Equinor ASA Q2 2025 Earnings Report

Equinor ASA EPS Results

• Actual EPS: $0.64
• Consensus EPS: $0.66
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: N/A

Equinor ASA Revenue Results

• Actual Revenue: $25.12 billion
• Expected Revenue: $23.88 billion
• Beat/Miss: Beat by +$1.24 billion
• YoY Revenue Growth: N/A

Equinor ASA Announcement Details

• Quarter: Q2 2025
• Date: 7/23/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 23, 2025
• Conference Call Time: 5:30AM ET

Equinor ASA (NYSE:EQNR), an energy company, engages in the exploration, production, transportation, refining, and marketing of petroleum and other forms of energy in Norway and internationally. It operates through Exploration & Production Norway; Exploration & Production International; Exploration & Production USA; Marketing, Midstream & Processing; Renewables; and Other segments. The company also transports, processes, manufactures, markets, and trades in oil and gas commodities, such as crude and condensate products, gas liquids, natural gas, and liquefied natural gas; trades in power and emissions; operates refineries, terminals and processing, and power plants; and develops low carbon solutions for oil and gas. In addition, it develops carbon capture and storage projects; provides transportation solutions, including pipelines, shipping, trucking, and rail; and develops and explores for renewable energy, such as offshore wind, green hydrogen, and solar power. The company was formerly known as Statoil ASA and changed its name to Equinor ASA in May 2018. Equinor ASA was incorporated in 1972 and is headquartered in Stavanger, Norway.

Equinor ASA Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Johan Castberg reached plateau production of 220,000 barrels per day in under three months, with oil realizing a $6/barrel premium to Brent.
• Neutral Sentiment: Reported an adjusted operating income of $6.5 billion pre-tax, while IFRS net income of $300 million was impacted by a $955 million impairment on U.S. offshore wind.
• Positive Sentiment: Second-quarter production rose 2% year-over-year to 2.096 million barrels per day, and Equinor maintained its 4% production growth guidance for the full year.
• Positive Sentiment: Advanced strategic portfolio actions with FIDs on Johan Sverdrup Phase III and Troll South, a $3.5 billion Peregrino divestment, and new long-term gas supply contracts for the UK and Germany.
• Neutral Sentiment: Achieved flat Q2 cost development, reaffirmed $13 billion CapEx guidance, and kept a robust balance sheet with net debt-to-capital at 15.2%.

Presentation

[Operator]

Thank you for standing by. My name is Cass, and I will be your conference operator today. At this time, I would like to welcome everyone to the Equinor Analyst Call Second Quarter. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

Thank you. I would now like to turn the call over to Borg Glad Peterson, Senior Vice President and Head of Investor Relations. Please go ahead.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, operator, and thank you to all of you for calling in. I'm here today together with our CFO, Torgrim Reitan. As usual, he will present our second quarter results before we open up for a Q and A session. As usual, we will keep this within one hour in total. So with that, I hand it to you, Torium, to take us through the numbers.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Thank you, Borg, and good morning and thank you for joining us. I hope you are enjoying your summer. Before we get to our results, let me draw your attention to the photo of Johan Castberg, a truly impressive field. Johan Castberg has ramped up to plateau production in less than three months to 220,000 barrels per day.

[Torgrim Reitan, EVP & CFO at Equinor]

The oil is of high quality, and we are now realizing a premium around $6 per barrel compared to Brent. Today, we report solid financial results, driven by strong operational performance, new fields on stream and strong production growth from U. S. Onshore. We report adjusted operating income of $6,500,000,000 before tax.

[Torgrim Reitan, EVP & CFO at Equinor]

Our IFRS net income of $300,000,000 was impacted by an impairment on our U. S. Offshore wind. I will come back to this. Year to date, our cash flow from operations after tax has been strong at billion.

[Torgrim Reitan, EVP & CFO at Equinor]

Our adjusted earnings per share was NOK0.64. Energy markets continue to be impacted by geopolitical unrest, conflicts and uncertainty around tariffs and trade wars. We have seen significant volatility in oil markets. The European gas market is impacted by lower storage levels. Inventories are now almost 20 percentage points lower than last year and also well below the average of the last five years.

[Torgrim Reitan, EVP & CFO at Equinor]

Warm weather in Europe has, over the past weeks, driven additional gas to power demand. At the same time, we see storage filling in Asia also driving demand and less LNG is now coming to Europe. In these times of uncertainty, we continue to focus on what we are able to control, our operations and how we maintain resilience. We are committed to cost and capital discipline, and we report a flat cost development in the quarter, which is our goal for the year. Our CapEx guidance stays firm, and our balance sheet remains robust through a lower price environment.

[Torgrim Reitan, EVP & CFO at Equinor]

Across the portfolio, we are making strategic progress. Johan Castberg reached plateau quickly, as I mentioned. We took the final investment decision on Johan Sverdrup Phase III and from south in the Troll area. All of this supports longevity on the NCS, maintaining production levels all the way to 02/1935. Recently, we announced two large long term contracts long term agreements for the supply of gas to UK and Germany.

[Torgrim Reitan, EVP & CFO at Equinor]

This demonstrates that large commercial players in Europe see the need for Norwegian gas for power production and for industry for decades to come. Internationally, we continue to optimize the portfolio. This quarter, we increased our U. S. Onshore gas production by 50% based on the transactions we did last year, and we captured almost 80% higher gas prices.

