6-K 1 eqnr1q19-mda_6k.htm EQUINOR FIRST QUARTER 2019 REPORT  

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

03 May, 2019

Commission File Number 1-15200

Equinor ASA

(Translation of registrant’s name into English)

 

FORUSBEEN 50, N-4035, STAVANGER, NORWAY

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F X        Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_____

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_____

 

This report on Form 6-K is being filed for the purposes of incorporation by reference in the Registration Statements on Form F-3 (File No. 333-221130) and Form S-8 (File No. 333-168426). This report shall be deemed filed and incorporated by reference in such Registration Statements and shall be deemed to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

 

This document includes portions from the previously published results announcement of Equinor ASA as of, and for the three months ended 31 March  2019, as revised to comply with the requirements of Item 10(e) of Regulation S-K regarding non-GAAP financial information promulgated by the U.S. Securities and Exchange Commission. This document does not update or otherwise supplement the information contained in the previously published results announcement.

 

 

 

Equinor first quarter 2019 results

Equinor reports net operating income of USD 4.73 billion and net income of USD 1.71 billion.

The first quarter was characterised by:

·           Solid results across all segments

·           Strong cash flow

·           On track to deliver on guidance from Capital Markets Update

·           Quarterly dividend of USD 0.26 per share

“In a quarter with lower commodity prices, we deliver higher after-tax results than in the same period last year. Our cash flow from operating activities was strong at 6.5 billion dollars in the quarter. We maintain high production, continue with strong cost focus and strict capital discipline, and we are on track to deliver on our guidance from our Capital Markets Update in February,” says Eldar Sætre, President and CEO of Equinor ASA. 

“Johan Sverdrup will start production later this year, and our project developments are on track to deliver production growth towards 2025. So far this year, we have accessed attractive new acreage in Norway and Argentina, announced the investment decision for a new platform at the ACG field offshore Azerbaijan and had the official opening of the Arkona wind farm in Germany,” says Sætre.

Net operating income was USD 4.73 billion in the first quarter, down from USD 4.96 billion in the same period last year. Production was maintained at a high level, but lower prices impacted the result. Underlying operating costs and administrative expenses per barrel increased somewhat from the same quarter last year, mainly due to new fields coming on stream. Depreciation expenses was down, mainly due to positive reserve revisions. A one-off provision effect related to earlier periods, negatively impacted the results from the Marketing, Midstream & Processing reporting segment in the quarter. Net income was USD 1.71 billion, up from USD 1.29 billion in the first quarter of 2018.

Equinor delivered total equity production of 2,178 mboe per day in the first quarter, on par with the same period in 2018. Expected natural decline from mature fields was offset by portfolio changes, new wells and new fields coming on stream.

 

As of the end of first quarter 2019, Equinor had completed 11 exploration wells with four commercial discoveries. Exploration expenses in the quarter were USD 0.27 billion, up from USD 0.25 billion in the same quarter of 2018, mainly due to higher field development costs.

 

Cash flows provided by operating activities before taxes paid and changes in working capital amounted to USD 6.45 billion for the first quarter of 2019 compared to USD 7.13 billion same period 2018.  

 

The board of directors has decided on a dividend of USD 0.26 per share for the first quarter, a 13% increase from the same quarter last year.

 

The twelve-month average Serious Incident Frequency (SIF) was 0.5 for the twelve months ended 31 March 2019, compared to 0.5 in the same period a year ago.

 

 

 

Quarters

Change

 

Q1 2019

Q4 2018

Q1 2018

Q1 on Q1

 

 

 

 

 

Net operating income (USD million)

4,732

6,745

4,960

(5%)

Net income (USD million)

1,712

3,367

1,285

33%

Total equity liquids and gas production (mboe per day) [4]

2,178

2,170

2,180

(0%)

Group average liquids price (USD/bbl) [1]

55.8

59.0

60.2

(7%)

 

GROUP REVIEW

First quarter 2019

Total equity liquids and gas production [4] was 2,178 mboe per day in the first quarter of 2019, at the same level as in the first quarter of 2018. Expected natural decline from mature fields on the NCS and in the E&P International reporting segment was offset by portfolio changes, new fields coming on stream and new wells in the US onshore business.  

Total entitlement liquids and gas production [3] was 2,002 mboe per day in the first quarter of 2019, slightly up compared to 1,993 mboe per day in the first quarter of 2018. The increase was due to portfolio changes, new fields coming on stream and new wells as described above, and lower effects from production sharing agreements (PSA) [4]. The increase was partially offset by expected natural decline from mature fields and higher US royalties [4]. The net effect from PSA and US royalties were 177 mboe per day in total in the first quarter of 2019 compared to 186 mboe per day in the first quarter of 2018.

 

Condensed income statement under IFRS

Quarters

Change

(unaudited, in USD million)

Q1 2019

Q4 2018

Q1 2018

Q1 on Q1

 

 

 

 

 

Total revenues and other income

16,482

22,438

19,884

(17%)

 

 

 

 

 

Purchases [net of inventory variation]

(6,656)

(9,821)

(9,794)

(32%)

Operating and administrative expenses

(2,639)

(2,701)

(2,514)

5%

Depreciation, amortisation and net impairment losses

(2,188)

(2,729)

(2,368)

(8%)

Exploration expenses

(268)

(442)

(249)

8%

 

 

 

 

 

Net operating income

4,732

6,745

4,960

(5%)

 

 

 

 

 

Net financial items

149

(179)

(420)

N/A

 

 

 

 

 

Income before tax

4,881

6,566

4,540

7%

 

 

 

 

 

Income tax

(3,168)

(3,200)

(3,255)

(3%)

 

 

 

 

 

Net income

1,712

3,367

1,285

33%

 

Net operating income was USD 4,732 million in the first quarter of 2019, compared to USD 4,960 million in the first quarter of 2018. The decrease was mainly impacted by lower average prices for liquids and gas, lower third-party crude oil volumes and higher operating and administrative expenses mainly due to portfolio changes and new fields coming on stream. A one-off provision effect related to earlier periods added to the decrease. The decrease was partially offset by lower depreciation expenses mainly due to increased proved reserves estimates, in addition to the NOK/USD exchange rate development.

In the first quarter of 2019, net operating income was positively impacted by changes in unrealised fair value of derivatives and inventory hedge contracts of USD 706 million and an impairment reversal of USD 116 million. In addition, net operating income was negatively impacted by an implementation effect of USD 123 million from a change of accounting policy for lifting imbalances.

In the first quarter of 2018, net operating income was positively impacted by an implementation effect of USD 287 million related to a change of accounting policy for lifting imbalances.

Total revenues and other income were USD 16,482 million in the first quarter of 2019 compared to USD 19,884 million in the first quarter of 2018. Lower third-party crude oil volumes and lower average prices for liquids and gas decreased Total revenues and other income as well as Purchases, partially offset by positive changes in unrealised fair value of derivatives and inventory hedge contracts.

Operating and administrative expenses were USD 2,639 million in the first quarter of 2019, an increase of USD 125 million compared to the first quarter of 2018. The increase was mainly due to an implementation effect from a change of accounting policy for lifting imbalances, portfolio changes and new fields coming on stream. The NOK/USD exchange rate development and the implementation of IFRS 16(1) partially offset the increase.

Depreciation expenses were USD 2,188 million in the first quarter of 2019, compared to USD 2,368 million in the first quarter of

 

2018. The 8% reduction was mainly due to higher proved reserves estimates and no depreciation effect for one of the fields on the NCS and an impairment reversal.  The NOK/USD exchange rate development added to the decrease. Portfolio changes and new fields coming on stream, and the implementation of IFRS 16(1) partially offset the decrease.

