735
-
-
Reversal of impairment
(1,675)
(1,379)
(250)
(47)
-
-
-
Adjusted depreciation, amortisation and net
impairments
1)
(10,431)
(6,002)
(1,734)
(1,665)
(869)
(3)
(156)
Exploration expenses
(1,004)
(363)
(451)
(190)
-
-
0
Adjusting Items
152
7
101
44
-
-
-
Impairment
175
7
101
66
-
-
-
Reversal of impairment
(22)
-
-
(22)
-
-
-
Adjusted exploration expenses
(852)
(356)
(350)
(146)
-
-
0
Net operating income/(loss)
1)
33,663
30,471
329
1,150
1,163
1,245
(695)
Sum of adjusting items
(177)
(1,372)
1,698
147
262
(1,381)
469
Adjusted earnings/(loss)
1)
33,486
29,099
2,028
1,297
1,424
(136)
(227)
Tax on adjusted earnings
(23,445)
(21,825)
(670)
(16)
(998)
23
40
Adjusted earnings/(loss) after tax
1)
10,042
7,274
1,358
1,281
426
(112)
(187)
1) E&P Norway, E&P International, MMP and Other segments are restated due
to implementation of IFRS 16 in the segments
Equinor fourth quarter 2022
53
Adjusted earnings after tax* by reporting
Quarters
Q4 2022
Q3 2022
Q4 2021
(in USD million)
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
E&P Norway
1)
14,594
(11,294)
3,300
21,079
(16,356)
4,723
14,809
(11,314)
3,496
E&P International
1)
676
(308)
367
942
(301)
641
689
(180)
508
E&P USA
474
(24)
450
889
(21)
868
587
(14)
574
MMP
1)
(540)
2,447
1,907
1,452
(929)
523
(997)
913
(83)
REN
(86)
(10)
(96)
(46)
14
(32)
(38)
8
(30)
Other
1)
(59)
(73)
(132)
(15)
9
(6)
(62)
(5)
(67)
Equinor group
15,059
(9,263)
5,796
24,301
(17,585)
6,715
14,989
(10,592)
4,397
Effective tax rates on adjusted
earnings
61.5%
72.4%
70.7%
1) Q4 2021 is restated due to implementation
of IFRS 16 in the segments.
Full year
2022
2021
(in USD million)
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
E&P Norway
1)
66,260
(51,373)
14,887
29,099
(21,825)
7,274
E&P International
1)
3,806
(1,248)
2,558
2,028
(670)
1,358
E&P USA
2,957
(79)
2,878
1,297
(16)
1,281
MMP
1)
2,253
474
2,727
1,424
(998)
426
REN
(184)
14
(170)
(136)
23
(112)
Other
1)
(151)
(38)
(189)
(227)
40
(186)
Equinor group
74,940
(52,250)
22,691
33,486
(23,445)
10,042
Effective tax rates on adjusted earnings
69.7%
70.0%
1) Full year 2021 is restated due to implementation
of IFRS 16 in the segments.
Equinor fourth quarter 2022
54
Reconciliation of adjusted earnings after tax to net income
Quarters
Reconciliation of adjusted earnings after tax to net income
Full year
Q4 2022
Q3 2022
Q4 2021
(in USD million)
2022
2021
16,584
26,103
13,578
Net operating income/(loss)
A
78,811
33,663
6,544
17,906
10,033
Income tax less tax on net financial items
B
50,098
23,800
10,039
8,196
3,545
Net operating income after tax
C = A-B
28,713
9,862
(1,525)
(1,802)
1,411
Items impacting net operating income/(loss)
1)
D
(3,871)
(177)
2,719
(321)
559
Tax on items impacting net operating income/(loss)
E
2,151
(356)
5,796
6,715
4,397
Adjusted earnings after tax*
F = C+D-E
22,691
10,042
(2,115)
1,053
(443)
Net financial items
G
(207)
(2,080)
(28)
121
267
Tax on net financial items
H
237
793
7,897
9,371
3,370
Net income/(loss)
I = C+G+H
28,744
8,576
1) For items impacting net operating income/(loss),
see Reconciliation of adjusted earnings in the Supplementary
disclosures.
