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
06 February, 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 contains a report of the fourth quarter 2018 results of Equinor ASA.
Equinor reports adjusted
earnings of USD 4.4 billion and USD 1.5 billion after tax in the fourth quarter
of 2018. IFRS net operating income was USD 6.7 billion and the IFRS net income
was
USD 3.4 billion.
The fourth quarter and full year were characterised by:
· Solid results and strong cash flow. Net debt ratio reduced to 22.2%
· Strong operational performance. Record high fourth quarter and full year production
· Continued growth in return on average capital employed to 12%
· The reserve replacement ratio (RRR) was all time high at 213%
· Step-up in quarterly dividend by 13% to USD 0.26 per share, subject to approval by the annual general meeting
“Strong operational performance and high production gave solid results and cash flow in a quarter with significant market volatility. We delivered growing returns for the full year and expect continued earnings growth. Following strong improvements in recent years, the board proposes an increase in quarterly dividend of 13% to USD 0.26 per share,” says Eldar Sætre, President and CEO of Equinor ASA.
“Our cash flow generation was strong across the business. At an overage oil price of 71 dollars per barrel, we generated an organic free cash flow well above 6 billion dollars for the full year. We have also done several value-enhancing transactions, strengthened our financial position and reduced our net debt ratio from 29 to 22.2 percent,” says Sætre.
Adjusted earnings [5] were USD 4.4 billion in the fourth quarter, up from USD 4 billion in the same period in 2017. Adjusted earnings after tax [5] were USD 1.5 billion, up from USD 1.3 billion in the same period last year. High production at higher prices contributed to the increase. Due to sales pricing mechanisms in the market, the significant fall in oil prices led to a negative one-off effect with a higher than normal differential between realised liquids prices and Brent Blend average. In addition, higher exploration activity and lower refinery and products trading margins impacted adjusted earnings negatively. For the full year, adjusted earnings were USD 18 billion, up 42 percent from USD 12.6 billion in 2017.
IFRS net operating income was USD 6.7 billion in the fourth quarter compared to USD 5.2 billion in the same period of 2017. IFRS net income was USD 3.4 billion, up from USD 2.6 billion in the fourth quarter of 2017. For the full year, IFRS net income was USD 7.5 billion, up from USD 4.6 billion in 2017.
“In 2018 we sanctioned seven new projects, which will deliver more than 1 billion barrels of resources to Equinor at an average break-even price of 14 dollars and very low CO2 emissions. In the quarter, we started production at Aasta Hansteen, Oseberg Vestflanken and Big Foot, and at the Apodi solar plant in Brazil. We also had the winning bid in an offshore wind lease round offshore Massachusetts in the US," says Sætre.
Equinor delivered total equity production of 2,170 mboe per day in the fourth quarter, an increase from 2,134 mboe per day in the same period in 2017. The increase was mainly due to portfolio changes and new wells especially in the US onshore. New fields coming on stream added to the increase. Expected natural decline in addition to reduced gas off-take partially offset the increase. Equinor delivered all-time high production in 2018 with an underlying production growth of more than 2% [7].
As of year-end 2018, Equinor had completed 24 exploration wells with nine commercial discoveries. Adjusted exploration expenses [5] in the quarter were USD 417 million, up from USD 274 million in the same quarter of 2017, mainly due to higher seismic and drilling activity.
The reserve replacement ratio (RRR) reached an all-time high of 213% in 2018, mainly driven by sanctioning of new fields, positive revisions and acquisitions. The reserves to production ratio (R/P) increased from 7.6 to 8.7 years.
Cash flows provided by operating activities before tax amounted to USD 27.6 billion in 2018 compared to USD 21.0 billion in 2017. Organic capital expenditure [5] was USD 9.9 billion for the full year of 2018. At year-end, net debt to capital employed [5] was reduced to 22.2%.
The board of directors proposes to the annual general meeting to increase the dividend by 13% to USD 0.26 per share for the fourth quarter.
Equinor fourth quarter 2018 2
The twelve-month average Serious Incident Frequency (SIF) was 0.5 for 2018, compared to 0.6 in 2017.
Capital markets update
Today, Equinor presents its update to the capital markets, focusing on three key deliveries:
· Growing cash flow and returns – capacity to generate around USD 14 billion in free cash flow [5] from 2019 to 2021, and more than 14% return on average capital employed (ROACE) [5] in 2021 (1) . Equinor can be organic free cash flow positive below USD 50 per barrel from 2019 to 2021
· Investing in a highly competitive portfolio of projects, expected to start production by 2025 and deliver 6 billion barrels to Equinor with low emissions and an average break-even oil price around USD 30 per barrel
· Delivering continued profitable growth at the Norwegian continental shelf, targeting international opportunities where we increasingly can leverage our industrial strength as an operator, and building a profitable core area in Brazil. Equinor expects to deliver around 3 percent compound annual production growth from 2019 to 2025 [7]
“Equinor is already delivering industry leading returns, and we expect to increase returns and cash flow even further going forward. We delivered record high production in 2018, and we are well positioned for profitable growth in the coming years. Internationally we are increasingly taking the role as operator, and we are strengthening Brazil as a core area for Equinor. On the NCS we expect to deliver at a record high production level in 2025," says Sætre.
“We have a strong and highly profitable portfolio of projects coming on stream towards 2025. In 2019 we will start production from Johan Sverdrup, which is expected to deliver a total production close to 300,000 barrels per day to Equinor at plateau, with a break-even price below 20 dollars per barrel,” says Sætre.
“We have over the past few years significantly improved our project portfolio and fundamentally strengthened our competitive position, creating a stronger and more resilient company. We continue to develop a culture of consistent capital discipline and continuous improvement. Digitalisation and innovation will support further enhanced safety, increased value creation and reduced emissions,” says Sætre.
Equinor’s unit production cost is industry leading around five dollars per barrel. The company is aiming to sustain a unit production cost at around 2017 level in 2020 (2) . Equinor has reduced the average break-even price of its non-sanctioned portfolio to below 40 USD per barrel, and increased the net present value of this portfolio by more than USD 7 billion since 2017.
Equinor is already an industry leader on carbon efficiency, and the portfolio of projects that will come on stream towards 2025 has 30% lower CO2-emissions per barrel than the current producing portfolio. Equinor continues to develop as a broad energy company, and is gradually building a profitable portfolio also within renewable energy.
Finally, Equinor announces its updated outlook:
· Equinor expects organic capex [5] of around USD 11 billion in 2019
· Equinor expects 2019 production to be around the same level as 2018, and to deliver an average annual production growth of around 3% from 2019 to 2025
· Equinor expects exploration activity of around USD 1.7 billion in 2019
Quarters |
Change |
|
|
Full year |
|
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
(in USD million, unless stated otherwise) |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
6,745 |
4,597 |
5,182 |
30% |
|
Net operating income |
20,137 |
13,771 |
46% |
4,387 |
4,843 |
3,956 |
11% |
|
Adjusted earnings [5] |
17,959 |
12,638 |
42% |
3,367 |
1,666 |
2,575 |
31% |
|
Net income |
7,538 |
4,598 |
64% |
1,537 |
1,988 |
1,307 |
18% |
|
Adjusted earnings after tax [5] |
6,693 |
4,528 |
48% |
2,170 |
2,066 |
2,134 |
2% |
|
Total equity liquids and gas production (mboe per day) [4] |
2,111 |
2,080 |
1% |
59.0 |
67.6 |
56.0 |
5% |
|
Group average liquids price (USD/bbl) [1] |
63.1 |
49.1 |
29% |
(1) Assuming USD 70 per barrel, real, including announced transactions, excluding new accounting standards and changes in future tax assets
(2) USD per boe Equinor equity production, real, assuming fixed currency
Equinor fourth quarter 2018 3
Fourth quarter 2018
Total equity liquids and gas production [4] was 2,170 mboe per day in the fourth quarter of 2018, up around 2% compared to 2,134 mboe per day in the fourth quarter of 2017 mainly due to portfolio changes and new wells especially in the US onshore business. New fields coming on stream added to the increase. Expected natural decline and lower flexible gas off-take partially offset the increase.
Total entitlement liquids and gas production [3] was up 3% to 2,020 mboe per day in the fourth quarter of 2018 compared to 1,962 mboe per day in the fourth quarter of 2017. The increase was due to the same elements as described above and lower effects from production sharing agreements (PSA) [4] partially offset by higher US royalties [4]. The effects from PSA and US royalties were 150 mboe per day in total in the fourth quarter of 2018 compared to 172 mboe per day in the fourth quarter of 2017.
Quarters |
Change |
|
Condensed income statement under IFRS |
Full year |
|
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
(unaudited, in USD million) |
2018 |
2017 |
Change |
22,438 |
19,136 |
17,114 |
31% |
|
Total revenues and other income |
79,593 |
61,187 |
30% |
|
|
|
|
|
|
|
|
|
(9,821) |
(9,486) |
(8,414) |
17% |
|
Purchases [net of inventory variation] |
(38,516) |
(28,212) |
37% |
(2,701) |
(2,493) |
(2,433) |
11% |
|
Operating and administrative expenses |
(10,286) |
(9,501) |
8% |
(2,729) |
(2,321) |
(1,292) |
>100% |
|
Depreciation, amortisation and net impairment losses |
(9,249) |
(8,644) |
7% |
(442) |
(239) |
207 |
N/A |
|
Exploration expenses |
(1,405) |
(1,059) |
33% |
6,745 |
4,597 |
5,182 |
30% |
|
Net operating income |
20,137 |
13,771 |
46% |
3,367 |
1,666 |
2,575 |
31% |
|
Net income |
7,538 |
4,598 |
64% |
|
|
|
|
|
|
|
|
|
Net operating income was USD 6,745 million in the fourth quarter of 2018, compared to USD 5,182 million in the fourth quarter of 2017. The increase was primarily due to higher market prices for both liquids and particularly gas while market volatility and sales pricing mechanisms lead to lower than expected realised liquids prices compared to Brent Blend average. The fourth quarter was also positively impacted by changes in fair value of derivatives and inventory hedge effects in addition to a net gain on sale of assets, and a dividend in excess of book value related to an equity accounted investment. The increase was partially offset by increased depreciation expenses mainly due to higher investments, higher production and net impairment reversals in previous periods, in addition to increased exploration expenses due to higher drilling activity.
In the fourth quarter of 2018, net operating income was positively impacted by changes in unrealised fair value of derivatives and inventory hedge contracts of USD 1,192 million, the net effect of a reduction in provision of USD 682 million related to the Agbami redetermination process in Nigeria and a net gain on sale of assets of USD 546 million.
In the fourth quarter of 2017, net operating income was positively impacted by net impairment reversals of USD 1,647 million, partially offset by negative changes in the fair value of derivatives and inventory hedge effects of USD 264 million.
Equinor fourth quarter 2018 4
Quarters |
Change |
|
Adjusted earnings |
Full year |
|
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
(in USD million) |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
19,874 |
19,481 |
17,455 |
14% |
|
Adjusted total revenues and other income |
77,451 |
60,782 |
27% |
(9,784) |
(9,516) |
(8,386) |
17% |
|
Adjusted purchases [6] |
(38,486) |
(28,247) |
36% |
(2,705) |
(2,471) |
(2,407) |
12% |
|
Adjusted operating and administrative expenses |
(10,172) |
(9,083) |
12% |
(2,582) |
(2,410) |
(2,433) |
6% |
|
Adjusted depreciation expenses |
(9,706) |
(9,699) |
0% |
(417) |
(239) |
(274) |
52% |
|
Adjusted exploration expenses |
(1,128) |
(1,115) |
1% |
4,387 |
4,843 |
3,956 |
11% |
|
Adjusted earnings [5] |
17,959 |
12,638 |
42% |
1,537 |
1,988 |
1,307 |
18% |
|
Adjusted earnings after tax [5] |
6,693 |
4,528 |
48% |
Adjusted operating and administrative expenses were USD 2,705 million in the fourth quarter of 2018, an increase of USD 298 million compared to the fourth quarter of 2017. The increase was mainly driven by higher operating costs due to acquired fields, increased transportation costs and higher operation and maintenance activity, partially offset by the NOK/USD exchange rate development.
Adjusted depreciation expenses were USD 2,582 million in the fourth quarter of 2018, compared to USD 2,433 million in the fourth quarter of 2017. The 6% increase was mainly related to higher investments and increased production in addition to effects from net impairment reversals in previous periods and portfolio changes. The increase was partially offset by higher proved reserve estimates on several fields.
Adjusted exploration expenses were USD 417 million in the fourth quarter of 2018, an increase of USD 143 million compared to the fourth quarter of 2017, mainly due to higher drilling costs and higher activity for both drilling and seismic. The increase was partially offset by a higher portion of exploration expenditure being capitalised this quarter.
After total adjustments (3) of net USD 2,358 million to net operating income, Adjusted earnings [5] were USD 4,387 million in the fourth quarter of 2018, up from USD 3,956 million in the fourth quarter of 2017.
Adjusted earnings after tax [5] were USD 1,537 million in the fourth quarter of 2018, which reflects an effective tax rate on adjusted earnings of 65.0%, compared to 67.0% in the fourth quarter of 2017. The decrease in the effective tax rate was mainly due to increased adjusted earnings in the fourth quarter of 2018 in entities with lower than average tax rates, and in entities without recognised taxes.
Cash flows provided by operating activities increased by USD 2,480 million compared to the fourth quarter of 2017. The increase was mainly due to increased cash flow from derivatives, higher liquids and gas prices and a change in working capital, partially offset by increased tax payments.
Cash flows used in investing activities increased by USD 493 million compared to the fourth quarter of 2017. The increase was mainly due to increased financial investments, partially offset by increased proceeds from the sale of assets and decreased capital expenditures.
Cash flows used in financing activities decreased by USD 2,623 million compared to the fourth quarter of 2017. The decrease was mainly due to reduced repayment of finance debt, partially offset by increased dividend paid.
Total cash flows increased by USD 4,610 million compared to the fourth quarter of 2017.
Free cash flow [5] in the fourth quarter of 2018 was USD 637 million, an increase of USD 1,011 million compared to the fourth quarter of 2017. The increase was mainly due to higher liquids and gas prices, increased proceeds from the sale of assets and decreased capital expenditures, partially offset by increased tax payments and dividends paid.
(3) For adjustments to net operating income, see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Equinor fourth quarter 2018 5
Equinor fourth quarter 2018 6
Full year 2018
Net operating income was USD 20,137 million in 2018 compared
to USD 13,771 million in 2017. The 46% increase was primarily driven by higher
liquids and gas prices and higher volumes. The increase was partially offset by
lower impairment reversals compared to 2017, increased operating and
administrative expenses due to higher operation and maintenance activity,
increased depreciation expenses due to higher investments and production, and increased
exploration expenses due to higher drilling activity.
In addition to the positive effect from a net gain on sale of assets of USD 654 million and the effect of a reduction in provision of USD 564 million, net operating income was positively impacted by changes in fair value of derivatives and inventory hedge contracts of USD 375 million, net impairment reversals of USD 315 million, and an implementation effect of USD 287 million related to a change in accounting policy for lifting imbalances. Net operating income was negatively impacted by operational storage effects of USD 132 million in 2018.
In 2017, net operating income was positively impacted by net impairment reversals of USD 1,137 million, a reversal of provisions related to our operations in Angola of USD 754 million and positive changes in the fair value of derivatives and inventory hedge contracts of USD 240 million, and negatively impacted by net losses on the sale of assets of USD 372 million.
Adjusted operating and administrative expenses were USD 10,172 million in 2018, an increase of USD 1,089 million compared to 2017. The increase was primarily due to higher operation and maintenance activity, acquired fields and increased transportation costs primarily driven by volume growth.
Adjusted depreciation expenses remained at the same level as in 2017 and were USD 9,706 million in 2018. Higher proved reserves estimate on several fields decreased the depreciation costs, offset by higher investments, effects from net impairment reversals in previous periods and increased production in the E&P International segment.
Adjusted exploration expenses increased by USD 13 million to USD 1,128 million in 2018, primarily due to higher drilling costs because of more expensive wells being drilled offset by a higher portion of exploration expenses being capitalised compared to 2017.
After total adjustments (4) of USD 2,178 million to net operating income, Adjusted earnings [5] were USD 17,959 million in 2018, up 42% from 2017 when adjusted earnings were USD 12,638 million.
Adjusted earnings after tax [5] were USD 6,693 million in 2018, compared to USD 4,528 million in 2017. The effective tax rate on adjusted earnings was 62.7%, compared to an effective tax rate of 64.2% for 2017. The decrease in the effective tax rate was mainly due to increased adjusted earnings in 2018 in entities without recognised taxes, partially offset by a reversal of provisions related to our operations in Angola in 2017.