Exploration expenses were USD 268 million in the first quarter of 2019, an increase of USD 19 million compared to the first quarter of 2018, mainly due to higher field development costs and a lower portion of exploration expenditures being capitalised this quarter. For more information, see table Exploration expenses in the Supplementary disclosures.

Net financial items amounted to a gain of USD 149 million in the first quarter of 2019, compared to a loss of USD 420 million in the first quarter of 2018. The positive change of USD 569 million is mainly due to gain on derivatives related to a long-term debt portfolio of USD 306 million in the first quarter of 2019 compared to a loss of USD 164 million in the first quarter of 2018. In addition there was a gain on financial investments of USD 77 million in the first quarter of 2019 compared to a loss off 55 million in the first quarter of 2018.

Income taxes were USD 3,168 million in the first quarter of 2019. The effective tax rate was 64.9%. In the first quarter of 2018, income taxes were USD 3,255 million and the effective tax rate was 71.7%. Please see note 5  Income taxes to the Condensed interim financial statements for information related to income taxes.

Net income in the first  quarter of 2019 was USD 1,712 million, up from USD 1,285 million in the first  quarter of 2018. The increase was mainly due to positive changes in net financial items and lower income tax, partially offset by the decrease in net operating income as discussed above.

  

Cash flows provided by operating activities decreased by USD 1,941 million compared to the first quarter of 2018. The decrease was mainly due to change in working capital of USD 993 million. In addition, there was an impact of increased derivative payments and increased tax payments.

Cash flows used in investing activities increased by USD 3,337 million compared to the first quarter of 2018. The increase was mainly due to increased financial investments, partially offset by decreased additions through business combinations and decreased capital expenditures.

Cash flows used in financing activities decreased by USD 18 million compared to the first quarter of 2018. The decrease was mainly due to reduced repayment of finance debt, partially offset by increased dividend paid and leasing payments reclassified to financing cash flow following the IFRS 16(1) implementation.

Total cash flows decreased by USD 5,260 million compared to the first quarter of 2018.

(1) See note 8 Changes in accounting policies 2019 to the Condensed interim financial statements

 

 

OUTLOOK

 

•               Equinor intends to continue to mature its large portfolio of exploration assets and estimates a total exploration activity level of around USD 1.7 billion for 2019, excluding signature bonuses

•               Equinor’s ambition is to keep the unit of production cost in the top quartile of its peer group

•               For the period 2019 – 2025, production growth [7] is expected to come from new projects resulting in around 3% CAGR (Compound Annual Growth Rate)

•               Production [7] for 2019 is estimated to be around the 2018 level

•               Scheduled maintenance activity is estimated to reduce the quarterly production by approximately 60 mboe per day in the second quarter of 2019. In total, maintenance is estimated to reduce equity production by around 40 mboe per day for the full year of 2019

 

These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Deferral of production to create future value, gas off-take, timing of new capacity coming on stream, operational regularity, activity level in the US onshore, as well as uncertainty around the closing of the announced transactions represent the most significant risks related to the foregoing production guidance. For further information, see section Forward-Looking Statements.



  

 

 

 

EXPLORATION & PRODUCTION NORWAY

 

First quarter 2019 review

 

Average daily production of liquids and gas decreased by 3% to 1,337 mboe per day in the first quarter of 2019, compared to 1,381 mboe per day in the first quarter of 2018. The decrease was mainly due to expected natural decline partially offset by positive contributions from new fields.

Net operating income  was USD 3,119 million in the first quarter of 2019 compared to USD 3,585 million in the first quarter of 2018. The decrease was mainly due to reduced liquids volumes and lower liquids prices, partially offset by lower depreciation expenses.

 

In the first quarter of 2019, net operating income was negatively impacted by an implementation effect of USD 42 million from a change of accounting policy for lifting imbalances, in addition to a net negative impact of USD 58 million from underlifted volumes in the quarter. In the first quarter of 2018, net operating income was positively impacted by the implementation effect of USD 216 million from a change of accounting policy for lifting imbalances.

 

Total revenues and other income decreased in the first quarter of 2019 compared to the first quarter of 2018, due to lower liquids prices and reduced liquids volumes.

 

Operating and administrative expenses  decreased mainly due to the NOK/USD exchange rate development, partially offset by increased costs for new fields.

 

Depreciation, amortisation and net impairment losses decreased mainly due to no depreciation effect for one of the fields, a net decrease in production and increased proved reserves estimates, partially offset by ramp up of new fields.

Exploration expenses increased mainly due to higher field development and seismic costs, in addition to a lower portion of exploration expenditure being capitalised this quarter.

Income statement under IFRS

Quarters

Change

(in USD million)

Q1 2019

Q4 2018

Q1 2018

Q1 on Q1

 

 

 

 

 

Total revenues and other income

4,988

6,036

5,773

(14%)

 

 

 

 

 

Operating and administrative expenses

(736)

(852)

(793)

(7%)

Depreciation, amortisation and net impairment losses

(1,019)

(1,272)

(1,296)

(21%)

Exploration expenses

(114)

(177)

(99)

15%

 

 

 

 

 

Net operating income

3,119

3,736

3,585

(13%)

 

 

 

EXPLORATION & PRODUCTION INTERNATIONAL

 

First quarter 2019 review

 

Average daily equity production of liquids and gas increased by 5% to 841 mboe per day in the first quarter of 2019 compared to
799 mboe per day in the first quarter of 2018. The increase was primarily driven by portfolio changes in Brazil, new fields in offshore North America, and new wells in the US onshore, partially offset by expected natural decline.

Average daily entitlement production of liquids and gas  increased by 8% to 664 mboe per day in the first quarter of 2019 compared to 613 mboe per day in the first quarter of 2018. The increase was due to higher equity production, and lower effects from production sharing agreements (PSA) [4], partially offset by higher US royalties [4]. The net effects from PSA and US royalties were 177 mboe per day in the first quarter of 2019 compared to 186 mboe per day in the first quarter of 2018. 

Net operating income was USD 716 million in the first quarter of 2019 compared to USD 706 million in the first quarter of 2018. The minor increase was mainly due to increased liquids production and an impairment reversal, partially offset by lower liquids prices, increased operating and administrative expenses and depreciation expenses. 

 

In the first quarter of 2019, net operating income was positively impacted by an impairment reversal of USD 116 million and negatively impacted by an implementation effect of USD 81 million from a change of accounting policy for lifting imbalances. In the first quarter of 2018, net operating income was positively impacted by an implementation effect of USD 71 million from a change of accounting policy for lifting imbalances.

 

Total revenues and other income increased mainly due to increased liquids volumes.

 

Operating and administrative expenses increased mainly due to portfolio changes.

 

Depreciation, amortisation and net impairment losses decreased mainly due to an impairment reversal and higher proved reserves estimates, partially offset by investments and increased production.

 

Exploration expenses increased slightly, mainly due to higher drilling and field development costs, partially offset by a higher portion of exploration expenditures being capitalised this quarter.