[Torgrim Reitan, EVP & CFO at Equinor]

In Brazil, we have announced the divestment of the Peregrino field for a value of $3,500,000,000 and we now focus our attention on the development of Bacalau and Raya. We expect first oil at Bacalau this autumn, and Raya, a domestic gas field, is expected to start production in 2028. Within our renewables business, we have secured a project financing package of EUR 6,000,000,000 for the Baltic two and three offshore wind farms in Poland. This is at favorable terms, supporting double digit equity returns. On Empire Wind one, the stop work order was lifted in May and the project is back in execution.

[Torgrim Reitan, EVP & CFO at Equinor]

This is positive, and I'm very glad to report that. However, we are making an impairment of $955,000,000 in the quarter. The main driver for this is the changes in regulations for future offshore wind projects in The U. S. Part of the impairment is related to the undeveloped Phase two of Empire Wind.

[Torgrim Reitan, EVP & CFO at Equinor]

However, the largest portion is related to the South Brooklyn Marine Terminal. The development of the terminal assumed future projects would use it. This is now unlikely with the current framework conditions, and this new reality is reflected in the updated book value for Empire Wind I and the South Brooklyn Marine Terminal. The impairment also includes the effect of higher tariffs in steel and a more limited amount related to the stop work order. The development we have seen leads to lower life cycle returns on Empire Wind, but the best way to protect value for our shareholders in the current situation was clearly to move forward with the project.

[Torgrim Reitan, EVP & CFO at Equinor]

And on a portfolio basis, our offshore wind projects in operations and execution still delivered double digit equity returns. Then to capital distribution. For the quarter, the Board approved an ordinary cash dividend of $0.37 per share and a third tranche of share buyback of up to 1,265,000,000.000, including the state's share. In total, we expect to deliver around $9,000,000,000 in capital distribution for the year, in line with what we said at the CMU. So let's dive into our results.

[Torgrim Reitan, EVP & CFO at Equinor]

Safety remains our top priority. We again delivered our best safety results with a serious incident frequency of 0.27 and a personal injury rate of two point two. We continue to learn from incidents and work hard towards improvements. In the second quarter, we produced 2,096,000 barrels per day, up more than 2% from last year. We are on track to deliver 4% production growth for the year.

[Torgrim Reitan, EVP & CFO at Equinor]

On the LCS, our liquids production is up 4%, driven by the ramp up of Johan Castberg and starting Halton East, and also high regularity on Johan Sverdrup and other fields had a significant impact. NCS production was impacted by planned maintenance and the shutdown of Hammerfest LNG. Our increased U. S. Onshore gas production is around double the production loss from divesting Nigeria and Azerbaijan, which impacted our international production.

[Torgrim Reitan, EVP & CFO at Equinor]

We produced 1.1 terawatt hours this quarter. Renewable production increased by 26%, mainly driven by the ramp up of Dogger Bank A in The UK. Now over to our financial results. Liquids prices were lower than the same quarter last year, while gas prices were higher in Europe and The U. S.

[Torgrim Reitan, EVP & CFO at Equinor]

This has impacted our results across segments. Adjusted operating income in E and P Norway totaled $5,700,000,000 before tax and $1,200,000,000 after tax. Our E and P International business delivered higher production from Brazil and new wells in Argentina and Angola. Peregrino and assets under our U. K.

[Torgrim Reitan, EVP & CFO at Equinor]

IGV are classified as held for sale. This represents around $10,000,000,000 and we do not report depreciation for these assets any longer. Our E and P U. S. Results were driven by high onshore gas production.

[Torgrim Reitan, EVP & CFO at Equinor]

Also, there was a one off related to an increased cost estimate in the abandonment obligations for Titan. MMP delivered solid gas trading, but results were below the guided range, impacted by the Hammerfest LNG maintenance and weaker crude trading. Our renewables results reflect higher project activity, but also significantly lower business development and early phase costs. This quarter, cash flow from operations was $9,200,000,000 Total taxes paid was $7,200,000,000 driven by two NCS tax installments totaling around $6,800,000,000 For the second half of this year, the NCS tax payments are expected to be NOK 100,000,000,000. These taxes will be paid across five equal installments from August through December.

[Torgrim Reitan, EVP & CFO at Equinor]

This reflects a change from previously paying six tax installments to now paying 10 annual tax installments in Norway. This quarter, we distributed $1,300,000,000 to our shareholders. Organic OpEx was $3,400,000,000 and our net cash flow was negative 600,000,000.0 We have a solid financial position with around NOK 24,000,000,000 in cash and cash equivalents. Our net debt to capital employed ratio increased to 15.2% this quarter. This reflects the state's share of the buyback from last year booked as finance debt, impacting the net debt ratio by around eight percentage points, as we said last quarter.

[Torgrim Reitan, EVP & CFO at Equinor]

The cash flow impact of this will be next quarter. At current forward prices, we expect the net ratio to remain around current levels towards the end of the year. Finally, to our guidance. We maintain the guidance we communicated at our CMU in February. Our progress is in line with those ambitions, both in terms of production growth and investments as well as capital distribution.

[Torgrim Reitan, EVP & CFO at Equinor]

So now back to you, Borg, and then I look forward to the Q and A session. So please, Borg.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, Torgrim. We have a good list already. And the first one on my list is Biraj Borkhataria from RBC. So please, Biraj, go ahead with your question.