Based on adjusted earnings after tax and average capital employed, calculated return on average capital employed (ROACE) [5] was 12.0% for the 12-month period ended 31 December 2018 and 8.2% for the 12-month period ended 31 December 2017.
Organic capital expenditures [5] amounted to USD 9.9 billion for the year ended 2018, compared to the original guidance for 2018 of USD 11 billion. Total capital expenditures were USD 15.2 billion in 2018.
Proved reserves at the end of 2018 were 6.175 billion boe, a net increase of 808 million boe compared to 5.367 billion boe at the end of 2017. The increase was mainly due to extensions and discoveries from sanctioning of new field development projects, mainly from the Troll phase 3 and the Johan Sverdrup phase 2 developments. Positive reserves revisions mainly due to continued drilling and improved oil recovery (IOR) efforts, higher prices and improved production performance, in addition to the acquisition of the Roncador field in Brazil and the increased ownership share in the Martin Linge field in Norway, contributed to the increase. The increase in reserves was partially offset by the 2018 production.
The reserve replacement ratio (RRR) was 213% in 2018 compared to 150% in 2017. The RRR measures the proved reserves added to the reserve base and includes the effects of sales and purchases, relative to the amount of oil and gas produced. The average three-year replacement ratio (including the effects of sales and purchases), was 153% at the end of 2018 compared to 99% at the end of 2017. The organic reserves replacement ratio, excluding sales and purchases was 189% compared to 148% in 2017. The organic average three-year replacement ratio, was 144% at the end of 2018.
All numbers are including equity accounted entities.
Cash flows provided by operating activities increased by USD 4,892 million compared to the full year 2017. The increase was mainly due to higher liquids and gas prices and a change in working capital, partially offset by increased tax payments.
(4) For adjustments to net operating income, see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Equinor fourth quarter 2018 7
Cash flows used in investing activities increased by USD 1,095 million compared to the full year 2017. The increase was mainly due to increased additions through business combinations and increased capital expenditures, partially offset by increased proceeds from the sale of assets, reduced financial investments and increased cash flow from derivatives.
Cash flows used in financing activities decreased by USD 798 million compared to the full year 2017. The decrease was mainly due to reduced repayment of finance debt and a bond issue, partially offset by increased dividends paid and increased collateral payments related to derivatives.
Total cash flows increased by USD 4,595 million compared to the full year 2017.
Free cash flow [5] for the full year of 2018 was USD 3,125 million compared to USD 3,458 million in the full year 2017. The decrease was mainly due to additions through business combinations, increased tax payments, increased capital expenditures and dividend paid, offset by higher liquids and gas prices and increased proceeds from the sale of assets. Excluding cash used in acquisitions, capital leases, other investments with significant different cash flow pattern, and proceeds from sale of assets; on an organic basis, free cash flow was more than USD 6 billion for the full year 2018.
· Organic capital expenditures [5] for 2019 are estimated at around USD 11 billion
· 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 quarterly production by approximately 15 mboe per day in the first 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.
Equinor fourth quarter 2018 8
Fourth quarter 2018 review
Average
daily production of liquids and gas decreased by
4% to 1,317 mboe per day in the fourth quarter of 2018, compared
to
1,376 mboe per day in the fourth quarter of 2017. The
decrease was mainly due to expected natural decline and lower flexible gas
off-take, partially offset by positive contributions from new wells and new
fields.
Net operating income was USD 3,736 million in the fourth quarter of 2018 compared to USD 3,211 million in the fourth quarter of 2017. The increase was mainly due to a higher gas transfer price. High market volatility and sales pricing mechanisms lead to lower than expected realised liquid price compared to Brent Blend average. In the fourth quarter of 2018, a gain from the sale of exploration assets positively impacted net operating income by USD 490 million. In the fourth quarter of 2017, reversals of impairment of USD 268 million positively impacted net operating income, partially offset by an underlift effect of USD 69 million.
Adjusted operating and administrative expenses increased mainly due to a change in the estimate for Gassled removal cost and project ramp-up, partially offset by the NOK/USD exchange rate development. Adjusted depreciation expenses increased mainly due to effects from impairment reversals in previous periods and increased field specific investment levels, partially offset by production with no depreciation effect and increased proved reserves on several fields. Adjusted exploration expenses increased mainly due to higher drilling activity and more wells being expensed this quarter.
After total adjustments of USD 504 million, Adjusted earnings [5] were USD 3,232 million in the fourth quarter of 2018, increased by 8% from USD 3,004 million in the fourth quarter of 2017.
Quarters |
Change |
|
Adjusted earnings |
Full year |
|
||||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
(in USD million) |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
|
|
5,529 |
5,465 |
5,189 |
7% |
|
Adjusted total revenues and other income |
21,709 |
17,676 |
23% |
|
|
|
|
|
|
|
|
|
|
|
(849) |
(781) |
(826) |
3% |
|
Adjusted operating and administrative expenses |
(3,266) |
(2,943) |
11% |
|
(1,272) |
(1,196) |
(1,245) |
2% |
|
Adjusted depreciation expenses |
(4,974) |
(4,779) |
4% |
|
(177) |
(94) |
(114) |
56% |
|
Adjusted exploration expenses |
(424) |
(379) |
12% |
|
|
|
|
|
|
|
|
|
|
|
3,232 |
3,393 |
3,004 |
8% |
|
Adjusted earnings [5] |
13,047 |
9,575 |
36% |
|
|
|
|
|
|
|
|
|
|
|
For comparable IFRS figures, see note 2 Segments to the Condensed interim financial statements. For adjustments to net operating income, see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures. |
|||||||||
Net operating income for Exploration & Production Norway was USD 14,406 million in 2018 compared to USD 10,485 million in 2017. The increase was primarily driven by higher liquids prices and gas transfer price, partially offset by reduced volumes.
In 2018, net operating income was positively impacted by net impairment reversals of USD 597 million, a gain from the sale of exploration assets of USD 490 million and the implementation effect of USD 216 million related to a change in accounting policy for lifting imbalances. In 2017, net impairment reversals of USD 905 million positively impacted net operating income.
Adjusted total revenues and other income increased by 23% compared to 2017, mainly due to higher liquids prices and gas transfer price, partially offset by reduced volume. Adjusted operating and administrative expenses increased mainly due to increased transportation costs and new fields coming on stream. Adjusted depreciation expenses increased mainly due to new fields coming on stream, increased field specific investment level and effects from impairment reversals, partially offset by changes in reserves. Adjusted exploration expenses increased mainly due to higher drilling costs because of more expensive wells being drilled, partially offset by a higher portion of exploration expenditure being capitalised in 2018.
After total adjustments of USD 1,359 million to net operating income, Adjusted earnings [5] were USD 13,047 million in 2018, up 36% from 2017 when adjusted earnings were USD 9,575 million.
Equinor fourth quarter 2018 9
Fourth quarter 2018 review
Average daily equity production of liquids and gas increased by 13% to 854 mboe per day in the fourth quarter of 2018 compared to 757 mboe per day in the fourth quarter of 2017. The increase was primarily driven by new fields in Brazil and 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 20% to 704 mboe per day in the fourth quarter of 2018 compared to 585 mboe per day in the fourth quarter of 2017. 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 effects from PSA and US royalties were 150 mboe per day in the fourth quarter of 2018 compared to 172 mboe per day in the fourth quarter of 2017.
Net operating income was USD 1,456 million in the fourth quarter of 2018 compared to USD 1,754 million in the fourth quarter of 2017. The decrease was mainly due to a net reversal of impairments of USD 1,331 million in the fourth quarter of 2017, and due to increased operating, administrative and depreciation expenses in the fourth quarter of 2018. This was partially offset by higher realised liquids and gas prices combined with higher entitlement production, and the net effect of a reduction in provisions related to a redetermination process in Nigeria of USD 682 million in the fourth quarter of 2018.
Adjusted operating and administrative expenses increased due to acquired fields, higher operation and maintenance activity, and increased transportation costs driven primarily by volume growth. Adjusted depreciation increased mainly due to higher production, partially offset by higher reserves estimates. Adjusted exploration expenses increased mainly due to higher drilling costs, seismic and field development activity, partially offset by a higher portion of exploration expenses being capitalised.
After total negative adjustments of USD 683 million to net operating income, Adjusted earnings [5] were USD 774 million in the fourth quarter of 2018, up from USD 438 million in the fourth quarter of 2017.
Quarters |
Change |
|
Adjusted earnings |
Full year |
|
||||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
(in USD million) |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
|
|
3,029 |
3,055 |
2,269 |
33% |
|
Adjusted total revenues and other income |
11,468 |
9,238 |
24% |
|
|
|
|
|
|
|
|
|
|
|
(33) |
11 |
0 |
>(100%) |
|
Adjusted purchases |
(26) |
(7) |
>100% |
|
(788) |
(822) |
(587) |
34% |
|
Adjusted operating and administrative expenses |
(3,013) |
(2,409) |
25% |
|
(1,194) |
(1,105) |
(1,084) |
10% |
|
Adjusted depreciation expenses |
(4,290) |
(4,525) |
(5%) |
|
(239) |
(145) |
(160) |
50% |
|
Adjusted exploration expenses |
(704) |
(737) |
(4%) |
|
|
|
|
|
|
|
|
|
|
|
774 |
994 |
438 |
76% |
|
Adjusted earnings [5] |
3,435 |
1,559 |
>100% |
|
|
|
|
|
|
|
|
|
|
|
For comparable IFRS figures, see note 2 Segments to the Condensed interim financial statements. For adjustments to net operating income, see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures. |
|||||||||
Net operating income for E&P International was USD 3,802 million in 2018, compared to USD 1,341 million in 2017. The increase was due to improved liquids and gas prices, higher production, and the net effect of a reduction in provisions related to a redetermination process in Nigeria of USD 682 million. The increases were partially offset by higher operating and administrative expenses, and by positive effects in 2017 from the reversal of provisions related to our operations in Angola of USD 754 million. In 2018, net operating income was negatively impacted by net impairments of USD 435 million mainly related to North American assets. In 2017, net operating income was positively impacted by net reversal of impairments of USD 183 million and negatively by net losses from the sale of assets of USD 379 million.
Adjusted operating and administrative expenses increased primarily due to acquired fields, higher operation and maintenance activity, and increased royalties and transportation costs driven by volume growth and higher liquids prices. In addition, reduced provisions in 2017 related to future asset retirement costs contributed to the increase. Adjusted depreciation expenses decreased mainly due to higher reserve estimates, partially offset by higher investments and increased production. Adjusted exploration expenses decreased mainly due to a higher portion of exploration expenses being capitalised, lower expensed exploration costs capitalised in previous years, partially offset by higher drilling costs, seismic and field development activity.
After total negative adjustments of net USD 367 million to net operating income, Adjusted earnings [5] were USD 3,435 million in 2018, up from USD 1,559 million in 2017.
Fourth quarter 2018 review
Natural gas sales volumes amounted to 15.4 billion standard cubic meters
(bcm) in the fourth quarter of 2018, down 0.2 bcm compared to fourth quarter of
2017. Of the total gas sales in fourth quarter of 2018, entitlement gas was
13.8 bcm, slightly down from the fourth quarter of 2017. The decrease was due
to lower Norwegian continental shelf entitlement volumes, offset by an increase
in US entitlement volumes.
Average invoiced European natural gas sales price [8] increased by 22% in the fourth quarter of 2018 compared to the fourth quarter of 2017 mainly due to increasing coal prices, high demand for storage injection and lower LNG supply. Average invoiced North American piped gas sales price [8] increased by 42% in the same period mainly due to an increase in the Henry Hub price and sales area basis.
Net operating income was USD 1,255 million in the fourth quarter of 2018 compared to USD 343 million in the fourth quarter of 2017. The increase was mainly related to unrealised derivative gains and periodisation of inventory hedging effects totalling USD 1,184 million in the fourth quarter of 2018 compared to a loss of USD 276 million in the same period of 2017. Negative operational storage effects in the fourth quarter of 2018 of USD 272 million compared to positive USD 77 million in the fourth quarter of 2017, and reduced processing margins in the fourth quarter of 2018 partially offset the increase.
Adjusted purchases [6] increased mainly due to higher prices for crude oil and gas. High market volatility and sales pricing mechanisms lead to lower than expected average liquid price compared to Brent Blend average. Adjusted operating and administrative expenses increased mainly due to increased transportation costs for liquids globally, and for gas in the US. Adjusted depreciation expenses increased slightly due to the effects from reversals of impairment in previous periods.
After total adjustments of USD 936 million to net operating income, Adjusted earnings [5] were USD 319 million in the fourth quarter of 2018, compared to USD 533 million in the fourth quarter of 2017. The decrease was mainly due to lower processing margins and lower liquid products trading results.
Quarters |
Change |
|
Adjusted earnings |
Full year |
|
||||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
(in USD million) |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
|
|
19,112 |
19,058 |
17,021 |
12% |
|
Adjusted total revenues and other income |
75,349 |
58,707 |
28% |
|
|
|
|
|
|
|
|
|
|
|
(17,545) |
(17,467) |
(15,346) |
14% |
|
Adjusted purchases [6] |
(69,164) |
(52,741) |
31% |
|
(1,150) |
(1,018) |
(1,056) |
9% |
|
Adjusted operating and administrative expenses |
(4,259) |
(3,913) |
9% |
|
(98) |
(92) |
(86) |
14% |
|
Adjusted depreciation expenses |
(370) |
(304) |
22% |
|
|
|
|
|
|
|
|
|
|
|
319 |
481 |
533 |
(40%) |
|
Adjusted earnings [5] |
1,556 |
1,749 |
(11%) |
|
|
|
|
|
|
|
|
|
|
|
For comparable IFRS figures, see note 2 Segments to the Condensed interim financial statements. For adjustments to net operating income, see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures. |
|||||||||
Net operating income for MMP was USD 1,906 million in 2018 compared to USD 2,243 million in 2017. The decrease was mainly due to operational storage effects of negative USD 132 million compared to positive USD 94 million in 2017, lower liquids trading results and reduced processing margins in 2018 compared to 2017. The decrease was partially offset by improved LNG results, the sale of ownership share in infrastructure assets of USD 129 million in 2018 and the net change in impairment reversals of USD 107 million between the periods.
Adjusted total revenues and other income and adjusted purchases increased, primarily driven by higher prices for all products. Adjusted operating and administrative expenses increased mainly due to increased transportation costs related to gas globally and higher liquids volumes, in addition to higher operation and maintenance activity related to refineries. The development in the NOK/USD exchange rate added to the increase. Adjusted depreciation expenses increased mainly due to a new processing asset.
After total adjustments of USD 350 million, Adjusted earnings [5] were USD 1,556 million in 2018, a decrease of 11% from 2017 when adjusted earnings were USD 1,749 million. The decrease was mainly due to lower processing margins and lower liquids trading results. The decrease was partially offset by improved results from European and US gas, in addition to LNG sales.
