UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a -16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
29 October 2020
Commission File Number 1- 15200
Equinor ASA
(Translation of registrant’s name into English)
FORUSBEEN 50, N-4035, STAVANGER, NORWAY
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20 -F or Form 40-F:
Form 20-F
X
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S -T Rule 101(b)(1):_____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S -T Rule 101(b)(7):_____
This Report on Form 6-K contains a report of the third quarter 2020 results of Equinor ASA.
Equinor third quarter 2020 2
Equinor third quarter 2020 results
Equinor reports adjusted earnings of USD 0.78 billion and USD 0.27 billion after tax in the third
quarter of 2020. IFRS net operating income was negative USD 2.02 billion and the IFRS net
income was negative USD 2.12 billion, following net impairments of USD 2.93 billion mainly
due to reduced future price assumptions.
●
●
●
●
(1)
“Our financial results are impacted by weak prices as regions across the world are still severely affected by the pandemi c. We see the
results of our forceful response to the market turmoil , with significant cost improvements and strict financial discipline. Net impairments
in the quarter are mainly due to reduced price assumptions. Significant uncertainty remains around the future commodity price
development underlining the importance of increased competitiveness and financial resilience, ” says Eldar Sætre, President and CEO
of Equinor ASA.
“We deliver solid operational results in the quarter with an underlying production growth of nine percent. We progress our competitive
project portfolio, supported by the tax policy measures in Norway, with the delivery of Plan for Development and Operation of the
Breidablikk field. Our specialised organisation for late-life production at the Norwegian continental shelf had a successful start -up
showing improved production efficiency and reduced cost,“ says Sætre.
“We continue to capture value from our renewable energy portfolio and position ourselves for profitable growth in value chains for
carbon capture and storage. This quarter we announced our partnership with BP, including the divestment of half of our share of
offshore wind projects Empire Wind and Beacon Wind in the US. We are progressing H2H Saltend, a project for large-scale
production of hydrogen in the UK, and in Norway we are progressing the Northern Lights project as part of creating full value cha ins
for carbon capture, transportation and storage, ” says Sætre.
Adjusted earnings [5] were USD 0.78 billion in the third quarter, down from USD 2.59 billion in the same period in 2019. Adjusted
earnings after tax [5] were USD 0.27 billion, down from USD 1.08 billion in the same period last year . Low prices for liquids and gas
impacted the earnings for the quarter.
Equinor is on track to deliver on the action plan launched in March 2020 of USD 3 billion to strengthen financial resilience, including a
reduction of operating costs of USD 0.70 billion . Unit production costs are significantly reduced from third quarter last year.
In the E&P Norway segment , Equinor saw weak prices impacting the results but took advantage of the flexibility in gas production as
gas prices in Europe recovered through the quarter.
Results in the E&P International segment were impacted by low prices, partially offset by a substantial reduction in costs. The E&P
USA segment was also impacted by weak prices, while continuing efforts to reduce activity and costs.
The Marketing, midstream and processing segment captured value from gas sales to Europe, offset by slightly negative refinery
margins in the quarter.
New energy solutions delivered a positive result in the quarter, including costs related to maturation of new projects. A capital gain of
around USD 1 billion from the divestment of a 50% non-operated interest of the offshore wind projects Empire Wind and Beacon Wind
in the US is expected to be booked in the first quarter of 2021.
IFRS net operating income was negative USD 2.02 billion in the third quarter, down from negative USD 0.47 billion in the same period
of 2019. IFRS net income was negative USD 2.12 billion in the third quarter, down from negative USD 1.11 billion in the third quarter
of 2019.
Net operating income was impacted by net impairment s of USD 2.93 billion mainly due to reduced future price assumptions as well as
1
This is a non-GAAP figure. Comparison numbers and reconciliation to IFRS are presented in the table Calculation of capital employed and
net debt to capital employed ratio as shown under the Supplementary section in the report.
Equinor third quarter 2020 3
some reductions in reserves estimates. Net impairments include USD 1.38 billion in the E&P USA segment, of which USD 1.21 billion
is related to US onshore. Impairments in the E&P International segment were USD 1.18 billion, while impairments within the E&P
Norway segment was USD 0.37 billion. In total, USD 0.58 billion of the net impairment was recognised as exploration expenses.
Equinor delivered total equity production of 1,994 mboe per day in the third quarter, up from 1,909 mboe per day in the same period in
2019, with an increased share of gas. Adjusting for portfolio transactions and government -imposed curtailments, this represents an
underlying production growth of around 9% compared to the third quarter of 2019.
At the end of the third quarter Equinor has completed 26 exploration wells with 13 commercial discoveries and two wells under
evaluation. At the quarter end, 16 wells were ongoing. Adjusted exploration expenses in the quarter were USD 0.30 billion, compared
to USD 0.26 billion in the same quarter of 2019.
Cash flows provided by operating activities before taxes paid and changes in working capital amounted to USD 10.2 billion in the first
nine months of 2020, compared to USD 16.6 billion in the first nine months of 2019. Organic capital expenditure [5] was USD 5.99
billion for the first nine months of 2020. At the closing of the quarter net debt to capital employed
(2)
end of the second quarter of 2020, mainly impacted by the net impairment in the quarter, as well as share buy-back from the
Norwegian state. Following the implementation of IFRS 16, net debt to capital employed
(2)
The board of directors has decided a cash dividend of USD 0.11 per share for the third quarter 2020.
The twelve-month average Serious Incident Frequency (SIF) for the period ending 30 September was 0.6 for 2020 , similar to the
same period for 201 9. The twelve-month average Recordable Injury Frequency (TRIF) for the period ending 30 September was 2.3 for
2020, compared to 2.5 in 2019.
Quarters
Change
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million, unless stated otherwise)
2020
2019
Change
(2,019)
(472)
(469)
>(100%)
Net operating income/(loss)
(2,434)
7,783
N/A
780
354
2,593
(70%)
Adjusted earnings [5]
3,181
9,934
(68%)
(2,124)
(251)
(1,107)
(92%)
Net income/(loss)
(3,080)
2,081
N/A
271
646
1,077
(75%)
Adjusted earnings after tax [5]
1,478
3,739
(60%)
1,994
2,011
1,909
4%
Total equity liquids and gas production (mboe per day) [4]
2,079
2,032
2%
38.3
22.9
52.5
(27%)
Group average liquids price (USD/bbl) [1]
35.2
55.8
(37%)
2
net debt to capital employed ratio as shown under the Supplementary section in the report.
Equinor third quarter 2020 4
GROUP REVIEW
Third quarter 2020
Total equity liquids and gas production
per day in the third quarter of 2019 mainly due to new fields on the NCS and UKCS. Increased flexible gas production added to the
increase, partially offset by expected natural decline mainly on the NCS, production halt in Brazil and divestment of the Eagle Ford
asset in the E&P USA segment in the fourth quarter of 2019.
Total entitlement liquids and gas production
[3] was 1,865 mboe per day in the third quarter of 2020, up 7% compared to 1,745
mboe per day in the third quarter of 2019. In addition to the factors mentioned above, production was positively influenced by lower
effects from production sharing agreements (PSA) [4], and lower US royalty volumes. The net effect of PSA and US royalties was 129
mboe per day in total in the third quarter of 2020 compared to 164 mboe per day in the third quarter of 2019.
Quarters
Change
Condensed income statement under IFRS
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(unaudited, in USD million)
2020
2019
Change
11,339
7,603
15,610
(27%)
Total revenues and other income
34,073
49,189
(31%)
(5,307)
(2,750)
(7,667)
(31%)
Purchases [net of inventory variation]
(15,453)
(22,928)
(33%)
(2,368)
(2,411)
(2,922)
(19%)
Operating and administrative expenses
(7,382)
(8,063)
(8%)
(4,798)
(2,522)
(4,619)
4%
Depreciation, amortisation and net impairment losses
(11,757)
(9,039)
30%
(886)
(393)
(871)
2%
Exploration expenses
(1,914)
(1,374)
39%
(2,019)
(472)
(469)
>(100%)
Net operating income/(loss)
(2,434)
7,783
N/A
(2,124)
(251)
(1,107)
(92%)
Net income/(loss)
(3,080)
2,081
N/A
Net operating income
was negative USD 2,019 million in the third quarter of 2020, compared to negative USD 469 million in the third
quarter of 2019. The decrease was mainly due to lower liquids and gas prices in addition to net impairments
3
reduced price assumptions
4
operational and administrative expenses, especially in the MMP segment, partially offset the decrease.
In the third quarter of 2020, net operating income was negatively impacted by net impairments
3
USD 108 million. Changes in fair value of derivatives and inventory hedge contracts of USD 352 million partially offset the decrease.
In the third quarter of 2019, net operating income was negatively impacted mainly by net impairments of USD 2,794 million, provisions
of USD 560 million and changes in fair value of derivatives and inventory hedge contracts of USD 444 million and positively affected
by gain from sale of assets of USD 849 million.
3
For more information, see note 2 Segments to the Condensed interim financial statements.
4
Equinor third quarter 2020 5
Quarters
Change
Adjusted earnings
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
10,909
8,044
15,352
(29%)
Adjusted total revenues and other income
33,923
47,999
(29%)
(5,203)
(2,798)
(7,642)
(32%)
Adjusted purchases [6]
(15,856)
(22,977)
(31%)
(2,179)
(2,351)
(2,421)
(10%)
Adjusted operating and administrative expenses
(6,975)
(7,354)
(5%)
(2,445)
(2,259)
(2,432)
1%
Adjusted depreciation, amortisation and net impairment
losses
(7,025)
(6,969)
1%
(302)
(282)
(263)
15%
Adjusted exploration expenses
(886)
(766)
16%
780
354
2,593
(70%)
Adjusted earnings [5]
3,181
9,934
(68%)
271
646
1,077
(75%)
Adjusted earnings after tax [5]
1,478
3,739
(60%)
For items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures in the Supplementary
disclosures.
Adjusted total revenues and other income
were USD 10,909 million in the third quarter of 2020 compared to USD 15,352 million in
the third quarter of 2019 . The decrease was mainly due to lower average prices for liquids and gas.
Adjusted purchases
2019. The decrease was mainly due to lower average prices for liquids and gas.
Adjusted operating and administrative expenses
were USD 2,179 million in the third quarter of 2020, compared to USD 2,421
million in the third quarter of 2019. The decrease was mainly due to lower activity level as a result of the Covid-19 pandemic and the
divestment of the Eagle Ford asset in the fourth quarter of 2019. Lower royalties and production fees added to the decrease. Higher
transportation costs for liquids, especially in the MMP segment , partially offset the decrease.
Adjusted depreciation, amort isation and net impairment losses
were USD 2,445 million in the third quarter of 2020, compared to
USD 2,432 million in the third quarter of 2019. The slight increase was mainly due to ramp-up of new fields on the NCS and higher
investments especially in the E&P segments. Higher proved reserves estimates especially in the E&P International and E&P USA
segments in addition to lower depreciation basis resulting from net impairments in previous periods mostly offset the increase.