[Biraj Borkhataria, Global Head - Energy Transition Research at RBC Capital Markets]

Thank you for taking my questions. The first one is just on the Empire Wind impairment and the impairment testing. The 3% discount rate, I think it's probably the lowest I've seen and looks a bit odd relative to sort of ten or thirty year treasury. So could you just help give me some rationale as to why you use that number? And then the second one is on working capital.

[Biraj Borkhataria, Global Head - Energy Transition Research at RBC Capital Markets]

We had another release this quarter. You talked about the lower volatility in trading. I'm trying to understand whether there is this a more structural level of working capital that we should be at relative to the last few years? Because I guess lower volatility means less capital for trading. What should we expect going forward? Thank you.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Thanks, Biraj. So first on Empire Wind. Yes. So the 3% discount rate we use, I just want to be clear on a couple of things.

[Torgrim Reitan, EVP & CFO at Equinor]

That is an unlevered discount rate and it is a real discount rate after tax as such. So I think that's two very important parameters going into that. Oil and gas investments are the discount rate we use for them is 5.5 percentage points. So there's a difference here, 5.53% between those two projects. What justifies a lower discount rate within these projects is actually that the revenue profile is fixed and is fixed for twenty five years as such.

[Torgrim Reitan, EVP & CFO at Equinor]

So there is a lot of reasoning and analysis behind all the discount rates we are using. So these should be consistent and applied consistently across the portfolio that we use. Your second question, Biraj, was related to working capital movements. So working capital is now $5,000,000,000 and is a reduction of $550,000,000 as far as I remember. It is actually not driven by the trading activities.

[Torgrim Reitan, EVP & CFO at Equinor]

It is driven by movements in the upstream segments as such. And on your question whether this is sort of a normal level, it has been stable. The working capital within the trading environment has remained stable for the time being. But on your point on sort of the volatility, there is a lot of volatility. The point is that the volatility is different than sort of the traditional volatility.

[Torgrim Reitan, EVP & CFO at Equinor]

The volatility is driven by political decisions, which makes it harder for traders to trade around. So there is less risk taking in the trading environment currently, and this is going across the whole trading environment as such. And that's sort of the nature of what's happening in the world for the time being. So thanks, Biraj.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, Biraj. Next one on my list is Irene Himona from Bernstein. So please go ahead, Irene. Your line is open.

[Irene Himona, Managing Director - Oil & Gas at Bernstein]

Thank you for taking my questions. My first one on the new tax system in Norway. Just to clarify, I think you said that all of the 10 installments for 2025 are payable over the five months, August to December. Is that correct? And then how will it be spread into twenty twenty six?

[Irene Himona, Managing Director - Oil & Gas at Bernstein]

My second question on gearing at 15%. So you've now reached the low end of your through the cycle range of 15% to 30%. I just wonder with Brand at less than 70 and this higher but unstructured volatility, is perhaps 15% to 20 preferable to 15% to 30% when the Board sets investor distributions? Thank you.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Thanks, Irene. So first, on the tax the structure of the tax payments. So the tax payment will be evenly distributed over the years. So in the second half of this year, there will be five installments and then there will be five installments in the first half next year.

[Torgrim Reitan, EVP & CFO at Equinor]

So there are tax payments in all months except from July and January. So it's just a way of distributing it even more evenly throughout the year than the six. So this is a minor adjustment to the payment schedule and we'll see to that. We guide you for every quarter coming how many installments you should expect for the next quarter and all of that. So the reason why I bring it up is sort of if you want to update your cash flow models, please do, and Investor Relations is happy to provide even more details to this as necessary.

[Torgrim Reitan, EVP & CFO at Equinor]

Your second question around gearing 15%, yes. So the increase of eight percentage points from last quarter is driven by sort of the annual payments to the state regarding share buyback programs. So 15%, we expect that to be around that level towards the end of the year. So it is very important for us to run with a conservative balance sheet and a robust financial position, and that is going to be the case going forward as well. We have no intention to sort of change the range.

[Torgrim Reitan, EVP & CFO at Equinor]

The range is not a target in itself. It's something that is broadly seen as consistent with our rating ambitions. So there is no sort of mathematical link here as such. When it comes to sort of the link to share buyback, and I think you mentioned that, mean share buyback is an important part of our capital distribution structure. We have not linked our capital distribution to development in cash flow from operations or free cash flow or what have you.

[Torgrim Reitan, EVP & CFO at Equinor]

But we are committed to remain competitive using those metrics when we compare ourselves to peers going forward, meaning that there will be times where sort of the balance sheet will strengthen and there are times when the balance sheet will sort of be weakened. So there's not sort of a mathematical relationship here and these boundaries are not seen as absolute in any way. We want to run with a very strong balance sheet and a strong cash position as you know that we have.

[Irene Himona, Managing Director - Oil & Gas at Bernstein]

Thank you very much.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, Irene. Next on my list is Alejandro Vigil from Santander Bank. Alex, please, your mic is open.

[Alejandro Vigil, Head - European Integrated Energy Equity Research at Santander]

Yes. Thank you for taking my questions. The first one is about Brazil. Just trying to understand the timing of the Peregrino divestment and also the Vaca Lao project, the expectations of production next year. Trying to understand if the Peruvian divestment is going to be offset by Bacalao volumes next year.

[Alejandro Vigil, Head - European Integrated Energy Equity Research at Santander]

And the second question is about The U. S. Onshore gas business that has been a clear focus of your strategy recently. If you see more opportunities of growth there through acquisitions and also if you are planning some investments in the downstream, in the gas fired project, for example, trying to leverage the AI boom in The U. S?