Fourth quarter 2018
CONSOLIDATED STATEMENT OF INCOME
Quarters |
|
|
Full year |
Full year |
||
Q4 2018 |
Q3 2018 |
Q4 2017 |
|
(unaudited, in USD million) |
2018 |
2017 |
|
|
|
|
|
|
|
21,722 |
18,989 |
17,110 |
|
Revenues |
78,555 |
60,971 |
136 |
42 |
(3) |
|
Net income/(loss) from equity accounted investments |
291 |
188 |
580 |
105 |
7 |
|
Other income |
746 |
27 |
|
|
|
|
|
|
|
22,438 |
19,136 |
17,114 |
|
Total revenues and other income |
79,593 |
61,187 |
|
|
|
|
|
|
|
(9,821) |
(9,486) |
(8,414) |
|
Purchases [net of inventory variation] |
(38,516) |
(28,212) |
(2,510) |
(2,306) |
(2,271) |
|
Operating expenses |
(9,528) |
(8,763) |
(190) |
(187) |
(163) |
|
Selling, general and administrative expenses |
(758) |
(738) |
(2,729) |
(2,321) |
(1,292) |
|
Depreciation, amortisation and net impairment losses |
(9,249) |
(8,644) |
(442) |
(239) |
207 |
|
Exploration expenses |
(1,405) |
(1,059) |
|
|
|
|
|
|
|
6,745 |
4,597 |
5,182 |
|
Net operating income/(loss) |
20,137 |
13,771 |
|
|
|
|
|
|
|
(179) |
(348) |
(39) |
|
Net financial items |
(1,263) |
(351) |
|
|
|
|
|
|
|
6,566 |
4,249 |
5,144 |
|
Income/(loss) before tax |
18,874 |
13,420 |
|
|
|
|
|
|
|
(3,200) |
(2,583) |
(2,568) |
|
Income tax |
(11,335) |
(8,822) |
|
|
|
|
|
|
|
3,367 |
1,666 |
2,575 |
|
Net income/(loss) |
7,538 |
4,598 |
|
|
|
|
|
|
|
3,366 |
1,665 |
2,574 |
|
Attributable to equity holders of the company |
7,535 |
4,590 |
1 |
0 |
1 |
|
Attributable to non-controlling interests |
3 |
8 |
|
|
|
|
|
|
|
1.01 |
0.50 |
0.78 |
|
Basic earnings per share (in USD) |
2.27 |
1.40 |
1.01 |
0.50 |
0.77 |
|
Diluted earnings per share (in USD) |
2.27 |
1.40 |
3,329 |
3,329 |
3,298 |
|
Weighted average number of ordinary shares outstanding (in millions) |
3,326 |
3,268 |
|
|
|
|
|
|
|
See note 9 Changes in accounting policies 2018.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters |
|
|
Full year |
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
|
(unaudited, in USD million) |
2018 |
2017 |
|
|
|
|
|
|
|
3,367 |
1,666 |
2,575 |
|
Net income/(loss) |
7,538 |
4,598 |
|
|
|
|
|
|
|
(132) |
54 |
244 |
|
Actuarial gains/(losses) on defined benefit pension plans |
(110) |
172 |
26 |
(13) |
(61) |
|
Income tax effect on income and expenses recognised in OCI1) |
22 |
(38) |
(106) |
41 |
183 |
|
Items that will not be reclassified to the Consolidated statement of income |
(88) |
134 |
|
|
|
|
|
|
|
(1,433) |
(43) |
(668) |
|
Currency translation adjustments |
(1,652) |
1,710 |
(0) |
0 |
(15) |
|
Net gains/(losses) from available for sale financial assets |
64 |
(64) |
6 |
(5) |
(27) |
|
Share of OCI from equity accounted investments |
(5) |
(40) |
(1,426) |
(48) |
(711) |
|
Items that may be subsequently reclassified to the Consolidated statement of income |
(1,593) |
1,607 |
|
|
|
|
|
|
|
(1,533) |
(6) |
(528) |
|
Other comprehensive income/(loss) |
(1,681) |
1,741 |
|
|
|
|
|
|
|
1,834 |
1,659 |
2,048 |
|
Total comprehensive income/(loss) |
5,857 |
6,339 |
|
|
|
|
|
|
|
1,833 |
1,659 |
2,047 |
|
Attributable to the equity holders of the company |
5,855 |
6,331 |
1 |
0 |
1 |
|
Attributable to non-controlling interests |
3 |
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) Other comprehensive income (OCI). |
|
|
CONSOLIDATED BALANCE SHEET
|
At 31 December |
At 30 September |
At 31 December |
(unaudited, in USD million) |
2018 |
2018 |
2017 |
|
|
|
|
ASSETS |
|
|
|
Property, plant and equipment |
65,262 |
67,384 |
63,637 |
Intangible assets |
9,672 |
9,880 |
8,621 |
Equity accounted investments |
2,863 |
2,801 |
2,551 |
Deferred tax assets |
3,304 |
2,688 |
2,441 |
Pension assets |
831 |
1,158 |
1,306 |
Derivative financial instruments |
1,032 |
1,003 |
1,603 |
Financial investments |
2,455 |
2,609 |
2,841 |
Prepayments and financial receivables |
1,033 |
1,281 |
912 |
|
|
|
|
Total non-current assets |
86,452 |
88,804 |
83,911 |
|
|
|
|
Inventories |
2,144 |
3,449 |
3,398 |
Trade and other receivables |
8,998 |
10,000 |
9,425 |
Derivative financial instruments |
318 |
249 |
159 |
Financial investments |
7,041 |
8,623 |
8,448 |
Cash and cash equivalents |
7,556 |
4,919 |
4,390 |
|
|
|
|
Total current assets |
26,056 |
27,239 |
25,820 |
|
|
|
|
Assets classified as held for sale |
0 |
0 |
1,369 |
|
|
|
|
Total assets |
112,508 |
116,043 |
111,100 |
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
Shareholders' equity |
42,970 |
41,907 |
39,861 |
Non-controlling interests |
19 |
23 |
24 |
|
|
|
|
Total equity |
42,990 |
41,930 |
39,885 |
|
|
|
|
Finance debt |
23,264 |
24,173 |
24,183 |
Deferred tax liabilities |
8,671 |
8,341 |
7,654 |
Pension liabilities |
3,820 |
3,997 |
3,904 |
Provisions |
15,952 |
16,540 |
15,557 |
Derivative financial instruments |
1,207 |
1,061 |
900 |
|
|
|
|
Total non-current liabilities |
52,914 |
54,113 |
52,198 |
|
|
|
|
Trade, other payables and provisions |
8,369 |
10,154 |
9,737 |
Current tax payable |
4,654 |
6,189 |
4,057 |
Finance debt |
2,463 |
1,823 |
4,091 |
Dividends payable |
766 |
766 |
729 |
Derivative financial instruments |
352 |
1,068 |
403 |
|
|
|
|
Total current liabilities |
16,605 |
20,000 |
19,017 |
|
|
|
|
Total liabilities |
69,519 |
74,113 |
71,214 |
|
|
|
|
Total equity and liabilities |
112,508 |
116,043 |
111,100 |
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 2016 |
1,156 |
6,607 |
32,573 |
(5,264) |
0 |
35,072 |
27 |
35,099 |
Net income/(loss) |
|
|
4,590 |
|
|
4,590 |
8 |
4,598 |
Other comprehensive income/(loss) |
|
|
71 |
1,710 |
(40) |
1,741 |
|
1,741 |
Total comprehensive income/(loss) |
|
|
|
|
|
|
|
6,339 |
Dividends |
24 |
1,333 |
(2,891) |
|
|
(1,534) |
|
(1,534) |
Other equity transactions |
|
(8) |
0 |
|
|
(8) |
(10) |
(18) |
|
|
|
|
|
|
|
|
|
At 31 December 2017 |
1,180 |
7,933 |
34,342 |
(3,554) |
(40) |
39,861 |
24 |
39,885 |
|
|
|
|
|
|
|
|
|
At 31 December 2017 |
1,180 |
7,933 |
34,342 |
(3,554) |
(40) |
39,861 |
24 |
39,885 |
Net income/(loss) |
|
|
7,535 |
|
|
7,535 |
3 |
7,538 |
Other comprehensive income/(loss) |
|
|
(24)2) |
(1,652) |
(5) |
(1,681) |
|
(1,681) |
Total comprehensive income/(loss) |
|
|
|
|
|
|
|
5,857 |
Dividends1) |
5 |
333 |
(3,064) |
|
|
(2,726) |
|
(2,726) |
Other equity transactions |
|
(19) |
0 |
|
|
(19) |
(8) |
(27) |
|
|
|
|
|
|
|
|
|
At 31 December 2018 |
1,185 |
8,247 |
38,790 |
(5,206) |
(44) |
42,970 |
19 |
42,990 |
|
* Numbers previously published under Available for sale financial assets column is transferred to Retained earnings column.
1) For more information, see note 7 Dividends.
2) For more information, see note 9 Changes in accounting policies 2018.
CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters |
|
|
Full year |
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
|
|
2018 |
2017 |
|
|
(restated*) |
|
(unaudited, in USD million) |
|
(restated*) |
|
|
|
|
|
|
|
6,566 |
4,249 |
5,144 |
|
Income/(loss) before tax |
18,874 |
13,420 |
|
|
|
|
|
|
|
2,730 |
2,321 |
1,292 |
|
Depreciation, amortisation and net impairment losses |
9,249 |
8,644 |
52 |
24 |
(501) |
|
Exploration expenditures written off |
357 |
(8) |
(68) |
77 |
(112) |
|
(Gains) losses on foreign currency transactions and balances |
166 |
(127) |
(543) |
(104) |
(4) |
|
(Gains) losses on sales of assets and businesses |
(648) |
395 |
(624) |
327 |
137 |
|
(Increase) decrease in other items related to operating activities2) |
(526) |
(884) |
(859) |
360 |
46 |
|
(Increase) decrease in net derivative financial instruments |
409 |
19 |
54 |
45 |
30 |
|
Interest received |
176 |
148 |
(124) |
(93) |
(218) |
|
Interest paid |
(441) |
(622) |
|
|
|
|
|
|
|
7,184 |
7,207 |
5,813 |
|
Cash flows provided by operating activities before taxes paid and working capital items |
27,615 |
20,985 |
|
|
|
|
|
|
|
(3,681) |
(1,887) |
(2,462) |
|
Taxes paid |
(9,010) |
(5,766) |
|
|
|
|
|
|
|
697 |
98 |
(1,630) |
|
(Increase) decrease in working capital |
1,090 |
(417) |
|
|
|
|
|
|
|
4,200 |
5,417 |
1,720 |
|
Cash flows provided by operating activities |
19,694 |
14,802 |
|
|
|
|
|
|
|
(0) |
0 |
0 |
|
Additions through business combinations3) |
(3,557) |
0 |
(2,990) |
(3,073) |
(3,398) |
|
Capital expenditures and investments |
(11,367) |
(10,755) |
1,345 |
(2,756) |
3,211 |
|
(Increase) decrease in financial investments |
1,358 |
592 |
67 |
117 |
(61) |
|
(Increase) decrease in derivatives financial instruments |
238 |
(439) |
264 |
21 |
42 |
|
(Increase) decrease in other items interest bearing |
343 |
79 |
620 |
135 |
4 |
|
Proceeds from sale of assets and businesses |
1,773 |
406 |
|
|
|
|
|
|
|
(694) |
(5,557) |
(201) |
|
Cash flows used in investing activities |
(11,212) |
(10,117) |
|
|
|
|
|
|
|
(0) |
998 |
0 |
|
New finance debt |
998 |
0 |
(756) |
(8) |
(3,507) |
|
Repayment of finance debt |
(2,875) |
(4,775) |
(760) |
(765) |
(373) |
|
Dividend paid |
(2,672) |
(1,491) |
720 |
(1,420) |
461 |
|
Net current finance debt and other |
(476) |
444 |
|
|
|
|
|
|
|
(796) |
(1,195) |
(3,419) |
|
Cash flows provided by (used in) financing activities |
(5,024) |
(5,822) |
|
|
|
|
|
|
|
2,710 |
(1,335) |
(1,900) |
|
Net increase (decrease) in cash and cash equivalents |
3,458 |
(1,137) |
|
|
|
|
|
|
|
(73) |
247 |
(40) |
|
Effect of exchange rate changes on cash and cash equivalents |
(292) |
436 |
4,919 |
6,006 |
6,330 |
|
Cash and cash equivalents at the beginning of the period (net of overdraft) |
4,390 |
5,090 |
|
|
|
|
|
|
|
7,556 |
4,919 |
4,390 |
|
Cash and cash equivalents at the end of the period (net of overdraft)1) |
7,556 |
4,390 |
|
|
|
|
|
|
|
* Related to a change in accounting policies, see note 9 Changes in accounting policies 2018 for more information.
1) At 31 December 2018 and at 31 December 2017 cash and cash equivalents net overdraft were zero.
2) The reversal of the provision related to profit oil and interest expenses relate to Block 4, Block 15, Block 17 and Block 31 offshore Angola of USD 1,073 million in the second quarter of 2017 had no cash effect and was excluded from Cash flow provided by operating activities.
3) Related to capital expenditures on the acquisition of interests in the Roncador field in Brazil, and the Martin Linge field and Garantiana discovery on the NCS, see note 3 Acquisitions and disposals for further information.
General information and organisation
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.
Statoil ASA changed its name to Equinor ASA following approval of the name change by the company’s annual general meeting on 15 May 2018.
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 (previously named Statoil Petroleum 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 fourth quarter of 2018 were authorised for issue by the board of directors on 5 February 2019.
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. 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 2017.
With effect from 1 January 2018, Equinor implemented IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. As of the same date, Equinor voluntarily changed its policy for recognition of revenue from the production of oil and gas properties in which Equinor shares an interest with other companies, as well as its policy for presentation of certain elements related to derivatives, non-cash currency effects and working capital items in the statement of cash flows. Reference is made to note 9 Changes in accounting policies 2018 for further information about these policy changes.
There have been no other changes to significant accounting policies in the four quarters of 2018 compared to the Consolidated annual financial statements for 2017.
IFRS 16 Leases will be implemented by Equinor on 1 January 2019. Reference is made to Note 10 IFRS 16 Leases for further information about the new standard and the expected implementation impact of the standard.
The issue of which method is the most appropriate for reflecting revenues related to lifting imbalances, and how to recognise revenue from the production of oil and gas properties in which an entity shares an interest with other companies, has been the subject of discussions in the IFRS Interpretations Committee (IFRIC) during the last months of 2018. No final decision has yet been made by the IASB in the matter. As stated above and explained in Note 9 Change in accounting policies 2018 in the section Change in accounting for lifting imbalances, Equinor in 2018 voluntarily changed its accounting policy from previously recognising revenue on the basis of volumes lifted and sold to customers during the period (the sales method) to instead recognising revenue based on Equinor’s ownership in producing fields. Based on the IFRIC discussions to date, Equinor has decided to return to the sales method. This change in policy will be implemented on 1 January 2019 and the impact on Equinor’s equity upon implementation is expected to be immaterial.
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. The subtotals and totals in some of the tables may not equal the sum of the amounts shown due to rounding.
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.
Equinor’s operations are managed through the following business
areas: 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). With effect from the third quarter 2018 DPB is a
new business area and former Development & Production USA (DPUSA) is
included in DPI. These changes have no effect on the reporting segments.
The
reporting segments Exploration & Production Norway (E&P Norway) and MMP
consist of the business areas DPN and MMP respectively. The business areas 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 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 business areas 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 business areas 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 fourth quarter of 2018 and 2017 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.