Adjusted exploration expenses
were USD 302 million in the third quarter of 2020 , compared to USD 263 million in the third quarter
of 2019. The increase was mainly due to a lower portion of exploration expenditures being capitalised and a higher portion of
exploration expenditure capitalised in earlier yea rs being expensed this quarter, partially offset by lower drilling costs. For more
information, see the table titled Adjusted exploration expenses in the Supplementary disclosures.
After total adjustments
5
Adjusted earnings
quarter of 2020, a 70% decrease from USD 2,593 million in the third quarter of 2019.
Adjusted earnings after tax
earnings of 65.3%, compared to 58.5% in the third quarter of 2019. The increase in the effective tax rate was mainly due to decreased
adjusted earnings in the third quarter of 2020 in entities with lower than average tax rates, and in entities without recognised taxes,
partially offset by the temporary changes to Norway’s petroleum tax system as described in note 8 Impact of pandemic and oil price
decline to the Condensed interim financial statements.
Cash flows provided by operating activities
decreased by USD 1,549 million compared to the third quarter of 2019. The decrease
was mainly due to lower liquids and gas prices and a change in working capital, partially offset by decreased tax payments.
Cash flows used in investing activities
increased by USD 2,877 million compared to the third quarter of 2019. The increase was
mainly due to increased financial investments and reduced proceeds from sale of assets, partially offset by lower cash flow used for
business combinations and capital expenditures.
5
For items impacting net operating income, see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures.
Equinor third quarter 2020 6
Cash flows provided by financing activities
increased by USD 820 million compared to the third quarter of 2019. The increase was
mainly due to increased short-term debt, increased collateral received and decreased dividend paid, partially offset by increased
payments related to the share buy-back programme and repayment of finance debt.
Total cash flows
decreased by USD 3,606 million compared to the third quarter of 2019.
Free cash flow
2019. The increase was mainly due to lower cash flow used for business combinations, decreased tax payments and lower capital
expenditures, partially offset by reduced proceeds from sale of assets, lower liquids and gas prices and increased payments related to
the share buy-back programme.
First nine months 2020
Net operating income
was negative USD 2,434 million in the first nine months of 2020 compared to positive USD 7,783 million in the
first nine months of 2019. The decrease was ma inly due to lower liquids and gas prices in addition to net impairments
6
related to reduced price assumptions
7
and negative reserve updates
.
In the first nine months of 2020, net operating income was negatively impacted mainly by net impairments
6
and
provisions of USD 290 million.
In the first nine months of 2019, net operating income was negatively affected mainly by net impairments of USD 2,678 million,
provisions of USD 557 million and positively impacted by net gain of sale of assets of USD 999 million and changes in the fair value of
derivatives and inventory hedge contracts of USD 267 million.
Adjusted total revenues and other income
were USD 33,923 million in the first nine months of 2020 compared to USD 47,999
million in the first nine months of 2019. The decrease was mainly due to lower average prices for liquids and gas.
Adjusted purchases [6]
months of 2019. The decrease was mainly due to lower average prices for liquids and gas.
Adjusted operating and admi nistrative expenses
were
USD 6,975 million in the first nine months of 2020, a decrease of USD 379
million compared to the first nine months of 2019. The decrease was mainly due to the NOK/USD exchange rate development in
addition to lower royalties and production fees driven by lower volumes and prices. The divestment of the Eagle Ford asset in the E&P
USA segment in the fourth quarter of 2019 and reduced Gassled removal costs added to the decrease. Higher transportation costs for
liquids in the MMP segment partially offset the decrease.
Adjusted depreciation, amortisation and net impairment losses
were
USD 7,025 million in the first nine months of 2020, up
USD 56 million compared to the first nine months of 2019. The slight increase was mainly due to ramp-up of new fields especially on
the NCS and UKCS and higher investments mainly in the US. Higher proved reserves estimates for several fields, lower depreciation
basis resulting from net impairments in previous periods and the NOK/USD exchange rate development mostly offset the increase.
Adjusted exploration expenses
increased by USD 120 million to USD 886 million in the first nine months of 2020, primarily due to a
higher portion of exploration expenditure capitalised in earlier years being expensed this period and higher drilling costs. The increase
was partially offset by a higher portion of exploration expenses being capitalised, lower seismic costs and other costs. For more
information, see table titled Adjusted exploration expenses in the Supplementary disclosures.
After total adjustments
8
Adjusted earnings
months of 2020, down 68% from USD 9,934 million in the first nine months of 2019.
Adjusted earnings after tax
months of 2019. The effective tax rate on adjusted earnings was 53.6% in first nine months of 2020, compared to an effective tax rate
of 62.4% in first nine months of 2019. The decrease in the effective tax rate was mainly caused by the temporary changes to Norway’s
petroleum tax system as described in note 8 Impact of pandemic and oil price decline to the Condensed interim financial statements,
in addition to changes in provision for best estimat es for uncertain tax positions.
6
For more information, see note 2 Segments to the Condensed interim financial statements.
7
For more information, see note 6 Property, plant and equiptment and intangible assets to the Condensed interim financial statements.
8
For items impacting net operating income, see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures
Equinor third quarter 2020 7
Cash flows provided by operating activities
decrease was mainly due to lower liquids and gas prices and a change in working capital, partially offset by decreased tax payments
and increased cash flow from derivatives.
Cash flows used in investing activities
mainly due to increased financial investments and reduced proceeds from sale of assets, partially offset by lower cash flow used for
business combinations and capital expenditures.
Cash flows provided by financing activities
increase was mainly due to bond issues in the second quarter of 2020, increased short-term debt and decreased dividend paid,
partially offset by increased payments related to the share buy-back program and increased repayment of finance debt.
Total cash flows
Free cash flow
[5] for the first nine months of 2020 was negative USD 1, 277 million including USD 332 million received from the
Lundin divestment included in the line item (increase)/decrease in financial investment in the cash flow statement, comp ared to USD
338 million in the first nine months of 2019. The decrease was mainly due to lower liquids and gas prices, reduced proceeds from sale
of assets and increased payments related to the share buy-back program , partially offset by decreased tax payments, lower cash flow
used for business combinations, lower capital expenditures and increased cash flow from derivatives.
OUTLOOK
●
Organic capital expenditures
9
, around USD 10 billion for 2021
9
, and
around USD 12 billion annual average for 2022 -2023
●
Equinor intends to continue to mature its attractive portfo lio of exploration assets and estimates a total
exploration activity
of around USD 1.1 billion for 2020, excluding signature bonuses, accruals and field development costs
●
Equinor’s ambition is to keep the
unit of production cost
●
For the period 2019 –2026,
production growth
(Compound Annual Growth Rate) based on current forecast
●
Scheduled maintenance activity
These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks
and uncertainties because they relate to events and depend on circumstances that will occur in the future. We continue to monitor the
impact of Covid-19 on our operations. Deferral of production to create future value, production cuts, gas off-take, timing of new
capacity coming on stream, operational regularity, impact of Covid-19 and activity level in the US onshore represent the most
significant risks related to the foregoing production guidance. There has been considerable uncertainty created by the Covid-19
pandemic and we are still unable to predict the ultimate impact of this event, including impact on general economic conditions
worldwide. Our future financial performance, including cash flow and liquidity, will be impacted by the extent and duration of the
current market conditions, the development in realised prices, including price differentials and the effectiveness of actions taken in
response to the pandemic. For further information, see section Forward-looking statements.
9
USD/NOK exchange rate assumption of 9.5.
Equinor third quarter 2020 8
EXPLORATION & PRODUCTION NORWAY
Third quarter 2020 review
Average daily production of liquids and gas
1,067 mboe per day in the third quarter of 2019. The increase was mainly due to ramp-up of new fields.
Net operating income
The decrease was mainly due to lower liquids price and gas transfer price in addition to impairments. Higher volumes partially offset
the decrease.
In the third quarter of 2020, net operating income was negatively impacted by impairments of USD 360 million, partially offset by
overlifted volumes of USD 23 million. In the third quarter of 2019, net operating income was positively impacted by gain on sale of
assets of USD 840 million, partially offset by a negative impact of USD 25 million related to underlifted volumes.
Adjusted operating and administrative expenses decreased mainly due to the NOK/USD exchange rate development, lower
transportation cost in addition to lower activity and reduced cost level as a result of the Covid -19 restrictions. Lower well maintenance
cost added to the decrease. Adjusted depreciation, amortisation and net impairment losses increased mainly due to ramp-up of new
fields. Adjusted exploration expenses increased mainly due to lower portion of exploration expenditure being capitalised, a higher
portion of exploration expenditure capitalised earlier years being expensed this quarter and higher field development costs. Lower
drilling costs partially offset the increase.
After total adjustments of USD 342 million to net operating income,
Adjusted
earnings/(loss)
quarter of 2020, compared to USD 1,735 million in the third quarter of 2019.
Quarters
Change
Adjusted earnings
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
2,763
1,715
3,680
(25%)
Adjusted total revenues and other income
8,071
13,007
(38%)
(699)
(743)
(822)
(15%)
Adjusted operating and administrative expenses
(2,097)
(2,422)
(13%)
(1,126)
(992)
(981)
15%
Adjusted depreciation, amortisation and net impairment
losses
(3,099)
(2,945)
5%
(165)
(65)
(142)
16%
Adjusted exploration expenses
(325)
(335)
(3%)
773
(85)
1,735
(55%)
Adjusted earnings/(loss) [5]
2,551
7,305
(65%)
For comparable IFRS figures, see note 2 Segments to the Condensed interim financial statements. For items impacting net operating
income/(loss), see Use and reconciliation of non -GAAP financial measures in the Supplementary disclosures.
First nine months 2020
Net operating income
first nine months of 2019. The decrease was mainly due to lower liquids price and gas transfer price in addition to impairments in the
first nine months of 2020. Higher liquids volumes partially offset the decrease.
In the first nine months of 2020, net operating income was negatively impacted by impairments of USD 1,219 million and underlifted
volumes of USD 26 million . In the first nine months of 2019, net operating income was positively impacted by a gain on sale of assets
of USD 977 million, partially offset by a negative impact of USD 94 million from underlifted volumes in the period and an
Equinor third quarter 2020 9
implementation effect of USD 42 million from a change in accounting policy for lifting imbalances.
Adjusted operating and administrative expenses decreased mainly due to the NOK/USD exchange rate development and reduced
Gassled removal costs. Adjusted depreciation, amortisation and net impairment losses increased mainly due to ramp-up of new fields.
The NOK/USD exchange rate development and higher proved reserves estimates for several fields partially offset the increase.
