Full Transcript: Equinor Q2 2026 Earnings Call

Equinor (NYSE: EQNR ) reported second-quarter financial results on Wednesday. The transcript from the company's second-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

8 billion year-to-date. The company announced strategic initiatives including the first wave of tieback projects on the Norwegian continental shelf and the final investment decision for the Greater Parche project in Angola. Equinor maintained its production guidance for 2026, expecting a 3% growth despite challenges at the Johan Castberg field. 39 per share.

4%, with expectations of dropping below 10% by year-end. Full Transcript OPERATOR Hello and welcome to the Equinor analyst call. I would like to turn the call over to Bart Glad Petersen, Head of Investor Relations. Bart, you may begin.

Bart Glad Petersen, Head of Investor Relations Thank you, operator, and good morning all. Thank you for joining the analyst call for Equinor's second quarter results. Our CFO, Torgrim Reitan, will as usual present the results before we open for a Q&A. You can already now sign up for questions by pressing star one on your phone.

We plan to complete the session within one hour in total and with that I hand it to you to take us through the results. Torgrim Reitan, CFO Thank you, Bart, and good morning, and thank you for joining us and I hope you are all enjoying your summer. Today, it is five weeks since our capital markets day where we shared with you our updated plans to deliver more energy, growing cash flow, and superior returns. We showed you an improved portfolio delivering production growth of 150,000 barrels per day to 2030, a growth in cash flow from operations of 30%, and an industry-leading 15% return on capital employed.

With this we expect to deliver over $40 billion in free cash flow towards 2030. And not to forget, we presented a breakeven after dividend of $50 per barrel. This is a reduction of this breakeven price of $10 per barrel. In the second quarter we took several concrete steps to deliver on this.

On the Norwegian continental shelf, we awarded the contracts for the first wave of tieback projects. This is an important first within our new NCS 2035 operating model, aiming to double the speed of developments and reduce costs by half. The contracts awarded for the first wave support these improvements. We continued to use business development as a tool to harmonize ownership across licenses.

We have done this through a series of swaps with DNO, Aker BP, and Vår Energi, supporting progress on the Ringwe Vest project. Internationally, we took the final investment decision for the Greater Parche project in Angola where we expect to generate more than $50 per barrel in cash flow from operations. Greater Parche is an important step in building longevity within the international E&P business and growing cash flow from operations by 80% towards 2030. We also delivered strong results in the quarter.

Production grew by 3% with well executed turnarounds and new fields like Irene and Simra coming on stream during the quarter. With this we capture value from higher prices and our trading business captures value uplift from increased volatility, delivering strong contributions to our results. 8 billion year to date. 7 billion this quarter.

33. While energy markets remain impacted by geopolitical unrest, we continue to focus on what we control: our operations, how we remain robust through price cycles, and our commitment to cost and capital discipline, then to capital distribution. 5 billion to $3 billion. 125 billion, including the state's share.

So let's dive into our results. First, let me start with safety, our top priority. Our serious incident frequency and personal injury rate remained relatively stable in the second quarter. We have seen a slight increase in both metrics this year when compared to 2025.

We are working very hard to learn from incidents to improve safety and performance. In the second quarter we produced 2,165,000 barrels per day, up 3% from the same quarter last year. On the NCS our production is up 4%, mainly driven by new fields like Johan Castberg, Halten East, and Verdande. Now we are adding also Irene and Simra, which came on stream this quarter.

Let me also highlight that we saw another quarter of strong performance from Johan Sverdrup. We have previously indicated a decline of 10% to 20% this year from that asset. Based on the strong performance so far, we now expect it to be at the low end of this range. NCS production was impacted by planned turnarounds and maintenance and also Johan Castberg coming offline for a period towards the end of the quarter and into July.

Johan Castberg is now back at plateau after production resumed last week, implying that the impact will be larger in the third quarter than in the second quarter. Internationally, the increase was driven by Adura in the UK and Bacalhau in Brazil. The growth more than offsets the decrease from our reduced ownership in Peregrino and the divestment of the onshore Argentina assets. During the first half of 2026 we have delivered in total a very strong production growth of 6%.

Therefore, our guidance of a 3% growth for the full year is now more robust than when we started the year, even taking into account the issues at Johan Castberg and the planned turnarounds. 2 TWh this quarter; the growth is from Dogger Bank in the UK and new onshore assets. Now to our financial results. Liquids and European gas prices were higher than the same quarter last year while US gas prices were lower.

