Equinor Reports Q1 2026 Results: Full Earnings Call Transcript

On Wednesday, Equinor (NYSE: EQNR ) discussed first-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit The full earnings call is available at Summary Equinor ASA reported record high production in Q1, with a 9% increase from the same quarter last year, driven by high regularity and new fields on the Norwegian Continental Shelf (NCS) and record production in the US.

1 billion. Cash flow from operations after tax was $6 billion, affected by increased collaterals and a positive price review settlement. The company maintained its guidance for 2026, expecting a 3% growth in oil and gas production. It plans to stay disciplined with its CapEx, focusing on high-grade investments.

5 billion share buyback guidance for the year. Safety remains a priority despite an increase in incidents, and the company continues to focus on cost reductions, achieving a 6% underlying cost reduction. The New Power segment, including renewables and power trading, reported close to zero results, with strong contributions from power trading. Management highlighted geopolitical risks and market volatility, particularly the impact of the Middle East conflict on energy markets, and emphasized their role as a reliable energy supplier.

Full Transcript OPERATOR Ladies and gentlemen, thank you for standing by. Hello and welcome to Equinor analyst call Q1 conference call. All lines have been placed on mute to prevent any background noise. I would now like to turn the conference over to Bård Glad Pedersen, Senior Vice President and Head of Investor Relations.

Please go ahead, sir. Bård Glad Pedersen, SVP Investor Relations Thank you, operator, and good morning to all. Welcome to the presentation of Equinor's first quarter results. As usual, I'm here with our CFO who will take us through the results and then take your questions.

We plan to complete the session within one hour. So with that, Torgrim, I hand it to you. Torgrim Reitan, CFO Thank you very much, Bård. Good morning and good afternoon to all of you.

So thank you for joining us today this quarter. War and conflict first and foremost are impacting people in a severe way. Energy markets are also fundamentally shifting and we have a particular role in providing reliable energy. Against this backdrop, I'm glad to report excellent operational performance with high regularity, new fields on stream, and in this quarter we delivered our highest production ever.

This is important for energy security and for our investors. The war in the Middle East is creating high volatility and imbalances in the markets. It is not clear when this conflict will be resolved or how long it will take to restore infrastructure in the region, or what the lasting impact to the markets will look like. We will focus on what we can control and influence: maintaining cost control and capital discipline, and being a reliable supplier of energy, delivering all of this in a very safe manner.

A good example of this is the Gullfaks field. Right now there oil is flowing into shuttle tankers bound for European customers just as it has gone for steadily 40 years. 3 billion barrels. We have now passed two and a half billion and we are still counting.

The world needs energy it can trust and the Norwegian continental shelf is a stable oil and gas province that continues to deliver above and beyond expectations. So over to the results. This quarter we delivered record high production, 9% up from the same quarter last year. High regularity and new fields on the NCS combined with record high production in the US contributes to this growth.

With this we capture value from higher prices, and our trading business captures value uplift from increased volatility. 1 billion. Year to date, our cash flow from operations after tax is $6 billion. An increase in collaterals supports strong trading results during volatility but reduces our cash flow in the quarter.

I will revert to this later. 48, positively impacted by strong results on financial items. On the NCS we made seven commercial discoveries and in January we were also awarded 35 new licenses. With this new acreage and strong exploration results, we will continue to be a reliable energy supplier.

In Brazil, we started drilling at the Raia gas field which we expect to be on stream in 2028. Portfolio optimization continues to deliver value and this quarter we received the first quarter dividend of $150 million from Aldura, then to capital distribution. 39 per share and a second tranche of the share buyback of up to $375 million. This is in line with what we indicated at our 4Q presentations.

At that time we expected to lean on the balance sheet in 2026 to maintain stable investments and competitive capital distribution. Higher prices will strengthen our cash flow, but there is still significant uncertainty. Competitive capital distribution remains a key priority for. As always, safety is our top priority and our safety performance has steadily improved over time.

This quarter we have however seen an increase in the number of incidents and we must continue our work to improve safety and ensure everyone working with Equinor returns home safely. Every day. 3 million barrels per day. This is an all-time high, up 9% compared to same quarter last year.

We are on track to deliver on our guidance of a 3% production growth for the year. Production on the NCS was up 10% mainly driven by high regularity across the portfolio and ramp-up of Johan Castberg, Halten East and Verdande. In the US we had record high production driven by Caesar Tonga offshore and our US gas position onshore. Outside of the US our international production also increased driven by Aldura and Bacalhau, but it was partly offset by our reduced ownership.

