Equinor ASA - $EQNR.NO

What’s Equinor ASA Business Model?

Equinor ASA operates as an energy company. The Company develops oil, gas, wind, and solar energy projects, as well as focuses on offshore operations and exploration services. Equinor serves customers worldwide.

What Equinor ASA is doing in more details?

No one equals Equinor (formerly Statoil) when it comes to exploring and developing the Norwegian continental shelf. Its wide-ranging activities include exploration, development and production of oil & gas, solar, and wind power in the Norwegian continental shelf and in both Americas.

With presence in more than 30 countries, Equinor is a major supplier of crude oil and the second-largest supplier of natural gas in the European market. Its operations include processing, refining, offshore wind and carbon capture, and storage activities.

The Norwegian government is Equinor’s majority owner with about 65% stake. Equinor has proved oil and gas reserves of more than 6,000 mmboe and produces more than 2,000 mboe/day. More than 70% of the company’s total sales is generated from Norway.

Where Equinor ASA is Operating?

Equinor has four main reporting segments. Marketing, and Midstream & Processing (MMP); Exploration & Production Norway (E&P Norway); Exploration & Production International (E&P International); and Other. MMP is Equinor’s biggest business segment, generating more than 65% of annual sales.

It manages the company’s marketing and trading activities related to oil products and natural gas, as well as transportation, processing and manufacturing, and the development of oil & gas assets. E&P Norway accounts for more than 20% of revenues.

It explores for and extracts crude oil, natural gas and natural gas liquids in the Norwegian continental shelf. E&P International, comprises Equinor’s worldwide exploration and extraction of crude oil, including Equinor’s upstream activity in the US and Mexico and the deep-water regions of the Gulf of Mexico and unconventional oil and gas assets in the US.

It generates around 10% of sales. The company’s Other segment combines several activities like renewable energy and low-carbon solutions, corporate merger and acquisition functions, as well as the technological division for global well and project delivery and related R&D functions.

The segment is not a significant source of revenue generation or net income. The sale of crude oil accounts for roughly half Equinor’s total revenue; natural gas accounts more than 15%; refined products account more than 15%; and natural gas liquids, transportation, and others account the remainder.

Where is the geographical reach of Equinor ASA?

Equinor, Norway-based, has operations in more than 30 countries in both North and South America, Africa, Asia, Europe and Oceania. Its key assets are in Norway, and internationally in Brazil and the US.

About 75% of annual revenue comes from Norway, followed by the US at just below 20%. Other notable sales destinations are Denmark and Brazil.

What is Equinor ASA’s Sales and Marketing Strategy?

Equinor is the second-largest supplier of natural gas to the European market. It markets and sells oil and gas owned by the Norwegian State through the Norwegian State’s share in production licences. This is known as the State’s Direct Financial Interest or SDFI.

What is Equinor ASA Financial Performance?

Equinor’s revenue is closely tied to the global oil price: in the past five years, it has only seen a 9% growth. Lower prices for liquids and gas largely affected the group’s financial result in 2019.

In addition, lower liquid volumes and higher impairments in the E&P reporting segments contributed to the decreased result compared to 2018. Revenue decreased by 20% in 2019 to $62.9 billion compared to $78.6 billion in the prior year.

The decrease was mainly due to lower average prices and lower volumes for liquids and gas. Its net income also fell considerably by 75% to $1.9 billion in 2019, a stark contrast to $7.5 billion from 2018.

This significant decrease was mainly a result of the decrease in net operating income, partially offset by lower income taxes and the positive change in the net financial items. Equinor’s cash flow generation in 2019 were reduced by $5.8 billion compared to $3.5 billion in 2018.

In 2019, operational cash flow decreased by $5.9 billion to $13.7 billion. Investing activities used $10.6 billion, a decrease of $618 million compared to 2018, mainly due to lower cash flows used for business combinations, lower capital expenditures and increased proceeds from sale of assets, partially offset by increased financial investments.

Cash flows used in financing activities increased by $472 million to $5.5 billion in 2019, mainly for lease payments, increased dividends paid, and share buy-back partially offset by decreased repayment of finance debt.

What is Equinor ASA Future Strategy?

Equinor is an international energy company committed to long-term value creation in a low carbon future inspired by its vision of shaping the future of energy.