Fourth quarter 2018 |
E&P Norway |
E&P International |
MMP |
Other |
Eliminations |
Total |
(in USD million) |
||||||
|
|
|
|
|
|
|
Revenues third party, other revenue and other income |
488 |
1,573 |
20,228 |
14 |
0 |
22,302 |
Revenues inter-segment |
5,589 |
2,299 |
87 |
0 |
(7,976) |
0 |
Net income/(loss) from equity accounted investments |
(41) |
6 |
5 |
165 |
0 |
136 |
|
|
|
|
|
|
|
Total revenues and other income |
6,036 |
3,877 |
20,320 |
180 |
(7,976) |
22,438 |
|
|
|
|
|
|
|
Purchases [net of inventory variation] |
1 |
(33) |
(17,817) |
(0) |
8,029 |
(9,821) |
Operating, selling, general and administrative expenses |
(852) |
(781) |
(1,150) |
(98) |
182 |
(2,701) |
Depreciation, amortisation and net impairment losses |
(1,272) |
(1,342) |
(98) |
(18) |
0 |
(2,729) |
Exploration expenses |
(177) |
(264) |
0 |
0 |
(0) |
(442) |
|
|
|
|
|
|
|
Net operating income/(loss) |
3,736 |
1,456 |
1,255 |
63 |
235 |
6,745 |
|
|
|
|
|
|
|
Additions to PP&E, intangibles and equity accounted investments |
1,442 |
1,141 |
75 |
205 |
0 |
2,862 |
|
|
|
|
|
|
|
Fourth quarter 2017 |
E&P Norway |
E&P International |
MMP |
Other |
Eliminations |
Total |
(in USD million) |
||||||
|
|
|
|
|
|
|
Revenues third party, other revenue and other income |
32 |
336 |
16,689 |
61 |
0 |
17,117 |
Revenues inter-segment |
5,064 |
1,970 |
39 |
0 |
(7,073) |
0 |
Net income/(loss) from equity accounted investments |
(14) |
6 |
17 |
(12) |
0 |
(3) |
|
|
|
|
|
|
|
Total revenues and other income |
5,082 |
2,311 |
16,744 |
50 |
(7,073) |
17,114 |
|
|
|
|
|
|
|
Purchases [net of inventory variation] |
(0) |
0 |
(15,269) |
(0) |
6,855 |
(8,414) |
Operating, selling, general and administrative expenses |
(780) |
(620) |
(1,095) |
(51) |
112 |
(2,433) |
Depreciation, amortisation and net impairment losses |
(977) |
(259) |
(38) |
(18) |
0 |
(1,292) |
Exploration expenses |
(114) |
321 |
0 |
(0) |
0 |
207 |
|
|
|
|
|
|
|
Net operating income/(loss) |
3,211 |
1,754 |
343 |
(20) |
(105) |
5,182 |
|
|
|
|
|
|
|
Additions to PP&E, intangibles and equity accounted investments |
1,163 |
2,239 |
103 |
223 |
0 |
3,728 |
Full year 2018 |
E&P Norway |
E&P International |
MMP |
Other |
Eliminations |
Total |
(in USD million) |
||||||
|
|
|
|
|
|
|
Revenues third party, other revenue and other income |
588 |
3,181 |
75,487 |
45 |
0 |
79,301 |
Revenues inter-segment |
21,877 |
9,186 |
291 |
2 |
(31,355) |
0 |
Net income/(loss) from equity accounted investments |
10 |
31 |
16 |
234 |
0 |
291 |
|
|
|
|
|
|
|
Total revenues and other income |
22,475 |
12,399 |
75,794 |
280 |
(31,355) |
79,593 |
|
|
|
|
|
|
|
Purchases [net of inventory variation] |
2 |
(26) |
(69,296) |
(0) |
30,805 |
(38,516) |
Operating, selling, general and administrative expenses |
(3,270) |
(3,006) |
(4,377) |
(288) |
653 |
(10,286) |
Depreciation, amortisation and net impairment losses |
(4,370) |
(4,592) |
(215) |
(72) |
0 |
(9,249) |
Exploration expenses |
(431) |
(973) |
0 |
0 |
0 |
(1,405) |
|
|
|
|
|
|
|
Net operating income/(loss) |
14,406 |
3,802 |
1,906 |
(79) |
103 |
20,137 |
|
|
|
|
|
|
|
Additions to PP&E, intangibles and equity accounted investments |
6,947 |
7,403 |
331 |
519 |
0 |
15,201 |
|
|
|
|
|
|
|
Balance sheet information |
|
|
|
|
|
|
Equity accounted investments |
1,102 |
296 |
92 |
1,373 |
0 |
2,863 |
Non-current segment assets |
30,762 |
38,672 |
5,148 |
353 |
0 |
74,934 |
Non-current assets, not allocated to segments |
|
|
|
|
|
8,655 |
|
|
|
|
|
|
|
Total non-current assets |
|
|
|
|
|
86,452 |
Full year 2017 |
E&P Norway |
E&P International |
MMP |
Other |
Eliminations |
Total |
(in USD million) |
||||||
|
|
|
|
|
|
|
Revenues third party, other revenue and other income |
(23) |
1,984 |
58,935 |
102 |
0 |
60,999 |
Revenues inter-segment |
17,586 |
7,249 |
83 |
1 |
(24,919) |
0 |
Net income/(loss) from equity accounted investments |
129 |
22 |
53 |
(16) |
0 |
188 |
|
|
|
|
|
|
|
Total revenues and other income |
17,692 |
9,256 |
59,071 |
87 |
(24,919) |
61,187 |
|
|
|
|
|
|
|
Purchases [net of inventory variation] |
0 |
(7) |
(52,647) |
(0) |
24,442 |
(28,212) |
Operating, selling, general and administrative expenses |
(2,954) |
(2,804) |
(3,925) |
(235) |
418 |
(9,501) |
Depreciation, amortisation and net impairment losses |
(3,874) |
(4,423) |
(256) |
(91) |
(0) |
(8,644) |
Exploration expenses |
(379) |
(681) |
0 |
0 |
(0) |
(1,059) |
|
|
|
|
|
|
|
Net operating income/(loss) |
10,485 |
1,341 |
2,243 |
(239) |
(59) |
13,771 |
|
|
|
|
|
|
|
Additions to PP&E, intangibles and equity accounted investments |
4,869 |
5,063 |
320 |
543 |
0 |
10,795 |
|
|
|
|
|
|
|
Balance sheet information |
|
|
|
|
|
|
Equity accounted investments |
1,133 |
234 |
134 |
1,050 |
0 |
2,551 |
Non-current segment assets |
30,278 |
36,453 |
5,137 |
390 |
0 |
72,258 |
Non-current assets, not allocated to segments |
|
|
|
|
|
9,102 |
|
|
|
|
|
|
|
Total non-current assets |
|
|
|
|
|
83,911 |
|
|
|
|
|
|
|
In the fourth quarter of 2018 the E&P International segment was impacted by a net release of a provision, combined with the effect of volumes lifted as of 31 December 2018, related to the redetermination process for the Agbami field in Nigeria. The effect on net operating income was USD 646 million. See note 8 Provisions, commitments, contingent liabilities and contingent assets.
Net income from equity accounted investments in the Other segment was impacted by a dividend of USD 137 million in excess of the carrying value of the investment.
In the fourth quarter of 2018 Equinor recognised net impairment of USD 36 million which was classified as Exploration expenses mainly in the E&P International segment.
For information regarding implementation of IFRS 15 and change of accounting policy for recognition of revenue from the production of oil and gas properties in which Equinor shares an interest with other companies, see note 9 Changes in accounting policies 2018.
For information regarding acquisition of interests, see note 3 Acquisitions and disposals.
Revenues from contract 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 full year of 2018, Norway constitutes 75% and the US constitutes 18% of such revenues.
Non-current assets by country |
|
|
|
|
|
|
|
|
At 31 December |
At 30 September |
At 31 December |
(in USD million) |
2018 |
2018 |
2017 |
|
|
|
|
Norway |
34,952 |
37,012 |
34,588 |
USA |
19,409 |
19,420 |
19,267 |
Brazil |
7,861 |
7,715 |
4,584 |
UK |
4,588 |
4,543 |
4,222 |
Angola |
1,874 |
2,111 |
2,888 |
Canada |
1,546 |
1,606 |
1,715 |
Azerbaijan |
1,452 |
1,452 |
1,472 |
Algeria |
986 |
1,076 |
1,114 |
Other countries |
5,128 |
5,130 |
4,958 |
|
|
|
|
Total non-current assets1) |
77,797 |
80,065 |
74,809 |
1) Excluding deferred tax assets, pension assets, non-current financial assets and assets classified as held for sale.
Acquisition of offshore wind lease in USA
In the fourth quarter Equinor submitted a winning bid of USD 135 million for lease OCS-A 0520, during the online offshore wind auction, where Equinor has been declared the provisional winner of one of three leases in an area offshore the Commonwealth of Massachusetts. Upon completion, which is subject to governmental approval, the acquisition will be recognised in the Other segment in the first half of 2019.
Swap of the interests in the Norwegian Sea and the North Sea region of the Norwegian continental shelf (NCS)
In the fourth quarter Equinor and Faroe Petroleum have agreed a number of transactions in the Norwegian Sea and the North Sea region of the Norwegian continental shelf (NCS). These transactions are considered a balanced swap when it comes to value with no cash consideration. The effective dates of the transactions are 1 January 2019 with closing subject to governmental approval. Upon closing, which is expected within the first half of 2019, the transactions will be recognised in the Exploration & Production Norway (E&P Norway) segment.
Acquisition of interest in Rosebank project in UK
In the fourth quarter Equinor signed an agreement to acquire Chevron’s 40% operated interest in the Rosebank project, one of the largest undeveloped fields on the UK continental shelf. The other partners in the field are Suncor Energy (40%) and Siccar Point Energy (20%). The transaction was closed in January 2019 and will be recognised in the Exploration & Production International (E&P International) segment.
Divestment of the interests in the discoveries on the NCS shelf
In the fourth quarter Equinor closed an agreement with Aker BP to sell its 77.8% operated interest in the King Lear discovery on the NCS shelf for a total consideration of USD 250 million and an agreement with PGNiG to sell its non-operated interests in the Tommeliten discovery on the NCS for a total consideration of USD 220 million. A gain of USD 449 million has been presented in the line item other income in the Consolidated statement of income in the E&P Norway segment. The transaction was tax exempt under the Norwegian petroleum tax legislation.
Acquisition of 100% shares in Danske Commodities
In the third quarter of 2018 Equinor has entered into an agreement to buy 100% of the shares in a Danish energy trading company Danske Commodities (DC) for a consideration of EUR 400 million, which will be adjusted for certain net cash and net working capital positions at closing. In addition, some smaller contingent payments depending on DC’s performance have been agreed. The transaction was closed in January 2019. Upon closing of the transaction, the assets and liabilities related to the acquired business will be reflected according to IFRS 3 Business Combinations. The transaction will be accounted for in the Marketing, Midstream & Processing (MMP) segment and will result in goodwill reflecting the expected synergies on the acquisition. At this stage, both the purchase price and the purchase price allocation are preliminary.
Acquisition and divestment of operated interest in Carcara field in Brazil
In the third quarter of 2018 Equinor and Barra Energia (“Barra”) signed an agreement to acquire Barra’s 10% interest in the BM-S-8 licence in Brazil’s Santos basin. Upon closing, Equinor intends to sell down 3.5% to ExxonMobil and 3% to Galp, so fully aligning interests across BM-S-8 and Carcará North. The total consideration for Barra’s 10% interest is USD 379 million, the same as for
Equinor’s earlier transaction in BM-S-8 with Queiroz Galvão Exploração e Produção (QGEP) in July 2017. Closing is subject to customary conditions, including partner and government approval and is expected within a year.
In the second quarter of 2018 Equinor completed the divestment of 39.5% of its 76% interest in BM-S-8, agreed in October 2017. 36.5% interest was divested to ExxonMobil and 3% to Galp for a total consideration of USD 1,493 million. The transaction is accounted for in the E&P International segment with no impact on the Consolidated statement of income. The cash proceeds from the sale were USD 1,016 million and the divested assets were previously presented as Assets classified as held for sale.
Acquisition of interest in Roncador field in Brazil
In the second quarter of 2018 Equinor closed an agreement with Petrobras to acquire a 25% interest in Roncador, an oil field in the Campos Basin in Brazil. Equinor paid Petrobras a cash consideration of USD 2,133 million, in addition to recognising a liability for contingent consideration of USD 392 million. The assets and liabilities related to the acquired portion of Roncador have been reflected in accordance with the principles of IFRS 3 Business Combinations. The acquisition resulted in an increase of Equinor’s property, plant and equipment of USD 2,550 million, intangible assets of USD 392 million and an increase in provisions of USD 808 million, the values include measurement period adjustment reflecting the new information received in the fourth quarter 2018. At this stage, both the purchase price and the purchase price allocation are preliminary. The partners have joint control and Equinor will account for its interest on a pro-rata basis. The transaction has been accounted for in the E&P International segment.
Acquisition of Cobalt’s North Platte interest in the Gulf of Mexico
In the first quarter of 2018 Equinor’s co-bid with Total in the bankruptcy auction for Cobalt’s interest in the North Platte discovery was successful with an aggregate bid of USD 339 million. The transaction was closed in April 2018. Upon closing, Total as operator owns 60% of North Platte and Equinor owns the remaining 40%. The value of the acquired exploration assets has been recognised in the E&P International segment for an amount of USD 246 million as intangible assets. Additionally, the transaction includes a contingent consideration up to USD 20 million.
Acquisition of interests in Martin Linge field and Garantiana discovery
In the first quarter of 2018 Equinor and Total closed an agreement to acquire Total’s equity stakes in the Martin Linge field (51%) and the Garantiana discovery (40%) on the NCS. Through this transaction Equinor increased the ownership share in the Martin Linge field from 19% to 70%. Equinor has paid Total a consideration of USD 1,541 million and has taken over the operatorships. The assets and liabilities related to the acquired portion of Martin Linge and Garantiana have been reflected in accordance with the principles of IFRS 3 Business Combinations. The acquisition resulted in an increase of Equinor’s property, plant and equipment of USD 1,418 million, intangible assets of USD 116 million, goodwill of USD 265 million, deferred tax liabilities of USD 265 million and other assets of USD 7 million. The partners have joint control and Equinor continues to account for its interest on a pro-rata basis using Equinor's new ownership share. The transaction has been accounted for in E&P Norway segment.
Quarters |
|
|
Full year |
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
|
(in USD million) |
2018 |
2017 |
|
|
|
|
|
|
|
68 |
(77) |
112 |
|
Gains (losses) on net foreign exchange |
(166) |
126 |
39 |
97 |
112 |
|
Interest income and other financial items |
283 |
487 |
(12) |
(109) |
73 |
|
Gains (losses) on derivative financial instruments |
(341) |
(61) |
(274) |
(259) |
(336) |
|
Interest and other finance expenses |
(1,040) |
(903) |
|
|
|
|
|
|
|
(179) |
(348) |
(39) |
|
Net financial items |
(1,263) |
(351) |
The line item Interest income and other financial items includes expenses of USD 64 million in the full year 2018 related to implementation of IFRS 9. See note 9 Changes in accounting policies 2018.
The line item Interest and other finance expenses includes an income of USD 319 million in the full year 2017 related to a release of a provision. See note 23 Other commitments, contingent liabilities and contingent assets in Equinor’s 2017 Annual Report and Form 20-F.
Equinor has a US Commercial paper program available with a limit
of USD 5 billion of which USD 842 million has been utilised
as of 31 December 2018.
In 2018 Equinor issued a USD 1 billion bond with 10 years maturity. The bond was issued in USD and is fully and unconditionally guaranteed by Equinor Energy AS.
Quarters |
|
|
Full year |
Full year |
||
Q4 2018 |
Q3 2018 |
Q4 2017 |
|
(in USD million) |
2018 |
2017 |
|
|
|
|
|
|
|
6,566 |
4,249 |
5,144 |
|
Income/(loss) before tax |
18,874 |
13,420 |
(3,200) |
(2,583) |
(2,568) |
|
Income tax expense |
(11,335) |
(8,822) |
48.7% |
60.8% |
49.9% |
|
Effective tax rate |
60.1% |
65.7% |
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 as described in note 3 Acquisitions and disposals. 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 fourth quarter of 2017 was primarily influenced by reversal of impairments recognised in countries with unrecognised deferred tax assets.
The tax rate for the full year 2017 was primarily influenced by the agreement with the Angolan Ministry of Finance related to Equinor’s participation in several blocks offshore Angola.
(in USD million) |
Property, plant and equipment |
Intangible assets |
|
|
|
|
|
Balance at 31 December 2017 |
63,637 |
8,621 |
|
Additions through business combinations |
3,968 |
773 |
|
Additions |
9,021 |
1,302 |
|
Transfers |
161 |
(161) |
|
Disposals and reclassifications |
96 |
(367) |
|
Expensed exploration expenditures and impairment losses |
- |
(357) |
|
Depreciation, amortisation and net impairment losses |
(9,236) |
(13) |
|
Effect of foreign currency translation adjustments |
(2,384) |
(127) |
|
|
|
|
|
Balance at 31 December 2018 |
65,262 |
9,672 |
|
Equinor’s Block 2 Exploration License in Tanzania was formally due to expire in June 2018, but based on communication with the applicable Tanzanian authorities, continues to be in operation while the process related to the grant of a new exploration licence to the existing licensees for the block is ongoing. The Block 2 asset remains capitalised within Intangible assets in the E&P International segment as of 31 December 2018.
Impairments/reversal of impairments
For information on impairment losses and reversals per reporting segment see note 2 Segments.
Full year 2018 |
Property, plant and equipment |
Intangible assets |
Total |
(in USD million) |
|||
|
|
|
|
Producing and development assets |
(604) |
237 |
(367) |
Acquisition costs related to oil and gas prospects |
- |
52 |
52 |
|
|
|
|
Total net impairment losses (reversals) recognised |
(604) |
289 |
(315) |
|
|
|
|
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.
A dividend of USD 0.23 per share was approved for the second quarter of 2018 and paid in the fourth quarter of 2018. For the third quarter of 2018 a dividend of USD 0.23 will be paid around 28 February 2019. The Equinor share will trade ex-dividend 19 February on Oslo Børs (OSE) and on New York Stock Exchange (NYSE). Record date will be 20 February.
On 5 February 2019 the board of directors proposed to declare a dividend for the fourth quarter of 2018 of USD 0.26 per share (subject to approval by the AGM). The Equinor share will trade ex-dividend 16 May 2019 on OSE and 17 May 2019 for ADR holders on NYSE. Record date will be 20 May 2019 on OSE and NYSE. Payment date will be around 29 May 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full year |
|
Full year |
Dividends |
|
Q4 2018 |
2018 |
Q4 2017 |
2017 |
|
|
|
|
|
|
Dividends paid in cash (in USD million) |
|
760 |
2,672 |
373 |
1,491 |
USD per share or ADS |
|
0.2300 |
0.9101 |
0.2201 |
0.8804 |
NOK per share |
|
1.9632 |
7.4907 |
1.7953 |
7.2615 |
|
|
|
|
|
|
Scrip dividends (in USD million) |
|
0 |
338 |
340 |
1,357 |
Number of shares issued (in million) |
|
0.0 |
15.5 |
17.5 |
78.1 |
|
|
|
|
|
|
Total dividends |
|
760 |
3,010 |
713 |
2,848 |
Through its ownership in OML 128 in Nigeria, Equinor is a party to an ownership interest redetermination process for the Agbami field. In October 2015, Equinor received the Expert’s final ruling which implied a reduction of 5.17 percentage points in Equinor’s equity interest in the field. Equinor had previously initiated arbitration proceedings to set aside interim decisions made by the Expert, but this was declined by the arbitration tribunal in its November 2015 judgment. Equinor proceeded to the Court of Appeal to have the arbitration award set aside, but the appeal was dismissed in the fourth quarter of 2018. Equinor is currently considering an appeal of this ruling to the Supreme Court. In 2016 Equinor also initiated arbitration to set aside the Expert’s final ruling. The award in this arbitration was delivered in the second quarter of 2018, dismissing Equinor’s claim. At the time of the arbitration award, there was no impact on Equinor’s accounting for the Agbami redetermination, as the outcome had been provided for in line with the Expert’s ruling.