This has impacted our results across the segments. 1 billion after tax. In our international E&P business, prices increased around 50% but operating income almost doubled based on production growth of 4% and increased quality in the portfolio. Our E&P US results were driven by high offshore production with higher prices, partly offset by lower gas prices.

In the US, MMP delivered $777 million pre-tax, well above the guiding of $400 million per quarter. This was driven by crude trading and strong performance at our refinery Mongstad, capturing value from higher margins. Our power results reflect a strong contribution from power trading for the second quarter in a row. In total, we have nearly doubled our adjusted operating income after tax compared to last year, demonstrating the improvements in the portfolio and our ability to capture value in higher price environments.

8 billion. 4 billion. 3 billion Norwegian kroner each. Also in the second quarter we received a quarterly cash distribution from Adura of $150 million.

The sale of the Argentina onshore assets resulted in cash proceeds of $558 million in the quarter, in addition to $88 million in proceeds received in the first quarter. We also recorded a gain of $467 million during the second quarter. Our financial position in Scatec was partially divested for $171 million during the quarter. Here we have an accumulated recorded gain of $61 million.

5 billion. 1 billion to our shareholders. We strengthened our balance sheet and have a solid financial position with around $24 billion in cash and cash equivalents. 6 billion.

This is a lower level than what we usually have. 4% this quarter despite three tax installments paid and the state's share of the buyback from last year booked as a finance debt. The state's share of share buyback was paid in early July and the cash flow impact will be as such in the third quarter. At current forward prices we expect the net debt ratio to be somewhat below 10% at the end of the year.

And now to our guidance where there are no changes. Our progress is in line with our communicated outlook both in terms of production, capex, and capital distribution. And finally, to conclude I will refer you back to a slide from our capital markets day five weeks ago. The second quarter results demonstrate execution in line with the plans we presented to deliver more energy: 150,000 barrels per day production growth to 2030, a growing cash flow, a 30% growth in cash flow from operations, and superior returns.

We will continue to lead the industry on the return on capital employed, and we aim for 15% through this decade. So now thank you very much and I look forward to your questions. So back to you, Bart. Bart Glad Petersen, Head of Investor Relations Thank you, Torgrim.

And we are ready to start the Q&A. We have a good list already. But let me remind you that you can sign up for asking a question by pressing star one on your phone. We ask that you limit yourself to two questions each.

First we have Theodor Svennilssen from SpareBank 1 Markets, and please Theodor, go ahead, your line is open. Theodor Svennilssen, Analyst at SpareBank 1 Markets Thank you. Good morning, Torgrim and Bart. Two questions left for me.

First, on the Castberg production. As far as I understand, there's still some trouble going into Q3. Just wondering specifically if you can indicate what you expect as net production from Castberg in Q3. And the second question is on downstream and MMP.

We definitely have observed strong refinery margins going into the third quarter. Could you comment on the profitability at Mongstad so far in third quarter and what you expect during the second half of this year? Torgrim Reitan, CFO Okay, thanks, Theodor. So as far as I got, the first question was about Johan Castberg, right.

So we have had some issues related to the turbines' heat waste that took, you know, three weeks—or 18 days—to get in order. We had it back in production from 13 July, meaning that the impact of that stop is around 14,000 barrels per day for next quarter. So that is up and running again. You know, it is a field that is producing very well, clearly, but it is still in a run-in period.

So there might always be some operational issues when you have a new field getting there. But no, that's the situation on Castberg. On the— Theodor Svennilssen, Analyst at SpareBank 1 Markets The 14,000—sorry, the 14,000, is that net to Equinor or gross? Torgrim Reitan, CFO Yeah, that is Equinor impact.

Okay, so then on the MMP results. So strong results, where Mongstad is contributing well, with very high regularity. This is part of the Other group in the MMP reporting. So it clearly creates significant value at the current refinery margins.

To say a little bit about the refinery situation and the margin in Europe: clearly the oil market is tight, but the product market is even tighter. And if you look at the FCC margin for the second quarter, it was actually at some $25 per barrel, which is very significant. We don't give a specific margin for Mongstad, but clearly it is significantly above what it costs to run it—at breakeven. So far into this quarter, it continues to deliver strong results.