  

Income statement under IFRS

Quarters

Change

(in USD million)

Q1 2019

Q4 2018

Q1 2018

Q1 on Q1

 

 

 

 

 

Total revenues and other income

2,810

3,877

2,523

11%

 

 

 

 

 

Purchases [net of inventory variation]

(39)

(33)

(5)

>100%

Operating and administrative expenses

(999)

(781)

(700)

43%

Depreciation, amortisation and net impairment losses

(902)

(1,342)

(962)

(6%)

Exploration expenses

(154)

(264)

(149)

3%

 

 

 

 

 

Net operating income

716

1,456

706

1%

 

 

 

MARKETING, MIDSTREAM & PROCESSING

 

First quarter 2019 review


Natural gas sales volumes amounted to 16.4 billion standard cubic meters (bcm) in the first quarter of 2019, up 0.9 bcm compared to the first quarter of 2018. Of the total gas sales in the first quarter of 2019, entitlement gas was 14.3 bcm, up 0.4 bcm from the first quarter of 2018. The increase was mainly due to an increase in US entitlement volumes and higher sales of third-party gas.

Liquids sales volumes amounted to 181.4 million barrels (mmbl) in the first quarter of 2019, down 36.7 mmbl compared to the first quarter of 2018. The decrease was mainly due to lower third-party crude oil volumes.

Average invoiced European natural gas sales price [8] was marginally lower in first quarter of 2019 compared to the first quarter of 2018. Average invoiced North American piped gas sales price [8] decreased by 10% in the same period mainly due to warmer than average weather in the period.

Net operating income was USD 1,184 million in the first quarter of 2019 compared to USD 673 million in the first quarter of 2018. The increase was mainly related to unrealised derivative gains and periodisation of inventory hedging effects totalling USD 706 million in the first quarter of 2019 compared to USD 184 million in the same period of 2018. Positive operational storage effects in the first quarter of 2019 of USD 130 million compared to USD 20 million in the first quarter of 2018 added to the increase. A one-off provision effect in the first quarter of 2019 negatively impacted net operating income.  

Purchases [net of inventory variation] decreased mainly due to decreased liquids volumes and lower prices for crude oil.

Operating and administrative expenses increased mainly due to increased transportation costs for liquids, and for gas in the US.

Depreciation, amortisation and net impairment remained at the same level as in the first quarter of 2018.

 

Income statement under IFRS

Quarters

Change

(in USD million)

Q1 2019

Q4 2018

Q1 2018

Q1 on Q1

 

 

 

 

 

Total revenues and other income

15,839

20,320

19,170

(17%)

 

 

 

 

 

Purchases [net of inventory variation] [6]

(13,468)

(17,817)

(17,365)

(22%)

Operating and administrative expenses

(1,095)

(1,150)

(1,042)

5%

Depreciation, amortisation and net impairment losses

(93)

(98)

(91)

2%

 

 

 

 

 

Net operating income

1,184

1,255

673

76%

 

 

 

CONDENSED INTERIM FINANCIAL STATEMENTS


First quarter 2019

CONSOLIDATED STATEMENT OF INCOME

 

 

Quarters

Full year

(unaudited, in USD million)

Note

Q1 2019

Q4 2018

Q1 2018

2018

 

 

 

 

 

 

Revenues

2

16,410

21,722

19,776

78,555

Net income/(loss) from equity accounted investments

 

64

136

101

291

Other income

 

8

580

7

746

 

 

 

 

 

 

Total revenues and other income

2

16,482

22,438

19,884

79,593

 

 

 

 

 

 

Purchases [net of inventory variation]

 

(6,656)

(9,821)

(9,794)

(38,516)

Operating expenses

 

(2,408)

(2,510)

(2,316)

(9,528)

Selling, general and administrative expenses

 

(231)

(190)

(198)

(758)

Depreciation, amortisation and net impairment losses

6

(2,188)

(2,729)

(2,368)

(9,249)

Exploration expenses

 

(268)

(442)

(249)

(1,405)

 

 

 

 

 

 

Net operating income

2

4,732

6,745

4,960

20,137

 

 

 

 

 

 

Net financial items

4

149

(179)

(420)

(1,263)

 

 

 

 

 

 

Income before tax

  

4,881

6,566

4,540

18,874

 

 

 

 

 

 

Income tax

5

(3,168)

(3,200)

(3,255)

(11,335)

 

 

 

 

 

 

Net income

 

1,712

3,367

1,285

7,538

 

 

 

 

 

 

Attributable to equity holders of the company

 

1,711

3,366

1,285

7,535

Attributable to non-controlling interests

 

1

1

0

3

 

 

 

 

 

 

Basic earnings per share (in USD)

 

0.51

1.01

0.39

2.27

Diluted earnings per share (in USD)

 

0.51

1.01

0.39

2.27

Weighted average number of ordinary shares outstanding (in millions)

 

3,331

3,329

3,316

3,326

 

 

 

 

 

 

 

  

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

Quarters

Full year

(unaudited, in USD million)

Q1 2019

Q4 2018

Q1 2018

2018

 

 

 

 

 

Net income

1,712

3,367

1,285

7,538

 

 

 

 

 

Actuarial gains/(losses) on defined benefit pension plans

120

(132)

(225)

(110)

Income tax effect on income and expenses recognised in OCI1)

(25)

26

57

22

Items that will not be reclassified to the Consolidated statement of income

94

(106)

(168)

(88)

 

 

 

 

 

Currency translation adjustments

324

(1,433)

1,220

(1,652)

Net gains/(losses) from available for sale financial assets

0

(0)

64

64

Share of OCI from equity accounted investments

2

6

(5)

(5)

Items that may be subsequently reclassified to the Consolidated statement of income

326

(1,426)

1,278

(1,593)

 

 

 

 

 

Other comprehensive income/(loss)

420

(1,533)

1,110

(1,681)

 

 

 

 

 

Total comprehensive income

2,132

1,834

2,396

5,857

 

 

 

 

 

Attributable to the equity holders of the company

2,131

1,833

2,395

5,855

Attributable to non-controlling interests

1

1

0

3

 

 

 

 

 

 

 

 

 

 

1) Other comprehensive income (OCI)

 

 

 

 

CONSOLIDATED BALANCE SHEET

 

 

At 31 March

At 31 December

At 31 March

(unaudited, in USD million)

Note

2019

2018

2018

 

 

 

 

 

ASSETS

 

 

 

 

Property, plant and equipment

6

70,901

65,262

66,052

Intangible assets

6

10,614

9,672

9,379

Equity accounted investments

 

2,801

2,863

2,640

Deferred tax assets

 

3,475

3,304

2,428

Pension assets

 

947

831

1,246

Derivative financial instruments

 

1,033

1,032

1,511

Financial investments

 

2,885

2,455

2,959

Prepayments and financial receivables

 

1,073

1,033

968

   

 

 

 

 

Total non-current assets

 

93,728

86,452

87,183

   

 

 

 

 

Inventories

 

2,686

2,144

2,832

Trade and other receivables

 

8,680

8,998

8,937

Derivative financial instruments

 

1,444

318

175

Financial investments

 

9,157

7,041

6,006

Cash and cash equivalents

 

6,618

7,556

8,932

   

 

 

 

 

Total current assets

 

28,586

26,056

26,881

   

 

 

 

 

Assets classified as held for sale

 

0

0

1,385

   

 

 

 

 

Total assets

 

122,313

112,508

115,449

   

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

Shareholders' equity

 

45,098

42,970

42,590

Non-controlling interests

 

19

19

26

   

 

 

 

 

Total equity

 

45,117

42,990

42,616

   

 

 

 

 

Finance debt

4, 8

26,398

23,264

24,607

Deferred tax liabilities

 

9,369

8,671

8,579

Pension liabilities

 

3,907

3,820

4,137

Provisions

7

17,131

15,952

15,456

Derivative financial instruments

 

1,136

1,207

757

   

 

 

 

 

Total non-current liabilities

 

57,941

52,914

53,536

   

 

 

 

 

Trade, other payables and provisions

 