[Torgrim Reitan, EVP & CFO at Equinor]

Okay.

[Torgrim Reitan, EVP & CFO at Equinor]

Thanks, Alejandro. So yes, so the divestment of Peregrino is is signed. It is not closed yet, so we expect to close the deal towards the end of the year. We are very satisfied with the price that we achieved and is a value creative asset. So and the reasoning behind doing that now is to concentrate on the new developments, Bacalau and Raya, and quite a few people will be moved from the Peregrino organization into a new organization.

[Torgrim Reitan, EVP & CFO at Equinor]

So this is from a portfolio high grading point of view. And then Peregrino has been through a long life already. We have invested into solidify it and make it high quality, and it was a good time to realize that value currently. Brazil remains very, very important and key country for us going forward, and we will keep sort of investing. And that brings me over to Bacalau.

[Torgrim Reitan, EVP & CFO at Equinor]

So Bacalau is progressing well. Commissioning is ongoing on the remaining systems. We have two drilling rigs, drilling wells working and we have two installation vessels working on subsea. So this is going according to plan and we will have quite a handful of wells producing by year end on Bacalau. And then there will be a lot of drilling activities going forward on Bacalau, and it will be a significant contributor to our international production.

[Torgrim Reitan, EVP & CFO at Equinor]

On U. S. Onshore gas, yes, so around a year ago or nine months ago, we made two acquisitions from EQT into the Marcellus play, increasing our exposure quite a bit into that assets. That adds close to 100,000 barrels a day with gas production under the operatorship of Xpand. Since then, gas prices has increased significantly and that is now contributing very well to the cash flow and earnings of the company.

[Torgrim Reitan, EVP & CFO at Equinor]

A little bit of color to why we do that, we do believe in natural gas in the long term. We see it as a very important part of energy transition and a significant part of the electrification of the world that is ongoing. And you're absolutely right, the location of Marcellus gas in the Northeast fits well with sort of a big drive in The U. S. To focus on data centers and build competitiveness related to AI.

[Torgrim Reitan, EVP & CFO at Equinor]

And energy is seen as the big facilitator for competitiveness of The U. S. Economy over the next years. So we are well positioned with what we have. And on your question on whether we could be interested in sort of seeing more opportunities and into gas fired power plants, it's no concrete plans, but we do see that there is a stronger and stronger link between gas markets and power markets going forward.

[Torgrim Reitan, EVP & CFO at Equinor]

So we are watching that space naturally. All right. Thanks, Zalando.

[Alejandro Vigil, Head - European Integrated Energy Equity Research at Santander]

Thank you.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you. Next one is from Redburn, Peter Low. Peter, please, your line is open.

[Peter Low, MD - Energy Equity Research at Rothschild & Co Redburn]

Hi, thanks. The first was just on unit OpEx costs in Norway. It looks like they've increased by around 10% year over year. I think part of that is just FX, but I'm not sure that explains all of it. I was just wondering what else was going on there.

[Peter Low, MD - Energy Equity Research at Rothschild & Co Redburn]

Does it relate to the cost profile of some of the projects that are ramping up? The second question was just, is there any notable maintenance or turnarounds expected in the third quarter that you're able to flag? Thanks.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Thanks, Peter. So when it comes to unit costs for NCS, unit production costs, we see that as stable quarter on quarter. A broader topic is a level of $6.7 per barrel, but it's sort of a good opportunity to broaden the discussion on cost. We said earlier this year that we aim this year to keep costs flat and fighting inflation and neutralizing the impact of inflation across the portfolio.

[Torgrim Reitan, EVP & CFO at Equinor]

So we really start to see the impact of that and there's a lot of initiatives and actions and momentum across the portfolio within operating and maintenance, strong push on efficiency. We have significantly reduced early phase in business development cost and also staff costs are coming down and we hardly do external recruitments any longer as such. So this is and you see it in the number, you see that on a quarter to quarter basis, we have been able to keep that flat even if we are growing production. So this will also be reflected in the unit production cost. So when it comes to turnaround, maybe one thing to mention is Hammerfest LNG, which has been in a turnaround situation for in the second quarter.

[Torgrim Reitan, EVP & CFO at Equinor]

That is still in maintenance, but we actually expect it to come back by the July and then being back in production in August and September. So other than that, when it comes to the coming quarters, we see let's see here, is it around 45,000 barrels per day turnaround impact in the third quarter and then lower in the fourth quarter, maybe 14,000 to 15,000 barrels per day as such. So the third quarter in total is on par with the second quarter as such. Yes. Thanks, Peter.

[Peter Low, MD - Energy Equity Research at Rothschild & Co Redburn]

Thank you.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, Peter. We are then turning to Hendri Patricot from UBS. So Henri, please ask your question.

[Henri Patricot, Executive Director & Equity Research - Oil & Gas sector at UBS Group]

Yes. Thank you, everyone. Two questions, please. The first one coming back to the Peregrine disposal and the proceeds of close to $3,000,000,000 How should we think about these? Is it mostly about strengthening the balance sheet or potentially opens up the potential for some acquisitions made to replace Peregrine volumes in international E and P or elsewhere?

[Henri Patricot, Executive Director & Equity Research - Oil & Gas sector at UBS Group]

And then secondly, on the two deals that you mentioned, Ogri, in The U. And Germany on natural gas sales. Could you go through the benefits for Equinor of signing these long term contracts and maybe also the rationale for sticking to spot prices rather than maybe find another pricing mechanism that could reduce your exposure to spot prices in a few years when we could see potentially lower prices as the market is oversupplied?