I encourage you to follow the general refinery margins going forward and that will directly impact the Mongstad delivery. Bart Glad Petersen, Head of Investor Relations Thank you. Thank you, Theodor. Next one on my list is Biraj Borkhataria from RBC.

Biraj, please go ahead. Biraj Borkhataria, Analyst at RBC Capital Markets Hi there. Just one question from me. Your partner Bay du Nord gave up their stake and you were targeting FID in 2027.

So are you comfortable to push that project forward at 100% or would you look to farm it down before progressing it? And maybe you could just talk a little bit about the sort of Canadian support for that project, because it looks like there's quite a lot of movement and sentiment change on the politics side in Canada recently. Thank you. Torgrim Reitan, CFO Okay, thank you.

Thank you very much, Biraj. Yeah, so BP is sort of handing over the ownership in that asset to ourselves. There will be ultimately a minimum payment for us for this share, subject to a final investment decision, but a minimum one compared to the size of the opportunity here. So the timeline, there's no change to that.

We aim to sanction it in 2027. And then, you know, we are working on bringing in another partner with us in this project. It is an attractive one, fully supported by the Canadian government. And as you would understand, in the current environment, energy security for all countries is very high on the agenda.

And the same goes for Canada. So this is an attractive investment opportunity that we look forward to realizing together with the Canadian government and potentially additional partners. Bart Glad Petersen, Head of Investor Relations Thank you, Biraj. Biraj Borkhataria, Analyst at RBC Capital Markets Thank you.

Bart Glad Petersen, Head of Investor Relations Thank you. The next one is Santander, Alejandro Vigil. Alejandro, please go ahead with your question. Alejandro Vigil, Analyst at Santander Yes, thank you for taking my questions.

I missed the beginning because I had some problems. So I don't know if someone asked about the European natural gas market, your expectation for the second half of the year in general, how you see the balance of demand and supply in the market. And the second question is related to that. We are seeing a very strong energy commodity environment, very strong cash flow.

Your leverage now probably will be below 10%. According to your comments, is there any room for additional buybacks this year above the 3 billion that you are guiding now? Thank you. Torgrim Reitan, CFO Okay, thank you very much, Alejandro.

Two very important and large questions. So let me take the first one first on the European gas situation. So it is a vulnerable situation and we might enter the autumn and winter with large uncertainties. So clearly the fact that the Strait of Hormuz is where it is sort of shuts in around 20% of the global LNG, you know, and restricts the global flows of LNG and that directly impacts Europe because currently around 30% of the supply will have to come from LNG, and Europe will compete particularly with Asia for that.

And then when we combine that with a storage situation in Europe where the storage filling is at 53%, which is more than 15 percentage points below a normal situation or average, it leads to a fairly tight situation. So, say that the situation around Hormuz is normalizing and we are back to sort of regular flows of LNG. Still, we do not believe that Europe will get to 80% storage filling before the winter and we'll be below that. So that is the situation.

Also worth mentioning is that Russian gas will leave Europe. I mean, this year LNG is going to be stopped and next year the remaining piped gas. So there will be even more LNG that needs to come to Europe. So first of all, we do hope the situation settles and that we can get back to normal, but we just need to be prepared for volatility and uncertainty in the European gas market.

You would know that we are very well placed to provide reliable energy into a situation like that, which we take very, very seriously. We have a cost of our gas of $2 per MMBtu currently selling into a close to $20 market, just illustrating how important the Norwegian gas is for Europe. We are the largest energy provider to Europe and we will continue to take that very, very seriously. Then your second question, strong cash flow, leverage, and the potential for additional share buyback.

So, you know, we aim to run with a very solid balance sheet. 4%. Based on the forward curve, as they looked a couple of days ago, we expect it to be somewhat lower than 10% by year-end and, you know, with a strong cash flow naturally. And we intend to run with a very solid balance sheet and particularly in high price environments to build balance sheet to be able to manage low price environments well.

As such, then the question related to whether there is a potential for more share buyback this year. The answer to that is no. When we entered this year we expected, of course, much lower oil and gas prices than what we have seen. The way we have distributed or used that additional cash is first and foremost we have increased our investment into oil and gas with $1 billion more in Norway, more internationally, actually adding to the production outlook in 2030.

Secondly, we are strengthening the balance sheet. You know, as we entered 2026, the plan was to lean on the balance sheet. We will no longer need to do that. We're actually strengthening the balance sheet.

And the third priority is actually to double the share buyback for the year.