Presentation of the strategy to accelerate Equinor’s transition


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Today, Equinor ASA (OSE: EQNR, NYSE: EQNR) presents its strategy to accelerate the business transition while increasing cash flow and returns.

Highlights of the strategy update:

  • Accelerate the transition and set the ambition to achieve a 40% reduction in net carbon intensity by 2035, on the way to net zero by 2050.
  • Increase investments in renewable energies and low carbon solutions to more than 50% of gross annual investments (1) by 2030.
  • Growing cash flow and returns, with free cash flow (2) of around $ 35 billion (3) before distribution of capital in 2021 – 2026 and a return of around 12% (3) on capital employed means (2) in 2021 – 2030.
  • Increased quarterly cash dividend to 18 cents per share and introduced a new share buyback program.

“Our strategy is based on clear actions to accelerate our transition while increasing cash flow and returns. We are optimizing our oil and gas portfolio to generate even stronger cash flow and returns with reduced emissions from production, and we anticipate significant profitable growth in renewable energy and low carbon solutions. This is a strategy to create value as a leader in the energy transition, ”said Anders Opedal, Chairman and CEO of Equinor.

Equinor has a clear ambition to become a net zero energy company by 2050, including emissions from production and final consumption. Today, Equinor is also setting itself intermediate ambitions, aiming to reduce the net carbon intensity by 20% by 2030 and by 40% by 2035.

“This is a business strategy to ensure long-term competitiveness during a time of profound change in energy systems as society moves towards net zero. We are strengthening our position as the world leader in low carbon oil and gas production. We will continue to reduce emissions and, in the longer term, Equinor expects to produce less oil and gas than today, recognizing the reduction in demand. Significant growth in renewable energy and low carbon solutions will accelerate the pace of change towards 2030 and 2035, ”Opedal said.

Optimized oil and gas portfolio

Equinor’s oil and gas portfolio can generate free cash flow after taxes and investments (2) of $ 45 billion (3) from 2021 to 2026. New projects entering production by 2030 have a threshold of average profitability less than 35 USD / b and a short return on investment of less than 2.5 years (3).

On the Norwegian Continental Shelf, Equinor is optimizing its operations to generate strong value creation and average annual free cash flow of approximately USD 4.5 billion (3) in 2021-2030. Further improvements on Johan Sverdrup’s world-class field reduce the price break-even point for the full field with 25% to 15 USD / bbl. Internationally, Equinor is concentrating its portfolio, abandoning positions operated in unconventional ones, giving priority to offshore operations where the company can use its core competencies. The international portfolio is expected to generate strong cash flow, become more robust to lower prices and show a significant increase at higher prices.

High value-added growth in renewable energies

Equinor forecasts gross investments (1) in renewable energies of around 23 billion USD from 2021 to 2026, and to increase the share of gross investments for renewable energies and low carbon solutions from about 4% in 2020 to more 50% by 2030. Low-cost access on a large scale, Equinor plans to reach an installed capacity of 12 to 16 GW (Equinor’s share) by 2030. Reflecting current market levels, Equinor is adjusting the Actual expected returns from the base of projects at 4 – 8% and remains committed to capturing more returns on equity through project finance and farm farms. Early access followed by a targeted farm down is an integral part of the value creation proposition. So far, Equinor has sold assets for $ 2.3 billion, recorded a capital gain of $ 1.7 billion and expects to generate nominal returns in the range of 12-16% from offshore wind projects with direct debit contracts in the United Kingdom and the United States.

New market opportunities in low carbon solutions

The energy transition represents an opportunity for Equinor to take advantage of its leadership position in carbon and hydrogen management, and to develop and develop new value chains and new markets. By 2035, Equinor’s ambition is to develop the storage capacity of 15 to 30 million tonnes of CO2 per year and to supply clean hydrogen in 3 to 5 industrial clusters.

Competitive capital allocation

Equinor’s board of directors has decided on a quarterly cash dividend of 18 cents per share for the second quarter of 2021, an increase of 3 cents from the first quarter. The second quarter 2021 cash dividend will be officially declared and announced as part of the second quarter results announcement, including key dividend information.

The board of directors also decided to introduce a new annual share buyback program of approximately $ 1.2 billion starting in 2022. In addition, Equinor plans to execute two rounds of share buybacks in 2021, with a first tranche of $ 300 million to be launched after the announcement of second quarter results, and an indicative second tranche of $ 300 million will be launched after the announcement of third quarter results.

The new share buyback program is expected to be executed when Brent oil prices are in or above the $ 50-60 / bbl range and Equinor’s net debt ratio (1) remains within. the communicated ambition of 15 to 30%, which is supported by the prices of raw materials.

The $ 5 billion share buyback program launched on September 5, 2019 and suspended on March 22, 2020 is canceled.

All share repurchase amounts include shares to be repurchased by the Norwegian State.

The purpose of the share buyback program is to reduce the issued share capital of the company. All shares repurchased under the program will be canceled. According to an agreement between Equinor and the Norwegian State, the Norwegian State will participate in the share buybacks on a pro rata basis. Carrying out share buybacks after the 2022 annual general meeting is subject to a renewed authorization, including the renewal of the agreement with the Norwegian State. Share buybacks will be executed within the framework of the applicable Safe Harbor provisions. Key information relating to the first tranche of the share buyback program will be announced and executed following the announcement of the second quarter 2021 financial report.

Outlook:

  • Organic investments (2) are estimated at an annual average of 9-10 billion USD for 2021-2022 and around 12 billion USD for 2023-2024 (4).
  • Production growth (5) from 2020 to 2021 is estimated at around 2%.

See forward-looking statements on our web pages: https://www.equinor.com/en/investors/quarterly-results/cmu2021-forward-looking-statement.html

Footnotes :1: Gross investments defined as capital expenditure before project financing 2: Non-GAPP measure3: Based on USD 60 per barrel 4: Average annual organic capital expenditure based on USD 95 / NOK: Percentage growth is based on historical production figures, adjusted for portfolio metrics

More information from:

Investor RelationsPeter Hutton, Senior Vice President of Investor Relations, +44 7881 918 792 (mobile)

hurrySissel Rinde, Vice President of Media Relations, + 47 412 60 584 (mobile)

This information is subject to disclosure requirements in accordance with Section 5-12 of the Norwegian Securities Law.

Source: Equinor ASA

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