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Equinor (EQNR) Q2 Earnings Beat Estimates, Revenues Miss
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Equinor ASA (EQNR - Free Report) reported second-quarter 2024 adjusted earnings per share of 84 cents, which beat the Zacks Consensus Estimate of 81 cents. However, the bottom line declined from the year-ago quarter’s figure of 89 cents.
Total quarterly revenues increased to $25,462 million from $22,870 million in the prior-year quarter. However, the top line missed the Zacks Consensus Estimate of $25,927 million.
The better-than-expected quarterly earnings can be attributed to robust gas production and higher liquids prices across major segments. This was partially offset by the lower price of gas.
Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $6,129 million, down 1% from $6,213 million registered in the year-ago quarter. Despite gas prices being lower than the prior-year quarter’s figure, higher liquids price and robust gas production aided in maintaining a relatively consistent level of revenues.
The company’s average daily production of liquids and gas increased 5% year over year to 1,375 thousand barrels of oil equivalent per day (MBoe/d). The figure was also above our estimate of 1,310 Mboe/d. The strong performance can be attributed to high production levels, supported by well-executed turnarounds and ramp-up of new fields, including Breidablikk and Hanz. However, the positives were slightly offset by a lower gas price than the year-earlier quarter’s level.
E&P International: The segment’s adjusted operating profit totaled $699 million, down 12% from the year-ago quarter’s figure of $797 million. The decline can be attributed to the higher adjusted operating and administrative expenses in the second quarter compared to that recorded a year ago. The rise in expenses was primarily due to increased production, higher liftings and a shift to a net overlift position.
Exploration expenses also increased year over year due to the capitalization of previously expensed exploration wells in Brazil, an expensed well in Argentina and higher seismic activity in the quarter.
The average daily equity production of liquids and gas increased to 336 MBoe/d from 328 MBoe/d in the year-ago quarter and also surpassed our estimate of 327.6 MBoe/d. The growth in production was primarily driven by new wells and the addition of the Buzzard field in the United Kingdom.
Additionally, a decrease in turnaround activities in the second quarter further contributed to the overall increase in production levels. However, the growth was partially offset by natural decline and operational issues in certain fields.
E&P USA: Equinor generated an adjusted quarterly profit of $264 million from this segment. The figure rose 17% from $226 million in the second quarter of 2023. E&P USA was aided by higher liquids prices, resulting in an increase in revenues from the prior-year quarter’s level.
The integrated firm’s average equity production of liquids and gas was 337 MBoe/d, down 7% from 363 MBoe/d in the year-ago period. The metric was also below our projection of 363.4 MBoe/d.
The decline in production was mainly due to turnaround activity in the Gulf of Mexico and curtailment of production affecting the Appalachia onshore assets. Revenues were negatively impacted by lower production and reduced gas prices. However, higher liquids prices contributed to the increase in revenues.
Marketing, Midstream & Processing: The segment reported adjusted earnings of $521 million, down 22% from $665 million a year ago.
Renewables: The segment reported an adjusted loss of $90 million, wider than the year-ago quarter’s registered loss of $84 million. Revenue growth was driven by the addition of onshore wind farms in operation in Brazil and Poland, boosting third-party revenues in the second quarter of 2024. However, lower prices and higher costs from projects offset the positives.
Free Cash Flow
In the June-end quarter, Equinor generated a negative free cash flow of $4,222 million compared with $10,758 million in the year-ago period. The cash flow was impacted by higher tax payments in Norway.
Balance Sheet
As of Jun 30, 2024, Equinor reported $8,641 million in cash and cash equivalents. The company’s long-term debt was $23,114 million.
Outlook
Equinor reiterated stable oil and gas production for 2024. Additionally, it expects renewable power generation to increase approximately 70% from that reported in 2023.
The company also reiterated its organic capital spending budget of $13 billion for the year.
SM Energy is an upstream energy firm operating in the prolific Midland Basin and the South Texas regions. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.
VAALCO Energyis an independent energy company involved in upstream operation business with a diversified presence in Africa and Canada. Having a large inventory of drilling locations in premium Canadian Acreage, the company’s production outlook seems bright.
Energy Transfer is a midstream player that owns and operates one of the most diversified portfolios of energy assets in the United States. Boasting a pipeline network extending more than 125,000 miles, its network spans over 44 states. With a presence in all the major U.S. production basins, the company’s outlook seems positive.
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Equinor (EQNR) Q2 Earnings Beat Estimates, Revenues Miss
Equinor ASA (EQNR - Free Report) reported second-quarter 2024 adjusted earnings per share of 84 cents, which beat the Zacks Consensus Estimate of 81 cents. However, the bottom line declined from the year-ago quarter’s figure of 89 cents.
