Equinor ASA (NYSE:EQNR) Q2 2019 Earnings Conference Call - Final Transcript

Jul 25, 2019 • 04:30 am ET


Equinor ASA (NYSE:EQNR) Q2 2019 Earnings Conference Call - Final Transcript


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Peter Hutton

Welcome to Equinor 2Q 2019 Results Conference Call. I'm delighted to be joined by Lars Christian Bacher, CFO, who will run through the results and highlights presentation, then we will open up for Q&A over the phone. And we expect to finish the call inside the hour, as I know this is a busy day for everybody.

Also, on the call we have Svein Skeie, Head of Performance Management; and Orjan Kvelvane, Head of Accounting.And with that, I pass over to Lars Christian to get us underway.

Lars Christian Bacher

Thank you, Peter. Good morning, everybody, and thank you for joining us.

In the second quarter of 2019, Equinor delivered good overall operational performance in a quarter characterized by a record high project activity and many planned turnarounds. In addition, our financial results were mainly impacted by lower realized oil and gas prices and our production mix in the quarter. We have said that we expect price volatility, and therefore, it is important to sustain and build up on the structural improvements achieved during the past years. I'm pleased to see that we continue to demonstrate strong cost focus and capital discipline. Equinor is a stronger company than we were just a few years ago. We have a stronger balance sheet and more competitive projects and we are more resilient to lower prices as well as carbon impact. With our net debt ratio below 20%, Equinor continues to be in a strong financial position and the Board has decided on a dividend of $0.26 per share for the second quarter, up 13% compared to last year.

Based on our strong capital discipline, continuous improvements and project execution, we are today lowering our capex guidance for 2019 from $11 billion to between $10 billion and $11 billion. Strong project execution is also why we are lowering the capex estimate for Johan Sverdrup Phase 1 by a further NOK3 billion from NOK86 billion to NOK83 billion. Since the PDO for Johan Sverdrup Phase 1 was approved back in 2015, recoverable resources have been increased from a range of 1.7 billion to 3.0 billion to a range of 2.2 billion to 3.2 billion barrels. In addition, we have reduced operating cost by around 30% and capex by NOK40 billion. These are unprecedented deliveries from a dedicated project team together with our partners and suppliers.

During the first half of 2019, the successful top side lifts at Johan Sverdrup reduced key schedule risks, and we are on track to start production in November as planned. And we expect to reach Phase 1 production plateau of 440,000 barrels per day during the summer of 2020, which is earlier than previously communicated.

Just before the summer, Norwegian Parliament approved the Phase 2 field development, which will bring the plateau capacity to 660,000 barrels per day, with a unit production cost of around $2 per barrel, a breakeven oil price below $20 per barrel and a CO2 emission well below 1 kilo per barrel. Johan Sverdrup is, in my view, the