In the first nine months of 2020, net
operating income was negatively
impacted mainly by net impairments
of USD 5,752 million and provisions
of USD 290 million.
In the first nine months of 2019, net
operating income was negatively
affected mainly by net impairments
of USD 2,678 million, provisions
of
USD 557 million and positively impacted
by net gain of sale of assets
of USD 999 million and changes
in the fair value of derivatives
and
inventory hedge contracts of USD
267 million.
Total revenues and
other income
were USD 34,073 million in the first
nine months of 2020 compared
to USD 49,189 million in the first
nine
months of 2019. The decrease was
mainly due to lower average prices
for liquids and gas.
Purchases
[6]
were USD 15,453 millio
n
in the first nine months of 2020 compared
to USD 22,928 million in
the first nine months of 2019.
The
decrease was mainly due to lower average
prices for liquids and gas.
Operating and administrative expenses
were
USD 7,382 million in
the first nine months of 2020, a decrease
of USD 681 million compared
to in the first nine months of 2019. The
decrease was mainly due to the NOK/USD
exchange rate development in addition
to lower royalties
and production fees driven by lower
volumes and prices. The
divestment of the Eagle
Ford asset in the E&P USA segment
in the fourth
quarter of 2019 and reduced Gassled
removal costs added to the decrease.
Higher transportation costs for
liquids in the MMP segment
partially offset the decrease.
Depreciation, amortisation and net
impairment losses
were USD 11,757
million in the first nine months
of 2020, an increase of USD 2,
718
million compared to the first nine months
of 2019.
The increase was mainly due to higher
net impairments mainly related to
reduced price
assumptions and negative reserve
updates
2
. Ramp-up of new fields especially
on the NCS and UKCS and
higher investments mainly in the
US added to the increase. The increase
was partially offset by higher
proved reserves estimates for
several fields, lower depreciation
basis
resulting from net impairments
in previous periods and the NOK/USD
exchange rate development.
Exploration expenses
increased by USD 540 million
to USD 1,914 million
in the first nine months of 2020,
primarily due to net impairment
of
assets, higher portion of exploration
expenditure capitalised in earlier
years being expensed this period
and higher drilling costs. A higher
portion of exploration expenses
being capitalised and lower seismic
costs and other costs
compared to the first nine months
of 2019 partially
offset the increase. For more information,
see the table titled Exploration
expenses in the Supplementary
disclosures.
Net financial items
amounted to negative
USD 426
million in the first nine
months of 2020, compared
to positive USD 489
million in
the first nine months
of 2019.
The decrease of USD 914 million
was mainly due to a gain
of USD 421 million on derivatives
related to
a long-term debt
portfolio in the first nine
months of 2020 compared
to a gain of USD 781 million
in the first nine months of
2019.
A
loss of USD 156 million
on net foreign exchange in
the first nine months of 2020
compared to a gain of USD 201
million in the first
nine months of 2019
in addition to lower gain
of USD 375 million
on Interest income and
other financial items in the
first nine months
of 2020 compared to
a gain of USD 535 million
in the first nine months of
2019, added to the decrease.
Income tax
was USD negative 221
million in the first nine months
of 2020 and the effective
tax rate was negative
7.7%. Income tax in
the first nine months
of 2019 was USD 6,191
million and the effective
tax rate was 74,8%. For
more information, see
note 5 Income
tax to the Condensed
interim financial statements.
Net income
in the first nine
months of 2020 was negative
USD 3,080 million compared
to positive USD 2,081
million in the first nine
months of 2019. The
decrease was mainly
due to the negative changes
in net operating income
as discussed above in addition
to
negative changes in
net financial items, partially
offset lower income
tax.
Cash flows provided by operating
activities
decreased by USD 3,932 million
compared to the first nine months
of 2019. The decrease was
mainly due to lower liquids and gas
prices and a change in working
capital, partially offset by
decreased tax payments
and increased cash
flow from derivatives.
Cash flows used in investing
activities
increased by USD 920 million
compared to the first nine
months of 2019. The increase
was mainly
due to increased financial investments
and reduced proceeds from sale
of assets, partially offset
by lower cash flow used for
business
combinations and capital expenditures.
Cash flows provided by financing
activities
increased by USD 8,107 million
compared to the first nine months
of 2019. The increase was
mainly due to bond issues in the seco
nd quarter of 2020, increased short
-term debt and decreased dividend
paid, partially offset by
increased
payments related to the share buy-
back program and increased repayment
of finance debt.
Total cash flows
increased by USD 3,255 million
compared to the first
nine months of 2019.
Free cash flow
[5] for the first nine months
of 2020 was negative USD
1,277 million including USD 332
million received from the Lundin
divestment included in the line item
(increase)/decrease in financial
investment in the cash flow statement,
compared to USD 338 million
in the
7
For more information, see note 6
Property, plant
and equiptment and intangible assets
to the Condensed interim financial
statements.