9,172

8,369

9,814

Current tax payable

5

5,974

4,654

5,881

Finance debt

 

3,401

2,463

3,224

Dividends payable

 

0

766

(0)

Derivative financial instruments

 

708

352

378

   

 

 

 

 

Total current liabilities

 

19,255

16,605

19,297

   

 

 

 

 

Total liabilities

 

77,196

69,519

72,833

   

 

 

 

 

Total equity and liabilities

 

122,313

112,508

115,449

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(unaudited, in USD million)

Share capital

Additional paid-in capital

Retained earnings

Currency translation adjustments

OCI from equity accounted investments

Shareholders' equity

Non-controlling interests

Total equity

 

 

 

 

 

 

 

 

 

At 31 December 2017

1,180

7,933

34,342

(3,554)

(40)

39,861

24

39,885

Net income

 

 

1,285

 

 

1,285

0

1,285

Other comprehensive income/(loss)

 

 

(104)

1,220

(5)

1,110

 

1,110

Total comprehensive income

 

 

 

 

 

 

 

2,396

Dividends

5

335

(1)

 

 

339

 

339

Other equity transactions

 

(5)

(0)

 

 

(5)

1

(4)

 

 

 

 

 

 

 

 

 

At 31 March  2018

1,185

8,263

35,522

(2,334)

(45)

42,590

26

42,616

 

 

 

 

 

 

 

 

 

At 31 December 2018

1,185

8,247

38,790

(5,206)

(44)

42,970

19

42,990

Net income

 

 

1,711

 

 

1,711

1

1,712

Other comprehensive income/(loss)

 

 

94

324

2

420

 

420

Total comprehensive income

 

 

 

 

 

 

 

2,132

Dividends  

0

0

0

 

 

0

 

0

Other equity transactions

 

(4)

(0)

 

 

(4)

(1)

(5)

 

 

 

 

 

 

 

 

 

At 31 March  2019

1,185

8,243

40,595

(4,883)

(42)

45,098

19

45,117

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

Quarters

 

Full year

(unaudited, in USD million)

Note

Q1 2019

Q4 2018

Q1 2018

2018

 

 

 

 

 

 

Income before tax

 

4,881

6,566

4,540

18,874

 

 

 

 

 

 

Depreciation, amortisation and net impairment losses

6

2,188

2,730

2,368

9,249

Exploration expenditures written off

 

19

52

28

357

(Gains) losses on foreign currency transactions and balances

 

12

(68)

19

166

(Gains) losses on sales of assets and businesses

3

(8)

(543)

(3)

(648)

(Increase) decrease in other items related to operating activities

 

287

(624)

(117)

(526)

(Increase) decrease in net derivative financial instruments

 

(808)

(859)

389

409

Interest received

 

53

54

36

176

Interest paid

 

(169)

(124)

(131)

(441)

 

 

 

 

 

 

Cash flows provided by operating activities before taxes paid and working capital items

 

6,454

7,184

7,131

27,615

 

 

 

 

 

 

Taxes paid

 

(1,389)

(3,681)

(1,118)

(9,010)

 

 

 

 

 

 

(Increase) decrease in working capital

 

69

697

1,062

1,090

 

 

 

 

 

 

Cash flows provided by operating activities

 

5,134

4,200

7,075

19,694

 

 

 

 

 

 

Additions through business combinations2)

3

(438)

(0)

(1,561)

(3,557)

Capital expenditures and investments

 

(2,033)

(2,990)

(2,529)

(11,367)

(Increase) decrease in financial investments

 

(2,462)

1,345

2,578

1,358

(Increase) decrease in derivatives financial instruments

 

39

67

(40)

238

(Increase) decrease in other items interest bearing

 

12

264

6

343

Proceeds from sale of assets and businesses

3

0

620

2

1,773

 

 

 

 

 

 

Cash flows used in investing activities

 

(4,882)

(694)

(1,545)

(11,212)

 

 

 

 

 

 

New finance debt

 

0

(0)

0

998

Repayment of finance debt

 

(263)

(756)

(851)

(2,875)

Dividend paid

 

(769)

(760)

(402)

(2,672)

Net current finance debt and other

 

(129)

720

75

(476)

 

 

 

 

 

 

Cash flows provided by (used in) financing activities

 

(1,161)

(796)

(1,179)

(5,024)

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(908)

2,710

4,352

3,458

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(30)

(73)

184

(292)

Cash and cash equivalents at the beginning of the period (net of overdraft)

 

7,556

4,919

4,390

4,390

 

 

 

 

 

 

Cash and cash equivalents at the end of the period (net of overdraft)1)

 

6,618

7,556

8,925

7,556

 

 

 

 

 

 

 

 

 

 

 

 

1)      At 31 March 2019 and at 31 December 2018 cash and cash equivalents net overdraft were zero. At 31 March 2018 net overdraft were USD 7 million.

2)      Net after cash and cash equivalents acquired.

  

 

 

 

Notes to the Condensed interim financial statements

1 Organisation and basis of preparation


Organisation and principal activities

Equinor ASA, originally Den Norske Stats Oljeselskap AS and subsequently Statoil ASA, was founded in 1972 and is incorporated and domiciled in Norway. The address of its registered office is Forusbeen 50, N-4035 Stavanger, Norway.

The Equinor group’s (Equinor’s) business consists principally of the exploration, production, transportation, refining and marketing of petroleum and petroleum-derived products, and other forms of energy. Equinor ASA is listed on the Oslo Børs (Norway) and the New York Stock Exchange (USA).

All Equinor's oil and gas activities and net assets on the Norwegian continental shelf (NCS) are owned by Equinor Energy AS, a 100% owned operating subsidiary of Equinor ASA. Equinor Energy AS is co-obligor or guarantor of certain debt obligations of Equinor ASA.

Equinor's Condensed interim financial statements for the first quarter of 2019 were authorised for issue by the board of directors on
2 May 2019.

Basis of preparation

These Condensed interim financial statements are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The Condensed interim financial statements do not include all the information and disclosures required by International Financial Reporting Standards (IFRS) for a complete set of financial statements, and these Condensed interim financial statements should be read in conjunction with the Consolidated annual financial statements for 2018. IFRS as adopted by the EU differ in certain respects from IFRS as issued by the IASB, but the differences do not impact Equinor's financial statements for the periods presented. A description of the significant accounting policies applied in preparing these Condensed interim financial statements is included in Equinor`s Consolidated annual financial statements for 2018.

With effect as of 1 January 2019, Equinor made the following changes affecting the significant accounting policies:

·           Implementation of IFRS 16 Leases. Reference is made to note 8 Changes in accounting policies 2019 for further information about the standard, the policy choices made by Equinor, and the IFRS 16 implementation impact.

·           Change in accounting policy for recognising revenue from the production of oil and gas properties in which Equinor shares an interest with other companies. Instead of recognising revenue based on Equinor’s ownership in producing fields, Equinor now recognises revenue on the basis of volumes lifted and sold to customers during the period (the sales method). This policy change was made due to the discussion in the IFRS Interpretations Committee (IFRIC) on the topic “Sale of output by a joint operator (IFRS 11)”, which was concluded in March 2019. The impact of the return to the sales method on Equinor’s financial statements is not material.

There have been no other changes to the significant accounting policies in the first quarter of 2019 compared to the Consolidated annual financial statements for 2018.

The Condensed interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the dates and interim periods presented. Interim period results are not necessarily indicative of results of operations or cash flows for an annual period. Certain amounts in the comparable periods in note disclosure have been reclassified to conform to current period presentation. The subtotals and totals in some of the tables may not equal the sum of the amounts shown due to rounding.