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Thanks, Hendrik. So first on Peregrino. So the headline value of the deal is at $3,500,000,000 The effective date was 01/01/2024, which is important to note. Since then, there will be a pro and contract settlement in sort of ultimately when we close this deal towards the end of the year.

[Torgrim Reitan, EVP & CFO at Equinor]

So the proceeds that we will receive is less than 3.5% depending on the prices, it is actually quite a bit of cash that sort of has been generated over the last two years that will need to be taken away from the headline number. On your question whether this opens up for other acquisitions, well, we do acquisitions and we do divestments more driven by the strategic reasoning and the value creation opportunities behind it. And over the last years, we have done quite a few, maybe worth mentioning a few. We have divested out of Nigeria and Azerbaijan, bringing in value. We have made acquisitions into U.

[Torgrim Reitan, EVP & CFO at Equinor]

S. Onshore. We have the Teluguino divestments. And then we are combining our portfolios in The U. K.

[Torgrim Reitan, EVP & CFO at Equinor]

With Shell and creating the largest operator in The U. K. As such. So it has been quite an active couple of years within M and A. And you can rest assured that we will have a focus on a strong balance sheet no matter what we do on the M and A front.

[Torgrim Reitan, EVP & CFO at Equinor]

Then on gas contracts, I think it's important for me to leave you with well, first of all, I mean, those contracts really demonstrate the attractiveness of Norwegian gas to EU. This is clearly driven by security of supply for our long term customers. So we have signed three long term contracts over the last one point five years. That is actually 20% of our natural gas position on the NCS, and it actually covers 6% of the EU imports. And then your question is, so how does this work?

[Torgrim Reitan, EVP & CFO at Equinor]

Well, they are priced based on spot prices in general. They also have free sourcing associated with it, so we don't need to source them with our own gas. We can buy gas in the market if we find that suitable. So it sort of it maintains we have full flexibility in our gas production system. And also, doesn't limit us in any way as such.

[Torgrim Reitan, EVP & CFO at Equinor]

It's just in contract that sort of adds value. It is important for me that you, as investors, have exposure to the European gas market when you buy the Equinor share, and we will continue to swap everything to an exposure equal to 70% day ahead and 30% month ahead in the portfolio, meaning that when you see volatility in the gas markets in Europe, you can rest assure that we will be able to capitalize on it and it will find its way to our earnings. Thanks, Hendrik.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you. The next one on my list is Theodor Sveinidlsen from Sberbanken Markets. Theodor, please, your line is open.

[Teodor Sveen-Nilsen, Equity Research Analyst at SpareBank 1 Markets]

Good afternoon. Thanks for taking my questions. First question that is on Wisting. Could you please provide an update on Wisting? Also maybe how Wisting's role will be in your ambition of keeping NCS production flat from 2020 to 02/1935?

[Teodor Sveen-Nilsen, Equity Research Analyst at SpareBank 1 Markets]

Second question, just want to go back to the 3% discount rate you used for impairment testing for Empire. Definitely understand there's a difference between the rate you use for impairment testing and the rate you use for investment decisions still. I just wanted to explain the relation between the 3% you use for impairment testing and four to 8% real return that you indicate SMP ambition for renewal projects? Thanks.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Thanks, Theodor. This thing is a promising discovery in the very north in the Barents Sea, as some of you would know. And we are actively working that to bring it forward to an investment decision. The investment decision might come next year, might come later, so we'll see.

[Torgrim Reitan, EVP & CFO at Equinor]

We do believe that the project absolutely has the characteristics to become a good development for Equinor in the future. When it will ultimately be sanctioned and put in production, we will have to come back to when, of course, when we know more about that. When it comes to the 2035 ambition and keeping NCS flat, The main driver behind that is projects that we have concrete and specific plans for. We have more than 200 IOR projects that are currently being matured to deliver into that. And also, we have more than 200 prospects that we are maturing to get into that portfolio.

[Torgrim Reitan, EVP & CFO at Equinor]

And then this is sort of a risk portfolio, so it's very hard to say whether this thing is in or out, but it's a natural part that we take that into the portfolio from a risk perspective towards 02/1935. When I'm touching that point, I am an old man and I remember in the IPO in 2001 that concern with investors was that NCS is declining, Why is this attractive? And here we are, after twenty five years, producing more than in 2001 and actually looking at the production in 2035 on the same level. So I mean it's a remarkable story of a basin that has kept giving. I used the opportunity for sales with Sharedevol, but anyway, it is an important part of the portfolio.

[Torgrim Reitan, EVP & CFO at Equinor]

On the 3% discount rate versus what we do for investment decisions. So the discount rate that we use for these purposes is meant to mirror our cost of capital, a relevant cost of capital for these investments. For investment decisions, we clearly are not satisfied with cost of capital. We need a significant premium to that. And for renewables projects, we want to see double digit returns on the money that we invest, the equity that we invest.

[Torgrim Reitan, EVP & CFO at Equinor]

So these are not consistent. The fourth rate, we have abandoned. We don't use that anymore, Theodor, so we use more than 10% of the money that we invest.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, Theodor. Next one is Paul Redman from BNP Paribas Exxon. Paul, your line is open.