Adjusted exploration expenses decreased mainly due to lower drilling costs. Lower portion of exploration expenditure being
capitalised and a higher portion of exploration expenditure capitalised earlier years being expensed this period partially offset the
decrease.
After total adjustments of USD 1,256 million to net operating income,
Adjusted earnings/(loss)
[5] were USD 2,551 million in the first
nine months of 2020, a decrease of 65% from USD 7,305 million in the first nine months of 2019.
Equinor third quarter 2020 10
EXPLORATION & PRODUCTION INTERNATIONAL
In the second quarter of 2020, Equinor changed its internal reporting to management, impacting the composition of Equinor's
operating and reporting segments. Equinor’s upstream activities in the USA are now reported separately to management, and such
information is also considered to be useful to the users of the financial statements, resulting in the exploration and production activities
in the USA being considered a separate operating- and reporting segment as of the second quarter of 2020. Previously these
activities were included in the DPI operating segment and presented as part of the E&P International reporting segment.
Third quarter 2020 review
Average daily equity production of liquids and gas
day in the third quarter of 2019. The decrease was primarily due to repairs on Peregrino (Brazil) resulting in a production halt, lower
gas nominations, natural decline in mature fields, partially offset by production ramp -up of new fields in the UK.
Average daily entitlement production of liquids and gas
was 255 mboe per day in the third quarter of 2020 compared to
312 mboe per day in the third quarter of 2019. The decrease was due to lower equity production partially offset by lower effects from
production sharing a greements (PSA). The net effects from PSA were 68 mboe per day in the third quarter of 2020 compared to
97 mboe per day in the third quarter of 2019.
Net operating income
was negative USD 1,328 million in the third quarter of 2020 compared to positive USD 325 million in the third
quarter of 2019. The decrease was mainly due to higher impairment s in the third quarter of 2020 , lower liquids and gas prices in
addition to lower entitlement production.
In the third quarter of 2020, net operating income was negatively impacted by impairments of USD 1 ,176 million. In the third quarter of
2019, net operating income was negatively impacted by net impairments of USD 56 million.
Adjusted operating and administrative expenses decreased mainly due to lower operation and maintenance expenses in addition to
lower royalties and production fees, driven by lower volumes and prices . Adjusted depreciation, amortisation and net impairment
losses decreased mainly due to higher proved reserves estimates and lower production from mature fields. Ramp -up of new fields on
stream partially offset the decrease. Adjusted explo ration expenses increased mainly due to a lower portion of exploration expenditure
being capitalised and a higher portion of exploration expenditure capitalised in earlier years being expensed this quarter. Lower drilling
and field development costs partially offset the increase.
After total adjustments of USD 1,224 million to net operating income,
Adjusted earnings/(loss)
the third quarter of 2020, down from positive USD 451 million in the third quarter of 2019.
Quarters
Change
Adjusted earnings
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
820
622
1,477
(44%)
Adjusted total revenues and other income
2,589
4,576
(43%)
12
(26)
16
(25%)
Adjusted purchases
(56)
(9)
>100%
(306)
(324)
(377)
(19%)
Adjusted operating and administrative expenses
(996)
(1,226)
(19%)
(511)
(475)
(564)
(9%)
Adjusted depreciation, amortisation and net impairment
losses
(1,529)
(1,551)
(1%)
(119)
(177)
(100)
18%
Adjusted exploration expenses
(488)
(367)
33%
(104)
(379)
451
N/A
Adjusted earnings/(loss) [5]
(479)
1,423
N/A
For comparable IFRS figures, see note 2 Segments to the Condensed interim financial statements. For items impacting net operating
Equinor third quarter 2020 11
income/(loss), see Use and reconciliation of non -GAAP financial measures in the Supplementary disclosures.
First nine months 2020
Net operating income
for E&P International was negative USD 2,189 million in the first nine months of 2020, compared to positive
USD 1,418 million in the first nine months of 2019. The decrease was mainly due to higher net impairments in the first nine months of
2020 and lower liquids and gas prices.
Equinor third quarter 2020 12
In the first nine months of 2020, net operating income was negatively impacted by net impairments of USD 1,705 million. In the first
nine months of 2019, net operating income was positively impacted by net impairment reversals of USD 60 million and negatively
impacted by an imp lementation effect of USD 63 million from a change in accounting policy for lifting imbalances.
Adjusted operating and administrative expenses decreased mainly due to lower royalties and production fees driven by lower volumes
and prices. Lower operation and maintenance expenses added to the decrease. Adjusted depreciation, amortisation and net
impairment losses decreased slightly due to higher proved reserves estimates and lower production from mature fields. New field s on
stream partially offset the decrease. Adjusted exploration expenses increased mainly due to a higher portion of exploration
expenditure capitalised in earlier years being expensed this period and higher drilling costs. Lower field development costs partially
offset the increase.
After total adjustments of USD 1,709 million to net operating income,
Adjusted
earnings/(loss)
the first nine months of 2020, down from USD 1,423 million in the first nine months of 2019.
Equinor third quarter 2020 13
EXPLORATION & PRODUCTION USA
In the second quarter of 2020, Equinor changed its internal reporting to management, impacting the composition of Equinor's
operating and reporting segments. Equinor’s upstream activities in the USA are now reported separately to management, and such
information is also considered to be useful to the users of the financial statements, resulting in the exploration and production activities
in the USA being considered a separate operating- and reporting segment as of the second quarter of 2020. Previously these
activities were included in the DPI operating segment and presented as part of the E&P International reporting segment.
Third quarter 2020 review
Average daily equity production of liquids and gas
day in the third quarter of 2019. The divestment of the Eagle Ford asset in 2019 resulted in a decrease, as well as planned
maintenance and weather shutdowns in the US offshore. New wells in the US onshore and additional ownership in the Caesar Tonga
field acquired in the third quarter of 2019 partially offset the decrease.
Average daily entitlement production of liquids and gas
decreased slightly to 337 mboe per day in the third quarter of 2020
compared to 366 mboe per day in the third quarter of 2019. The decrease was due to lower equity production slightly offset by lower
effects from US onshore royalty volumes after the divestment of the Eagle Ford asset. The net effects from US royalties were 61
mboe per day in the third quarter of 2020 compared to 67 mboe per day in the third quarter of 2019.
Net operating income
was negative USD 1,606 million in the third quarter of 2020 compared to negative USD 2,587 million in the
third quarter of 2019. The increase was mainly due to lower depreciation, net impairments and lower operating costs due to the
divestment of the Eagle Ford asset. Lower commodity prices partially offset the increase.
In the third quarter o f 2020, net operating income was negatively impacted by net impairments of USD 1,377 million, with the largest
effect on unconventional US onshore assets. In the third quarter of 2019, net operating income was negatively impacted by net
impairments of USD 2,532 million.
Adjusted operating and administrative expenses decreased mainly due to the divestment of the Eagle Ford asset, lower transportation
cost due to reduced production volumes in addition to lower production fees driven by lower prices. Adjuste d depreciation,
amortisation and net impairment losses decreased mainly due to lower depreciation basis resulting from net impairments in previous
periods and higher proved reserves estimates in US offshore. Increased investments and acquired interest in the Caesar Tonga field
during 2019 partially offset the decrease . Adjusted exploration expenses remain unchanged due to higher drilling costs offset by a
higher portion of exploration expenditure being capitalised.
After total adjustments of USD 1,413 million to net operating income,
Adjusted earnings/(loss)
the third quarter of 2020, down from negative USD 16 million in the third quarter of 2019.
Quarters
Change
Adjusted earnings
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
611
475
986
(38%)
Adjusted total revenues and other income
1,971
3,169
(38%)
(315)
(302)
(376)
(16%)
Adjusted operating and administrative expenses
(977)
(1,143)
(15%)
(469)
(475)
(605)
(22%)
Adjusted depreciation, amortisation and net impairment
losses
(1,444)
(1,634)
(12%)
(20)
(40)
(21)
(4%)
Adjusted exploration expenses
(74)
(64)
17%
(193)
(341)
(16)
>(100%)
Adjusted earnings/(loss) [5]
(524)
327
N/A
Equinor third quarter 2020 14
For comparable IFRS figures, see note 2 Segments to the Condensed interim financial statements. For items impacting net operating
income/(loss), see Use and reconciliation of non -GAAP financial measures in the Supplementary disclosures.
First nine months 2020
Net operating income
for E&P USA was negative USD 2,953 million in the first nine months of 2020, compared to negative
USD 2,278 million in the first nine months of 2019. The decrease was mainly due to higher net impairments in the first nine months of
2020 in addition to lower liquids and gas prices. Lower operating and administrative expenses in addition to lower depreciation
expenses partially offset the decrease.
In the first nine months of 2020, net operating income was negatively impacted by net impairment losses of USD 2,296 million, mainly
due to reduced price assumptions with the largest effect being on an unconventional US onshore asset. In the first nine months of
2019, net operating income was negatively impacted by net impairments of USD 2,532 million, with the largest effect on
unconventional US onshore assets.
Adjusted operating and administrative expenses decreased mainly due to divestment of the Eagle Ford asset in the fourth quarter of
2019 in addition to lower severance taxes due to lower prices. Adjusted depreciation, amortisation and net impairment losses
decreased mainly due to lower depreciation basis resulting from net impairments in previous periods and higher proved reserves
estimates in US offshore. Increased investments and acquired interest in the Caesar Tonga field during 2019 parti ally offset the
decrease. Adjusted exploration expenses increased mainly due to higher drilling and field development costs . A higher portion of
exploration expenditure being capitalised partially offset the increase.
After total adjustments of USD 2,429 million to net operating income.
Adjusted
earnings/(loss)
the first nine months of 2020, down from USD 327 million in the first nine months of 2019.
Equinor third quarter 2020 15
MARKETING, MIDSTREAM & PROCESSING
Third quarter 2020 review
Natural gas sales volumes
amounted to 14.1 billion standard cubic meters (bcm) in the third quarter of 2020, an increase of 1.6 bcm
compared to the third quarter of 2019. Of the total gas sales in the third quarter of 2020, entitlement gas was 12.6 bcm, up 1.4 bcm
from the third quarter of 2019. The increase was mainly due to higher NCS entitlement volumes.
Liquids sales volumes
quarter of 2019 mainly due to increased NCS volumes.
Average invoiced European natural gas sales price
was 48% lower in the third quarter of 2020 compared to the third quarter of
2019 mainly due to drop in European gas prices.
Average invoiced North American piped gas sales price
the same period mainly due to the decreased Henry Hub price.
Net operating income
quarter of 2019. The increase was mainly due to inventory hedging effects and unrealised gain on derivatives amounting of
USD 325 million in the third quarter of 2020, compared to a loss on derivatives of USD 453 million in the third quarter of 2019. In
addition, provisions and impairment related to damage to the South Riding Point oil terminal in Bahamas negatively impacted net
operating income in the third quarter of 2019.