The Condensed interim financial statements are unaudited.

Use of estimates

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis, considering current and expected future market conditions. A change in an accounting estimate is recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

 

2 Segments


Equinor’s operations are managed through the following business areas (operating segments): Development & Production Norway (DPN), Development & Production International (DPI), Development & Production Brazil (DPB), Marketing, Midstream & Processing (MMP), New Energy Solutions (NES), Technology, Projects & Drilling (TPD), Exploration (EXP) and Global Strategy & Business Development (GSB).

The reporting segments Exploration & Production Norway (E&P Norway) and MMP consist of the business areas DPN and MMP respectively. The operating segments DPI and DPB are aggregated into the reporting segment Exploration & Production International (E&P International). The aggregation has its basis in similar economic characteristics, such as similar long-term average gross margins, the assets’ long term and capital-intensive nature and exposure to volatile oil and gas commodity prices, the nature of products, service and production processes, the type and class of customers, the methods of distribution and regulatory environment. The operating segments NES, GSB, TPD, EXP and corporate staffs and support functions are aggregated into the reporting segment “Other” due to the immateriality of these areas. The majority of costs within the operating segments GSB, TPD and EXP are allocated to the E&P Norway, E&P International and MMP reporting segments.

The eliminations section includes the elimination of inter-segment sales and related unrealised profits, mainly from the sale of crude oil and products. Inter-segment revenues are based upon estimated market prices.

Segment data for the first quarter of 2019 and 2018 is presented below. The reported measure of segment profit is net operating income/(loss).  Deferred tax assets, pension assets and non-current financial assets are not allocated to the segments. The line item Additions to PP&E, intangibles and equity accounted investments excludes movements related to changes in asset retirement obligations.

The measurement basis for segments is IFRS as applied by the Group with exception of IFRS 16 Leases. All IFRS 16 Leases are presented within the Other segment. The lease costs for the period are allocated to the different segments based on underlying lease payments, with a corresponding credit in the Other segment. Lease costs allocated to licence partners are recognised as other revenue in the Other segment. Additions to Property, plant and equipment, Intangible assets and Equity accounted investments in the E&P and MMP segments include the period’s allocated lease costs related to activity being capitalised with a corresponding negative addition in the Other segment.



 

First quarter 2019

E&P Norway

E&P International

MMP

Other

Eliminations

Total

(in USD million)

 

 

 

 

 

 

 

Revenues third party, other revenue and other income

3

594

15,735

86

0

16,418

Revenues inter-segment

4,979

2,205

100

0

(7,284)

0

Net income/(loss) from equity accounted investments

6

11

5

42

0

64

 

 

 

 

 

 

 

Total revenues and other income

4,988

2,810

15,839

129

(7,284)

16,482

 

 

 

 

 

 

 

Purchases [net of inventory variation]

0

(39)

(13,468)

(0)

6,850

(6,656)

Operating, selling, general and administrative expenses

(736)

(999)

(1,095)

(1)

191

(2,639)

Depreciation, amortisation and net impairment losses

(1,019)

(902)

(93)

(174)

0

(2,188)

Exploration expenses

(114)

(154)

0

0

(0)

(268)

 

 

 

 

 

 

 

Net operating income/(loss)

3,119

716

1,184

(46)

(242)

4,732

 

 

 

 

 

 

 

Additions to PP&E, intangibles and equity accounted investments

1,223

1,221

487

467

0

3,398

 

 

 

 

 

 

 

Balance sheet information

 

 

 

 

 

 

Equity accounted investments

1,009

305

93

1,395

0

2,801

Non-current segment assets

32,218

39,333

5,347

4,617

0

81,515

Non-current assets, not allocated to segments 

 

 

 

 

 

9,411

 

 

 

 

 

 

 

Total non-current assets

 

 

 

 

 

93,728

 

First quarter 2018

E&P Norway

E&P International

MMP

Other

Eliminations

Total

(in USD million)

 

 

 

 

 

 

 

Revenues third party, other revenue and other income

154

471

19,142

16

0

19,783

Revenues inter-segment

5,573

2,044

22

0

(7,638)

0

Net income/(loss) from equity accounted investments

46

9

6

40

0

101

 

 

 

 

 

 

 

Total revenues and other income

5,773

2,523

19,170

56

(7,638)

19,884

 

 

 

 

 

 

 

Purchases [net of inventory variation]

0

(5)

(17,365)

0

7,576

(9,794)

Operating, selling, general and administrative expenses

(793)

(700)

(1,042)

(87)

108

(2,514)

Depreciation, amortisation and net impairment losses

(1,296)

(962)

(91)

(19)

0

(2,368)

Exploration expenses

(99)

(149)

0

0

0

(249)

 

 

 

 

 

 

 

Net operating income/(loss)

3,585

706

673

(49)

46

4,960

 

 

 

 

 

 

 

Additions to PP&E, intangibles and equity accounted investments

2,819

1,284

50

24

0

4,178

 

 

 

 

 

 

 

Balance sheet information

 

 

 

 

 

 

Equity accounted investments

1,174

232

127

1,107

0

2,640

Non-current segment assets

33,042

36,702

5,303

385

0

75,432

Non-current assets, not allocated to segments 

 

 

 

 

 

9,111

 

 

 

 

 

 

 

Total non-current assets

 

 

 

 

 

87,183

 

 

 

 

 

 

 

 

In the first quarter of 2019 Equinor recognised an impairment reversal of USD 116 million related to an asset in the E&P International segment (Europe and Asia) mainly as a result of increased reserves.

 

For further information regarding implementation of IFRS 16, see note 8 Changes in accounting policies 2019.

 

For information regarding acquisition of interests, see note 3 Acquisitions and disposals.

  

Revenues from contracts with customers by geographical areas

When attributing the line item Revenues third party, other revenue and other income to the country of the legal entity executing the sale for the first quarter of 2019, Norway constitutes 76% and the US constitutes 17% of such revenues.

  

 

Non-current assets by country

 

 

 

 

 

 

 

 

At 31 March

At 31 December

At 31 March

(in USD million)

2019

2018

2018

 

 

 

 

Norway

39,477

34,952

37,511

USA

19,872

19,409

19,312

Brazil

7,991

7,861

4,940

UK

5,406

4,588

4,553

Angola

1,870

1,874

2,594

Canada

1,621

1,546

1,645

Azerbaijan

1,476

1,452

1,461

Algeria

979

986

1,057

Other countries

5,625

5,128

4,999

 

 

 

 

Total non-current assets 1)

84,316

77,797

78,072

 

1)   Excluding deferred tax assets, pension assets, non-current financial assets and assets classified as held for sale.

  



 

Revenues from contracts with customers and other revenues

 

Quarters

Full Year

(in USD million)

Q1 2019

Q4 2018

Q1 2018

2018

 

 

 

 

 

Crude oil

7,610

9,767

10,731

40,948

Natural gas

3,766

4,079

3,843

14,070

Refined products

2,503

3,285

3,026

13,124

Natural gas liquids

1,492

1,801

1,487

7,167

Transportation

304

268

298

1,033

Other sales

132

594

124

903

 

 

 

 

 

Revenues from contracts with customers

15,807

19,794

19,510

77,246

 

 

 

 

 

Over/Under lift

 

(94)

216

137

Taxes paid in-kind

83

466

116

865

Physically settled commodity derivatives

(60)

130

82

488

Gain (loss) on commodity derivatives

513

1,418

(148)

(216)

Other revenues

67

9

0

36

Total other revenues

603

1,928

266

1,309

 

 

 

 

 

Revenues

16,410

21,722

19,776

78,555

 

 

 

 

 

 

Equinor changed its policy for the accounting of lifting imbalances on 1 January 2019, and consequently there will be no items reported in other revenue related to over/under lift as of this date. Based on materiality considerations, comparative periods have not been restated. Reference is made to Note 1 Organisation and basis of preparation for further information.

