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Equinor (EQNR) Q2 Earnings Beat Estimates, Revenues Fall Y/Y

Equinor ASA EQNR reported second-quarter 2020 adjusted earnings per share of 19 cents against the Zacks Consensus Estimate of a loss of 13 cents. However, the bottom line deteriorated from 34 cents in the year-ago quarter.

Total revenues declined 56% to $7,603 million from $17,096 million in the prior-year quarter.

The better-than-expected earnings were driven by strong results from liquids trading that backed the company’s marketing, midstream & processing segment. This was offset partially by low commodity prices.

Equinor ASA Price, Consensus and EPS Surprise

Equinor ASA Price, Consensus and EPS Surprise

Equinor ASA price-consensus-eps-surprise-chart | Equinor ASA Quote

Segment Analysis

Exploration & Production Norway (E&P Norway): The segment reported net operating loss of $104 million, down from $2,478 million profit in the year-ago quarter. The underperformance was owing to low commodity prices. Higher oil equivalent production partially offset the negative.

The company’s average daily production of liquids and gas rose 7% year over year to 1,281 thousand barrels of oil equivalent per day (MBoE/D), thanks to contributions from new oil and gas fields.

E&P International: The segment’s net operating loss was recorded at $548 million, reflecting deterioration from $551 million in the June quarter of 2019. The upstream activities in the international market were hurt by low prices of commodities. 

The company’s average daily equity production of liquids and gas declined to 325 MBoE/D from 416 MBoE/D in the year-ago quarter.

E&P USA: Through this segment, Equinor generated quarterly loss of $332 million against a profit of $134 million in the second quarter of 2019. Weak commodity prices hurt the segment, with partial support from considerable cost-reduction initiatives.

The integrated firm’s average equity production of liquids and gas was recorded at 405 MBoE/D, up marginally from 404 MBoE/D in the year-ago quarter. Activities in new wells in onshore U.S. resources backed production volumes.

Marketing, Midstream & Processing (MMP): The segment’s profit of $610 million improved drastically from $216 million a year ago, thanks to excellent results from liquids trading.

Balance Sheet

As of Jun 30, 2020, Equinor reported $9,700 million in cash and cash equivalents. The company’s long-term debt amounted to $37,110 million at quarter-end. Total debt-to-capitalization ratio at the end of the second quarter was 51%.

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Equinor projects compound annual production growth rate of 3% from 2019 through 2026, banking on mostly new projects. For 2020, the company projects organic capital budget of $8.5 billion, while the budget is estimated at $10 billion for 2021.

The company also foresees expenditure for exploration activities through 2020 at $1.1 billion.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include NGL Energy Partners LP NGL, Antero Resources Corporation AR and Apache Corporation APA, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NGL Energy Partners’ bottom line for second-quarter 2020 is expected to rise 92.7% year over year.

Antero Resources’ bottom line for second-quarter 2020 is likely to grow 28.6% year over year.

Apache’s second-quarter bottom-line estimates have moved up over the past 30 days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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