[Paul Redman, Director - VP Energy Equity Research at BNP Paribas Exane]

Yes. Thank you very much for your time. I guess my first question is just I think you said in the prelim remarks that the view is that debt would remain flat at current levels or the gearing would remain flat at current levels. I just wanted to ask what's included in that assumption, price, is there a view on working capital included, how much Peregrino inflows you expect, kind of just some of the steps that are taken to get to that assumption. And then a second question on CapEx. I think for your $13,000,000,000 guidance for the year, you're using an $11 NOK USD rate. What's the impact if that goes down to 10,000,000,000 that FX rate impact?

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Thanks, Paul. So when it comes to net debt towards the year end, so around current levels, I mean, it's we all know that prices can fluctuate. So in that statement, it's sort of based on where the prices are currently, forward prices as such. And working capital assumptions in that is sort of fairly stable working capital assumptions.

[Torgrim Reitan, EVP & CFO at Equinor]

And Peregrino is the closing of Pellegrino is there are two separate transactions there, and we assume at least one of them to be in this side of New Year, and the other one is a little bit more uncertain. So that's why we say around because there are so many moving parts there. But I just want to give you some sort of guidance on that. The step up during this year is happening in the second quarter and after the second quarter, it is a stable development. Then on sort of your CapEx, yes, so $13,000,000,000 we maintain that guidance, and we have used a currency assumption of 11, as you say.

[Torgrim Reitan, EVP & CFO at Equinor]

So there is a certain part of investments that is in Norwegian kroner, so hard to give an exact number, but around 30 ish percentage points, I would say, is exposed to Norwegian kroner. So with a bit stronger Norwegian kroner, it has sort of a pressure into the number, but we work very hard to manage all of this. And with all the efforts going on currently in the portfolio, we have decided to maintain the guidance.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, Paul. Let's move on to Michele Della Wigna from Goldman Sachs. Michele, please, you're ready for your question.

[Michele Della Vigna, Managing Director at Goldman Sachs]

Thank you very much. Thank you for your time, Torgrim. Two questions, if I may. I wanted to refer back to your comment on maintaining a competitive cash return to shareholders and whether perhaps you could elaborate a bit more on what metrics you are mostly looking at. If I look at your peers, most of them are using an operating cash flow payout.

[Michele Della Vigna, Managing Director at Goldman Sachs]

So I wonder if that would be something that you're referring to. And then secondly, thinking about some of the opportunities opening up globally, there is a very public process led by Galp on Namibia, which is one of the interesting new basins that are opening up. I was wondering if you're actively participating in that one.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay.

[Torgrim Reitan, EVP & CFO at Equinor]

Thanks, Michele. So capital distribution to be competitive. So of course, we know very well what our peers are using and all of that. So we want to remain competitive in that setting. I can give you maybe a couple of data points.

[Torgrim Reitan, EVP & CFO at Equinor]

The cash dividend is currently at $0.37 per share. We have grown that by $02 per year, and we want to keep growing that cash dividend sort of also in the future. So you should see that part of capital distribution as bankable. This will be something that we are extremely committed to keep on delivering through the cycles. Then we will use on top of that share buyback to see to that the total package is competitive.

[Torgrim Reitan, EVP & CFO at Equinor]

And we will also use share buyback to sort of we had an extreme situation in 2022 with very, very high prices, and we use share buyback to sort of distribute that part of the earnings in a way. So we want to use share buyback as that tool. So we don't have a formula, and I don't intend to introduce a formula. We know what the others are doing, and we want to put forward a share buyback program that keeps us competitive versus peers. When you measure us against those type of metrics, I'm not talking about yield, I'm talking about those type of metrics that others are using.

[Torgrim Reitan, EVP & CFO at Equinor]

When that is said, from time to time, we are willing to use the balance sheet if we find that appropriate. And all this time, we find it appropriate to strengthen the balance sheet as So yes, thanks, Mikael. Then you had a second one that was on Namibia. Clearly, we know what's going on, and I won't comment on specifics on Namibia, but what I would like to say is that what we have done over the last few years is focusing our upstream E and P portfolio internationally, and that has served us well. And clearly, deepening into areas where we are is something that typically has priority.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you. Next one on my list is Morgan Stanley, Martin Rats. Martin, please go ahead.

[Martijn Rats, Chief Commodity Strategist & Head - European Oil & Gas Equity Research at Morgan Stanley]

Yes. A lot of good questions have already been asked, but the answer I just wanted to sort of follow-up on what you just replied to Michele. As in this point about being competitive compared to us, it's really sort of quite crucial and important. As you can imagine, we're all very interested in what the buyback will be in 2026. But if the buyback is meant to if the buyback is going to be competitive, then you it sort of implies that the CapEx also has to be competitive in the sense that if in an overall financial framework, you can only be sort of competitive in one area if you do something similar in another area too.

[Martijn Rats, Chief Commodity Strategist & Head - European Oil & Gas Equity Research at Morgan Stanley]

And relative to CFFO, Equinor's CapEx is quite high and the sort of CapEx percentage of CFFO is much higher than many of the other European peers. So I understand that you're saying, well, the distribution should also be competitive, but how can the distributions be competitive if the CapEx is at a much higher percentage of CFFO? How are we ending up in a competitive space then? And secondly, the other point I wanted to ask about the buyback is sort of somewhat of a mechanical point. But would you envision to continue to simply communicate to the markets what the buyback is for the following year at the full year results?