In 2018, Equinor also explored the possibility of an out-of-court settlement of the redetermination dispute. A non-binding agreement has been reached during the fourth quarter of 2018. Equinor’s best estimate related to the redetermination has changed, and the provision net of tax has been reduced by USD 349 million in the fourth quarter. The reversal of the provision has been recognised in the Consolidated statement of income, combined with the effect of volumes lifted as of 31 December 2018, mainly through an increase in other revenue of USD 774 million, increase in depreciation, amortisation and net impairment losses of USD 143 million, and increased tax cost of USD 297 million.
As of 31 December 2018, Equinor’s remaining provision net of tax related to the Agbami redetermination amounts to USD 854 million. The provision is reflected within Non-current provisions in the Consolidated balance sheet.
On 28 February 2018, Equinor received a notice of deviation from Norwegian tax authorities related to an ongoing dispute regarding the level of Research & Development cost to be allocated to the offshore tax regime, increasing the maximum exposure in this matter to approximately USD 500 million. Equinor provided for its best estimate in the matter.
Some long-term gas sales agreements contain price review clauses, which in certain cases lead to claims subject to arbitration. The range of exposure related to ongoing arbitration broadened in the second quarter of 2018, and the exposure for Equinor has been estimated to an amount equivalent to approximately USD 1.2 billion for gas delivered prior to year-end 2018. Based on Equinor’s assessment, no provision is included in the Consolidated financial statements at year-end 2018. Price review arbitration related
changes in provisions throughout 2018 are immaterial and have been reflected in the Consolidated statement of income as adjustments to revenue from contracts with customers.
In March 2016 Equinor Energy AS, acting on behalf of the Troll field partners, terminated a long-term contract for the drilling rig COSL Innovator. The termination was disputed in court by the rig owner COSL Offshore Management AS (COSL). Equinor’s share of the total exposure, based on COSL’s original claim, has been estimated to be approximately USD 200 million excluding penalty interest. In May 2018, the court of first instance (Oslo District Court) ruled that while the contract could be cancelled according to the applicable clauses of the contract and with payment of the appropriate cancellation charge, the contract had not been validly terminated. In June 2018 both parties appealed the verdict to the court of appeal. Oslo District Court’s ruling is consequently not final. Equinor intends to defend its own and the Troll partners’ position and considers it to be more likely than not that the final verdict will conclude that the termination of the rig contract was valid under its terms. No provision related to the dispute is included in Equinor’s accounts as of 31 December 2018.
In October 2018, Supreme Court of Nigeria rendered a judgement in a dispute between the Federal Government of Nigeria and the Governments of Rivers, Bayelsa and Akwa Ibom States in favour of the latter. The Supreme Court judgement provides for potential retroactive adjustment of certain production sharing contracts in favour of the Federal Government, including OML 128 (Agbami) where Equinor has 53,85% equity interest. Equinor sees no merit to the case. No provision has been made for this matter.
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.
With effect from 1 January 2018, Equinor has implemented IFRS 9 Financial
Instruments and IFRS 15 Revenue from Contracts with Customers. As of the same
date, Equinor has voluntarily changed its policy for recognition of revenue
from the production of oil and gas properties in which Equinor shares an
interest with other companies, as well as its policy for presentation of
certain elements related to derivatives, non-cash currency effects and working
capital items in the statement of cash flows.
Information about each accounting policy change is available in the following. For certain tables as listed below, reference is however made to note 9 of Equinor’s first quarter 2018 Condensed interim financial statements;
· IFRS 9: Table showing the financial assets at 1 January 2018 by category, according to previous requirements and according to IFRS 9, with differences in carrying amounts noted.
· Change in Cash flow presentation – restatement of comparative periods: Tables showing originally reported and restated amounts for the full years 2017 and 2016, and for the four quarters of 2017.
IFRS 9 Financial Instruments
IFRS 9 replaced IAS 39 Financial Instruments: Recognition and Measurement. IFRS
9 has been implemented retrospectively with the cumulative effect of initially
applying the standard recognised at the date of initial application. The
implementation impact of IFRS 9 is immaterial, and Equinor’s equity as at
January 2018 have consequently not been adjusted upon adoption of the standard.
In accordance with the IFRS 9’s transitional provisions, comparative figures
have not been restated.
There are no changes related to classification of Equinor’s liabilities following the implementation of IFRS 9.
Portions of Equinor’s cash equivalents and current financial investments tied to liquidity management, which under IAS 39 was classified as held for trading and reflected at fair value through profit and loss, are under IFRS 9 to be measured at amortised cost, based on an evaluation of the contractual terms and the business model applied. The impact of the change is immaterial.
For certain financial assets previously classified as Available for sale (AFS), changes in fair value which under IAS 39 was reflected in OCI, are reflected in profit and loss under IFRS 9. As a result, fair value loss of USD 64 million that had been accumulated in the available-for-sale financial assets reserve were expensed in the statement of income as an implementation effect.
No significant changes were made for Equinor’s expected loss recognition process to satisfy IFRS 9’s financial asset impairment requirements. Credit risk related to financial assets measured at amortised cost is immaterial.
IFRS 15 covers the recognition of revenue in the financial statements and related disclosure, and has replaced existing revenue recognition guidance, including IAS 18 Revenue. Equinor has implemented IFRS 15 retrospectively, with the cumulative effect recognised at the date of initial application. The impact on Equinor’s equity was immaterial. As allowed by the standard, prior periods have not been restated. Total revenues and other income in the Consolidated statement of income has not been impacted materially by the implementation of IFRS 15.
IFRS 15 requires identification of the performance obligations for the transfer of goods and services in each contract with customers. Revenue is recognised upon satisfaction of the performance obligations for the amounts that reflect the consideration to which Equinor expects to be entitled in exchange for those goods and services. Under IFRS 15, revenue from the sale of crude oil, natural gas, petroleum products and other merchandise is recognised when a customer obtains control of those products, which normally is when title passes at point of delivery, based on the contractual terms of the agreements. Each such sale normally represents a single performance obligation. In the case of natural gas, sales are completed over time in line with the delivery of the actual physical quantities.
The accounting for Equinor’s sale of the SDFI’s natural gas and crude oil under IFRS 15 has not led to changes compared to the practice under IAS 18.
With effect from 1 January 2018, Equinor has presented ‘Revenue from contracts with customers’ and ‘Other revenue’ (USD 19.9 billion and USD 1.8 billion in the fourth quarter of 2018, and USD 77.7 billion and USD 0.8 billion for the year 2018) as a single caption, Revenues, in the Consolidated statement of income. The impact of commodity-based derivatives within Other revenue increased Revenues with USD 1.4 billion in the fourth quarter of 2018, and decreased Revenues with USD 0.2 billion for the year 2018. In addition to the impact of commodity-based derivatives connected with sales contracts or revenue-related risk management, ‘Other revenue’ mainly includes taxes paid in kind under certain production sharing agreements (PSAs) and adjustments for imbalances between oil and gas production and sales. These items represent a form of revenue, or are closely connected to revenue transactions. In addition, the impact of certain commodity-based earn-out and contingent consideration agreements are now presented under 'Other income'. These elements were previously presented within Revenues.
Change in accounting for
lifting imbalances
Equinor voluntarily changed its
policy for recognition of revenue from the production of oil and gas properties
in which Equinor shares an interest with other companies. Prior to 2018, Equinor
recognised revenue on the basis of volumes lifted and sold to customers during
the period (the sales method). Under the new method, during
2018 Equinor recognises revenues according to Equinor’s ownership in producing
fields, where the accounting for the imbalances is presented as Other revenue. This
voluntary change in policy has been made because it better reflects Equinor’s
operational performance, and at the time of the decision also increased
comparability with the financial reporting of Equinor’s peers. The change in
policy affects the timing of revenue recognition from oil and gas production;
however, the implementation impact recognised in the first quarter of 2018 was
immaterial. Equinor’s equity as at 1 January 2018 has consequently not been
adjusted upon the change in policy, and comparative figures have not been
restated. For information on the method to be applied by Equinor in
accounting for lifting imbalances as of 1 January 2019, reference is made to
Note 1 Organisation and basis of preparation.
Change in Cash
flow presentation – restatement of comparative periods
Equinor has changed its presentation of certain elements related
to derivatives, non-cash currency effects and working capital items in the Consolidated
statement of cash flows. The presentation was changed to better reflect the
cash impact of the different items within operating, investing and financing
activities. The changes impact the classification of cash flow items within
cash flows provided by operating activities and reclassification of cash flow
elements relating to foreign exchange derivatives from operating activities to
investing and financing activities.
Changes
to classification of foreign currency derivatives
Equinor applies foreign currency derivatives to hedge currency exposure related
to financial investments and long-term debt in foreign currencies. Cash receipts
and payments related to these derivatives have previously been classified as an
operating cash flow together with cash flows from other derivative positions.
To better align the cash receipt and payments from foreign currency derivatives
with the cash flows related to the underlying hedged items, the cash receipts
and payments from these derivatives have been reclassified from an operating
cash flow to an investing or financing cash flow depending on the nature of the
hedged item.
Changes
to classification of non-cash currency effects
Non-cash currency exchange gains and losses and currency translation effects
previously presented as part of the individual line items within Cash flows
provided by operating activities have been reclassified into the line item
gain/loss on foreign currency transactions and balances. This to better
distinguish changes in items relating to operating activities, i.e.
decrease/increase in working capital, from the balance sheet impact of non-cash
currency effects.
Changes
to classification related to working capital items
Certain items that previously have been presented as part of change in working
capital have been reclassified to other items related to operating activities
if the nature of the item is non-cash provisions.
IFRS 16 Leases, which will be implemented by Equinor on 1 January 2019, covers the recognition of leases and related disclosure in the financial statements, and will replace IAS 17 Leases. The new standard defines a lease as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In the financial statement of lessees, IFRS 16 requires recognition in the balance sheet for each contract that meets its definition of a lease as right-of-use (RoU) asset and lease liability, while lease payments are to be reflected as interest expense and a reduction of lease liabilities. The right-of-use assets are to be depreciated over the shorter of each contract’s term and the assets’ useful life. IFRS 16 will also lead to changes in the classification of lease-related payments in the statement of cash flows, where the portion of lease payments representing down-payments of lease liabilities will be classified as cash flows used in financing activities.
The standard implies a significant change in lessees’ accounting for leases currently defined as operating leases under IAS 17.
Equinor is for the most part a lessee in applying lease accounting, and the descriptions below consequently reflect lessee accounting. However, in certain instances, particularly as relates to Equinor’s role as operator in unincorporated joint operations (licenses), lessor accounting is applied.
Upon implementation of IFRS 16, the following main implementation and application policy choices have been made by Equinor;
IFRS 16 transition choices
· IFRS 16 will be implemented retrospectively with the cumulative effect of initially recognising the standard as an adjustment to retained earnings at the date of initial application, and without restatement of prior periods’ reported figures (“the modified retrospective method”)
· Contracts already classified either as leases under IAS 17 or as non-lease service arrangements will maintain their respective classifications upon the implementation of IFRS 16 (“grandfathering of contracts”)
· Leases for which the lease term ends within 12 months of 1 January 2019 will not be reflected as leases under IFRS 16
· Right-of-use assets will for most contracts initially be reflected at an amount equal to the corresponding lease liability. Any existing onerous contract provisions related to leases will reduce the value of the corresponding RoU asset to be recognized
IFRS 16 policy application choices
· Short term leases (12 months or less) and leases of low value assets will not be reflected in the balance sheet but will be expensed or (if appropriate) capitalised as incurred, depending on the activity in which the leased asset is used
· Non-lease components within lease contracts will be accounted for separately for all underlying classes of assets and reflected in the relevant expense category or (if appropriate) capitalised as incurred, depending on the activity involved
Significant accounting interpretations and judgments related to the IFRS 16 application
IFRS 16 in general, as well as the policy application choices made, involve several accounting interpretations and application of judgement which will impact Equinor’s Consolidated financial statements. The accounting issues and interpretations which will most significantly affect the implementation of IFRS 16 in Equinor are summarised below.
Distinguishing operators and joint operations
as lessees, including sublease considerations
The most significant accounting judgment in Equinor’s application of IFRS 16
has been and remains distinguishing between the joint operation (licenses) or
the operator as the relevant lessee in upstream activity lease contracts, and
consequently whether such contracts are to be reflected gross (100%) in the
operator’s financial statements, or according to each joint operation partner’s
proportionate share of the lease.
In the oil and gas industry, where activity frequently is carried out through joint arrangements or similar arrangements, the application of IFRS 16 requires evaluations of whether the joint arrangement or its operator is the lessee in each lease agreement.
In many cases where an operator is the sole signatory to a lease contract of an asset to be used in the activities of a specific joint operation, the operator does so implicitly or explicitly on behalf of the joint arrangement. In certain jurisdictions, and importantly for Equinor this includes the Norwegian continental shelf (NCS), the concessions granted by the authorities establish both a right and an obligation for the operator to enter into necessary agreements in the name of the joint operations (licenses). As is the customary norm in upstream activities operated through joint arrangements, the operator will manage the lease, pay the lessor, and subsequently re-bill the partners for their share of the lease costs. In each such instance, it is necessary to determine:
· Whether the operator is the sole lessee in the external lease arrangement, and if so, whether the billings to partners may represent sub-leases, or;
· Whether it is in fact the joint arrangement which is the lessee, with each participant accounting for its proportionate share of the lease
Depending on facts and circumstances in each case, the conclusions reached may vary between contracts and legal jurisdictions.
In summary, Equinor expects to recognise lease liabilities based on the principles described below. In the following, the term “license” references non-incorporated joint operations and similar arrangements;
Leases to be recognised by Equinor as the operator of a license
Where all partners in a license are considered to share the primary responsibility for lease payments under a contract, the related lease liability and RoU asset will be recognised net by Equinor, on the basis of Equinor’s participation interest in the license. Such instances include contracts where all license partners have co-signed a lease contract, or when Equinor as the operator of the license has been given a legally binding mandate to sign the external lease contract on behalf of the license partners, provided that this mandate makes all license participants primary liable for the external lease liability.
Equinor will recognise a lease liability on a gross (100%) basis when it is considered to have the primary responsibility for the full external lease payments. When a financial sublease is considered to exist between Equinor and a license, Equinor will derecognise a portion of the RoU asset equal to the non-operators’ interests in the lease, and instead recognise a corresponding financial lease receivable. A financial sublease will typically exist where Equinor enters into a contract in its own name, where it has the primary responsibility for the external lease payments, where the leased asset is to be used on one specific license, and where the costs and risks related to the use of this asset are carried by that specific license.
Where Equinor reports its lease liabilities on a gross basis, due to being considered the primary responsible for the external lease payment, and where the use of the leased asset on a license is not considered a financial sublease, Equinor will recognise the related RoU asset on a gross basis. Lease payments recovered by Equinor from its license partners based on their proportionate shares of the lease will be recognised as other revenues. Such expenses have under the previous lease accounting rules been reflected net by Equinor, on the basis of Equinor’s net participation interest in the license. Expenses which are not included in a recognised lease obligation, such as payments for short term leases, non-lease components and variable lease payments, will continue to be reported net in Equinor’s statement of income, on the basis of Equinor’s net participation interest.
Leases to be recognised by Equinor as a non-operator of a license
As a license participant, but non-operator, of an oil and gas license, Equinor will recognise its proportionate share of a lease when Equinor is considered to share the primary responsibility for a license committed lease liability. This includes contracts where Equinor has co-signed a lease contract, or contracts for which the operator has been given a legally binding mandate to sign the external lease contract on behalf of the license partners.
Equinor will also recognise its proportionate share when a lease contract is entered by the operator of a license, and where the operator’s use of the leased asset represents a sublease from the operator to the license. A sublease is considered to take place in situations where the operator agrees with its license partners that an identified asset is committed to be used solely in the operations of the specific license for a specified period of time, and where the use of the asset is deemed to be controlled jointly by the license partnership.