It continues to pursue its strategy of always safe, high value and low carbon through developing and maximising the value of its unique Norwegian continental shelf position, its international oil and gas business, its manufacturing and trading activities and its growing new energy business.

Equinor expects volatility in energy prices. Equinor’s strategic response is focused on creating value by building a more resilient, diverse, and option-rich portfolio, delivered by an empowered organisation.

To do so, Equinor will continue to concentrate its strategy realisation development around the following areas: Norwegian continental shelf, international oil and gas, new energy solutions, and midstream and marketing.

Equinor is actively shaping its future portfolio guided by the following strategic principles: cash generation capacities, capex flexibility, capture value from cycles, low-carbon advantage.

To deliver on this strategy, Equinor has identified four key strategic enablers that will continue to support the business’ needs: safe and secure operations, technology and innovation, empowered people, and stakeholder engagement.

What are Equinor ASA’s Mergers and Acquisitions?

In mid-2019, Equinor completes acquisition with Shell in the US Gulf of Mexico. This transaction demonstrates Equinor’s ambition to grow and strengthens the portfolio in the US Gulf of Mexico.

Equinor?has a broad portfolio in the Gulf of Mexico, with active exploration activity, equity and operated production. In early 2019, whereby Equinor has acquired Chevron’s 40% operated interest in the Rosebank project in the West of Shetland region of the UK Continental Shelf.

Rosebank further strengthens Equinor’s UK upstream portfolio Equinor’s UK portfolio also includes attractive exploration opportunities and three producing offshore wind farms. In addition, Equinor is the largest supplier of crude oil and of natural gas to the UK.

Also, in early 2019, Equinor completes acquisition of Danske Commodities for EUR 400 million. This acquisition ? of one of Europe’s largest short-term electricity traders ? supports Equinor’s development as a broad energy company.

“The acquisition of Danske Commodities strengthens our ability to capture value from our production of renewable electricity and supports our aim to grow in profitable new energy solutions. DC’s market presence and expertise in energy trading complements Equinor’s position as the second-largest supplier of natural gas to Europe and as one of the world’s largest net-sellers of crude oil,” said Irene Rummelhoff, Equinor’s executive vice president for marketing, midstream and processing.

What is Equinor ASA’s Background?

Statoil is the Norwegian state oil company, founded as Den Norske Stats Oljeselskap AS in 1972. Its stocks were traded in NYSE from June 2001. From Norway, the company quickly spread to 30 countries. In 2007, it merged with Hydro’s oil and gas division.

Equinor launched the world’s first commercial offshore windfarm in 2017, and with an eye on expanding beyond oil and gas to solar and wind, Statoil (emphasizing “oil”) changed its name to Equinor in 2018.

What is Equinor ASA’s History?

To exert greater control over exploration and production of the Norwegian continental shelf (NCS), the government of Norway set up Den norske stats oljeselskap (Statoil) in 1972.

A decade earlier three geologists had visited Norway on behalf of Phillips Petroleum (later renamed ConocoPhillips) to apply for sole rights to explore on the NCS. The government initially refused drilling rights to foreign companies, and in 1963 Norway claimed sovereignty over the NCS.

Two years later the government began allowing exploration. Phillips’ major discovery in the Ekofisk field in 1969 prompted Norway to set up its own oil company.

After Statoil’s formation in 1972, the company garnered funds to expand through taxation of multinationals, production limits, leasing contracts, and other measures.

In 1974 a giant discovery was made in the North Sea’s Statfjord field, and Statoil was given a 50% stake. A year later Statoil began exploring for oil and gas, exporting oil, and commissioning its first subsea oil pipeline, the Norpipe, which extended to the UK.

In 1986 Statoil’s gas pipeline system, the Statpipe, began transporting gas from the North Sea to the mainland. Moving into retailing, Statoil acquired Esso’s service stations and other downstream operations in Sweden and Denmark in 1985 and 1986.

The next year, cost overruns stemming from the extension of Statoil’s Mongstad oil refinery led to the ousting of the company’s first president, Arve Johnsen, and many of his deputies. Harald Norvik was appointed CEO in 1988.

In 1990 Statoil and BP teamed up to develop international operations, and in 1992 Statoil acquired BP’s service stations in Ireland. Statoil and Neste Chemicals (later part of Industri Kapital) formed the Borealis petrochemicals group in 1994.