[Martijn Rats, Chief Commodity Strategist & Head - European Oil & Gas Equity Research at Morgan Stanley]

Or could you also move to more of a sort of quarterly sort of come as it go type guidance? Because I can imagine that looking into 2026, it might be quite hard to make up your mind on how the entire year is going to pan out already like right at the start. Just hoping you could say a few things about these two things.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Thanks, Martin. So on the first one, actually a very good question, and I'm very glad you asked it because there's something to comment around that because the Norwegian tax system creates a disturbance when you compare us to others. CapEx is a pretax number. Cash flow from operation is an after tax number.

[Torgrim Reitan, EVP & CFO at Equinor]

And when you look at our CapEx profile, a significant part of that is sort of in the Norwegian continental shelf with 78% tax deduction as we spend. So as you would understand, our after tax cash flow to CapEx is significantly lower and if you compare that number to our peers, you probably will get to another conclusion as such. And then that number needs to be prepared on an equal basis with the cash from operations post tax. There's a lot of details in this, and I'm clearly more than happy to follow-up with you afterwards, Martin, through Investor Relations and all of that. But I'm very glad you asked that because it's such an important driver behind why we might look different than the others, while we are actually more similar than you should believe.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. Then on your second question on buyback, that is not a topic for discussion today. If there will be any changes to this, I mean, we will typically do that on the Capital Markets Day or something like that. But it's something that we it has nothing to say about currently. And then if there is something new to it, it will have to come at such an event. Thanks, Martin.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you. Next one is Joon Olaisen from ABG Sundal Collier. Joon, please go ahead.

[John Olaisen, Head - Research at ABG Sundal Collier]

Good morning, everybody. Actually, good afternoon right now. But a couple of questions very quickly. What is your latest view of the timing of when Johan Sverdrup will come off plateau? And secondly, you talked about cost inflation and the fighting cost inflation.

[John Olaisen, Head - Research at ABG Sundal Collier]

Do you still see the same cost inflation? Or has cost inflation come down? Is cost inflation about coming down a little bit? And maybe are there differences between Norway and outside of Norway when it comes to cost inflation? I will assume there is maybe some deflation in onshore in The U.

[John Olaisen, Head - Research at ABG Sundal Collier]

S. So if you could comment a little bit on the Easter, that would great, please.

[Torgrim Reitan, EVP & CFO at Equinor]

Perfect, Jan. So first on Johan Sverdrup. This quarter, we had a very high regularity on Johan Sverdrup, actually 99, so there's a great job done by the organization to keep it that way. Production this year in 2025, we say that's pretty close to the production levels we saw in 2023, 'twenty four, maybe around 720,000 barrels per day. So there are a couple of things I really would like to underline here that is going very well.

[Torgrim Reitan, EVP & CFO at Equinor]

One is sort of the work related to water management. And as you would understand, as you produce these wells, there will be sort of water produced and our ability to manage water as sort of that increases is extremely important. This is a core capability that we have done for forty years, but that is going well. We are also now drilling or retrofitting multilaterals into wells we have drilled earlier and multilaterals, several wells out of one wellbore. That is also producing wells.

[Torgrim Reitan, EVP & CFO at Equinor]

And then lastly, we made a final investment decision on Johan Sverdrup Phase three earlier this year. And all of these elements have enabled us to increase our assumptions when it comes to recovery rates from 65% to seventy five percent. So I mean it's going well with Johan Sverdrup. We have the Phase two of Johan Sverdrup was designed to bring forward volumes at a very much higher level, but of course coming off plateau earlier as So the field will come off plateau. And I don't have a number for you, but I just want to leave with you that this has a high attention and we have our very best people working on these topics and we will give you an update later on that.

[Torgrim Reitan, EVP & CFO at Equinor]

When it comes to cost inflation, We see that we continue to be able to take out efficiency in the organization and in the portfolio. It comes from scale in our operations. We can put on new developments without increasing the organization and without even limited cost. We are prioritizing very hard. We have a lot of opportunities, but prioritizing very hard and taking out sort of efficiency across the more administrative or structural part of the company.

[Torgrim Reitan, EVP & CFO at Equinor]

So that sort of internal thing is going well. Looking outside and inflation, there is still a tight market within the oil and gas sector, still a heated market, but maybe a couple of points. We see that within drilling and well, high end floater market has softened a bit. We also see that within engineering and construction, it is tight in Norway currently due to the tax package, and you know that very well, Jan, but that will drop off. So we actually see that sort of the pressure there will come off in the next maybe twelve months and also a little bit coming off in sort of the high end floater market in Norway.

[Torgrim Reitan, EVP & CFO at Equinor]

When it comes to the yards and Asian yards, we see that is busy. We do think that will continue. There's a lot of FPSOs being built. That leads me to subsea and marine, which sort of we do think will remain tight because FPSO going forward. They always have a large subsea scope as such.

[Torgrim Reitan, EVP & CFO at Equinor]

So to summarize, I think in Norway, there might be a little bit of easing when sort of all this activity related to the tax package is coming off. Apart from that, it's a fairly tight market, Jon. So thank you very much.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, Jon. Time is moving, and I still have a few on the list. So I ask that you limit yourself to one question, and we'll try to cover as many as possible. Next is Kim Fustier from HSBC. Kim, please go ahead.

[Kim Fustier, Head - European Oil & Gas Research at HSBC]

Right. Yes. Hi, thank you for taking my question, singular, I guess. I wanted to ask about operations and just that ramp up on your catbird was remarkably fast. I mean, that ramp up in line with your plan and your expectations?