Quarters
Change
Adjusted exploration expenses*
Full year
Q4 2022
Q3 2022
Q4 2021
Q4 on Q4
(in USD million)
2022
2021
Change
144
102
114
26%
E&P Norway exploration expenditures
493
522
(5%)
114
172
97
18%
E&P International exploration expenditures
445
369
21%
50
23
59
(15%)
E&P USA exploration expenditures
149
136
10%
307
296
269
14%
Group exploration expenditures
1,087
1,027
6%
183
15
(2)
N/A
Expensed, previously capitalised exploration expenditures
283
19
>100%
(95)
(19)
(65)
46%
Capitalised share of current period's exploration
activity
(224)
(194)
16%
0
(17)
4
(100%)
Impairment (reversal of impairment)
59
152
(61%)
396
275
206
92%
Exploration expenses according to IFRS
1,205
1,004
20%
(0)
17
(4)
(100%)
Items impacting net operating income/(loss)
1)
(59)
(152)
(61%)
Equinor fourth quarter 2022
55
396
292
202
96%
Adjusted exploration expenses*
1,146
852
35%
1) For items impacting net operating income/(loss),
see Reconciliation of adjusted earnings in the Supplementary
disclosures.
Equinor fourth quarter 2022
56
Calculated ROACE
Calculated ROACE based on IFRS
31 December
(in USD million, except percentages)
2022
2021
Net income/(loss)
A
28,744
8,576
Average total equity
1
46,506
36,458
Average current finance debt and lease liabilities
6,001
6,081
Average non-current finance debt and lease liabilities
28,202
31,096
- Average cash and cash equivalents
(14,853)
(10,442)
- Average current financial investments
(25,561)
(16,555)
Average net-interest bearing debt
2
(6,210)
10,180
Average capital employed
B = 1+2
40,296
46,638
Calculated ROACE based on Net income/loss and
capital employed
A/B
71.3%
18.4%
Calculated ROACE based on Adjusted earnings after
tax and capital employed adjusted
31 December
(in USD million, except percentages)
2022
2021
Adjusted earnings after tax
A
22,691
10,042
Average capital employed adjusted (B)
B
41,134
44,153
Calculated ROACE based on Adjusted earnings
after tax and capital employed
A/B
55.2%
22.7%
Equinor fourth quarter 2022
57
Calculation of capital employed and net debt to capital employed ratio
The table below reconciles the net interest-bearing debt adjusted, the capital employed, the net debt to
capital employed ratio
adjusted including lease liabilities and the net debt to capital employed adjusted ratio with the
most directly comparable financial
measure or measures calculated in accordance with IFRS.
Calculation of capital employed and net debt to capital
employed ratio
At 31 December
At 31 December
(in USD million)
2022
2021
Shareholders' equity
53,988
39,010
Non-controlling interests
1
14
Total equity
A
53,989
39,024
Current finance debt and lease liabilities
5,617
6,386
Non-current finance debt and lease liabilities
26,551
29,854
Gross interest-bearing debt
B
32,168
36,239
Cash and cash equivalents
15,579
14,126
Current financial investments
29,876
21,246
Cash and cash equivalents and financial investment
C
45,455
35,372
Net interest-bearing debt [9]
B1 = B-C
(13,288)
867
Other interest-bearing elements
1)
6,538
2,369
Net interest-bearing debt adjusted normalised for
tax payment, including lease liabilities*
B2
(6,750)
3,236
Lease liabilities
3,668
3,562
Net interest-bearing debt adjusted*
B3
(10,417)
(326)
Calculation of capital employed*
Capital employed
A+B1
40,701
39,891
Capital employed adjusted, including lease liabilities
A+B2
47,239
42,259
Capital employed adjusted
A+B3
43,571
38,697
Equinor fourth quarter 2022
58
Calculated net debt to capital employed*
Net debt to capital employed
(B1)/(A+B1)
(32.6%)
2.2%
Net debt to capital employed adjusted, including lease
liabilities
(B2)/(A+B2)
(14.3%)
7.7%
Net debt to capital employed adjusted
(B3)/(A+B3)
(23.9%)
(0.8%)
1)
Cash and cash equivalents adjustments regarding
collateral deposits classified as cash and cash equivalents
in the Consolidated
balance sheet but considered as non-cash in the non-GAAP
calculations as well as financial investments in
Equinor Insurance AS
classified as current financial investments.
