The Norwegian oil company has benefited from high energy prices, which have boosted results. On the other hand, the company’s withdrawal from Russian joint ventures comes with a billion-dollar impairment.
First quarter of 2022 has certainly not been unfavorable for Equinor, which sees a doubling of revenue. At the same time, the operating result has tripled, while the bottom line grew by more than 250%.
The explanation is to be found in the markedly higher energy prices this quarter compared to the same period last year. Equinor has thus realized average price per barrel of Brent crude of USD 101.4, a 67% jump from the first quarter of 2021. The European gas price has risen from USD 6.65 to USD 29.6 per mmbtu (28.6 m3).
This has resulted in revenue of USD 36.39 against USD 17.58bn in the first three months of 2021. Meanwhile, net operating income amounted to USD 18.39 against USD 5.22bn in Q1 2021.
On the bottom line, Equinor generated Q1 profit of USD 4.71bn against USD 1.85bn last year. This corresponds to more than half of the bottom line in all of 2021 during which Equinor generated USD 8.57bn.
The company reached free cash flow of USD 12.7bn in the quarter against USD 5.17bn.
In the first quarter, output has fallen slightly from 2,168 million barrels of oil equivalent to 2,106 million barrels. But Equinor projects 2022 output to average around 2% higher than in 2021.
Impairments of Russian activities
The war in Ukraine hasn’t just resulted in higher energy prices, but also led Equinor to make the decision on Feb. 28 to stop all new investments in Russia and start the process of withdrawing from Russian joint ventures. This has entailed impairments of USD 1.08bn, Equinor informs the Q1 financial report.
”The invasion of Ukraine stands as a dark moment for Europe and our thoughts are with all suffering the consequences of the brutal war. After having been in Russia for three decades, we saw the situation as untenable and acted decisively by stopping new investments into Russia and by starting the process of exiting Equinor’s Russian joint ventures. Exiting Russia will heavily impact our employees, and it leads to impairments of our assets in the country this quarter,” says Chief Executive Officer of Equinor Anders Opedal.
