Equinor ASA (NYSE:EQNR) Q3 2018 Earnings Conference Call - Final Transcript

Oct 25, 2018 • 04:30 am ET


Equinor ASA (NYSE:EQNR) Q3 2018 Earnings Conference Call - Final Transcript


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I'm Peter Hutton, Head of Investor Relations at Equinor. And I'm delighted to welcome Lars Christian Bacher, our CFO. He's also joined by Svein Skeie, Head of Performance Management; and Morten Haukaas, Chief Accountant. Lars Christian will run through the presentation for around 12 to 15 minutes, and then we will open up for questions, and we'd expect the call to finish within the hour.

So with that, let me pass the word over to Lars Christian. Thank you.

Lars Christian Bacher

Thank you, Peter, and good morning, everybody. I've been looking forward to talking to you in my new capacity as CFO. It's good to start by presenting Equinor's strong third quarter result.

Three things to highlight; one, our adjusted earnings before tax this quarter more than doubled compared to the same period last year to $4.8 billion. The after-tax adjusted earnings were strong, $2 billion, which is up more than 140%. You have to go all the way back to first quarter 2014 to find strong results, and then remember, the oil price level above $100. Our third quarter IFRS net operating income was $4.6 billion.

Two; we had the best ever after-tax adjusted earnings for our international segment of $774 million. And three, we are lowering our CapEx guidance from around $11 billion to around $10 billion. This is strong deliveries. Higher oil and gas prices have, of course, contributed to the good result, but it is not the only explanation. We create material value, because we used the downturn to reduce costs and to transform Equinor into a more competitive company, being more agile and resilient.

With the E&P industry seeing higher oil and gas prices, now is the time we must show discipline and protect the structural improvements we have achieved over the last four years. Together with our suppliers and partners, we have a joint responsibility to continue to improve and further strengthen our competitive position. This is how we can create the basis for a stable activity level, new projects and value creation for all.

We are continuing to progress our next-generation portfolio. In third quarter, we delivered field development plans for Johan Sverdrup Phase 2, and Troll Phase 3. These two projects, both with very low break-evens, are excellent examples of our ability to deliver on our always safe, high value and low carbon strategy.

Phase 1 of Johan Sverdrup is more than 80% complete, and expected to start producing in November next year. But it's not only the largest project that generate value. On October 14, we started producing oil from Oseberg Vestflanken 2, the first unmanned wellhead platform on the Norwegian continental shelf. We delivered this field with a CapEx of NOK6.5 billion, around 20% below forecast at the investment decision. The break-even for the field has been reduced from $34 at FID to less than $20 per barrel now, further improving an already robust field development.

The Mariner field in the UK is progressing with hookup and commissioning ongoing offshore. Due to challenging