Adjusted purchases [6] decreased mainly due to lower prices for all products. Adjusted operating and administrative expenses
increased mainly due to higher transportation cost for liquids. Adjusted depreciation, amortisation and net impairment losses
decreased slightly.
After total adjustments of negative USD 289 million to net operating income,
Adjusted earnings
quarter of 2020, compared to USD 448 million in the third quarter of 2019. The decrease was mainly due to negative refinery margins
partially offset by strong piped gas result.
Quarters
Change
Adjusted earnings
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
10,704
7,805
14,641
(27%)
Adjusted total revenues and other income
33,293
46,223
(28%)
(9,174)
(5,272)
(13,016)
(30%)
Adjusted purchases [6]
(27,603)
(41,666)
(34%)
(1,167)
(1,274)
(1,072)
9%
Adjusted operating and administrative expenses
(3,752)
(3,242)
16%
(102)
(98)
(105)
(3%)
Adjusted depreciation, amortisation and net impairment
losses
(287)
(298)
(4%)
262
1,161
448
(42%)
Adjusted earnings [5]
1,652
1,017
62%
For comparable IFRS figures, see note 2 Segments to the Condensed interim financial statements. For items impacting net operating
income/(loss), see Use and reconciliation of non -GAAP financial measures in the Supplementary disclosures.
First nine months 2020
Net operating income
for MMP was USD 839 million in the first nine months of 2020 compared to USD 644 million in the first nine
months of 2019. The increase was mainly due to strong results from liquids trading and price review settlement in addition to lower
provisions of USD 246 million in the first nine months of 2020 compared to USD 510 million in the first nine months of 2019. Weaker
Equinor third quarter 2020 16
refinery results and higher impairments relate d to refinery and infrastructure assets in the third quarter of 2020 partially offset the
increase.
Adjusted total revenues and other income and Adjusted purchases decreased mainly due to lower prices for all products, partially
offset by settlement of price revisions. Adjusted operating and administrative expenses increased mainly due to higher transportation
cost for liquid volumes . Adjusted depreciation, amortisation and net impairment losses decreased slightly in the first nine months of
2020.
After total net adjustments of USD 813 million,
increase from USD 1,017 million in the first nine months of 2019, mainly due to increased results from gas and liquids trading.
Equinor third quarter 2020 17
CONDENSED INTERIM FINANCIAL STATEMENTS
Third quarter 2020
CONSOLIDATED STATEMENT OF INCOME
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(unaudited, in USD million)
Note
2020
2019
2019*
11,250
7,563
14,704
Revenues
33,878
48,011
62,911
86
33
46
Net income/(loss) from equity accounted investments
190
149
164
3
7
860
Other income
5
1,028
1,283
11,339
7,603
15,610
Total revenues and other income
2
34,073
49,189
64,357
(5,307)
(2,750)
(7,667)
Purchases [net of inventory variation]
(15,453)
(22,928)
(29,532)
(2,187)
(2,234)
(2,732)
Operating expenses
(6,826)
(7,422)
(9,660)
(181)
(177)
(190)
Selling, general and administrative expenses
(555)
(642)
(809)
(4,798)
(2,522)
(4,619)
Depreciation, amortisation and net impairment losses
6
(11,757)
(9,039)
(13,204)
(886)
(393)
(871)
Exploration expenses
(1,914)
(1,374)
(1,854)
(13,359)
(8,075)
(16,079)
Total operating expenses
2
(36,506)
(41,405)
(55,058)
(2,019)
(472)
(469)
Net operating income/(loss)
2
(2,434)
7,783
9,299
(343)
(379)
(343)
Interest expenses and other financial expenses
(1,066)
(1,029)
(1,450)
142
130
683
Other financial items
640
1,517
1,443
(201)
(248)
340
Net financial items
4
(426)
489
(7)
(2,220)
(720)
(129)
Income/(loss) before tax
(2,859)
8,272
9,292
95
469
(978)
Income tax
5
(221)
(6,191)
(7,441)
(2,124)
(251)
(1,107)
Net income/(loss)
(3,080)
2,081
1,851
Equinor third quarter 2020 18
(2,127)
(254)
(1,107)
Attributable to equity holders of the company
(3,088)
2,079
1,843
3
3
1
Attributable to non-controlling interests
8
2
8
(0.65)
(0.08)
(0.33)
Basic earnings per share (in USD)
(0.94)
0.62
0.55
(0.65)
(0.08)
(0.33)
Diluted earnings per share (in USD)
(0.94)
0.62
0.55
3,248
3,276
3,329
Weighted average number of ordinary shares outstanding (in millions)
3,276
3,330
3,326
3,257
3,284
3,337
Weighted average number of ordinary shares outstanding diluted (in
millions)
3,284
3,338
3,334
* Audited
Equinor third quarter 2020 19
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(unaudited, in USD million)
2020
2019
2019*
(2,124)
(251)
(1,107)
Net income/(loss)
(3,080)
2,081
1,851
34
41
192
Actuarial gains/(losses) on defined benefit pension plans
197
365
427
(6)
(8)
(49)
Income tax effect on income and expenses recognised in OCI
1)
(56)
(86)
(98)
27
33
142
Items that will not be reclassified to the Consolidated statement of
income
141
279
330
888
1,560
(1,726)
Currency translation adjustments
(1,734)
(1,254)
(51)
0
0
57
Share of OCI from equity accounted investments
0
44
44
888
1,560
(1,668)
Items that may be subsequently reclassified to the Consolidated
statement of income
(1,734)
(1,210)
(7)
915
1,593
(1,526)
Other comprehensive income/(loss)
(1,593)
(930)
323
(1,209)
1,342
(2,633)
Total comprehensive income/(loss)
(4,673)
1,151
2,174
(1,212)
1,340
(2,633)
Attributable to the equity holders of the company
(4,682)
1,149
2,166
3
3
1
Attributable to non-controlling interests
8
2
8
* Audited
1) Other comprehensive income (OCI).
Equinor third quarter 2020 20
CONSOLIDATED BALANCE SHEET
At 30 September
At 30 June
At 31 December
At 30 September
(unaudited, in USD million)
Note
2020
2020
2019*
2019
ASSETS
Property, plant and equipment
6
62,988
63,941
69,953
69,954
Intangible assets
6
9,667
10,317
10,738
10,877
Equity accounted investments
1,650
1,599
1,442
1,421
Deferred tax assets
4,251
3,794
3,881
3,435
Pension assets
1,103
963
1,093
871
Derivative financial instruments
1,964
1,630
1,365
1,486
Financial investments
3,437
3,157
3,600
3,185
Prepayments and financial receivables
1,240
1,311
1,214
1,174
Total non-current assets
86,300
86,711
93,285
92,403
Inventories
2,860
2,974
3,363
2,501
Trade and other receivables
6,108
5,489
8,233
6,917
Derivative financial instruments
570
589
578
949
Financial investments
10,563
9,319
7,426
7,203
Cash and cash equivalents
7,844
9,700
5,177
6,838
Total current assets
27,944
28,072
24,778
24,408
Assets classified as held for sale
3
188
0
0
297
Total assets
114,432
114,783
118,063
117,108
EQUITY AND LIABILITIES
Shareholders' equity
34,084
35,587
41,139
40,983
Non-controlling interests
24
23
20
16
Total equity
34,108
35,610
41,159
40,999
Finance debt
4
32,193
31,647
24,945
24,401
Equinor third quarter 2020 21
Deferred tax liabilities
9,451
8,907
9,410
9,731
Pension liabilities
3,705
3,572
3,867
3,765
Provisions and other liabilities
7
19,191
18,097
17,951
18,269
Derivative financial instruments
787
967
1,173
1,409
Total non-current liabilities
65,328
63,191
57,346
57,576
Trade, other payables and provisions
8,118
8,620
10,450
8,663
Current tax payable
5
543
674
3,699
4,115
Finance debt
4
5,277
5,463
4,087
4,375
Dividends payable
292
297
859
864
Derivative financial instruments
765
928
462
516
Total current liabilities
14,996
15,982
19,557
18,533
Total liabilities
80,324
79,173
76,904
76,109
Total equity and liabilities
114,432
114,783
118,063
117,108
* Audited
Equinor third quarter 2020 22
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited, in USD million)
Share
capital
Additional
paid-in
capital
Retained
earnings
Currency
translation
adjustments
OCI from
equity
accounted
investments
Share-
holders'
equity
Non-
controlling
interests
Total equity
At 31 December 2018*
1,185
8,247
38,790
(5,206)
(44)
42,970
19
42,990
Net income/(loss)
2,079
2,079
2
2,081
Other comprehensive income/(loss)
279
(1,254)
44
(930)
(930)
Total comprehensive income/(loss)
1,151
Dividends
(2,596)
(2,596)
(2,596)
Share buy-back
1)
(500)
(500)
(500)
Other equity transactions
(12)
(29)
(40)
(5)
(45)
At 30 September 2019
1,185
7,735
38,523
(6,460)
0
40,983
16
40,999
At 31 December 2019*
1,185
7,732
37,481
(5,258)
0
41,139
20
41,159
Net income/(loss)
(3,088)
(3,088)
8
(3,080)
Other comprehensive income/(loss)
141
(1,734)
0
(1,593)
(1,593)
Total comprehensive income/(loss)
(4,673)
Dividends
(1,476)
(1,476)
(1,476)
Share buy-back
1)
(21)
(869)
(890)
(890)
Other equity transactions
(8)
(0)
(8)
(4)
(12)
At 30 September 2020
1,164
6,855
33,056
(6,991)
0
34,084
24
34,108
* Audited
1) In September 2019 Equinor launched a USD 5 billion share buy-back programme, where the first tranche of the programme of around
USD 1.5 billion has been finalis ed. A proportionate share of 67% from the Norwegian State was redeemed in accordance with an
agreement with the Ministry of Petroleum and Energy for the Norwegian State to maintain their ownership percentage in Equinor. The
redemption was approved by the annual general meeting held 14 May 2020.
quarter 2019. The State’s share including interest and dividends has been recognised as a short-term obligation and as a reduction in
equity as treasury shares, subsequent to the decision at the annual general meeting held on 14 May 2020. The liability of USD 0.9 billion
(NOK 9.1 billion) was settled 23 July 2020. The corresponding shares of the first tranche of the buyback programme were cancelled
on 16 July 2020.
Equinor has suspended the remaining share buy-back programme until further notice. The announced second tranche of around
USD 675 million, including the Norwegian State share, will under the current market conditions not be executed as previously announced
and planned.