 

As of 1 January 2019, Equinor also increased the level of disclosure for elements included in revenues in the Consolidated statement of income and changed the way physical settlement of commodity derivatives is presented. The changes in fair value of such contracts prior to settlement are included in gain (loss) on commodity derivatives, while the resulting impact upon physical settlement is shown separately in physically settled commodity derivatives. Actual physical deliveries made by Equinor through such contracts are included in revenue from contracts with customers at contract price. Certain reclassifications within revenues have been made to the reported periods of 2018 to ensure comparability, but there is no change to the previously reported revenues in the Consolidated statement of income.

 

 

3 Acquisitions and disposals

 

Acquisition of interest in Rosebank project in UK

In the first quarter of 2019 Equinor closed an agreement to acquire Chevron’s 40% operated interest in the Rosebank project. A cash consideration of USD 71 million was paid on the closing date and is subject to final adjustment. The payment of the remaining consideration is subject to certain conditions being met and was reflected at fair value at the transaction date. The transaction represents an asset purchase. The value of the acquired exploration asset has been recognised in the Exploration & Production International (E&P International) segment.

 

Acquisition of 100% shares in Danske Commodities

In the first quarter of 2019 Equinor closed an agreement to acquire 100% of the shares in a Danish energy trading company Danske Commodities (DC) for a cash consideration of EUR 465 million (USD 535 million). In addition, Equinor recognised an insignificant liability for contingent consideration depending on DC’s performance measured at the fair value on the transaction date. The assets and liabilities related to the acquired business have been reflected according to the principles of IFRS 3 Business Combinations. The acquisition resulted in an increase of Equinor’s non-current assets of USD 13 million, current assets of USD 836 million, current liabilities of USD 749 million, and deferred tax liability of USD 2 million. The transaction has been accounted for in the Marketing, Midstream & Processing (MMP) segment and resulted in goodwill of USD 437 million reflecting the expected synergies on the acquisition and competence and access to the energy markets. At this stage, both the purchase price and the purchase price allocation are preliminary.

 

Acquisition of offshore wind lease in USA

In the first quarter of 2019 Equinor paid a winning bid of USD 135 million in an auction for the rights to develop a wind farm within an offshore wind lease OCS-A 0520, in an area offshore the Commonwealth of Massachusetts. Upon completion the acquisition has been recognised in the Other segment  as an increase in the intangible assets.

  

 

4 Financial items

 

Quarters

Full year

(in USD million)

Q1 2019

Q4 2018

Q1 2018

2018

 

 

 

 

 

Gains (losses) on net foreign exchange

(12)

68

(19)

(166)

Interest income and other financial items

211

39

(7)

283

Gains (losses) on derivative financial instruments

306

(12)

(164)

(341)

Interest and other finance expenses

(356)

(274)

(229)

(1,040)

 

 

 

 

 

Net financial items

149

(179)

(420)

(1,263)

 

The line item Interest income and other financial items includes expenses of USD 64 million in the first quarter of 2018 and the full year 2018 related to implementation of IFRS 9. See note 27 Changes in accounting policies in Equinor’s 2018 Annual Report and Form 20-F.

 

Equinor has a US Commercial paper programme available with a limit of USD 5 billion of which USD 382 million has been utilised
as of 31 March 2019.

  

 

5 Income taxes

 

Quarters

Full year

(in USD million)

Q1 2019

Q4 2018

Q1 2018

2018

 

 

 

 

 

Income before tax

4,881

6,566

4,540

18,874

Income tax expense

(3,168)

(3,200)

(3,255)

(11,335)

Effective tax rate

64.9%

48.7%

71.7%

60.1%

 

The tax rate for the first quarter of 2019 was primarily influenced by positive operating income in countries with unrecognised deferred tax assets.

 

 

 

The tax rate for the fourth quarter of 2018 and for the full year 2018 was primarily influenced by positive operating income in countries with unrecognised deferred tax assets, and tax exempted divestment of interest at the Norwegian continental shelf. The tax rate was also influenced by recognition of previously unrecognised deferred tax assets of USD 560 million in the fourth quarter of 2018 and
USD 910 million for the full year 2018 reflected in the E&P International segment.

 

The tax rate for the first quarter of 2018 was primarily influenced by tax effect of foreign exchange gains in entities that are taxable in other currencies than the functional currency. This was partially offset by positive operating income in countries with unrecognised deferred tax assets.

 

6 Property, plant and equipment and intangible assets

(in USD million)

Property, plant and equipment

Intangible assets

 

 

 

 

 

Balance at 31 December 2018

65,262

9,672

 

Implementation of IFRS 16 Leases1)

3,992

0

 

Opening balance per 1 January 2019

69,254

9,672

 

Additions through business combinations

1

447

 

Additions

3,338

551

 

Transfers

48

(48)

 

Disposals and reclassifications

(11)

(2)

 

Expensed exploration expenditures and impairment losses

-

(19)

 

Depreciation, amortisation and net impairment losses

(2,183)

(5)

 

Effect of foreign currency translation adjustments

454

18

 

 

 

 

 

Balance at 31 March  2019

70,901

10,614

 

 

 

 

 

1) See note 8 Changes in accounting policies 2019

 

 

 

 

The line depreciation, amortisation and net impairment losses excludes costs related to leases used in activities being capitalised in the reporting period. Gross depreciation of right of use (RoU) assets amounts to USD 264 million in the first quarter of 2019, of which depreciation costs of USD 98 million have been allocated to exploration and development activities being capitalised. The book value of RoU assets per 31 March 2019 amounts to USD 4,483 million, while additions to RoU assets amounts to USD 382 million in the first quarter of 2019.  

 

Impairments and impairment reversals

For information on impairment losses and reversals per reporting segment see note 2 Segments.

  

First quarter 2019

Property, plant and equipment

Intangible assets

Total

(in USD million)

 

 

 

 

Producing and development assets

(114)

0

(114)

Acquisition costs related to oil and gas prospects

-

3

3

 

 

 

 

Total net impairment losses (reversals) recognised

(114)

3

(112)

 

 

 

 

 

The impairment charges have been recognised in the Consolidated statement of income as depreciation, amortisation and net impairment losses and exploration expenses based on the impaired assets’ nature of property, plant and equipment and intangible assets, respectively.

 

Value in use estimates and discounted cash flows used to determine the recoverable amount of assets tested for impairment are based on internal forecasts on costs, production profiles and commodity prices.

 

 

7 Provisions, commitments, contingent liabilities and contingent assets

 

Equinor's estimated asset retirement obligations (ARO) have increased by USD 1,141 million, mainly due to a reduction in discount rates. Changes in ARO are reflected within property, plant and equipment and provisions in the Consolidated balance sheet.

 

During the normal course of its business Equinor is involved in legal and other proceedings, and several claims are unresolved and currently outstanding. The ultimate liability or asset, respectively, in respect of such litigation and claims cannot be determined now. Equinor has provided in its Condensed interim financial statements for probable liabilities related to litigation and claims based on the company's best judgement. Equinor does not expect that its financial position, results of operations or cash flows will be materially affected by the resolution of these legal proceedings.