Equinor fourth quarter 2022
59
FORWARD
-LOOKING STATEMENTS
This report contains certain forward-looking statements that involve risks and uncertainties. In some cases,
we use words such as
"ambition", "continue", "could", "estimate", "intend", "expect", "believe", "likely", "may", "outlook",
"plan", "strategy", "will", "guidance",
"targets", and similar expressions to identify forward-looking statements. Forward-looking
statements include all statements other than
statements of historical fact, including, among others, statements regarding Equinor's plans, intentions, aims,
ambitions and
expectations; the commitment to develop as a broad energy company; the ambition to be a leader in
the energy transition and reduce
net group-wide greenhouse gas emissions; future financial performance, including cash flow and
liquidity; accounting policies; the
ambition to grow cash flow and returns and improve return on average capital employed (ROACE)*;
expectations regarding progress
on the energy transition plan; expectations regarding cash flow and returns from Equinor’s
oil and gas portfolio; plans to develop fields
and increase gas exports; expectations and plans for renewables production capacity and investments in renewables;
expectations
and plans regarding development of renewables projects, CCUS and hydrogen businesses; market outlook
and future economic
projections and assumptions, including commodity price and refinery assumptions; organic capital
expenditures through 2026;
expectations and estimates regarding production and execution of projects; expectations regarding growth in
oil and gas and
renewable power production; estimates regarding tax payments and expectations regarding utilisation of
tax losses; the ambition to
keep unit of production cost in the top quartile of our peer group; scheduled maintenance activity
and the effects thereof on equity
production; completion and results of acquisitions and disposals; expected amount and timing of dividend
payments and the
implementation of our share buy-back programme; and provisions and contingent liabilities. You should not place undue reliance on
these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements
for many reasons.
These forward-looking statements reflect current views about future events, are based on management’s current expectations and
assumptions and are, by their nature, subject to significant risks and uncertainties because they
relate to events and depend on
circumstances that will occur in the future. There are a number of factors that could cause actual
results and developments to differ
materially from those expressed or implied by these forward-looking statements, including levels
of industry product supply, demand
and pricing, in particular in light of significant oil price volatility and the uncertainty created by Russia’s invasion of Ukraine;
social and
economic conditions in relevant areas of the world; levels and calculations of reserves and material differences from reserves
estimates; natural disasters, adverse weather conditions, climate change, and other changes to business
conditions; regulatory
stability and access to attractive renewable opportunities; unsuccessful drilling; operational problems, in particular in light
of supply
chain disruptions; health, safety and environmental risks; the effects of climate change; regulations on hydraulic fracturing;
security
breaches, including breaches of our digital infrastructure (cybersecurity); ineffectiveness of crisis management systems; the actions
of
competitors; the development and use of new technology, particularly in the renewable energy sector; inability to meet strategic
objectives; the difficulties involving transportation infrastructure; political instability; reputational damage; an inability to attract
and
retain personnel; risks related to implementing a new corporate structure; inadequate insurance coverage;
changes or uncertainty in
or non-compliance with laws and governmental regulations; the actions of the Norwegian state
as majority shareholder; failure to meet
our ethical and social standards; the political and economic policies of Norway and other oil-producing
countries; non-compliance with
international trade sanctions; the actions of field partners; adverse changes in tax regimes; exchange
rate and interest rate
fluctuations; factors relating to trading, supply and financial risk; general economic conditions; and other factors
discussed elsewhere
in this report and in Equinor's Annual Report on Form 20-F for the year ended December 31, 2021,
filed with the U.S. Securities and
Exchange Commission (including section 2.13 Risk review - Risk factors thereof). Equinor's
2021 Annual Report and Form 20-F are
available at Equinor's website www.equinor.com. Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet
these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the
forward-looking statements. Any forward-looking statement speaks only as of the date on which
such statement is made, and, except
as required by applicable law, we undertake no obligation to update any of these statements after the date of this report, either to
make them conform to actual results or changes in our expectations.