Equinor third quarter 2020 23
CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(unaudited, in USD million)
Note
2020
2019
2019*
(2,220)
(720)
(129)
Income/(loss) before tax
(2,859)
8,272
9,292
4,798
2,522
4,619
Depreciation, amortisation and net impairment losses
6
11,757
9,039
13,204
662
125
650
Exploration expenditures written off
1,222
673
777
131
321
(295)
(Gains)/losses on foreign currency transactions and balances
4
156
(201)
(224)
(1)
(15)
(851)
(Gains)/losses on sale of assets and businesses
3
(2)
(994)
(1,187)
258
257
678
(Increase)/decrease in other items related to operating
activities
750
1,159
1,016
(182)
25
141
(Increase)/decrease in net derivative financial instruments
(446)
(988)
(595)
41
43
50
Interest received
150
166
215
(146)
(198)
(226)
Interest paid
(526)
(526)
(723)
3,342
2,360
4,637
Cash flows provided by operating activities before taxes paid
and working capital items
10,201
16,600
21,776
(110)
(1,744)
(1,447)
Taxes paid
(2,742)
(5,636)
(8,286)
(600)
(248)
990
(Increase)/decrease in working capital
583
1,010
259
2,632
368
4,180
Cash flows provided by operating activities
8,043
11,975
13,749
0
(0)
(1,794)
Cash used in business combinations
1)
3
0
(2,274)
(2,274)
(1,723)
(1,899)
(2,637)
Capital expenditures and investments
(5,972)
(7,504)
(10,204)
(1,034)
(2,730)
2,584
(Increase)/decrease in financial investments
2)
(3,165)
(801)
(1,012)
(261)
(45)
182
(Increase)/decrease in derivatives financial instruments
(332)
295
298
(18)
2
0
(Increase)/decrease in other interest- bearing items
(16)
8
(10)
14
0
1,519
Proceeds from sale of assets and businesses
3
16
1,726
2,608
(3,023)
(4,671)
(146)
Cash flows used in investing activities
(9,469)
(8,549)
(10,594)
0
8,347
0
New finance debt
8,347
0
984
Equinor third quarter 2020 24
(1,642)
(318)
(855)
Repayment of finance debt
(2,266)
(1,389)
(2,419)
(287)
(904)
(859)
Dividends paid
(2,037)
(2,492)
(3,342)
(1,001)
0
(91)
Share buy-back
3)
(1,059)
(91)
(442)
1,308
(150)
(639)
Net current finance debt and other
1,110
(41)
(277)
(1,623)
6,975
(2,443)
Cash flows provided by/(used in) financing activities
4,095
(4,012)
(5,496)
(2,014)
2,672
1,590
Net increase/(decrease) in cash and cash equivalents
2,669
(587)
(2,341)
158
162
(154)
Effect of exchange rate changes on cash and cash
equivalents
(1)
(153)
(38)
9,700
6,866
5,379
Cash and cash equivalents at the beginning of the period (net
of overdraft)
5,177
7,556
7,556
7,844
9,700
6,816
Cash and cash equivalents at the end of the period (net of
overdraft)
4)
7,844
6,816
5,177
* Audited
1) Net after cash and cash equivalents acquired.
2) Includes sale of Lundin shares in the second quarter of 2020. For more information, see note 3 Acquisition and disposals.
3) For more information, see Consolidated statement of changes in equity.
4) At 30 September 2020 cash and cash equivalents net overdraft was zero. At 30 September 2019 net overdraft was USD 22 million and
at 31 December 2019 net over draft was zero.
Equinor third quarter 2020 25
Notes to the Condensed interim financial statements
1 Organisation and basis of preparation
Organisation and principal activities
Equinor ASA, originally Den Norske Stats Oljeselskap AS, was founded in 1972 and is incorporated and domiciled in Norway. The
address of its registered office is Forusbeen 50, N-4035 Stavanger, Norway.
The Equinor group’s (Equinor’s) business consists principally of the exploration, production, transportation, refining and marketing of
petroleum and petroleum -derived products, and other forms of energy. Equinor ASA is listed on the Oslo Børs (Norway) and the New
York Stock Exchange (USA).
All of Equinor's oil and gas activities and net assets on the Norwegian continental shelf (NCS) are owned by Equinor Energy AS, a
100% owned operating subsidiary of Equinor ASA. Equinor Energy AS is co -obligor or guarantor of certain debt obligations of Equinor
ASA.
Following changes in Equinor's internal reporting to management the composition of Equinor's operating and reporting segments has
changed as of the second quarter of 2020. Segment information for p rior periods has been restated to align with the new segment
presentation. For further information see note 2 Segments to these Condensed interim financial statements.
Equinor's Condensed interim financial statements for the third quarter of 2020 were authorised for issue by the board of directors on
28 October 2020.
Basis of preparation
These Condensed interim financial statements are prepared in accordance with International Accounting Standard 34 Interim
Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU).
The Condensed interim financial statements do not include all the information and disclosures required by International Financial
Reporting Standards (IFRS) for a complete set of financial statements, and these Condensed interim financial statements should be
read in conjunction with the Consolidated annual financial statements for 2019. IFRS as adopted by the EU differs in certain respects
from IFRS as issued by the IASB, but the differences do not impact Equinor's financial statements for the periods presented. A
description of the significant accounting policies applied in preparing these Condensed interim financial statements is included in
Equinor`s Consolidated annual financial statements for 2019.
On 1 January 2020, Equinor implemented amendments to IFRS 3 Business Combinations, which apply to relevant transactions that
occur on or after the implementation date. The amendments introduce clarification to the definition of a business, and also establish
an optional test to identify a concentration of fair value that, if applied and met, will lead to the conclusion that an acquired set of
activities and assets is not a business.
There have been no other changes to the significant accounting policies during the first nine months of 2020 compared to the
Consolidated annual financial statements for 2019.
The Condensed interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations and cash flows for the dates and inter im periods presented. Interim period
results are not necessarily indicative of results of operations or cash flows for an annual period. Certain amounts in the comparable
periods in the note disclosures have been reclassified to conform to current period presentation. The subtotals and totals in some of
the tables may not equal the sum of the amounts shown due to rounding.
The Condensed interim financial statements are unaudited.
Use of estimates
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions
that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reas onable under the circumstances,
the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed
on an on-going basis, considering current and expected future market conditions. A change in an accounting estimate is recognised in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods. The ongoing Covid-19 pandemic and the steep oil price decline experienced
during 2020 create additional estimation uncertainties and impact key assumptions applied by Equinor in the valuation of our assets
Equinor third quarter 2020 26
and the measurement of our liabilities, and related sensitivities. Reference is made to note 8 Impact of the Covid-19 pandemic and oil
price decline for further information.
Equinor third quarter 2020 27
2 Segments
Equinor’s operations are managed through the following operating segments (business areas): Development & Production Norway
(DPN), Development & Production International (DPI), Development & Production Brazil (DPB), Development & Production USA
(DPUSA), Marketing, Midstream & Processing (MMP), New Energy Solutions (NES), Technology, Projects & Drilling (TPD),
Exploration (EXP) and Global Strategy & Business Development (GSB).
The reporting segments Exploration & Production Norway (E&P Norway), Exploration & Production USA (E&P USA) and MMP consist
of the business areas DPN, DPUSA and MMP respectively. The operating segments DPI and DPB are aggregated into the reporting
segment Exploration & Production International (E&P International). The aggregation has its basis in similar economic characteristics,
such as similar long-term average gross margins, the assets’ long term and capital-intensive nature and exposure to volatile oil and
gas commodity prices, the nature of products, service and production processes, the type and class of customers, the methods of
distribution and regulatory environment. The operating segments NES, GSB, TPD, EXP and corporate staffs and support functions
are aggregated into the reporting segment “Other” due to the immateriality of these operating segments. The majority of the costs
within the operating segments GSB, TPD and EXP are allocated to the E&P Norway, E&P USA, E&P International and MMP reporting
segments.
In the second quarter of 2020, Equinor changed its internal reporting to management, impacting the composition of Equinor's
operating and reporting segments. Equinor’s upstream activities in the USA is as from the second quarter reported separately to
management. The fact that such information is also considered to be useful to the users of the financial statements, resulted in the
exploration and production activities in the USA as of the second quarter of 2020 were considered a separate operating- and reporting
segment. Previously these activities were included in the DPI operating segment and presented as part of the E&P International
reporting segment.
The eliminations section includes the elimination of inter-segment sales and related unrealised profits, mainly from the sale of crude oil
and natural gas. Inter-segment revenues are based upon estimated market prices.
Segment data for the third quarter and the first nine months of 2020 and 2019 is presented below. The reported measure of segment
profit is net operating income/(loss)
.
segments.
The measurement basis for segments is IFRS as applied by the group with the exception of IFRS 16 Leases and the line item
Additions to PP&E, intangibles and equity accounted investments. All IFRS 16 leases are presented within the Other segment. The
lease costs for the period are allocated to the different segments based on underlying lease payments, with a corresponding credit in
the Other segment. Lease costs allocated to licence partners are recognised as other revenues in the Other segment. Additions to
PP&E, intangible assets and equity accounted investments in the E&P and MMP segments include the period’s allocated lease costs
related to activity being capitalised with a corresponding negative addition in the Other segment. The line item Additions to PP&E,
intangibles and equity accounted investments excludes movements related to changes in asset retirement obligations.