4 terawatt hours. Then to the financials. 7 billion post-tax. This reflects the high production and strong price realization.

Crude qualities that can be used for jet fuel and diesel have seen stronger differentials and we have benefited from this at Gullfaks and Johan Sverdrup. Normally crude from Johan Sverdrup trades at a slight discount to Brent, but we are now seeing a premium of $5 and in March we sold cargoes at a $13 premium from Johan Sverdrup. Our E&P International results reflect increased production and some overlift in the quarter and are impacted also by high depreciation in Aldura. Results for the US are driven by record high production and strong realized gas prices, particularly during the cold spell at the start of the quarter.

MMP delivered close to double our quarterly guidance: $787 million before tax, mostly due to strong products and US gas trading. MMP results demonstrate how we continue to capture value from a volatile market. This is the first quarter where we report Power as a separate segment, combining renewables, flexible power and power trading. The result came in close to zero with strong contribution from the power trading business.

Adjusted operational cost and SG&A was up 9% compared to the same quarter last year. Underlying OPEX and SG&A including portfolio changes was down 6% and adjusted for currency it was down more than 10%, which was the ambition we set in February, and we deliver cost reductions even if we have more fields on stream and we are growing production. This quarter cash flow for operations after tax was $6 billion. In addition, I want to highlight two points.

First, we have a cash inflow of around $800 million from a positive price review settlement. This is cash in but it is not included in the cash flow from operations for the quarter. Second, we have put in cash collaterals of almost $900 million. This is to be expected during times of volatility and it supports strong trading results but however it does reduce the cash flow from operations in the quarter.

Also, there is a net increase in working capital of $800 million in the first quarter. 2 billion. Next quarter we will pay three installments of 20 billion kroner each in June. We will determine tax payments for the second half of this year and the first half of 2027.

Organic CapEx for the quarter was $3 billion, in line with our CapEx guidance for the year, and we have a strong cash position of $20 billion. Our net debt ratio decreased to 15%. Higher prices will impact our outlook for cash flow and net debt towards the end of the year. In February we expected a cash flow from operations of $16 billion after tax in 2026.

This was based on a scenario with $65 Brent and $9 per MMBtu for European gas. We see large movements in forward prices on a daily basis and there is significant uncertainty making it hard to predict our cash flow for the year. However, if we assume that Brent averages $85 per barrel this year and European gas prices of $13 per MMBtu, we expect the cash flow from operations to be around $8 billion higher for 2026. At the same time, our future tax liabilities will increase with around $4 billion due to the tax lag in Norway.

This is when we measure it compared to what we expected in February. With higher prices, we no longer expect to lean on the balance sheet this year. With the scenario of $85 oil, we expect our net debt ratio to remain fairly stable through the second quarter when we will recognize the state's share of buybacks for 2025 as net debt. Then we expect it to reduce to somewhat below 15% during the second half of the year.

Our guidance presented in February remains stable. There are no changes to that. For 2026, we expect $13 billion in organic opex and around 3% growth in oil and gas production. So by that I would like to say thank you very much for your attention and I leave the word back to you, Bård, for the Q&A.

Bård Glad Pedersen, SVP Investor Relations Thank you, Torgrim. And we will then start the Q&A. Let me remind you that if you want to sign up to ask a question, you can press star one on your phone. We have a good list already.

And we'll start with Alejandro Vigil from Santander. So please, Alejandro, your line should be open. Alejandro Vigil, Analyst at Santander Questions for the year. 5 billion share buyback today.

Bård Glad Pedersen, SVP Investor Relations Alex, sorry, yes, sorry, can you hear me? We missed the start of your question because the line wasn't open in time. So can you start over, please? Alejandro Vigil, Analyst at Santander Okay, yeah, yeah, no problem.

5 billion. This is already fixed or depending on the commodity environment. If in the second half of the year we have these higher energy prices, you will be in a position to update to increase these buybacks. That will be the first one.

And the second one is about your views about the European natural gas market. We have seen, you know, relatively, I would say, relaxed energy market in Europe with forwards also relatively low versus the expectations of the situation in the Middle East. If you can share with us your view about the situation and the outlook for the second half of the year. Thank you.

Torgrim Reitan, CFO Thank you very much, Alejandro. So, personal capital distribution. 5 billion for the year. There's no change to that guidance.