Reporting of rig sharing arrangements
As a significant operator on the NCS, Equinor might sign lease
contracts on behalf of one or more individual licenses which have committed to
use the leased rig for specific periods of time. A rig sharing arrangement will
determine where and when the rig will be used throughout the contract period.
When a license is considered a lessee in a rig sharing arrangement, the license
is considered a lessee for its respective portion of the full lease period.
Accordingly, Equinor will account for these lease contracts from a license
perspective, both with regards to considering when to use the short-term exemption
from IFRS 16’s requirements, and when determining the commencement of the
lease.
When a rig lease is entered in Equinor’s own name, the lease liability will be recognised in Equinor’s Consolidated balance sheet on a gross (100%) basis. However, Equinor will not recognise any lease liability for periods where the rig is formally assigned to another party, effectively transferring both the right to use the leased asset and the primary responsibility for lease payments under the contract to this other party.
When a leased asset is assigned to a license for more than one non-consecutive periods within the same contract, Equinor will account for these non-consecutive periods in combination, both when considering whether to use the short-term exemption, and when determining the commencement of the lease.
Separation of lease and non-lease components
Many of Equinor’s lease contracts, such as rig and vessel leases, involve a number of additional services and components, including personnel cost, maintenance, drilling related activities, and other items. For a number of these contracts, the additional services represent a not inconsiderable portion of the total contract value. Where the additional services are not separately priced, the consideration paid has been allocated based on the relative stand-alone prices of the lease and non-lease components. Equinor’s previous practice for lease commitments reporting was to not distinguish fixed non-lease components within a lease contract from the actual lease components. The choice made under IFRS 16 to account for non-lease components separately for all classes of assets consequently represents a change in Equinor’s reporting of leases.
Evaluating
the impact of option periods for the lease terms
Many of Equinor’s major leases, such as leases of vessels, rigs and buildings,
include options to extend the lease term. Under IFRS 16, the evaluation of
whether each lease contract’s extension options are considered reasonably
certain to be exercised, are made at commencement of the leases and
subsequently when facts and circumstances which are under the control of
Equinor require it. In Equinor’s view, the term ‘reasonably certain’ implies a
probability level significantly higher than ‘probable’, and this has been
reflected in Equinor’s evaluations.
Distinguishing fixed and variable lease payment
elements
Under IFRS 16, fixed and in-substance fixed lease payments are to be included
in the commencement date computation of a lease liability, while variable
payments dependent on use of the asset are not. Particularly as regards
drilling rig leases, Equinor’s lease contracts include fixed rates for when the
asset in question is in operation, and various alternative, lower rates
(“stand-by rates”) for periods where the asset is engaged in specified
activities or idle, but still under contract. In general, variability in lease
payments under the contract has its basis of different uses and activity
levels, and the variable elements have been determined to relate to non-lease
components only. Consequently, the lease components of these contractual
payments are considered fixed for the purposes of IFRS 16.
Determining
the incremental borrowing rate to be used as discount factor
In measuring the present value of the lease liability under IFRS 16, the
standard requires that the lessee’s incremental borrowing rate be used as
discount factor if the rate implicit in the lease cannot be readily determined.
In establishing Equinor’s lease liabilities, the incremental borrowing rates
used as discount factors in discounting payments are established based on a
consistent approach reflecting the Group’s borrowing rate, the currency of the
obligation, the duration of the lease term, and the credit spread for the legal
entity entering the lease contract.
Expected impact from implementation of IFRS 16 on Equinor’s financial statements
Balance sheet
Equinor currently expects that the implementation of IFRS 16 on 1 January 2019 will increase the Consolidated balance sheet by adding lease liabilities of approximately USD 4 billion and a corresponding right of use assets on the asset side. Consequently, equity is not expected to be impacted from the implementation of IFRS 16. The figure is a preliminary estimate, on basis of Equinor’s current policy interpretations.
Certain policy interpretation elements are currently under review by the IASB and the IFRS Interpretations Committee (IFRIC), particularly related to the recognition of leases entered by operators in the oil and gas industry for the use in joint operations (gross/net/sublease accounting issues, as discussed above). Equinor considers its current interpretations and application of IFRS 16 on these matters, as also described above, to be sufficiently in line with statements made by the IASB and the IFRIC.
The estimated impact on Equinor’s balance sheet is lower than the operating lease commitments disclosed in note 21 in Equinor’s annual financial statements for 2017. In addition to changes in the lease portfolio during 2018, the main reasons for this reduction are that certain contractual payments included in the lease commitments will not be included in the lease liabilities to be reported in the opening balance per 1 January 2019 under IFRS 16. This include short term leases and lease contracts which ends within 2019, certain non-lease components previously reported as part of lease commitments and lease commitments related to leases not yet commenced. Reference is made to the policy descriptions above for explanations of the reconciling items. Leases not yet commenced relates to situations where a contract is signed, but where Equinor has not yet obtained the right to control an underlying identified asset, either on its own or through a joint operation.
Lease liabilities are further reduced from discounting, as lease liabilities under IFRS 16 are discounted net present values while lease commitments have historically been reported at nominal payments.
These effects are partially offset by higher reported lease liabilities relating to lease contracts entered for the use on operated licenses. Following the policy interpretation described above, Equinor will report lease liabilities on a gross basis for contracts where Equinor has the primary responsibility for a lease payment towards an asset owner. Where Equinor has entered such contracts solely for the use on operated licenses, and where the licenses have committed to share the costs of these lease contracts, these lease commitments have previously been reported on a net basis, reflecting Equinor’s net commitment. In particular, lease contracts for assets used to serve Equinor’s portfolio of operated assets across licenses on the NCS, and where the contract is not signed on behalf of a specific license have previously been reported on a net basis but will be reported gross under IFRS 16. However, as most license specific leases on the NCS, such as rigs and FSOs, are entered on behalf of specific licenses, these leases will continue to be reported on a net basis, consistent with previously reported lease commitments.
Extension and termination options within the lease contracts are in all material respect reported on the same basis as under IAS 17 Leases. Most leases are used in operational activities. The extension options which are considered reasonably certain to be exercised are mainly those for which operational decisions have been made which make the leased assets vital to the continued relevant business activities.
Statement of income
In the Consolidated statement of income, operating lease costs will be replaced by depreciation and interest expenses. For leases allocated to activities which are capitalised, the costs will continue to be expensed as before, through depreciation of the asset involved or through the subsequent expensing of capitalised exploration.
Equinor expects more currency volatility within financial items due to recognition of lease liabilities in foreign currencies. In particular, this relates to USD-denominated lease contracts for assets such as drilling rigs and supply vessels used on the NCS, where the contract is entered into by an Equinor entity with NOK as its functional currency, and NOK-based office leases entered into by Equinor ASA, which has USD as its functional currency.
Cash flow statement
In the cash flow statement, lease down-payments will be presented as a cash flow used in financing activities under IFRS 16. Previously, operating lease costs were presented within cash flows from operations or investing cash flows respectively, depending on whether the leased asset is used in operating activity or activities that are capitalised.
In situations where Equinor is considered to have the primary responsibility for a lease liability, and consequently reports the lease liability on a gross basis, any corresponding payments from partner recharges recognised as other revenue in the income statement will also be reported on a gross basis in the cash flow statement, with the gross lease payments being recognised as a financing cash flow and the recharge from partners recognised as an operating cash flow.
Consequently, cash flows from operating activities will increase and cash flow used in investing activities will be reduced due to the implementation of IFRS 16.
Segment reporting
Equinor does not plan changes to how management will monitor and follow up lease contracts used in its business operations. All lease contracts will therefore be presented within Equinor’s “Other”-segment, and the E&P segments as well as the MMP segment will continue to be presented without reflecting IFRS 16 lease accounting. In these segments, the costs of operating leases will be presented as operating costs rather than depreciation and interests. A corresponding credit will be recognised in the “Other”-segment to offset the lease costs recognised in the E&P and MMP segments.
OPERATIONAL DATA |
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||
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|
|
|
|
Quarters |
Change |
|
|
Full year |
|
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
Operational data |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prices |
|
|
|
67.8 |
75.3 |
61.3 |
11% |
|
Average Brent oil price (USD/bbl) |
71.1 |
54.2 |
31% |
59.8 |
69.1 |
57.2 |
5% |
|
E&P Norway average liquids price (USD/bbl) |
64.3 |
50.2 |
28% |
58.1 |
65.9 |
54.4 |
7% |
|
E&P International average liquids price (USD/bbl) |
61.6 |
47.6 |
29% |
59.0 |
67.6 |
56.0 |
5% |
|
Group average liquids price (USD/bbl) |
63.1 |
49.1 |
29% |
497 |
557 |
457 |
9% |
|
Group average liquids price (NOK/bbl) [1] |
513 |
405 |
27% |
6.40 |
5.48 |
4.90 |
31% |
|
Transfer price natural gas (USD/mmbtu) [9] |
5.65 |
4.33 |
31% |
7.67 |
6.99 |
6.27 |
22% |
|
Average invoiced gas prices - Europe (USD/mmbtu) [8] |
7.04 |
5.55 |
27% |
3.58 |
2.58 |
2.53 |
42% |
|
Average invoiced gas prices - North America (USD/mmbtu) [8] |
3.04 |
2.73 |
11% |
4.1 |
6.9 |
5.5 |
(24%) |
|
Refining reference margin (USD/bbl) [2] |
5.3 |
6.3 |
(16%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entitlement production (mboe per day) |
|
|
|
571 |
547 |
588 |
(3%) |
|
E&P Norway entitlement liquids production |
565 |
594 |
(5%) |
454 |
458 |
394 |
15% |
|
E&P International entitlement liquids production |
434 |
415 |
5% |
1,026 |
1,005 |
982 |
4% |
|
Group entitlement liquids production |
999 |
1,009 |
(1%) |
745 |
688 |
788 |
(5%) |
|
E&P Norway entitlement gas production |
722 |
740 |
(2%) |
249 |
202 |
191 |
30% |
|
E&P International entitlement gas production |
218 |
173 |
26% |
995 |
890 |
979 |
2% |
|
Group entitlement gas production |
940 |
913 |
3% |
2,020 |
1,895 |
1,962 |
3% |
|
Total entitlement liquids and gas production [3] |
1,940 |
1,922 |
1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity production (mboe per day) |
|
|
|
571 |
547 |
588 |
(3%) |
|
E&P Norway equity liquids production |
565 |
594 |
(5%) |
580 |
586 |
532 |
9% |
|
E&P International equity liquids production |
567 |
545 |
4% |
1,152 |
1,133 |
1,120 |
3% |
|
Group equity liquids production |
1,132 |
1,139 |
(1%) |
745 |
688 |
788 |
(5%) |
|
E&P Norway equity gas production |
722 |
740 |
(2%) |
273 |
245 |
225 |
21% |
|
E&P International equity gas production |
256 |
200 |
28% |
1,019 |
933 |
1,013 |
1% |
|
Group equity gas production |
979 |
941 |
4% |
2,170 |
2,066 |
2,134 |
2% |
|
Total equity liquids and gas production [4] |
2,111 |
2,080 |
1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MMP sales volumes |
|
|
|
211.8 |
204.1 |
215.0 |
(2%) |
|
Crude oil sales volumes (mmbl) |
845.4 |
817.0 |
3% |
13.8 |
12.8 |
13.9 |
(1%) |
|
Natural gas sales Equinor entitlement (bcm) |
52.8 |
52.0 |
1% |
1.6 |
1.3 |
1.7 |
(6%) |
|
Natural gas sales third-party volumes (bcm) |
5.7 |
6.4 |
(11%) |
EXCHANGE RATES |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Quarters |
Change |
|
|
Full year |
|
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
Exchange rates |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
0.1186 |
0.1214 |
0.1226 |
(3%) |
|
NOK/USD average daily exchange rate |
0.1229 |
0.1210 |
2% |
0.1151 |
0.1223 |
0.1219 |
(6%) |
|
NOK/USD period-end exchange rate |
0.1151 |
0.1219 |
(6%) |
8.4298 |
8.2366 |
8.1577 |
3% |
|
USD/NOK average daily exchange rate |
8.1338 |
8.2630 |
(2%) |
8.6885 |
8.1777 |
8.2050 |
6% |
|
USD/NOK period-end exchange rate |
8.6885 |
8.2050 |
6% |
1.1413 |
1.1628 |
1.1774 |
(3%) |
|
EUR/USD average daily exchange rate |
1.1798 |
1.1288 |
5% |
1.1450 |
1.1576 |
1.1993 |
(5%) |
|
EUR/USD period-end exchange rate |
1.1450 |
1.1993 |
(5%) |
HEALTH, SAFETY AND THE ENVIRONMENT |
|
|
|
|
|
|
Full year |
Full year |
Health, safety and the environment |
2018 |
2017 |
|
|
|
Injury/incident frequency |
|
|
Total recordable injury frequency (TRIF) |
2.8 |
2.8 |
Serious Incident Frequency (SIF) |
0.5 |
0.6 |
Oil spills |
|
|
Accidental oil spills (number of) |
239 |
207 |
Accidental oil spills (cubic metres) |
141 |
34 |
|
|
|
|
|
|
|
Full year |
Full year |
Climate |
2018 |
2017 |
|
|
|
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).