Third quarter 2020
E&P
Norway
E&P
Internationa
l
E&P USA
MMP
Other
Eliminations
Total
(in USD million)
Revenues third party, other revenues and other
income
15
91
76
11,000
71
0
11,253
Revenues inter-segment
2,806
731
535
47
1
(4,121)
0
Net income/(loss) from equity accounted investments
0
18
0
8
60
0
86
Total revenues and other income
2,822
840
611
11,055
132
(4,121)
11,339
Purchases [net of inventory variation]
0
12
0
(9,171)
1
3,851
(5,307)
Operating, selling, general and administrative
expenses
(735)
(373)
(344)
(1,231)
152
163
(2,368)
Depreciation, amortisation and net impairment losses
(1,486)
(1,504)
(1,460)
(102)
(247)
0
(4,798)
Exploration expenses
(170)
(304)
(413)
0
1
0
(886)
Equinor third quarter 2020 28
Total operating expenses
(2,391)
(2,168)
(2,217)
(10,504)
(93)
4,014
(13,359)
Net operating income/(loss)
431
(1,328)
(1,606)
551
39
(107)
(2,019)
Additions to PP&E, intangibles and equity accounted
investments
1,103
357
252
35
278
0
2,025
Equinor third quarter 2020 29
Third quarter 2019
E&P
Norway
E&P
Internationa
l
E&P
USA
MMP
Other
Eliminations
Total
(in USD million)
(restated)
(restated)
Revenues third party, other revenues and other
income
866
403
106
14,099
90
0
15,564
Revenues inter-segment
3,630
939
888
85
1
(5,543)
0
Net income/(loss) from equity accounted investments
2
9
2
4
29
0
46
Total revenues and other income
4,498
1,351
996
14,188
121
(5,543)
15,610
Purchases [net of inventory variation]
0
16
(1)
(13,048)
(0)
5,366
(7,667)
Operating, selling, general and administrative
expenses
(817)
(321)
(425)
(1,585)
41
185
(2,922)
Depreciation, amortisation and net impairment losses
(981)
(620)
(2,529)
(311)
(177)
0
(4,619)
Exploration expenses
(142)
(100)
(629)
0
0
0
(871)
Total operating expenses
(1,940)
(1,025)
(3,583)
(14,945)
(137)
5,551
(16,079)
Net operating income/(loss)
2,558
325
(2,587)
(757)
(16)
8
(469)
Additions to PP&E, intangibles and equity accounted
investments
2,920
511
1,408
127
111
0
5,077
First nine months 2020
E&P
Norway
E&P
Internationa
l
E&P USA
MMP
Other
Eliminations
Total
(in USD million)
Revenues third party, other revenue and other income
33
308
285
33,087
169
0
33,882
Revenues inter-segment
7,985
2,412
1,686
232
3
(12,318)
0
Net income/(loss) from equity accounted investments
0
22
0
26
142
0
190
Total revenues and other income
8,018
2,742
1,971
33,344
315
(12,318)
34,073
Purchases [net of inventory variation]
0
(56)
0
(27,799)
1
12,400
(15,453)
Operating, selling, general and administrative
expenses
(2,076)
(1,152)
(1,008)
(3,998)
336
516
(7,382)
Depreciation, amortisation and net impairment losses
(4,318)
(2,883)
(3,171)
(709)
(676)
0
(11,757)
Exploration expenses
(330)
(840)
(745)
0
1
0
(1,914)
Total operating expenses
(6,724)
(4,931)
(4,924)
(32,505)
(338)
12,916
(36,506)
Equinor third quarter 2020 30
Net operating income/(loss)
1,294
(2,189)
(2,953)
839
(23)
599
(2,434)
Additions to PP&E, intangibles and equity accounted
investments
3,511
1,582
945
142
768
0
6,948
Balance sheet information
Equity accounted investments
2
581
0
90
977
0
1,650
Non-current segment assets
31,442
18,710
14,113
4,427
3,964
0
72,655
Non-current assets not allocated to segments
11,995
Total non-current assets
86,300
Equinor third quarter 2020 31
First nine months 2019
E&P
Norway
E&P
Internationa
l
E&P
USA
MMP
Other
Eliminations
Total
(in USD million)
(restated)
(restated)
Revenues third party, other revenue and other income
1,026
1,310
320
46,149
235
0
49,040
Revenues inter-segment
12,835
3,271
2,854
312
3
(19,275)
0
Net income/(loss) from equity accounted investments
15
27
5
20
82
0
149
Total revenues and other income
13,876
4,608
3,179
46,481
320
(19,275)
49,189
Purchases [net of inventory variation]
1
(9)
(1)
(41,581)
(0)
18,661
(22,928)
Operating, selling, general and administrative
expenses
(2,441)
(1,324)
(1,226)
(3,753)
103
578
(8,063)
Depreciation, amortisation and net impairment losses
(2,945)
(1,491)
(3,558)
(504)
(541)
0
(9,039)
Exploration expenses
(335)
(367)
(672)
0
0
0
(1,374)
Total operating expenses
(5,721)
(3,190)
(5,457)
(45,837)
(439)
19,239
(41,405)
Net operating income/(loss)
8,155
1,418
(2,278)
644
(120)
(36)
7,783
Additions to PP&E, intangibles and equity accounted
investments
5,860
2,291
2,486
674
596
0
11,907
Balance sheet information
Equity accounted investments
2
306
81
88
943
0
1,421
Non-current segment assets
33,737
20,562
17,307
4,956
4,270
0
80,831
Non-current assets not allocated to segments
10,151
Total non-current assets
92,403
In the third quarter of 2020 Equinor recognised net impairment of USD 2,928 million of which USD 575 million was classified as
exploration expenses.
In the E&P Norway segment the impairments were USD 365 million of which USD 5 million related to exploration assets. The
impairments were mainly due to price reductions and reduced reserve estimates.
In the E&P International segment the impairments were USD 1,176 million of which USD 183 million related to exploration assets . The
impairments were caused by reduced price assumptions and reduction in reserve estimates in the Europa and Asia and the North
America - conventional other areas.
In the E&P USA segment the net impairment was USD 1,37 7 million of which USD 386 million was classified as exploration expenses.
Impairment losses of USD 1,611 million were mainly caused by reduced price assumptions. USD 1,447 million related to North
America non-conventional assets and USD 164 million related to North America - conventional offshore Gulf of Mexico assets .
Impairment reversals of USD 234 million related to North America non -conventional assets due to performance trends and
accelerated production.
Equinor third quarter 2020 32
Most of the renewable assets in Equinor Group are accounted for using equity method and the results are presented in the Other
reporting segment. The net income from the equity accounted investments within the operating segment NES was USD 60 million in
the third quarter of 2020 and USD 142 million in the first nine months of 2020, which compares to USD 29 million in the third quarter of
2019 and USD 82 million in the first nine months of 2019. Current quarter result was materially impacted by the reversal of losses in
the Dogger Bank projec ts. This was partially offse t by lower income from other equity accounted investments including the effect of
reduced ownership share in Arkona wind farm compared to 2019.
For information regarding acquisition and disposal of interests, see note 3 Acquisitions and disposals.
See also note 8 Impact of the Covid-19 pandemic and oil price decline.
Equinor third quarter 2020 33
Revenues from contract s with customers by geographical areas
When attributing the line item Revenues third party, other revenues and other income to the country of the legal entity executing the
sale for the third quarter of 2020, Norway constitutes 82% and the US constitutes 13% of such revenues. For the third quarter of 2019 ,
Norway and the US constituted 73% and 20% of such revenues, respectively.
For the first nine months of 2020, Norway constitutes 81% and the US constitutes 14% of such revenues. For the first nine months of
2019, Norway and the US constituted 74% and 19% of such revenues , respectively.
Non-current assets by country
At 30 September
At 30 June
At 31 December
At 30 September
(in USD million)
2020
2020
2019
2019
Norway
37,327
36,383
40,292
39,994
USA
14,858
16,524
17,776
18,455
Brazil
8,752
8,796
8,724
8,669
UK
4,175
4,913
5,657
5,261
Azerbaijan
1,684
1,696
1,598
1,551
Canada
1,468
1,435
1,672
1,651
Angola
1,270
1,331
1,564
1,669
Tanzania
985
964
964
964
Denmark
911
887
984
958
Algeria
845
866
915
930
Other countries
2,030
2,064
1,986
2,149
Total non-current assets
1)
74,305
75,858
82,133
82,252
1) Excluding deferred tax assets, pension assets and non -current financial assets.
Revenues from contracts with customers and other revenues
Quarters
Full Year
(in USD million)
Q3 2020
Q2 2020
Q3 2019
2019
Crude oil
6,635
4,018
8,667
33,505
Natural gas
1,351
1,188
2,236
11,281
1,048
923
1,847
9,366
229
196
290
1,359
74
68
99
556
Refined products
1,560
1,258
2,404
10,652
Natural gas liquids
1,282
839
1,224
5,807
Transportation
295
286
205
967
Other sales
91
88
123
445
Revenues from contracts with customers
11,215
7,677
14,859
62,657
Taxes paid in-kind
27
(9)
83
344
Physically settled commodity derivatives
(16)
152
(610)
(1,086)
Gain/(loss) on commodity derivatives
(44)
(318)
298
732
Other revenues
70
61
74
265
Total other revenues
36
(114)
(155)
254
Revenues
11,250
7,563
14,704
62,911
Equinor third quarter 2020 34
3 Acquisitions and disposals
Divestment of non-operated interest in the Empire Wind and Beacon Wind assets on the US east coast
On 10 September 2020 Equinor entered into an agreement with BP to sell 50% non-operated interests in the Empire Wind and
Beacon Wind assets for a total consideration before adjustments of USD 1.1 billion. Through this transaction, the two companies are
also establishing a strategic partnership for further growth within offshore wind in the US. Following the transaction, Equinor will
remain the operator with a 50% interest. The 100% of interest share has been reclassified as held for sale. The transaction has an
effective date of
1 January 2020 and is expected to close in early 2021, subject to customary conditions including purchase price adjustments and
authority approval. Upon transaction closing, the gain will be presented in the line item Other income in the Consolidated statement of
income in the Other segment.
Divestment of remaining shares in Lundin
On 8 May 2020 Equinor closed the divestment of its remaining (4.9%) financial shareholding in Lundin Energy AB (formerly Lundin
Petroleum AB). The consideration is SEK 3.3 billion (USD 0.3 billion). The impact on the Consolidated statement of income in the
second quarter was a loss of USD 0.1 billion and was recognised as Interest income and other financial items.
Investment in interest onshore Argentina
On 30 January 2020 Equinor closed a transaction to acquire a 50% ownership share in SPM Argentina S.A (SPM) from Schlumberger
Production Management Holding Argentina B.V.
Shell acquired the remaining 50% ownership share of SPM.
SPM holds a 49%
interest in the Bandurria Sur onshore block in Argentina, and the block is in the pilot phase of development. The consideration
including final adjustments is USD 187 million. In the second quarter , Equinor increased its shareholding in the Bandurria Sur by 5.5%
to 30% for a final consideration of USD 44 million. The investment in SPM was accounted for as a joint venture using the equity
method and reported in the E&P International segment.
4 Financial items
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(in USD million)
2020
2019
2019
(131)
(321)
295
Gains/(losses) on net foreign exchange
(156)
201
224
235
262
180
Interest income and other financial items
375
535
746
39
189
208
Gains/(losses) on derivative financial instruments
421
781
473
(343)
(379)
(343)
Interest and other finance expenses
(1,066)
(1,029)
(1,450)
(201)
(248)
340
Net financial items
(426)
489
(7)
Gains on derivative financial instruments for the first nine months of 2020 of USD 421 million and for the first nine months of 2019 of
USD 781 million, are mainly due to decreased interest rates.
Equinor has a US Commercial paper programme available with a limit of USD 5 billion of which USD 787 million has been utilised as
of
30 September 2020.
In the first nine months of 2020, Equinor recorded total lease payments of USD 1,054 million, of which USD 93 million were payment
of interests and USD 961 million were down-payment of lease liabilities. Lease liabilities as at 30 September 2020 were USD 4,218
million, presented in the balance sheet within the line items Current and Non-current finance debt with USD 1,039 million and USD
3,120 million, respectively.
In the second quarter of 2020 Equinor ASA issued bonds with maturities from 5 to 30 years for a total amount of USD 8.3 billion. The
bonds were issued in USD and EUR, amounting to USD 6.5 billion and EUR 1.75 billion, and are fully and unconditionally guaranteed
by Equinor Energy AS.
