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Equinor (EQNR) Jumps More Than 4% Despite Q3 Earnings Decline
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Equinor ASA (EQNR - Free Report) reported third-quarter 2020 adjusted earnings per share of 9 cents, lower than the year-ago quarter’s 33 cents.
Total revenues declined 27.4% to $11,339 million from $15,610 million in the prior-year quarter.
The deterioration was owing to a decline in liquid and gas prices, partially offset by ramped-up production from U.K.’s new fields.
Despite the weaker results, the Norwegian energy giant’s stock price improved more than 4% since the earnings announcement on Oct 29. It’s likely that investors cheered its massive improvement in free cashflow in the September quarter despite the coronavirus pandemic-induced low-price environment.
The energy major got approvals from the board of directors for quarterly dividend of 11 cents per share, representing a hike of 22.2% from the prior dividend.
Segment Analysis
Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $773 million, down from $1,735 million in the year-ago quarter. The underperformance was owing to a decline in liquid prices. Higher oil equivalent production partially offset the negative.
The company’s average daily production of liquids and gas rose 19% year over year to 1,273 thousand barrels of oil equivalent per day (MBoE/D), thanks to contributions from new oil and gas fields.
E&P International: The segment’s adjusted operating loss was recorded at $104 million against the year-ago quarter’s earnings of $451 million. The upstream activities in the international market were hurt by weaker liquids and gas prices. This was partially negated by ramp up in production from U.K.’s new fields.
The company’s average daily equity production of liquids and gas declined to 323 MBoE/D from 410 MBoE/D in the year-ago quarter.
E&P USA: Through this segment, Equinor generated adjusted quarterly loss of $193 million, wider than a loss of $16 million in the September quarter of 2019.
Lower liquids and gas prices hurt the segment, partially offset by cost-reduction initiatives.
The integrated firm’s average equity production of liquids and gas was recorded at 398 MBoE/D, down from 432 MBoE/D in the year-ago quarter. The decrease was primarily due to the sale of Eagle Ford assets in 2019.
Marketing, Midstream & Processing (MMP): The segment’s adjusted profit of $262 million declined from $448 million a year ago. The downside was owing to negative refinery margins.
Free Cashflows
In the September quarter, Equinor generated free cashflows of $216 million against negative free cashflow of $672 million in the year-ago quarter. Despite the coronavirus pandemic, the massive improvement was aided by lower capital expenditures.
Balance Sheet
As of Sep 30, 2020, Equinor reported $7,844 million in cash and cash equivalents. The company’s total debt amounted to $37,470 million at quarter-end. Total debt-to-capitalization ratio at the end of the third quarter was 52.3%.
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Equinor reiterated its expectations for compound annual production growth rate at 3% from 2019 through 2026, banking on mostly new projects. For 2020, the company reaffirmed its projection for organic capital budget at $8.5 billion, while the budget is estimated at $10 billion for 2021. For 2022 to 2023, the company’s projection for annual average organic capital expenditure stands at $12 billion.
The company also foresees expenditure for exploration activities through 2020 at $1.1 billion.
Zacks Rank & Stock to Consider
The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Sunoco LP (SUN - Free Report) and Abraxas Petroleum Corporation (AXAS - Free Report) and Antero Resources Corporation (AR - Free Report) . While Sunoco sports a Zacks Rank #1 (Strong Buy), Abraxas and Antero carry a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunocohas seen upward estimate revisions for its 2020 bottom line in the past 30 days.
Abraxashas also seen upward estimate revisions for its 2020 bottom line in the past 30 days.
Anterohas seen upward estimate revisions for 2020 bottom line in the past 30 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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Equinor (EQNR) Jumps More Than 4% Despite Q3 Earnings Decline
Equinor ASA (EQNR - Free Report) reported third-quarter 2020 adjusted earnings per share of 9 cents, lower than the year-ago quarter’s 33 cents.
Total revenues declined 27.4% to $11,339 million from $15,610 million in the prior-year quarter.
The deterioration was owing to a decline in liquid and gas prices, partially offset by ramped-up production from U.K.’s new fields.
Despite the weaker results, the Norwegian energy giant’s stock price improved more than 4% since the earnings announcement on Oct 29. It’s likely that investors cheered its massive improvement in free cashflow in the September quarter despite the coronavirus pandemic-induced low-price environment.
Equinor ASA Price, Consensus and EPS Surprise
Equinor ASA price-consensus-eps-surprise-chart | Equinor ASA Quote
Dividend Hike
The energy major got approvals from the board of directors for quarterly dividend of 11 cents per share, representing a hike of 22.2% from the prior dividend.
Segment Analysis
Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $773 million, down from $1,735 million in the year-ago quarter. The underperformance was owing to a decline in liquid prices. Higher oil equivalent production partially offset the negative.
The company’s average daily production of liquids and gas rose 19% year over year to 1,273 thousand barrels of oil equivalent per day (MBoE/D), thanks to contributions from new oil and gas fields.
E&P International: The segment’s adjusted operating loss was recorded at $104 million against the year-ago quarter’s earnings of $451 million. The upstream activities in the international market were hurt by weaker liquids and gas prices. This was partially negated by ramp up in production from U.K.’s new fields.
The company’s average daily equity production of liquids and gas declined to 323 MBoE/D from 410 MBoE/D in the year-ago quarter.
E&P USA: Through this segment, Equinor generated adjusted quarterly loss of $193 million, wider than a loss of $16 million in the September quarter of 2019.
Lower liquids and gas prices hurt the segment, partially offset by cost-reduction initiatives.
The integrated firm’s average equity production of liquids and gas was recorded at 398 MBoE/D, down from 432 MBoE/D in the year-ago quarter. The decrease was primarily due to the sale of Eagle Ford assets in 2019.
Marketing, Midstream & Processing (MMP): The segment’s adjusted profit of $262 million declined from $448 million a year ago. The downside was owing to negative refinery margins.
Free Cashflows
In the September quarter, Equinor generated free cashflows of $216 million against negative free cashflow of $672 million in the year-ago quarter. Despite the coronavirus pandemic, the massive improvement was aided by lower capital expenditures.
Balance Sheet
As of Sep 30, 2020, Equinor reported $7,844 million in cash and cash equivalents. The company’s total debt amounted to $37,470 million at quarter-end. Total debt-to-capitalization ratio at the end of the third quarter was 52.3%.
View
Equinor reiterated its expectations for compound annual production growth rate at 3% from 2019 through 2026, banking on mostly new projects. For 2020, the company reaffirmed its projection for organic capital budget at $8.5 billion, while the budget is estimated at $10 billion for 2021. For 2022 to 2023, the company’s projection for annual average organic capital expenditure stands at $12 billion.
The company also foresees expenditure for exploration activities through 2020 at $1.1 billion.
Zacks Rank & Stock to Consider
The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Sunoco LP (SUN - Free Report) and Abraxas Petroleum Corporation (AXAS - Free Report) and Antero Resources Corporation (AR - Free Report) . While Sunoco sports a Zacks Rank #1 (Strong Buy), Abraxas and Antero carry a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunocohas seen upward estimate revisions for its 2020 bottom line in the past 30 days.
Abraxashas also seen upward estimate revisions for its 2020 bottom line in the past 30 days.
Anterohas seen upward estimate revisions for 2020 bottom line in the past 30 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>