Reconciliation of net operating income to adjusted earnings |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
The table specifies the adjustments made to each of the profit and loss line item included in the net operating income subtotal. |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items impacting net operating income in the fourth quarter of 2018 |
Equinor group |
|
Exploration & Production Norway |
|
Exploration & Production International |
|
Marketing, Midstream & Processing |
|
Other |
(in USD million) |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
Net operating income |
6,745 |
|
3,736 |
|
1,456 |
|
1,255 |
|
298 |
|
|
|
|
|
|
|
|
|
|
Total revenues and other income |
(2,564) |
|
(507) |
|
(849) |
|
(1,208) |
|
- |
Changes in fair value of derivatives |
(901) |
|
(17) |
|
9 |
|
(893) |
|
- |
Periodisation of inventory hedging effect |
(291) |
|
- |
|
- |
|
(291) |
|
- |
Gain/loss on sale of assets |
(549) |
|
(490) |
|
(35) |
|
(24) |
|
- |
Provisions1) |
(823) |
|
- |
|
(823) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Purchases [net of inventory variation] |
37 |
|
- |
|
- |
|
272 |
|
(235) |
Operational storage effects |
272 |
|
- |
|
- |
|
272 |
|
- |
Eliminations |
(235) |
|
- |
|
- |
|
- |
|
(235) |
|
|
|
|
|
|
|
|
|
|
Operating and administrative expenses |
(4) |
|
3 |
|
(7) |
|
- |
|
- |
Gain/loss on sale of assets |
3 |
|
3 |
|
0 |
|
- |
|
- |
Provisions1) |
(7) |
|
- |
|
(7) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and impairment |
148 |
|
- |
|
148 |
|
- |
|
- |
Provisions1) |
148 |
|
- |
|
148 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Exploration expenses |
25 |
|
- |
|
25 |
|
- |
|
- |
Impairment |
36 |
|
- |
|
36 |
|
- |
|
- |
Cost accrual changes |
(11) |
|
- |
|
(11) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Sum of adjustments to net operating income |
(2,358) |
|
(504) |
|
(683) |
|
(936) |
|
(235) |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings [5] |
4,387 |
|
3,232 |
|
774 |
|
319 |
|
63 |
|
|
|
|
|
|
|
|
|
|
Tax on adjusted earnings |
(2,850) |
|
(2,411) |
|
(282) |
|
(174) |
|
18 |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings after tax [5] |
1,537 |
|
821 |
|
491 |
|
144 |
|
81 |
|
|
|
|
|
|
|
|
|
|
1) Related to the Agbami redetermination process in Nigeria |
|||||||||
|
|
|
|
|
|
|
|
|
|
Items impacting net operating income in the fourth quarter of 2017 |
Equinor group |
Exploration & Production Norway |
Exploration & Production International |
Marketing, Midstream & Processing |
Other |
(in USD million) |
|||||
|
|
|
|
|
|
Net operating income |
5,182 |
3,211 |
1,754 |
343 |
(125) |
|
|
|
|
|
|
Total revenues and other income |
341 |
107 |
(42) |
276 |
(0) |
Changes in fair value of derivatives |
145 |
(12) |
(0) |
158 |
- |
Periodisation of inventory hedging effect |
119 |
- |
- |
119 |
- |
Over-/underlift |
78 |
119 |
(41) |
- |
- |
Gain/loss on sale of assets |
(1) |
- |
(1) |
- |
(0) |
|
|
|
|
|
|
Purchases [net of inventory variation] |
28 |
- |
- |
(77) |
105 |
Operational storage effects |
(77) |
- |
- |
(77) |
- |
Eliminations |
105 |
- |
- |
- |
105 |
|
|
|
|
|
|
Operating and administrative expenses |
26 |
(46) |
33 |
39 |
- |
Over-/underlift |
(15) |
(50) |
35 |
- |
- |
Other adjustments |
4 |
4 |
- |
- |
- |
Gain/loss on sale of assets |
(6) |
- |
(6) |
- |
- |
Provisions |
39 |
- |
- |
39 |
- |
Cost accrual changes |
4 |
- |
4 |
- |
- |
|
|
|
|
|
|
Depreciation, amortisation and impairment |
(1,141) |
(268) |
(825) |
(48) |
- |
Reversal of Impairment |
(1,141) |
(268) |
(825) |
(48) |
- |
|
|
|
|
|
|
Exploration expenses |
(481) |
- |
(481) |
- |
- |
Impairment |
11 |
- |
11 |
- |
- |
Reversal of Impairment |
(517) |
- |
(517) |
- |
- |
Cost accrual changes |
25 |
- |
25 |
- |
- |
|
|
|
|
|
|
Sum of adjustments to net operating income |
(1,227) |
(207) |
(1,315) |
190 |
105 |
|
|
|
|
|
|
Adjusted earnings [5] |
3,956 |
3,004 |
438 |
533 |
(20) |
|
|
|
|
|
|
Tax on adjusted earnings |
(2,649) |
(2,184) |
(239) |
(242) |
16 |
|
|
|
|
|
|
Adjusted earnings after tax [5] |
1,307 |
819 |
200 |
292 |
(4) |
|
|
|
|
|
|
Items impacting net operating income in the full year of 2018 |
Equinor group |
|
Exploration & Production Norway |
|
Exploration & Production International |
|
Marketing, Midstream & Processing |
|
Other |
(in USD million) |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
Net operating income |
20,137 |
|
14,406 |
|
3,802 |
|
1,906 |
|
23 |
|
|
|
|
|
|
|
|
|
|
Total revenues and other income |
(2,141) |
|
(766) |
|
(931) |
|
(445) |
|
- |
Changes in fair value of derivatives |
(95) |
|
(60) |
|
0 |
|
(35) |
|
- |
Periodisation of inventory hedging effect |
(280) |
|
- |
|
- |
|
(280) |
|
- |
Change in accounting policy1) |
(287) |
|
(216) |
|
(71) |
|
- |
|
- |
Gain/loss on sale of assets |
(656) |
|
(490) |
|
(37) |
|
(129) |
|
- |
Provisions |
(823) |
|
- |
|
(823) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Purchases [net of inventory variation] |
29 |
|
- |
|
- |
|
132 |
|
(103) |
Operational storage effects |
132 |
|
- |
|
- |
|
132 |
|
- |
Eliminations |
(103) |
|
- |
|
- |
|
- |
|
(103) |
|
|
|
|
|
|
|
|
|
|
Operating and administrative expenses |
114 |
|
4 |
|
(8) |
|
118 |
|
- |
Other adjustments |
1 |
|
1 |
|
- |
|
- |
|
- |
Gain/loss on sale of assets |
2 |
|
3 |
|
(1) |
|
- |
|
- |
Provisions |
111 |
|
- |
|
(7) |
|
118 |
|
- |
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and impairment |
(457) |
|
(604) |
|
302 |
|
(155) |
|
- |
Impairment |
794 |
|
- |
|
794 |
|
- |
|
- |
Reversal of impairment |
(1,399) |
|
(604) |
|
(640) |
|
(155) |
|
- |
Provisions |
148 |
|
- |
|
148 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Exploration expenses |
276 |
|
7 |
|
269 |
|
- |
|
- |
Impairment |
287 |
|
7 |
|
280 |
|
- |
|
- |
Cost accrual changes |
(11) |
|
- |
|
(11) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Sum of adjustments to net operating income |
(2,178) |
|
(1,359) |
|
(367) |
|
(350) |
|
(103) |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings [5] |
17,959 |
|
13,047 |
|
3,435 |
|
1,556 |
|
(79) |
|
|
|
|
|
|
|
|
|
|
Tax on adjusted earnings |
(11,265) |
|
(9,514) |
|
(992) |
|
(707) |
|
(53) |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings after tax [5] |
6,693 |
|
3,533 |
|
2,443 |
|
849 |
|
(132) |
1) Change in accounting policy for lifting imbalances. |
|
|
|
|
|
|
|
|
|
Items impacting net operating income in the full year of 2017 |
Equinor group |
|
Exploration & Production Norway |
|
Exploration & Production International |
|
Marketing, Midstream & Processing |
|
Other |
(in USD million) |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
Net operating income |
13,771 |
|
10,485 |
|
1,341 |
|
2,243 |
|
(298) |
|
|
|
|
|
|
|
|
|
|
Total revenues and other income |
(405) |
|
(16) |
|
(18) |
|
(365) |
|
(7) |
Changes in fair value of derivatives |
(197) |
|
103 |
|
22 |
|
(322) |
|
- |
Periodisation of inventory hedging effect |
(43) |
|
- |
|
- |
|
(43) |
|
- |
Over-/underlift |
(155) |
|
(119) |
|
(36) |
|
- |
|
- |
Gain/loss on sale of assets |
(10) |
|
- |
|
(3) |
|
- |
|
(7) |
|
|
|
|
|
|
|
|
|
|
Purchases [net of inventory variation] |
(35) |
|
- |
|
- |
|
(94) |
|
59 |
Operational storage effects |
(94) |
|
- |
|
- |
|
(94) |
|
- |
Eliminations |
59 |
|
- |
|
- |
|
- |
|
59 |
|
|
|
|
|
|
|
|
|
|
Operating and administrative expenses |
418 |
|
11 |
|
395 |
|
12 |
|
- |
Over-/underlift |
11 |
|
7 |
|
4 |
|
- |
|
- |
Other adjustments |
9 |
|
4 |
|
5 |
|
- |
|
- |
Gain/loss on sale of assets |
382 |
|
- |
|
382 |
|
- |
|
- |
Provisions |
12 |
|
- |
|
- |
|
12 |
|
- |
Cost accrual changes |
4 |
|
- |
|
4 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and impairment |
(1,055) |
|
(905) |
|
(102) |
|
(48) |
|
- |
Impairment |
917 |
|
194 |
|
723 |
|
- |
|
- |
Reversal of impairment |
(1,972) |
|
(1,099) |
|
(825) |
|
(48) |
|
- |
|
|
|
|
|
|
|
|
|
|
Exploration expenses |
(56) |
|
- |
|
(56) |
|
- |
|
- |
Impairment |
435 |
|
- |
|
435 |
|
- |
|
- |
Reversal of impairment |
(517) |
|
- |
|
(517) |
|
- |
|
- |
Cost accrual changes |
25 |
|
- |
|
25 |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Sum of adjustments to net operating income |
(1,133) |
|
(910) |
|
219 |
|
(495) |
|
53 |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings [5] |
12,638 |
|
9,575 |
|
1,559 |
|
1,749 |
|
(245) |
|
|
|
|
|
|
|
|
|
|
Tax on adjusted earnings |
(8,110) |
|
(6,772) |
|
(633) |
|
(807) |
|
103 |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings after tax [5] |
4,528 |
|
2,771 |
|
949 |
|
948 |
|
(139) |
|
|
|
|
|
|
|
|
|
|
Items impacting net operating income in the third quarter of 2018 |
Equinor group |
|
Exploration & Production Norway |
|
Exploration & Production International |
|
Marketing, Midstream & Processing |
|
Other |
(in USD million) |
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
Net operating income |
4,597 |
|
3,393 |
|
1,078 |
|
157 |
|
(32) |
|
|
|
|
|
|
|
|
|
|
Total revenues and other income |
345 |
|
- |
|
4 |
|
341 |
|
- |
Changes in fair value of derivatives |
312 |
|
- |
|
4 |
|
308 |
|
- |
Periodisation of inventory hedging effect |
138 |
|
- |
|
- |
|
138 |
|
- |
Gain/loss on sale of assets |
(105) |
|
- |
|
- |
|
(105) |
|
- |
|
|
|
|
|
|
|
|
|
|
Purchases [net of inventory variation] |
(31) |
|
- |
|
- |
|
(38) |
|
7 |
Operational storage effects |
(38) |
|
- |
|
- |
|
(38) |
|
- |
Eliminations |
7 |
|
- |
|
- |
|
- |
|
7 |
|
|
|
|
|
|
|
|
|
|
Operating and administrative expenses |
22 |
|
- |
|
(0) |
|
22 |
|
- |
Provisions |
22 |
|
- |
|
- |
|
22 |
|
- |
|
|
|
|
|
|
|
|
|
|
Depreciation, amortisation and impairment |
(89) |
|
- |
|
(89) |
|
- |
|
- |
Impairment |
269 |
|
- |
|
269 |
|
- |
|
- |
Reversal of Impairment |
(358) |
|
- |
|
(358) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Sum of adjustments to net operating income |
247 |
|
- |
|
(85) |
|
324 |
|
7 |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings [5] |
4,843 |
|
3,393 |
|
994 |
|
481 |
|
(25) |
|
|
|
|
|
|
|
|
|
|
Tax on adjusted earnings |
(2,856) |
|
(2,463) |
|
(219) |
|
(178) |
|
5 |
|
|
|
|
|
|
|
|
|
|
Adjusted earnings after tax [5] |
1,988 |
|
930 |
|
774 |
|
303 |
|
(19) |
Adjusted earnings Marketing, Midstream & Processing (MMP) break down |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
Quarters |
Change |
|
Adjusted earnings break down |
Full year |
|
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
(in USD million) |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
257 |
247 |
286 |
(10%) |
|
Natural Gas Europe |
946 |
691 |
37% |
13 |
(6) |
(6) |
N/A |
|
Natural Gas US |
92 |
26 |
>100% |
3 |
129 |
94 |
(97%) |
|
Liquids |
205 |
412 |
(50%) |
45 |
112 |
160 |
(72%) |
|
Other |
312 |
621 |
(50%) |
|
|
|
|
|
|
|
|
|
319 |
481 |
533 |
(40%) |
|
Adjusted earnings MMP |
1,556 |
1,749 |
(11%) |
ADJUSTED EARNINGS AFTER TAX BY SEGMENT [5] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter |
||||||
|
2018 |
|
|
|
2017 |
|
|
(in USD million) |
Adjusted earnings |
Tax on adjusted earnings |
Adjusted earnings after tax |
|
Adjusted earnings |
Tax on adjusted earnings |
Adjusted earnings after tax |
|
|||||||
|
|
|
|
|
|
|
|
E&P Norway |
3,232 |
(2,411) |
821 |
|
3,004 |
(2,184) |
819 |
E&P International |
774 |
(282) |
491 |
|
438 |
(239) |
200 |
MMP |
319 |
(174) |
144 |
|
533 |
(242) |
292 |
Other |
63 |
18 |
81 |
|
(20) |
16 |
(4) |
|
|
|
|
|
|
|
|
Group |
4,387 |
(2,850) |
1,537 |
|
3,956 |
(2,649) |
1,307 |
|
|
|
|
|
|
|
|
Effective tax rates on adjusted earnings |
|
|
65.0% |
|
|
|
67.0% |
|
Full year |
||||||
2018 |
|
2017 |
|||||
(in USD million) |
Adjusted earnings |
Tax on adjusted earnings |
Adjusted earnings after tax |
|
Adjusted earnings |
Tax on adjusted earnings |
Adjusted earnings after tax |
|
|||||||
|
|
|
|
|
|
|
|
E&P Norway |
13,047 |
(9,514) |
3,533 |
|
9,575 |
(6,772) |
2,771 1) |
E&P International |
3,435 |
(992) |
2,443 |
|
1,559 |
(633) |
949 1) |
MMP |
1,556 |
(707) |
849 |
|
1,749 |
(807) |
948 1) |
Other |
(79) |
(53) |
(132) |
|
(245) |
103 |
(139)1) |
|
|
|
|
|
|
|
|
Group |
17,959 |
(11,265) |
6,693 |
|
12,638 |
(8,110) |
4,528 |
|
|
|
|
|
|
|
|
Effective tax rates on adjusted earnings |
|
|
62.7% |
|
|
|
64.2% |
1) The figures from the first quarter 2017 do not include minor adjustments mainly related to net financial items allocated at business level.
Reconciliation of adjusted earnings after tax to net income |
|||||||
|
|
|
|
|
|
|
|
Quarters |
|
Reconciliation of adjusted earnings after tax to net income |
|
Full year |
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
|
(in USD million) |
|
2018 |
2017 |
|
|
|
|
|
|
|
|
6,745 |
4,597 |
5,182 |
|
Net operating income (NOI) |
A |
20,137 |
13,771 |
3,470 |
2,689 |
2,662 |
|
Tax on NOI |
B |
11,970 |
8,944 |
|
|
|
|
|
|
|
|
3,275 |
1,908 |
2,520 |
|
NOI after tax |
C = A-B |
8,167 |
4,827 |
|
|
|
|
|
|
|
|
(2,358) |
247 |
(1,227) |
|
Adjustments1) |
D |
(2,178) |
(1,133) |
(620) |
167 |
(13) |
|
Tax on adjustments |
E |
(705) |
(834) |
|
|
|
|
|
|
|
|
1,537 |
1,988 |
1,307 |
|
Adjusted earnings after tax [5] |
F = C+D-E |
6,693 |
4,528 |
|
|
|
|
|
|
|
|
(179) |
(348) |
(39) |
|
Net financial items |
G |
(1,263) |
(351) |
270 |
106 |
94 |
|
Tax on net financial items |
H |
635 |
122 |
|
|
|
|
|
|
|
|
3,367 |
1,666 |
2,575 |
|
Net income |
I = C+G+H |
7,538 |
4,598 |
1) Represents the total adjustments to net operating income made to arrive at adjusted earnings (i.e. adjusted purchases, adjusted operating and administrative expenses, adjusted depreciation, amortisation and impairment expenses and adjusted exploration expenses, each of which are presented and reconciled to the relevant related IFRS figure for the periods presented in this report).