Equinor third quarter 2020 35
5 Income taxes
Quarters
First nine months
Full year
Q3 2020
Q2 2020
Q3 2019
(in USD million)
2020
2019
2019
(2,220)
(720)
(129)
Income/(loss) before tax
(2,859)
8,272
9,292
95
469
(978)
Income tax
(221)
(6,191)
(7,441)
4.3%
65.2%
>(100%)
Effective tax rate
(7.7%)
74.8%
80.1%
The tax rate for the third quarter 2020 and for the first nine months of 2020 was primarily influenced by losses including net
impairments recognised in countries with unrecognised deferred taxes or in countries with lower than average tax rates. The tax rate
was also influenced by currency effects in entities that are taxable in other currencies than the functional currency, partially offset by
the temporary changes to Norway’s petroleum tax system.
The tax rate for the first nine months of 2020 was also influenced by changes in best estimates for uncertain tax positions.
The tax rate for the third quarter of 2019 and the first nine months of 2019 was primarily influenced by losses recognised in countries
with unrecognised deferred tax assets partially offset by the tax exempted divestment of shares in Lundin.
The tax rate for the full year 2019 was primarily influenced by losses recognised in countries with unrecognised deferred tax assets or
in countries with lower than average tax rates, p artially offset by tax exempted gains on divestments.
6 Property, plant and equipment and intangible assets
(in USD million)
Property, plant and
equipment
Intangible
assets
Balance at 31 December 2019
69,953
10,738
Additions
7,595
551
Transfers
67
(67)
Disposals and reclassifications
(15)
(6)
Transferred to assets classified as held for sale
(10)
(177)
Expensed exploration expenditures and net impairment losses
-
(1,222)
Depreciation, amortisation and net impairment losses
(11,737)
(20)
Effect of foreign currency translation adjustments
(2,864)
(130)
Balance at 30 September 2020
62,988
9,667
Right-of-use (RoU) assets are included within property, plant and equipment with a net book value of USD 3,944 million as at
30 September 2020. Additions to RoU assets amount to USD 1,001 million. Gross depreciation and impairment of RoU assets
amounts to USD 927 million in the first nine months of 2020, of which depreciation costs of USD 278 million have been allocated to
exploration and development activities and are presented net on the Depreciation, amortisation and net impairment losses and
Additions lines in the table above.
Equinor’s Block 2 Exploration License in Tanzania was due to expire in June 2018 but based on indications from the Tanzanian
authorities that the license would be extended the asset has remained capitalised . The license was formally extended by 3.5 years in
and from the second quarter of 2020. The capitalised expenditures included in intangible assets related to the license are USD 962
million.
Equinor third quarter 2020 36
Impairments and impairment reversals
For information on impairment losses and reversals per reporting segment, see note 2 Segments.
First nine months 2020
Property, plant and
equipment
Intangible
assets
Total
(in USD million)
Producing and development assets
4,732
589
5,321
Goodwill
-
1
1
Acquisition costs related to oil and gas prospects
-
434
434
Total net impairment losses/(reversals) recognised
4,732
1,023
5,755
The net impairments have been recognised in the Consolidated statement of income as Depreciation, amortisation and net
impairment losses and Exploration expenses based on the impaired assets’ nature of property, plant and equipment and intangible
assets, respectively.
The recoverable amounts in the third quarter of 2020 were discounted cash flows based on value in use.
Value in use estimates and discounted cash flows used to determine the recoverable amount of assets tested for impairment are
based on internal forecasts on costs, production profiles and commodity prices.
Changes to accounting assumptions
Management’s future commodity price assumptions and currency assumptions are used for value-in-use impairment testing. The
same assumptions are also used for evaluating investment opportunities, together with other relevant criteria, including among others
robustness targets (value creation in lower commodity price scenarios). While there are inherent uncertainties in the assumptions, the
commodity price assumptions as well as currency assumptions reflect management’s best estimate of the price and currency
development over the life of the Group’s assets based on its view of relevant current circumstances and the likely future development
of such circumstances, including energy demand development, energy and climate change policies as well as the speed of the energy
transition, population and economic growth, geopolitical risks, technology and cost development, and other factors. Management’s
best estimate also takes into consideration a range of external forecasts.
During the third quarter, Equinor has performed a thorough and broad analysis of the expected development in drivers for the different
commodity markets and exchange rates, following the recent and ongoing Covid-19 situation and management has gained more
insight into the development of the different markets in which we operate. Significant uncertainty continues to exist regarding future
commodity price development due to the potential long-term impact on demand resulting from the ongoing Covid-19 pandemic and
the measures taken to contain it, energy investments in the transition to a lower carbon economy and future supply actions by OPEC+
and other factors. Following management’s analysis of the expected development in drivers for the different commodity markets and
exchange rates, Equinor has decided to revise the assumptions. As a result, both short- and long-term prices have been reduced,
some by more than twenty percent. Management will continue to monitor these developments and the impact they may have on its
commodity price assumptions.
For Brent-blend, compared to current prices, we expect a strengthening of the prices through the 2020s. In 2025, the assumption is 65
USD/bbl (78 USD/bbl) , with a further increase towards 2030. Beyond 2030 , we expect a gradual decline with an estimate of 64
USD/bbl in 2040 (82 USD/bbl), which approximates the average price level for the period 2021-2050. In 2050, the oil prices are
expected to be below 60 USD/bbl. All commodity prices are on a real 2020 basis, and comparables as per fourth quarter 2019 are
given in brackets.
For natural gas in the UK (NBP), we expect some volatility, where the trend is a gradual increase in prices from today’s current prices
up to 6.5 USD/mmBtu in 2030 (7.7 USD/mmBtu). From 2030, we expect prices at levels sufficient to incentivise the next LNG
investment cycle and a flatter price-curve, with the price gradually increasing to 7.8 USD/mmBtu close to 2040 (7.7 USD/mmBtu).
Beyond 2040, a declining price trend is foreseen as the energy transition is expected to impact the demand side. For 2050, the price
has been set at the pre-2035 level. Henry Hub follows the same pattern, gradually increasing from today’s current prices to 3.3
USD/mmBtu in 2030 (3.7 USD/mmBtu) and gradually increasing to 3 .7 USD/mmBtu in 2040 (3.7 USD/mmBtu) before gradually
declining through the 2040s.
Equinor has performed analyses of the NOK currency exchange rates, which suggests that a return to a previously assumed long-
term equilibrium is less likely. This conclusion is supported by the historical 5-year average and spot prices in the currency market, as
Equinor third quarter 2020 37
well as an expected lower oil price and increased market uncertainty. Equinor has therefore implemented new long-term exchange
rates from 2023 onwards. The NOK/USD rate has been revised to 8.5 (previously 7.0), while the NOK/EUR rate has been revised to
10.0 (from previously 9.0).
In 2020 we have continued to see a significant drop in risk-free interest rates. Long-term risk-free interest rates (10 years) have
decreased by approximately 1.3 percentage points in the period from year -end 2019 to 30 September 2020. The stock market
recovery after the initial Covid-19 impact in March, and despite lower expectations of future cash flows, is indicating a lower market
risk premium. The low interest rates combined with lack of good alternative investment opportunities, channels more funds towards
the equity market resulting in investors accepting lower returns on investments, and we see a downward shift in the estimated equity
risk premium. Taking this into account, Equinor has adjusted the Weighted Average Cost of Capital (WACC) for accounting purposes,
real post-tax, down from 6% to 5% with effect as of the third quarter of 2020.
Please refer to note 8 Impact of the Covid-19 pandemic and oil price.
Sensitivities
Commodity prices have historically been volatile. Significant downward adjustments of Equinor’s commodity price assumptions would
result in impairment losses on certain producing and development assets in Equinor’s portfolio, while an opposite adjustment could
lead to impairment -reversals. If a decline in commodity price forecasts over the lifetime of the assets were 30%, considered to
represent a reasonably possible change, the impairment amount to be recognised could illustratively be in the region of USD 12 billion
before tax effects. This illustrative impairment sensitivity, based on a simplified method, assumes no changes to input factors other
than prices; however, a price reduction of 30% is likely to result in changes in business plans as well as other factors used when
estimating an asset’s recoverable amount. These associated changes reduce the stand-alone impact on commodity price sensitivity.
Changes in such input factors would likely include a reduction in the cost level in the oil and gas industry as well as offsetting currency
effects, both of which have historically occurred following significant changes in commodity prices. The illustrative sensitivity is
therefore not considered to represent a best estimate of an expected impairment impact, nor an estimated impact on revenues or
operating income in such a scenario. In comparison, following the amended assumptions and the decline in commodity prices
presently disclosed for this quarter, the impairment impact recognised is considerably lower. A significant and prolonged reduction in
oil and gas prices would also result in mitigating actions by Equinor and its licence partners, as a reduction of oil and gas prices would
impact drilling plans and production profiles for new and existing assets. Quantifying such impacts is considered impracticable, as it
requires detailed technical, geological a nd economical evaluations based on hypothetical scenarios and not based on existing
business or development plans.
7 Provisions, commitments, contingent liabilities and contingent assets
Asset retirement obligation
Equinor’s estimated asset retirement obligations (ARO) have increased by USD 928 million compared to year-end 2019, mainly due to
the decrease in discount rate. Changes in ARO are reflected within property, plant and equipment and provisions in the Consolida ted
balance sheet.
Onerous contract
Due to significant ly reduced expected use of a transportation agreement , Equinor provided in the second quarter USD 154 million as
an onerous contract. In third quarter the provision has increased to USD 162 million. The provision is recognised in the MMP segment
as an operating expense in the Consolidated statement of income and has been included in the line item Provisions and other
liabilities in the Consolidated balance sheet.
Price review arbitration
Some long-term gas sales agreements contain price review clauses, which in certain cases lead to claims subject to arbitration.
The exposure related to price reviews has been reduced by approximately USD 1.3 billion due to settlements in the second quarter.
The remaining exposure for gas delivered prior to 30 September is immaterial. Price review related changes in the second quarter
represent an income of approximately USD 150 million before tax and USD 30 million after tax . The amounts have been reflected in
the Consolidated statement of income as revenues and income tax, respectively.
A dispute between the Federal Government of Nigeria and the Governments of Rivers, Bayelsa and Akwa Ibom States in
Nigera
In October 2018, the Supreme Court of Nigeria rendered a judgement in a dispute between the Federal Government of Nigeria and
the Governments of Rivers, Bayelsa and Akwa Ibom States in favour of the latter. The Supreme Court judgement provides for
potential retroactive adjustment of certain production sharing contracts in favour of the Federal Government, including OML 128
(Agbami). This case has been withdrawn by the plaintiff in the second quarter of 2020 with no impact on Equinor’s Interim financial
statements.
Equinor third quarter 2020 38
Dispute with Brazilian tax authorities
Brazilian tax authorities issued an updated tax assessment for 2011 for Equinor’s Brazilian subsidiary which was party to Equinor’s
divestment of 40% of the Peregrino field to Sinochem at that time. The assessment disputed Equinor’s allocation of the sale proceeds
between entities and assets involved, resulting in a significantly higher assessed taxable gain and related taxes payable in Brazil.