[Kim Fustier, Head - European Oil & Gas Research at HSBC]

Or was it, in fact, better expectations? And what did you do in terms of preparation or anything that made maybe this ramp up faster than others we've seen before?

[Torgrim Reitan, EVP & CFO at Equinor]

Okay.

[Torgrim Reitan, EVP & CFO at Equinor]

Thanks, Kim. Yes, thank you for the question. Yes, is Johan Castberg is a mega greenfield development and the fact that we were able to bring it on plateau in less than three months is just remarkable. We had assumed in our plans that we should be able to go quickly, but we actually ended up doing it even quicker than we had planned to. Johan Castberg is at 220,000 barrels per day at plateau production, and it's going to be a significant contribution to the production growth this year and have a full impact in the second half of this year into the 4% production growth that we have put forward.

[Torgrim Reitan, EVP & CFO at Equinor]

Good installation of the ship and assets on the field.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you. Moving on to Nash Kwai in Barclays. Nash, please go ahead.

[Naisheng Cui, Equity Research Analyst at Barclays]

Hey, good morning. Good afternoon. Thanks for taking my question. Just a follow-up on the cost inflation side. I think one of your Norwegian peers mentioned about CapEx cost inflation.

[Naisheng Cui, Equity Research Analyst at Barclays]

And I want and it's interesting, Tom, earlier you mentioned about 30% of your 25% capacity as opposed to Norwegian kroner. Just wonder how should you think about 2026 impact? And you mentioned that you still want to keep the CapEx guidance. Do you have to give up any opportunities? Thank you.

[Torgrim Reitan, EVP & CFO at Equinor]

Yes. No, thanks, Nash. So managing currency exposure is a natural part of what we do. We define ourselves as a dollar company. Revenues are in dollars, accounts are in dollars, investments largely in dollars, costs also in dollars, and you should think about as a dollar company as such.

[Torgrim Reitan, EVP & CFO at Equinor]

And then we'll have to manage fluctuations in other currencies like Norwegian kroner and particularly Norwegian kroner and so on. So clearly, we have the intention to be able to tighten up the portfolio further so we can actually stay within our current guidance even if there will be a little bit Norwegian kroner exposure in there. So that's the plan.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Then it's Matt Lofting from JPMorgan.

[Matt Lofting, Energy Equity Research Analyst & Executive Director at JP Morgan]

Most of mine have been asked, but I'll just ask you, Torgrim, on MMP. I think you made some comments earlier around sort of the challenges in the recent environment around the trading businesses, less appetite to take risk in the second quarter. How do you see the environment going forward from here thinking about the second half of the year? Do you expect also to see as we sit today any changes around that? And or is the business in a position where if it doesn't change that the setup and the exposures can be better adapted to work around it? Thank you.

[Torgrim Reitan, EVP & CFO at Equinor]

Okay. No, thanks, Matt. Yes, it's a good question. There is still a lot of value to be had within the trading environment even if the risk is different. And I can give you a couple of examples.

[Torgrim Reitan, EVP & CFO at Equinor]

Within our gas trading, we see geographical arbitrage opportunities that is not linked to political risk in any way. For instance, with Russian gas now getting out of the market, we see higher prices in the East than in the West, and we have access to all these markets through our pipeline systems and contracts and all of that. So currently, we are actually selling more gas towards the East than the West and taking out arbitrage opportunities, and you'll see that in the MMP results. You saw that in the second quarter. Also, based on your portfolio of oil qualities and shipping fees and contracts enables you to take out value of trading.

[Torgrim Reitan, EVP & CFO at Equinor]

So this is sort of a little bit back to basic when it comes to trading and sort of asset backed trading and physical trading and all of that, and that will still continue. However, within sort of the more trades that are exposed to geopolitical changes and all of that, traders are struggling for the time being and there's a little bit of risk off on that part of the portfolio, something that we see across the whole trading community as such. Still quite a bit of value to be had, but the volatility is different than it used to be and it's harder for traders to create value out of it.

[BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor]

Thank you, Torbjorn. There was a lot of questions today, but we have now passed the hour, and I want to be respectful for We didn't manage to get fully through the list, but of course, the Investor Relations team remain available for calls during today and later in the week to follow-up. So then we can conclude the call, and I thank you all for calling in and for asking your questions. Have a good rest of the day.

Participants

Analysts

• BÃ¥rd Glad Pedersen, SVP & Head - IR at Equinor
• Torgrim Reitan, EVP & CFO at Equinor
• Biraj Borkhataria, Global Head - Energy Transition Research at RBC Capital Markets
• Irene Himona, Managing Director - Oil & Gas at Bernstein
• Alejandro Vigil, Head - European Integrated Energy Equity Research at Santander
• Peter Low, MD - Energy Equity Research at Rothschild & Co Redburn
• Henri Patricot, Executive Director & Equity Research - Oil & Gas sector at UBS Group
• Teodor Sveen-Nilsen, Equity Research Analyst at SpareBank 1 Markets
• Paul Redman, Director - VP Energy Equity Research at BNP Paribas Exane
• Michele Della Vigna, Managing Director at Goldman Sachs
• Martijn Rats, Chief Commodity Strategist & Head - European Oil & Gas Equity Research at Morgan Stanley
• John Olaisen, Head - Research at ABG Sundal Collier
• Kim Fustier, Head - European Oil & Gas Research at HSBC
• Naisheng Cui, Equity Research Analyst at Barclays
• Matt Lofting, Energy Equity Research Analyst & Executive Director at JP Morgan