NET ADJUSTED FINANCIAL ITEMS 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other financial items |
Net foreign exchange gains (losses) |
Gains (losses) derivative financial instruments |
Interest and other finance expenses |
Net before tax |
Estimated tax effect |
Net after tax |
|
Net adjusted financial items in the fourth quarter of 2018 |
||||||||
(in USD million) |
||||||||
|
|
|
|
|
|
|
|
|
Financial items according to IFRS |
39 |
68 |
(12) |
(274) |
(179) |
296 |
117 |
|
|
|
|
|
|
|
|
|
|
Foreign exchange (FX) impacts (incl. derivatives) |
(19) |
(68) |
- |
- |
(87) |
- |
- |
|
Interest rate (IR) derivatives |
- |
- |
12 |
- |
12 |
- |
- |
|
Fair value adjustment financial investment |
86 |
- |
- |
- |
86 |
- |
- |
|
|
|
|
|
|
|
|
|
|
Adjusted financial items |
106 |
0 |
0 |
(274) |
(167) |
296 |
129 |
|
|
|
|
|
|
|
|
|
|
Interest income and other financial items |
Net foreign exchange gains (losses) |
Gains (losses) derivative financial instruments |
Interest and other finance expenses |
Net before tax |
Estimated tax effect |
Net after tax |
|
Net adjusted financial items in the full year of 2018 |
||||||||
(in USD million) |
||||||||
|
|
|
|
|
|
|
|
|
Financial items according to IFRS |
283 |
(166) |
(341) |
(1040) |
(1263) |
660 |
(603) |
|
|
|
|
|
|
|
|
|
|
Foreign exchange (FX) impacts (incl. derivatives) |
(3) |
166 |
- |
- |
163 |
- |
- |
|
Interest rate (IR) derivatives |
- |
- |
341 |
- |
341 |
- |
- |
|
Fair value adjustment financial investment |
147 |
- |
- |
- |
147 |
- |
- |
|
|
|
|
|
|
|
|
|
|
Adjusted financial items excluding FX and IR derivatives |
427 |
0 |
0 |
(1040) |
(612) |
660 |
48 |
NET ADJUSTED FINANCIAL ITEMS 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other financial items |
Net foreign exchange gains (losses) |
Gains (losses) derivative financial instruments |
Interest and other finance expenses |
Net before tax |
Estimated tax effect |
Net after tax |
|
Net adjusted financial items in the fourth quarter of 2017 |
||||||||
(in USD million) |
||||||||
|
|
|
|
|
|
|
|
|
Adjusted financial items |
93 |
0 |
0 |
(336) |
(243) |
61 |
(182) |
ADJUSTED EXPLORATION EXPENSES |
|
|||||||
|
|
|
|
|
|
|
|
|
Quarters |
Change |
|
Adjusted exploration expenses |
Full year |
|
|||
Q4 2018 |
Q3 2018 |
Q4 2017 |
Q4 on Q4 |
|
(in USD million) |
2018 |
2017 |
Change |
|
|
|
|
|
|
|
|
|
233 |
135 |
149 |
56% |
|
E&P Norway exploration expenditures (activity) |
573 |
472 |
21% |
295 |
182 |
193 |
53% |
|
E&P International exploration expenditures (activity) |
865 |
762 |
13% |
|
|
|
|
|
|
|
|
|
528 |
316 |
343 |
54% |
|
Group exploration expenditures (activity) |
1,438 |
1,234 |
17% |
16 |
24 |
5 |
>100% |
|
Expensed, previously capitalised exploration expenditures |
68 |
73 |
(8%) |
(138) |
(102) |
(49) |
>100% |
|
Capitalised share of current period's exploration activity |
(390) |
(167) |
>100% |
36 |
0 |
(506) |
N/A |
|
Impairment (reversal of impairment) |
289 |
(81) |
N/A |
|
|
|
|
|
|
|
|
|
442 |
239 |
(207) |
N/A |
|
Exploration expenses IFRS |
1,405 |
1,059 |
33% |
|
|
|
|
|
|
|
|
|
(25) |
- |
481 |
N/A |
|
Items impacting |
(276) |
56 |
N/A |
|
|
|
|
|
|
|
|
|
417 |
239 |
274 |
52% |
|
Adjusted exploration expenses |
1,128 |
1,115 |
1% |
|
|
|
|
|
|
|
|
|
For items impacting, see Reconciliation of net operating income to adjusted earnings in the Supplementary disclosures. |
Calculated Adjusted ROACE based on Adjusted earnings after tax and capital employed [5] |
31 December |
||
(in USD million, except percentages) |
2018 |
2017 |
|
|
|
|
|
Adjusted earnings after tax (A) |
6,694 |
4,529 |
|
|
|
|
|
Average capital employed (B) |
55,704 |
55,330 |
|
|
|
|
|
Calculated ROACE based on Adjusted earnings after tax and capital employed (A/B) |
12.0% |
8.2% |
Calculation of capital employed and net debt to capital employed ratio |
|
At 31 December |
At 30 September |
At 31 December |
(in USD million) |
|
2018 |
2018 |
2017 |
|
|
|
|
|
Shareholders' equity |
|
42,970 |
41,907 |
39,861 |
Non-controlling interests |
|
19 |
23 |
24 |
|
|
|
|
|
Total equity |
A |
42,990 |
41,930 |
39,885 |
|
|
|
|
|
Current finance debt |
|
2,463 |
1,823 |
4,091 |
Non-current finance debt |
|
23,264 |
24,173 |
24,183 |
|
|
|
|
|
Gross interest-bearing debt |
B |
25,727 |
25,996 |
28,274 |
|
|
|
|
|
Cash and cash equivalents |
|
7,556 |
4,919 |
4,390 |
Current financial investments |
|
7,041 |
8,623 |
8,448 |
|
|
|
|
|
Cash and cash equivalents and financial investment |
C |
14,597 |
13,541 |
12,837 |
|
|
|
|
|
Net interest-bearing debt before adjustments [10] |
B1 = B-C |
11,130 |
12,455 |
15,437 |
|
|
|
|
|
Other interest-bearing elements 1) |
|
1,261 |
1,313 |
1,014 |
Marketing instruction adjustment 2) |
|
(146) |
(151) |
(164) |
|
|
|
|
|
Net interest-bearing debt adjusted [5] |
B2 |
12,246 |
13,617 |
16,287 |
|
|
|
|
|
Normalisation for cash-build up before tax payment (50% of Tax Payment) 3) |
|
- |
866 |
- |
|
|
|
|
|
Net interest-bearing debt adjusted [5] |
B3 |
12,246 |
14,483 |
16,287 |
|
|
|
|
|
Calculation of capital employed [5] |
|
|
|
|
Capital employed before adjustments to net interest-bearing debt |
A+B1 |
54,120 |
54,385 |
55,322 |
Capital employed before normalisation for cash build up for tax payment |
A+B2 |
55,235 |
55,547 |
56,172 |
Capital employed adjusted |
A+B3 |
55,235 |
56,413 |
56,172 |
|
|
|
|
|
Calculated net debt to capital employed [5] |
|
|
|
|
Net debt to capital employed before adjustments |
(B1)/(A+B1) |
20.6% |
22.9% |
27.9% |
Net debt to capital employed before normalisation for tax payment |
(B2)/(A+B2) |
22.2% |
24.5% |
29.0% |
Net debt to capital employed adjusted |
(B3)/(A+B3) |
22.2% |
25.7% |
29.0% |
1) Cash and cash equivalents adjustments regarding collateral deposits classified as cash and cash equivalents in the Consolidated balance sheet but considered as non-cash in the non-GAAP calculations as well as financial investments in Equinor Insurance AS classified as current financial investments.
2) Adjustment to gross interest-bearing debt due to the Norwegian state`s financial interest (SDFI) part of the financial lease in the Snøhvit vessels which are included in Equinor’s Consolidated balance sheet.
3) Adjustment to net interest-bearing debt for cash build-up in the first quarter and the third quarter before tax payment on 1 April and 1 October. This is to exclude 50% of the cash build-up to have a more even allocation of tax payments between the four quarters and hence a more representative net interest-bearing debt.
Non-GAAP financial measures are defined as numerical measures that either exclude or include amounts that are not excluded or included in the comparable measures calculated and presented in accordance with GAAP (i.e. IFRS).
For more information on our use of non-GAAP financial measures, see section 5.2 Use and reconciliation of non-GAAP financial measures in Equinor's 2017 Annual Report and Form 20-F.
The following financial measures may be considered non-GAAP financial measures:
· Adjusted earnings (including adjusted revenues and other income, adjusted purchases, adjusted operating expenses and selling, general and administrative expenses, adjusted depreciation and adjusted exploration expenses) – for more information see below
· Adjusted earnings after tax – for more information see below
· Return on average capital employed after tax (ROACE) – this measure provides useful information for both the group and investors about performance during the period under evaluation. Equinor uses ROACE to measure the return on capital employed, regardless of whether the financing is through equity or debt. The use of ROACE should not be viewed as an alternative to income before financial items, income taxes and minority interest, or to net income, which are measures calculated in accordance with GAAP or ratios based on these figures
· Net interest-bearing debt adjusted – for more information see section 5.2 Use and reconciliation of non-GAAP financial measures - Net debt to capital employed ratio and note 18 Finance debt in Equinor`s 2017 Annual Report and Form 20-F
· Net debt to capital employed ratio before adjustments and Net debt to capital employed ratio adjusted – for more information see section 5.2 Use and reconciliation of non-GAAP financial measures in Equinor’s 2017 Annual Report and Form 20-F
· Organic capital expenditures – capital expenditures excluding acquisitions, capital leases and other investments with significant different cash flow pattern. Capital expenditures are defined as additions to property, plant and equipment (including capitalised financial leases), capitalised exploration expenditures, intangible assets, long-term share investments and investments in equity accounted companies. See section 5.2 Use and reconciliation of non-GAAP financial measures in Equinor`s 2017 Annual Report and Form 20-F for more information on organic capital expenditures
· Free cash flow includes the following line items from the Consolidated statement of cash flows: Cash flows provided by operating activities before taxes paid and working capital items, taxes paid, additions through business combinations, capital expenditures and investments, (Increase) decrease in other items interest bearing, proceeds from sale of assets and businesses and dividend paid
Adjusted earnings are based on net operating
income and adjusts for certain items affecting the income for the period in
order to separate out effects that management considers may not be well
correlated to Equinor’s underlying operational performance in the individual
reporting period. Management considers adjusted earnings to be a supplemental
measure to Equinor’s IFRS measures that provides an indication of Equinor’s underlying
operational performance in the period and facilitates a better understanding of
operational trends between the periods. Adjusted earnings adjusts for the
following items:
· Changes in fair value of derivatives: Certain gas contracts are, due to pricing or delivery conditions, deemed to contain embedded derivatives, required to be carried at fair value. Certain transactions related to historical divestments include contingent consideration, are carried at fair value. The accounting impacts of changes in fair value of the aforementioned are excluded from adjusted earnings. In addition, adjustments are also made for changes in the unrealised fair value of derivatives related to some natural gas trading contracts. Due to the nature of these gas sales contracts, these are classified as financial derivatives to be measured at fair value at the balance sheet date. Unrealised gains and losses on these contracts reflect the value of the difference between current market gas prices and the actual prices to be realised under the gas sales contracts. Only realised gains and losses on these contracts are reflected in adjusted earnings. This presentation best reflects the underlying performance of the business as it replaces the effect of temporary timing differences associated with the re-measurements of the derivatives to fair value at the balance sheet date with actual realised gains and losses for the period
· Periodisation of inventory hedging effect: Commercial storage is hedged in the paper market and is accounted for using the lower of cost or market price. If market prices increase above cost price, the inventory will not reflect this increase in value. There will be a loss on the derivative hedging the inventory since the derivatives always reflect changes in the market price. An adjustment is made to reflect the unrealised market increase of the commercial storage. As a result, loss on derivatives is matched by a similar adjustment for the exposure being managed. If market prices decrease below cost price, the write-down of the inventory and the derivative effect in the IFRS income statement will offset each other and no adjustment is made
· Over/underlift: In the first quarter of 2018, Equinor changed the accounting policy for lifting imbalances, see note 9 Changes in accounting policies to the Condensed interim financial statements for further information. For historical periods over/underlift was accounted for using the sales method and therefore revenues were reflected in the period the product was sold rather than in the period it was produced. The over/underlift position depended on a number of factors related to our lifting programme and the way it corresponded to our entitlement share of production. The effect on income for the period was therefore adjusted, to show estimated revenues and associated costs based upon the production for the period to reflect operational performance and
comparability with peers. In light of
the change in accounting policy, following first quarter 2018, adjusted earnings
will not include the over/underlift adjustment made in arriving at this figure
in previous periods
· The operational storage is not hedged and is not part of the trading portfolio. Cost of goods sold is measured based on the FIFO (first-in, first-out) method, and includes realised gains or losses that arise due to changes in market prices. These gains or losses will fluctuate from one period to another and are not considered part of the underlying operations for the period
· Impairment and reversal of impairment are excluded from adjusted earnings since they affect the economics of an asset for the lifetime of that asset, not only the period in which it is impaired or the impairment is reversed. Impairment and reversal of impairment can impact both the exploration expenses and the depreciation, amortisation and impairment line items
· Gain or loss from sales of assets is eliminated from the measure since the gain or loss does not give an indication of future performance or periodic performance; such a gain or loss is related to the cumulative value creation from the time the asset is acquired until it is sold
· Internal unrealised profit on inventories: Volumes derived from equity oil inventory will vary depending on several factors and inventory strategies, i.e. level of crude oil in inventory, equity oil used in the refining process and level of in-transit cargoes. Internal profit related to volumes sold between entities within the group, and still in inventory at period end, is eliminated according to IFRS (write down to production cost). The proportion of realised versus unrealised gain will fluctuate from one period to another due to inventory strategies and consequently impact net operating income. Write-down to production cost is not assessed to be a part of the underlying operational performance, and elimination of internal profit related to equity volumes is excluded in adjusted earnings
· Other items of income and expense are adjusted when the impacts on income in the period are not reflective of Equinor’s underlying operational performance in the reporting period. Such items may be unusual or infrequent transactions but they may also include transactions that are significant which would not necessarily qualify as either unusual or infrequent. Other items can include transactions such as provisions related to reorganisation, early retirement, etc.
· Change in accounting policy are adjusted when the impacts on income in the period are unusual or infrequent, and not reflective of Equinor’s underlying operational performance in the reporting period
The measure adjusted earnings after tax excludes net financial items and the associated tax effects on net financial items. It is based on adjusted earnings less the tax effects on all elements included in adjusted earnings (or calculated tax on operating income and on each of the adjusting items using an estimated marginal tax rate). In addition, tax effect related to tax exposure items not related to the individual reporting period is excluded from adjusted earnings after tax. Management considers adjusted earnings after tax, which reflects a normalised tax charge associated with its operational performance excluding the impact of financing, to be a supplemental measure to Equinor’s net income. Certain net USD denominated financial positions are held by group companies that have a USD functional currency that is different from the currency in which the taxable income is measured. As currency exchange rates change between periods, the basis for measuring net financial items for IFRS will change disproportionally with taxable income which includes exchange gains and losses from translating the net USD denominated financial positions into the currency of the applicable tax return. Therefore, the effective tax rate may be significantly higher or lower than the statutory tax rate for any given period.
Management considers that adjusted earnings after tax provides a better indication of the taxes associated with underlying operational performance in the period (excluding financing), and therefore better facilitates a comparison between periods. However, the adjusted taxes included in adjusted earnings after tax should not be considered indicative of the amount of current or total tax expense (or taxes payable) for the period.
Adjusted earnings and adjusted earnings after tax should be considered additional measures rather than substitutes for net operating income and net income, which are the most directly comparable IFRS measures. There are material limitations associated with the use of adjusted earnings and adjusted earnings after tax compared with the IFRS measures since they do not include all the items of revenues/gains or expenses/losses of Equinor which are needed to evaluate its profitability on an overall basis. Adjusted earnings and adjusted earnings after tax are only intended to be indicative of the underlying developments in trends of our on-going operations for the production, manufacturing and marketing of our products and exclude pre-and post-tax impacts of net financial items. We reflect such underlying development in our operations by eliminating the effects of certain items that may not be directly associated with the period's operations or financing. However, for that reason, adjusted earnings and adjusted earnings after tax are not complete measures of profitability. The measures should therefore not be used in isolation.
Adjusted earnings equal the sum of net operating income less all applicable adjustments. Adjusted earnings after tax equals the sum of net operating income less income tax in business areas and adjustments to operating income taking the applicable marginal tax into consideration. See the tables in the following section for details.
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. All statements other than statements of historical fact, including,
among others, statements regarding plans and expectations with respect to
Equinor’s returns, balance sheet and long-term underlying earnings growth; cash
flow and returns and the average break-even price; start-up of projects through
2025, including Johan Sverdrup; Equinor’s digitalisation and innovation;
expected carbon emissions from the current portfolio; building a profitable
renewable energy portfolio; market outlook and future economic projections and
assumptions; capital expenditure and exploration guidance for 2019 and beyond; production
guidance through 2025 and unit production cost through 2020; CAGR for the
period 2019 – 2025; organic capital expenditure for 2019; Equinor’s intention
to mature its portfolio; exploration and development activities, including
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 for
2019; expected dividend payments and dividend subscription price; estimated
provisions and liabilities, including the COSL Offshore Management AS
litigation; implementation of IFRS 16, and the impact thereof; planned and
announced acquisitions and divestments, including timing and impact thereof, including
the acquisition of lease OCS-A 0520 in Massachusetts, the swap of interests
with Faroe Petroleum in the NCS, the acquisition of Danske Commodities, the
acquisition of Chevron’s interest in the Rosebank project and other pending
acquisitions and divestments discussed in this report; and the projected impact
or timing of administrative or governmental rules, standards, decisions or
laws, including with respect to and future impact of legal proceedings are
forward-looking statements.
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, 2017, filed with the U.S. Securities and Exchange Commission (and section 2.11 Risk review – Risk factors thereof). Equinor’s 2017 Annual Report and Form 20-F is available at Equinor’s website www.equinor.com.
We use certain terms in this document, such as “resource” and “resources” that the SEC’s rules prohibit us from including in our filings with the SEC. U.S. investors are urged to closely consider the disclosures in our Form 20-F, SEC File No. 1-15200. This form is available on our website or by calling 1-800-SEC-0330 or logging on to www.sec.gov.
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.
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 license. 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. These are non-GAAP figures. See section Use and reconciliation of non-GAAP financial measures in the report for more details.
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.
10. Since different legal entities in the group lend to projects and others borrow from banks, project financing through external bank or similar institutions will not be netted in the balance sheet and will over-report the debt stated in the balance sheet compared to the underlying exposure in the Group. Similarly, certain net interest-bearing debt incurred from activities pursuant to the Marketing Instruction of the Norwegian government are off-set against receivables on the SDFI. Some interest-bearing elements are classified together with non-interest bearing elements, and are therefore included when calculating the net interest-bearing debt.
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: 06 February, 2019
By: ___/s/ Lars Christian Bacher
Name: Lars Christian Bacher
Title: Chief Financial Officer