  

 

8 Changes in accounting policies 2019

 

IFRS 16 Leases
IFRS 16 Leases was implemented by Equinor on 1 January 2019. The new accounting standard covers the recognition, measurement and presentation of leases and related disclosures in the financial statements and has replaced IAS 17 Leases. IFRS 16 requires that all leases, except for short term leases and leases of low value assets are reflected in the balance sheet of a lessee as a lease liability and a Right of use (RoU) asset. Equinor has implemented the standard according to the modified retrospective method with no restatement of comparable figures for 2018, which are still presented in accordance with IAS 17.

 

Reference is made to note 23 Implementation of IFRS 16 in Equinor’s annual financial statements 2018 for a detailed description of policy choices, transition alternatives and conclusions to judgmental accounting matters made upon the implementation of the standard. There have been no changes to these elements compared to the description in the 2018 annual financial statements, and the 2018 note on Implementation of IFRS 16 Leases therefore describes the accounting policy applied for balances and transactions in 2019.

 

The implementation of IFRS 16 on 1 January 2019 has increased the Consolidated balance sheet by adding lease liabilities of
USD 4.2 billion and right of use assets of USD 4.0 billion. The difference between the lease liabilities and the right of use assets being recognised relates mainly to the derecognition of former onerous contract provisions which are now presented as impairment of RoU assets, and the recognition of financial sublease receivables. Equinor’s equity has not been impacted from the implementation of IFRS 16. The following line items in the balance sheet have been impacted as result of the new accounting standard:

  

 

 

At 31 December

 

IFRS 16

At 1 January

(in USD million)

2018

 

Adjustments

2019

Property, plant and equipment

65,262

 

3,992

69,254

Prepayments and financial receivables

1,033

 

52

1,085

Total non-current assets

 

 

4,044

 

Trade and other receivables

8,998

 

45

9,043

Total current assets

 

 

45

 

 

 

 

 

 

Total assets

 

 

4,089

 

 

 

 

 

 

Non-current finance debt

23,264

 

3,159

26,423

Provisions

15,952

 

(105)

15,847

Total non-current liabilities

 

 

3,054

 

Trade and other payables and provisions

8,369

 

(34)

8,335

Current finance debt

2,463

 

1,069

3,532

Total current liabilities

 

 

1,035

 

 

 

 

 

 

Total liabilities

 

 

4,089

 

 

 

 

Note 23 Implementation of IFRS 16 Leases in the annual financial statements 2018 include a reconciliation between the lease liabilities recognised under IFRS 16 to the lease commitments reported under IAS 17 at year end 2018.

 

As of 1 January 2019 Equinor had incurred commitments of USD 2,116 million relating to lease contracts which had not yet commenced. These commitments will be recognised lease liabilities and RoU assets upon commencement of the lease, when Equinor obtains the right to control the use of an identified underlying asset. Of these commitments, USD 94 million commenced or were cancelled in the first quarter of 2019, USD 231 million are expected to commence later in 2019, USD 1,267 million are expected to commence in 2020 and the remainder are expected to commence between 2021 and 2024. The estimated commencement dates are subject to operational uncertainty. The duration of these lease contracts ranges from 2.5 to 8 years.

 

The right of use assets recognised in the opening balance per 1 January 2019 relate to leases of rigs (USD 1,212 million), vessels (USD 1,302 million), land and buildings (USD 1,537 million), storage facilities (USD 72 million) and other (USD 249 million). The figures include finance leases of USD 380 million which were previously recognised under IAS 17. Equinor mainly leases assets for operational purposes and not as a tool for financing.

 

The table below shows a maturity profile, based on undiscounted cash flows, for Equinor’s lease liabilities per 1 January 2019;

 

 

 

 

 

 

 

 

(in USD million)

2019

2020-2021

2022-2023

2024-2028

After 2028

Total

 

 

 

 

 

 

 

Lease payments

1,133

1,655

921

1,086

472

5,267

 

In the first quarter of 2019, Equinor recorded total lease payments of USD 296 million, of which USD 41 million were payment of interests and USD 255 million were down-payments of lease liabilities. The total lease liabilities per 31 March 2019 were USD 4,767 million, presented in the balance sheet within the lines Current and Non-current finance debt with USD 1,135 million and USD 3,632 million respectively. The weighted average discount rate used to calculate the lease liability in the opening balance under IFRS 16 per
1 January 2019 was 3.1%.

 

9 Subsequent events


On 2 May 2019, the board of directors resolved to declare a dividend for the first quarter of 2019 of USD 0.26 per share. The Equinor share will trade ex-dividend 19 August 2019 on Oslo Børs and for ADR holders on New York Stock Exchange. Record date will be
20 August 2019 and payment date will be around 28 August 2019. 

On 30 April 2019, Equinor and Faroe Petroleum have closed a number of transactions in the Norwegian Sea and the North Sea region of the Norwegian continental shelf (NCS) agreed in December 2018. These transactions represent a balanced swap with no cash consideration. The effective dates of the transactions are 1 January 2019. Upon closing, the assets and liabilities related to the acquired interests will be reflected according to the principles of IFRS 3 Business Combinations. The value of the acquired assets is expected in the range of USD 0.2 billion and will be recognised in the Exploration & Production Norway segment. At this stage, both the acquisition values and the purchase price allocation are preliminary.

 

 



 

 

 

Supplementary disclosures

 

Operational data

 

 

 

 

 

 

 

 

 

 

Quarters

Change

Operational data

Q1 2019

Q4 2018

Q1 2018

Q1 on Q1

 

 

 

 

 

Prices

 

 

 

 

Average Brent oil price (USD/bbl)

63.2

67.8

66.8

(5%)

E&P Norway average liquids price (USD/bbl)

57.0

59.8

61.2

(7%)

E&P International average liquids price (USD/bbl)

54.6

58.1

58.8

(7%)

Group average liquids price (USD/bbl) [1]

55.8

59.0

60.2

(7%)

Group average liquids price (NOK/bbl) [1]

479

497

472

1%

Transfer price natural gas (USD/mmbtu) [9]

5.57

6.40

5.48

2%

Average invoiced gas prices - Europe (USD/mmbtu) [8]

6.89

7.67

6.90

(0%)

Average invoiced gas prices - North America (USD/mmbtu) [8]

3.13

3.58

3.48

(10%)

Refining reference margin (USD/bbl) [2]

3.0

4.1

3.8

(22%)

 

 

 

 

 

Entitlement production (mboe per day)

 

 

 

 

E&P Norway entitlement liquids production

546

571

601

(9%)

E&P International entitlement liquids production

443

454

395

12%

Group entitlement liquids production

988

1,026

996

(1%)

E&P Norway entitlement gas production

792

745

780

2%

E&P International entitlement gas production

221

249

218

2%

Group entitlement gas production

1,013

995

998

2%

Total entitlement liquids and gas production [3]

2,002

2,020

1,993

0%

 

 

 

 

 

Equity production (mboe per day)

 

 

 

 

E&P Norway equity liquids production

546

571

601

(9%)

E&P International equity liquids production

567

580

538

5%

Group equity liquids production

1,112

1,152

1,139

(2%)

E&P Norway equity gas production

792

745

780

2%

E&P International equity gas production

274

273

261

5%

Group equity gas production

1,066

1,019

1,041

2%

Total equity liquids and gas production [4]

2,178

2,170

2,180

(0%)

 

 

 

 

 

MMP sales volumes

 

 

 

 

Crude oil sales volumes (mmbl)

181.4

211.8

218.1

(17%)

Natural gas sales Equinor entitlement (bcm)

14.3

13.8

13.8

3%

Natural gas sales third-party volumes (bcm)

2.2

1.6

1.7

28%

 

Exchange rates

 