The company in 1995 acquired Aran Energy, moving into exploration of offshore Ireland and the UK. Statoil brought its field projects in China and Azerbaijan onstream in 1997. That year Statoil spun off its shipping operations as Navion, partly owned by Norway’s Rasmussen group.

It also contracted with Kvaerner to build a giant offshore gas platform for the Aasgard field in the Norwegian Sea The Aasgard field project resulted in cost overruns in 1999, again leading to a Statoil board shakeup and CEO resignation.

Norvik, who had advocated partial privatization of Statoil, was replaced by Olav Fjell, former head of Norway’s Postbanken (who resigned in 2003). That year Statoil helped Norsk Hydro take over rival Saga in return for some of Saga’s assets.

As part of a major restructuring in 2000, Statoil sold most assets of US unit Statoil Energy. Political opposition that year postponed Statoil’s plans for partial privatization, but the government proceeded with an IPO in 2001, raising about $3 billion.

In 2002 Statoil sold its oil and gas assets in the Danish North Sea to Dong, the Danish state oil company, for about $120 million. That year the company also acquired the Polish unit of Sweden’s Preem Petroleum, which owned 79 gas stations in Poland.

In 2003 Statoil sold its Navion unit to shipping group Teekay for about $800 million. That year it also acquired two Algerian natural gas projects from BP for $740 million. A bribery scandal involving an Iranian oil contract forced the resignation of the chairman, CEO, and another top executive in 2003.

Statoil sold its 50% stake in petrochemicals venture Borealis in 2005.

In 2006 the company acquired three oil prospects in the Gulf of Mexico from Plains Exploration & Production for $700 million. It also acquired offshore assets in the Gulf of Mexico from Anadarko Petroleum for $901 million.

Expanding its upstream, midstream, and downstream assets, in 2007 the company acquired $4.2 billion of subsea equipment from Aver Kvaerner, Canada’s North American Oil Sands Corporation for $1.96 billion, and 274 gas stations in Scandinavia from ConocoPhillips.

In a major expansion that gave it a major international profile (including a strong presence in the deepwater Gulf of Mexico) in 2007 Statoil acquired the oil and gas exploration and production operations of Norsk Hydro in a $30 billion deal and became StatoilHydro.

In 2008 Statoil acquired ConocoPhillips’ Jet gas station chain in Norway, Sweden, and Denmark.

Growing its exploration and production asset base, in 2008 paid about $1.8 billion to acquire holdings in heavy-oil and deep-water projects in Brazil and the Gulf of Mexico from Anadarko Petroleum.

That year it also teamed up with Chesapeake Energy to jointly explore unconventional gas opportunities around the world, including in the Marcellus Shale play in the US.

Beefing up its global infrastructure, in 2009 the company bought a crude oil terminal in the Bahamas (and a 50% interest in a related tugboat business) from World Point Terminals for $263.2 million.

The company reported a downturn in revenues and income in 2009 primarily as the result of the impact of the global recession on lowering commodity prices and weakening oil and gas demand.

In 2010, in a move to generate cash to pay down debt and to invest in its higher-return core exploration and production assets, Statoil spun off its retail network of gas stations (including a chain of 200 automated outlets) in eight north European countries.

Statoil retained more than 50% of the unit (Statoil Fuel and Retail) following the spin off. It also sold a 40% stake in its Peregrino oil field (offshore Brazil) to Sinochem for $3 billion and a 40% stake in its Canadian oil sands project to PTT Exploration and Production for $2.3 billion.

In 2011 it also sold its 24% stake in the Gassled Pipeline joint venture to investment firms for $3.3 billion. That year it increased its presence in Alaska (where it is the fourth largest explorer) by acquiring a 25% stake in 50 Conoco Phillips oil leases located in the Chukchi Sea.

Higher oil and gas price and increased demand, coupled with its strategic acquisitions, divestments, and reorganizations helped to lift Statoil’s revenue sand net income in 2010.

Building its exploration and production position in the US, in 2011 the company expanded its holdings in shale assets, buying Brigham Exploration in a $4.4 billion deal.

Thanks to new drilling technologies, US gas shale has emerged as a lucrative growth market, and Brigham Exploration had well-established shale plays in the Rockies.

To raise cash and focus on its core exploration and production activities, in 2012 the company agreed to sell its 54% stake in Statoil Fuel and Retail to Alimentation Couche-Tard for $2.8 billion.

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