We use certain terms in this document, such as "resource" and "resources", that the SEC's rules prohibit us from including in
our
filings with the SEC. U.S. investors are urged to closely consider the disclosures in our
Form 20-F, SEC File No. 1-15200. This form is
available on our website or by calling 1-800-SEC-0330 or logging on to www.sec.gov.
Equinor fourth quarter 2022
60
END NOTES
1.
The group's
average liquids price
is a volume-weighted average of the segment prices of crude oil, condensate and natural gas
liquids (NGL).
2.
The
refining reference margin
is a typical gross margin and will differ from the actual margin, due to variations in type of crude
and other feedstock, throughput, product yields, freight cost, inventory, etc
3.
Liquids volumes
include oil, condensate and NGL, exclusive of royalty oil.
4.
Equity volumes
represent produced volumes under a
production sharing agreement (PSA)
that correspond to Equinor’s
ownership share in a field.
Entitlement volumes
, on the other hand, represent Equinor’s share of the volumes distributed to the
partners in the field, which are subject to deductions for, among other things, royalty and the host government's share of profit oil.
Under the terms of a PSA, the amount of profit oil deducted from equity volumes will
normally increase with the cumulative return
on investment to the partners and/or production from the licence. Consequently, the gap between entitlement and equity volumes
will likely increase in times of high liquids prices. The distinction between equity and entitlement
is relevant to most PSA regimes,
whereas it is not applicable in most concessionary regimes such as those in Norway, the UK, the US, Canada and Brazil.
5.
Transactions with the
Norwegian State.
The Norwegian State, represented by the Ministry of Trade, Industry and Fisheries, is
the majority shareholder of Equinor and it also holds major investments in other entities. This ownership
structure means that
Equinor participates in transactions with many parties that are under a common ownership structure
and therefore meet the
definition of a related party. Equinor purchases liquids and natural gas from the Norwegian State, represented by SDFI (the
State's Direct Financial Interest). In addition, Equinor sells the State's natural gas
production in its own name, but for the
Norwegian State's account and risk, and related expenditures are refunded by the State.
6.
The production guidance reflects our estimates of
proved reserves
calculated in accordance with US Securities and Exchange
Commission (SEC) guidelines and additional production from other reserves not included in
proved reserves estimates.
7.
The group's
average invoiced gas prices
include volumes sold by the MMP segment.
8.
The internal
transfer price
paid from the MMP segment to the E&P Norway and E&P USA segments.
9.
Since different legal entities in the group lend to projects and others borrow from banks, project financing through external
bank
or similar institutions is not netted in the balance sheet and results in over-reporting of the debt
stated in the balance sheet
compared to the underlying exposure in the group. Similarly, certain net interest-bearing debt incurred from activities pursuant to
the Marketing Instruction of the Norwegian government are offset against receivables on the SDFI. Some
interest-bearing
elements are classified together with non-interest bearing elements and are therefore included when
calculating the net interest-
bearing debt.
Signatures
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorised.
EQUINOR ASA
(Registrant)
Dated: 8 February, 2023
By: ___/s/ Torgrim Reitan
Name: Torgrim Reitan
Title:
Chief Financial Officer