Total quarterly revenues increased to $25,462 million from $22,870 million in the prior-year quarter. However, the top line missed the Zacks Consensus Estimate of $25,927 million.
The better-than-expected quarterly earnings can be attributed to robust gas production and higher liquids prices across major segments. This was partially offset by the lower price of gas.
Equinor ASA Price, Consensus and EPS Surprise
Equinor ASA price-consensus-eps-surprise-chart | Equinor ASA Quote
Segmental Analysis
Exploration & Production Norway (E&P Norway): The segment reported adjusted earnings of $6,129 million, down 1% from $6,213 million registered in the year-ago quarter. Despite gas prices being lower than the prior-year quarter’s figure, higher liquids price and robust gas production aided in maintaining a relatively consistent level of revenues.
The company’s average daily production of liquids and gas increased 5% year over year to 1,375 thousand barrels of oil equivalent per day (MBoe/d). The figure was also above our estimate of 1,310 Mboe/d. The strong performance can be attributed to high production levels, supported by well-executed turnarounds and ramp-up of new fields, including Breidablikk and Hanz. However, the positives were slightly offset by a lower gas price than the year-earlier quarter’s level.
E&P International: The segment’s adjusted operating profit totaled $699 million, down 12% from the year-ago quarter’s figure of $797 million. The decline can be attributed to the higher adjusted operating and administrative expenses in the second quarter compared to that recorded a year ago. The rise in expenses was primarily due to increased production, higher liftings and a shift to a net overlift position.
Exploration expenses also increased year over year due to the capitalization of previously expensed exploration wells in Brazil, an expensed well in Argentina and higher seismic activity in the quarter.
The average daily equity production of liquids and gas increased to 336 MBoe/d from 328 MBoe/d in the year-ago quarter and also surpassed our estimate of 327.6 MBoe/d. The growth in production was primarily driven by new wells and the addition of the Buzzard field in the United Kingdom.
Additionally, a decrease in turnaround activities in the second quarter further contributed to the overall increase in production levels. However, the growth was partially offset by natural decline and operational issues in certain fields.
E&P USA: Equinor generated an adjusted quarterly profit of $264 million from this segment. The figure rose 17% from $226 million in the second quarter of 2023. E&P USA was aided by higher liquids prices, resulting in an increase in revenues from the prior-year quarter’s level.
The integrated firm’s average equity production of liquids and gas was 337 MBoe/d, down 7% from 363 MBoe/d in the year-ago period. The metric was also below our projection of 363.4 MBoe/d.
The decline in production was mainly due to turnaround activity in the Gulf of Mexico and curtailment of production affecting the Appalachia onshore assets. Revenues were negatively impacted by lower production and reduced gas prices. However, higher liquids prices contributed to the increase in revenues.
Marketing, Midstream & Processing: The segment reported adjusted earnings of $521 million, down 22% from $665 million a year ago.
Renewables: The segment reported an adjusted loss of $90 million, wider than the year-ago quarter’s registered loss of $84 million. Revenue growth was driven by the addition of onshore wind farms in operation in Brazil and Poland, boosting third-party revenues in the second quarter of 2024. However, lower prices and higher costs from projects offset the positives.
Free Cash Flow
In the June-end quarter, Equinor generated a negative free cash flow of $4,222 million compared with $10,758 million in the year-ago period. The cash flow was impacted by higher tax payments in Norway.
Balance Sheet
As of Jun 30, 2024, Equinor reported $8,641 million in cash and cash equivalents. The company’s long-term debt was $23,114 million.
Outlook
Equinor reiterated stable oil and gas production for 2024. Additionally, it expects renewable power generation to increase approximately 70% from that reported in 2023.
The company also reiterated its organic capital spending budget of $13 billion for the year.
Zacks Rank and Key Picks
Currently, EQNR carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the energy sector are SM Energy (SM - Free Report) , VAALCO Energy (EGY - Free Report) and Energy Transfer LP (ET - Free Report) . SM Energy presently sports a Zacks Rank #1 (Strong Buy), while VAALCO and Energy Transfer carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy is an upstream energy firm operating in the prolific Midland Basin and the South Texas regions. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.
VAALCO Energyis an independent energy company involved in upstream operation business with a diversified presence in Africa and Canada. Having a large inventory of drilling locations in premium Canadian Acreage, the company’s production outlook seems bright.
Energy Transfer is a midstream player that owns and operates one of the most diversified portfolios of energy assets in the United States. Boasting a pipeline network extending more than 125,000 miles, its network spans over 44 states. With a presence in all the major U.S. production basins, the company’s outlook seems positive.