Norwegian oil and gas company, Equinor, has announced that it will pay $10 billion to shareholders this year after it reported record fourth-quarter pre-tax profits, benefiting from the boom in oil and gas prices.
The company’s adjusted earnings before tax jumped to $15 billion in the fourth quarter, up from $756 million a year earlier, surpassing the $13.2 billion predicted in a poll of 23 analysts compiled by Equinor.
Sustained by soaring oil prices and disciplined spending, Equinor generated $25 billion of free cash flow in 2021- equivalent to Senegal’s GDP in 2020, according to World Bank data.
“We are capturing value from high prices for gas and liquids with excellent performance and increased production,” CEO Anders Opedal said in statement.
The oil and gas sector saw an improvement last year as markets rebounded after the pandemic-driven slump of 2020, with the price of European natural gas quadrupling and North Sea crude rising more than 50 per cent.
Meanwhile, governments across Europe are announcing steps aimed at cushioning the blow of the rising energy costs on households.
Majority state-owned Equinor, which is in its 50th year, this year, said it would raise its regular dividend to $0.20 from $0.18 previously, and pay an additional extraordinary dividend of $0.20 for a period of four quarters, with overall payments amounting to $5 billion this year.
Additionally, Equinor is advancing plans to increase its share buybacks in 2022 to $5 billion from $1.3 billion in 2021, up from a previous plan of $1.2 billion, taking the total cash flow shareholders will receive this year to $10 billion.
High profits, a phenomenon across European Oil Companies
Some other oil companies in the European oil industry have also posted soaring profits in recent days, riding on the back of the skyrocketing energy prices. Like Equinor, BP promised to increase its share buybacks and Shell said it will raise both dividends and stock purchases.
“Equinor delivers a set of results well ahead of expectations, especially in terms of shareholder remuneration. The planned $10 billion shareholder distribution for 2022 represents a 10% yield, which sets Equinor at the very high end of the IOC (international oil companies) sector range”.
Equinor
Equinor’s quarterly petroleum production stood at 21.6 million barrels of oil equivalent per day (boepd), up 6 per cent from the fourth quarter of 2020. The company expects its oil and gas production to grow by 2 per cent in 2022.
The company noted that it would increase its climate ambitions for the next decade, reducing net group-wide greenhouse gas emissions from its global operations- the scope 1 and scope 2 emissions- by 50 per cent by 2030.
“The new ambition is aligned with the Paris agreement and a pathway to limit global warming to 1.5 degree Celsius. This is a significant step that will demand a great effort.”
Anders Opedal, CEO, Equinor
Equinor’s shares has risen 68 per cent in the last 12 months, more than double the rise in the European oil and gas index.
The company reduced its 2023 capital spending forecast to $10 billion from $12 billion, but kept the 2024 estimate unchanged at $12 billion and said it would remain at that level in 2025.
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