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Equinor reveals $3bn COVID-19 action plan

By: Tom Russell 25/03/2020 Equinor

General

Equinor has launched a USD 3 billion action plan to strengthen the financial resilience in a market impacted by the COVID-19 and low commodity prices. The Norwegian energy company also updated its outlook for 2020.

Equinor stated that it can be organic cash flow neutral before capital distribution in 2020 with an average oil price around USD 25 per barrel for the remaining part of the year.

The main elements of its action plan to achieve this includes reducing organic CAPEX for 2020 from USD 10-11 billion to around USD 8.5 billion, a reduction of around 20%. The plan includes efforts to reduce exploration activity for 2020 from around USD 1.4 billion to around USD 1 billion. The action plan will also cut operating costs for 2020 by around USD 700 million, compared to original estimates.

Reductions in organic CAPEX are driven by a strict process of prioritisation, where flexibility of cost and schedule for sanctioned and non-sanctioned projects have been reviewed. Within US onshore activities, drilling and completion activities are being halted to produce the volumes at a later period, reducing investments significantly for 2020.

These cost reductions come in addition to the already announced suspension of buy-back under the share buy-back programme until further notice. The second tranche of around USD 675 million, including the Norwegian State share, intended to be launched from around 18 May to 28 October 2020, will not be executed as previously planned.

"Equinor is in a strong financial position to handle market volatility and uncertainty. Our strategy remains firm, and we are now taking actions to further strengthen our resilience in this situation with the spread of the corona virus and low commodity prices," says president and CEO of Equinor ASA, Eldar Sætre

"We have implemented measures to reduce the risk of spreading the corona virus and have so far been able to maintain production at all our fields. Safe operations remain our first priority in this situation," added Sætre.

The announcement follows news last week that Equinor established a temporary corporate project to handle both short-term immediate response and long-term implications of COVID-19. The project will be headed by EVP Pål Eitrheim reporting directly to Eldar Sætre.

Equinor has already implemented measures to limit the spread of the Coronavirus and to ensure business continuity, including reducing and delaying non-critical tasks at fields and plants, implemented procedures for working from home and taken strict travel restrictions and quarantine measures.

Equinor ASA operates a number of offshore wind arms off the coast of the UK and Germany. Last year it secured Contracts for Difference for three projects it is developing with SSE Renewables. The projects are to have a combined capacity of 3.6 GW and are located more than 130 km off the east coast of the UK, in the North Sea. The company is also developing the Hywind Tampen floating offshore wind farm. The array is designed to reduce emissions from oil and gas production. It is also developing projects in Poland and the United States.

By 2026, Equinor expects its renewable production capacity to stand at 4-6 GW, a ten-times increase on its current capacity. By 2035, the company expects to further increase its installed renewables capacity to 12-16 GW, depending on project opportunities.

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Equinor reveals $3bn COVID-19 action plan

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