 

 

 

 

 

 

 

 

 

Quarters

Change

Exchange rates

Q1 2019

Q4 2018

Q1 2018

Q1 on Q1

 

 

 

 

 

NOK/USD average daily exchange rate

0.1166

0.1186

0.1276

(9%)

NOK/USD period-end exchange rate

0.1163

0.1151

0.1286

(10%)

USD/NOK average daily exchange rate

8.5779

8.4298

7.8382

9%

USD/NOK period-end exchange rate

8.5972

8.6885

7.7773

11%

EUR/USD average daily exchange rate

1.1357

1.1413

1.2292

(8%)

EUR/USD period-end exchange rate

1.1235

1.1450

1.2398

(9%)

 

 

Health, safety and the environment

 

 

 

 

 

 

 

 

Twelve months average per

 

 

First quarter

First quarter

Q1 2019

Q1 2018

 

Health, safety and the environment

2019

2018

 

 

 

 

 

 

 

 

 

Injury/incident frequency

 

 

2.9

2.6

 

Total recordable injury frequency (TRIF)

2.8

2.2

0.5

0.5

 

Serious Incident Frequency (SIF)

0.6

0.5

 

 

 

Oil spills

 

 

216

249

 

Accidental oil spills (number of)

50

72

57

111

 

Accidental oil spills (cubic metres)

10

91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First quarter

Full year

Climate

 

 

 

2019

2018

 

 

 

 

 

 

Upstream CO2 intensity (kg CO2/boe) 1)

9

9

 

1)      For Equinor operated assets in E&P Norway and E&P International, the total amount of direct CO2 released to the atmosphere (kg), divided by total marketed hydrocarbon production (boe).

 

 

EXPLORATION EXPENSES

 

 

 

 

 

 

Exploration expenses

Quarters

Change

(in USD million)

Q1 2019

Q4 2018

Q1 2018

Q1 on Q1

 

 

 

 

 

E&P Norway exploration expenditures (activity)

121

233

131

(7%)

E&P International exploration expenditures (activity)

207

295

193

8%

 

 

 

 

 

Group exploration expenditures (activity)

328

528

323

2%

Expensed, previously capitalised exploration expenditures

16

16

17

(6%)

Capitalised share of current period's exploration activity

(79)

(138)

(103)

(23%)

Impairment (reversal of impairment)

3

36

11

(75%)

 

 

 

 

 

Exploration expenses IFRS

268

442

249

8%

 

 

 

FORWARD-LOOKING STATEMENTS


This report contains certain forward-looking statements that involve risks and uncertainties. In some cases, we use words such as "ambition", "continue", "could", "estimate", "expect", "believe", "focus", "likely", "may", "outlook", "plan", "strategy", "will", "guidance" and similar expressions to identify forward-looking statements. Forward-looking statements include all statements other than statements of historical fact, including, among others, statements regarding Equinor’s plans, intentions, aims and expectations with respect to Equinor’s start-up of projects through 2025, including Johan Sverdrup; intention to deliver on Equinor’s guidance from the Capital Markets Update; market outlook and future economic projections and assumptions; production growth through 2025 and production guidance for 2019; CAGR for the period 2019 – 2025; Equinor’s intention to mature its portfolio; estimates regarding exploration activity levels; ambition to keep unit of production cost in the top quartile of its peer group; equity production and expectations for 2019; planned maintenance activity and the effects thereof;  expected dividend payments and dividend subscription price; planned and announced acquisitions and divestments, including timing and impact thereof, including the transactions between Equinor and Faroe Petroleum in the Norwegian Sea and North Sea.

You should not place undue reliance on these forward- looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons.

These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including levels of industry product supply, demand and pricing; price and availability of alternative fuels; currency exchange rate and interest rate fluctuations; the political and economic policies of Norway and other oil-producing countries; EU developments; general economic conditions; political and social stability and economic growth in relevant areas of the world; global political events and actions, including war, political hostilities and terrorism; economic sanctions, security breaches; changes or uncertainty in or non-compliance with laws and governmental regulations; the timing of bringing new fields or wells on stream; an inability to exploit growth or investment opportunities; material differences from reserves estimates; unsuccessful drilling; an inability to find and develop reserves; ineffectiveness of crisis management systems; adverse changes in tax regimes; the development and use of new technology; geological or technical difficulties; operational problems; operator error; inadequate insurance coverage; the lack of necessary transportation infrastructure when a field is in a remote location and other transportation problems; the actions of competitors; the actions of field partners; the actions of governments (including the Norwegian state as majority shareholder); counterparty defaults; natural disasters and adverse weather conditions, climate change, and other changes to business conditions; an inability to attract and retain personnel; relevant governmental approvals; labour relations and industrial actions by workers and other factors discussed elsewhere in this report. Additional information, including information on factors that may affect Equinor’s business, is contained in Equinor’s Annual Report on Form 20-F for the year ended December 31, 2018, filed with the U.S. Securities and Exchange Commission (and section 2.11 Risk review – Risk factors thereof). Equinor’s 2018 Annual Report and Form 20-F is available at Equinor’s website www.equinor.com. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, we undertake no obligation to update any of these statements after the date of this report, whether to make them either conform to actual results or changes in our expectations or otherwise.

 

 

 

END NOTES

 

1.     The Group's average liquids price is a volume-weighted average of the segment prices of crude oil, condensate and natural gas liquids (NGL).

2.     The refining reference margin is a typical average gross margin of our two refineries, Mongstad and Kalundborg. The reference margin will differ from the actual margin, due to variations in type of crude and other feedstock, throughput, product yields, freight cost, inventory, etc.

3.     Liquids volumes include oil, condensate and NGL, exclusive of royalty oil.

4.     Equity volumes represent produced volumes under a Production Sharing Agreement (PSA) that correspond to Equinor's ownership share in a field. Entitlement volumes, on the other hand, represent Equinor's share of the volumes distributed to the partners in the field, which are subject to deductions for, among other things, royalty and the host government's share of profit oil. Under the terms of a PSA, the amount of profit oil deducted from equity volumes will normally increase with the cumulative return on investment to the partners and/or production from the licence. Consequently, the gap between entitlement and equity volumes will likely increase in times of high liquids prices. The distinction between equity and entitlement is relevant to most PSA regimes, whereas it is not applicable in most concessionary regimes such as those in Norway, the UK, the US, Canada and Brazil.

5.     Not applicable this quarter.

6.     Transactions with the Norwegian State. The Norwegian State, represented by the Ministry of Petroleum and Energy (MPE), is the majority shareholder of Equinor and it also holds major investments in other entities. This ownership structure means that Equinor participates in transactions with many parties that are under a common ownership structure and therefore meet the definition of a related party. Equinor purchases liquids and natural gas from the Norwegian State, represented by SDFI (the State's Direct Financial Interest). In addition, Equinor sell the State's natural gas production in its own name, but for the Norwegian State's account and risk as well as related expenditures refunded by the State. All transactions are considered priced on an arms-length basis.

7.     The production guidance reflects our estimates of proved reserves calculated in accordance with US Securities and Exchange Commission (SEC) guidelines and additional production from other reserves not included in proved reserves estimates. The growth percentage is based on historical production numbers, adjusted for portfolio measures.

8.     The Group's average invoiced gas prices include volumes sold by the MMP segment.

9.     The internal transfer price paid from MMP to E&P Norway.

  

 

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.

 

EQUINOR ASA

(Registrant)

 

Dated: 03 May, 2019

By: ___/s/ Lars Christian Bacher

Name: Lars Christian Bacher

Title:    Chief Financial Officer