We said that we were planning to lean on the balance sheet for this year, as I said, to remain competitive. Clearly there's still a lot of uncertainty around this, so it is way too early to have a discussion on that. But what I can say is that we expect not to lean on the balance sheet for the rest of the year with the current price outlook. Normally we announce the dividend and share buyback at the fourth quarter presentation, and that should be the starting point for any discussions around this.

From the AGM we have the mandate to change during the year, but that is not the normal approach. With all this uncertainty around us, it is important for me to say that any share buyback beyond the base will have to be based on money that we have already earned. So this is clearly too early to have a discussion on that topic. What is important for me to say is that being competitive in our capital distribution will have priority in the capital allocation going forward.

Yes, so that was the first question. Let me see, the second one was on the natural gas market. It's a very, very important question. At the outset, when we started this year, we expected a softer gas market for 2026 and 2027, based on more LNG coming to the market.

With the closing of the strait, 20% of global LNG is shut in, so the situation is very different. I think the main attention has been on the oil market, but equally important is the natural gas market because when the strait opens, we believe it will take maybe half a year for oil to get back to normal; for gas it will take much longer. QatarEnergy has said that 70% of the export capacity from the Gulf is damaged and will take three to five years to repair. So currently we don't see that glut of LNG through this decade as we were expecting just half a year ago.

This is a topic that we are very occupied with, and I do think the world will see this more clearly in a bit. When it comes to the European situation, storage levels are at 30% currently. That is 6% below seasonal normal, and the curves and the market don't give incentive to inject for the time being. We believe that gas storages will likely not reach the 80% target that is set, meaning that going forward the European gas market will be vulnerable to weather events and operational issues.

In addition, there is 32 bcm of Russian gas that will leave the market over these two years. It's clear there is quite a lot of additional LNG that needs to come to Europe to satisfy the necessary demand. Clearly an area to watch. We take the role as a reliable energy supplier extremely seriously.

First, it's important to produce at maximum and deliver natural gas to Europe in a situation like this. Bård Glad Pedersen, SVP Investor Relations Thank you, Alejandro. Thank you. The next one is Biraj Borkhataria from RBC.

Biraj, please go ahead with your question. Biraj Borkhataria, Analyst at RBC Hi there. Hopefully you can hear me. Just had one question and it's about your Ørsted holding.

You're obviously now kind of in the black or close to the black on the investment, but you've moved from not wanting a board seat to then suggesting you want a board seat and then not nominating a board member. So I just want to understand: do you still see this as a long-term strategic holding as you previously said, or has something changed here? And then related to that, are you in discussions around a potential JV with them and should we expect an update with the CMD? Thank you.

Torgrim Reitan, CFO Thanks, Biraj. There is no change in the way that we view our ownership position in Ørsted. We see ourselves as a long-term industrial owner, and we believe, as we have said earlier, that this industry is now coming out of its first crisis and there is consolidation needed. We do believe that collaboration between the two companies has the potential to create shareholder value both for Ørsted's shareholders and Equinor shareholders.

So this remains firm. Ørsted is a great company. When it comes to a board position, the timing for that needs to be right. We informed Ørsted that we would not nominate a board member this year.

But our approach to this ownership is the same: a long-term industrial owner. Bård Glad Pedersen, SVP Investor Relations Thank you, Biraj. Next one is Alistair Syme from Citi. Alistair, please, your line is open.

Alistair Syme, Analyst at Citi Thanks. Bård, can you talk a little bit about activity levels in the US onshore? Appreciate this is a non-operated position, but how many rigs running in Eagle Ford and Marcellus, and any thoughts on ambitions to increase? And then as a follow-up, I think later on this year Germany's looking to move forward with its tenders on 9 gigawatts of gas-fired power.

Is this a tender that might fit with Equinor's strategy in this area? Torgrim Reitan, CFO Okay, thanks, Alistair. Our onshore position in the US is now fully concentrated in the Marcellus, and we are not operating any longer. We are together with [partner] in Marcellus.

That produces very well. The production area increased by 17,000 barrels per day and we are now at 320 barrels per day. So that is good, and [the partner] is a good operator. This is, as you know, the area in the US with the lowest breakeven, around a dollar for that production, well situated in future demand to data centers and gas-to-power and all of that.

So it remains a very strategic asset for us. When it comes to offshore wind and auctions in Europe, I would say that Europe in general is an area where clearly there is quite a bit of support for this, driven by energy security now much more than decarbonisation.