Equinor disagreed with the assessment and had the case brought forward to the second instance of the Administrative Court in Brazil
which decided the case in Equinor’s favour. Equinor has received confirmation that the decision is considered final and non-
appealable. The final ruling did not have any impact on Equinor’s Interim Financial statement.
KKD Oil Sands Partnership
Canadian tax authorities have issued a proposal of re-assessment for 2014 for Equinor’s Canadian subsidiary which was party to
Equinor’s divestment of 40% of the KKD Oil Sands partnership at that time. The proposal disputes the partners allocation between
entities and asse ts involved. Maximum exposure is estimated to be approximately USD 360 million. The ongoing process of formal
communication with the Canadian tax authorities, as well as any subseque nt litigation that may become necessary, may take several
years. No taxes will become payable until the matter has been finally settled. Equinor is of the view that all applicable tax regulations
have been applied in the case and that Equinor has a strong position. No amounts have consequently been provided for in the
accounts.
Deviation notices from Norwegian tax authorities
With reference to the previously disclosed dispute in Norway regarding the level of Research & Development cost to be allocated to
the offshore tax regime, a Norwegian supreme court ruling announced in second quarter and Equinor’s subsequent correspondence
with the Norwegian tax authorities in third quarter has resulted in a reduced maximum exposure in this matter to approximately USD
250 million. Equinor provides for its best estimate in the matter.
Suit for an annulment of Petrobras' sale of the interest in BM-S-8 to Equinor
In March 2017, the Union of Workers of Oil Tankers of Sergipe (Sindipetro) filed a class action suit against Petrobras, Equinor and
ANP - the Brazilian Regulatory Agency - to see k annulment of Petrobras' sale of the interest and operatorship in BM-S-8 to Equinor, a
transaction which was closed in November 2016. There was also an injunction request aiming to suspend the assignment, which first
was granted in April 2017 by a federal judge, but subsequently lifted by the federal court. The injunction request has now been finally
dismissed by the courts.
Claim from Petrofac regarding multiple variation order requests performed in Algeria (In Salah)
Petrofac International (UAE) LLC (PIUL) was awarded the EPC Contract to execute the ISSF Project (the In Salah Southern
Fields Project which has finalised the development of four gas fields in central Algeria). Following suspension of activity after the
terrorist attack at another field in Algeria (In Amenas) in 2013, PIUL issued multiple Variation Order Requests (VoRs) related to the
costs incurred for stand -by and remobilisation costs after the evacuation of expatriates. Several VoRs have been paid, but the
settlement of the remaining has been unsuccessful. PIUL initiated arbitration on 7 August 2020 claiming an estimated amount of USD
533 million, of which Equinor In Salah AS holds a 31,85% share. Equinor's maximum exposure amounts to USD 170 million. Equinor
provides for its best estimate in the matter.
During the normal course of its business Equinor is involved in legal and other proceedings, and several claims are unresolved and
currently outstanding. The ultimate liability or asset, respectively, in respect of such litigation and claims cannot be determined now.
Equinor has provided in its Condensed interim financial statements for probable liabilities related to litigation and claims based on the
company's best judgement. Equinor does not expect that its financial position, results of operations or cash flows will be materially
affected by the resolution of these legal proceedings.
8 Impact of the Covid-19 pandemic and oil price decline
The COVID-19 pandemic with global lockdowns has slowed, and in many countries, contracted economic growth and has had
dramatic consequences for energy demand. As a result, commodity prices collapsed in the first half of 2020 before a partial re-bounce
in the second half, impacting the energy industry and Equinor. The full extent, duration and consequences of the Covid-19 pandemic
and the resulting operational and economic impact for Equinor cannot be ascertained at this time. However, resulting changes in
market risk and economic circumstances impact Equinor’s assumptions about the future and related sources of estimation uncertainty.
Updates of certain information previously provided in Equinor’s Annual financial statement s for 2019, as well as other relevant
information, are consequently included below.
The mitigation effects from COVID-19 have had a massive impact on oil demand, particularly mobility fuels. According to the
International Energy Agency (IEA), Global energy demand in 2020 is estimated to drop by 5-6%, with the largest uncertainty being
around the shake of a second wave of lockdowns in the last quarter this year. Significant Opec+ supply cuts and shut -in production
around the world following the announcement at 1 May 2020, have so far prevented another price collapse and storages running full.
Equinor third quarter 2020 39
In Norway, where Equinor has production on the NCS, the Norwegian Government announced unilateral oil production cuts portioned
out to relevant fields via their production licenses. Equinor complies with the revised production permits issued by the authorities, but
for the third quarter of 2020 the production cuts in Norway and internationally did not have significant impact on the total production.
An updated overview of Equinor’s price assumptions as of 30 September 2020 has been provided in note 6 Property, plant and
equipment and intangible assets. Equinor has evaluated the reasonable possible changes in certain assumptions as of 30 September
2020. For interest rate and currency risk, the reasonable possible change remains unchanged from 31 December 2019.
As of 30 September 2020, the reasonable possible change in prices is deemed to be -50%/+50% for short-term contracts, and -
30%/+30% for the long -term derivatives, based on their duration. The short -term price contracts are considered more volatile
compared to year-end 2019.
The table below contains the price risk sensitivities of Equinor's commodity-based derivatives contracts. Equinor enters into
commodity-based derivative contracts mainly to manage short-term commodity risk. However, since none of the derivative financial
instruments included in the table below are part of formal hedging relationships, any changes in their fair values would be recognised
in the Consolidated statement of income.
Commodity price sensitivity
31 December 2019
(in USD million)
- 50%
+ 50%
- 30%
+ 30%
Crude oil and refined products net gain/(losses)
1,092
(1,092)
569
(563)
Natural gas and electricity net gains/(losses)
333
283
(33)
49
Due to market developments and related consequences, certain Equinor suppliers and customers have indicated that contractual
clauses such as those involving force majeure are being explored. The potential impact for Equinor, if any, is currently uncertain.
As a measure to maintain activity in the oil and gas related industry, the Norwegian Government on 19 June 2020 enacted temporary
targeted changes to Norway’s petroleum tax system for investments incurred in 2020 and 2021 and for new projects with final
investment decisions submitted by end of 2022. The changes are effective from 1 January 2020 and provide companies with a direct
tax deduction in the special petroleum tax (56% tax rate) instead of tax depreciation over 6 years. One of the changes is that the tax
uplift benefit, which has increased from 20.8%. to 24% will be recognised over one year instead of four years. Tax depreciation
towards the ordinary corporate tax (22% tax rate) will continue with a six-year depreciation profile. The totality of the petroleum tax
changes will increase the profitability for investments and strengthen Equinor’s’ liquidity.
9 Subsequent events
On 28 October 2020, the board of directors resolved to declare a dividend for the third quarter of 2020 of USD 0.11 per share. The
Equinor shares will trade ex-dividend 11 February 2021 on the Oslo Børs and for ADR holders on the New York Stock Exchange.
Record date will be 12 February 2021 and payment date will be 26 February 2021.
Equinor third quarter 2020 40
Supplementary disclosures
Operational data
Quarters
Change
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
Operational data
2020
2019
Change
Prices
43.0
29.2
61.9
(31%)
Average Brent oil price (USD/bbl)
40.8
64.7
(37%)
39.6
23.5
52.6
(25%)
E&P Norway average liquids price (USD/bbl)
35.9
56.6
(37%)
39.1
24.4
58.1
(33%)
E&P International average liquids price (USD/bbl)
37.3
60.3
(38%)
32.2
19.0
45.9
(30%)
E&P USA average liquids price (USD/bbl)
30.3
48.6
(38%)
38.3
22.9
52.5
(27%)
Group average liquids price (USD/bbl) [1]
35.2
55.8
(37%)
349
229
465
(25%)
Group average liquids price (NOK/bbl) [1]
335
486
(31%)
1.45
0.91
3.96
(63%)
E&P Norway average internal gas price (USD/mmbtu) [9]
1.70
4.66
(64%)
1.13
1.26
1.74
(35%)
E&P USA average internal gas price (USD/mmbtu) [9]
1.31
2.29
(43%)
2.72
2.24
5.19
(48%)
Average invoiced gas prices - Europe (USD/mmbtu) [8]
3.06
5.95
(49%)
1.53
1.47
1.99
(23%)
Average invoiced gas prices - North America (USD/mmbtu) [8]
1.63
2.51
(35%)
(0.1)
3.9
5.9
>(100%)
Refining reference margin (USD/bbl) [2]
1.8
4.4
(58%)
Entitlement production (mboe per day)
619
637
497
25%
E&P Norway entitlement liquids production
635
507
25%
220
235
266
(17%)
E&P International entitlement liquids production
240
272
(12%)
151
172
182
(17%)
E&P USA entitlement liquids production
170
172
(2%)
991
1,044
946
5%
Group entitlement liquids production
1,045
951
10%
654
644
570
15%
E&P Norway entitlement gas production
681
691
(1%)
35
31
47
(25%)
E&P International entitlement gas production
41
39
4%
185
179
183
1%
E&P USA entitlement gas production
179
181
(1%)
874
854
799
9%
Group entitlement gas production
901
911
(1%)
1,865
1,897
1,745
7%
Total entitlement liquids and gas production [3]
1,946
1,862
5%
Equity production (mboe per day)
619
637
497
25%
E&P Norway equity liquids production
635
507
25%
283
291
352
(20%)
E&P International equity liquids production
309
355
(13%)
173
195
212
(18%)
E&P USA equity liquids production
194
209
(7%)
1,076
1,123
1,061
1%
Group equity liquids production
1,138
1,071
6%
654
644
570
15%
E&P Norway equity gas production
681
691
(1%)
Equinor third quarter 2020 41
40
34
58
(31%)
E&P International equity gas production
47
61
(22%)
224
210
220
2%
E&P USA equity gas production
213
210
2%
918
888
848
8%
Group equity gas production
941
961
(2%)
1,994
2,011
1,909
4%
Total equity liquids and gas production [4]
2,079
2,032
2%
NES power production
319
305
342
(7%)
Power generation (GWh)
1,181
1,278
(8%)
Exchange rates
Quarters
Change
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
Exchange rates
2020
2019
Change
0.1095
0.1000
0.1129
(3%)
NOK/USD average daily exchange rate
0.1050
0.1150
(9%)
0.1055
0.1026
0.1100
(4%)
NOK/USD period-end exchange rate
0.1055
0.1100
(4%)
9.1321
10.0023
8.8573
3%
USD/NOK average daily exchange rate
9.5266
8.6979
10%
9.4814
9.7446
9.0874
4%
USD/NOK period-end exchange rate
9.4814
9.0874
4%
1.1685
1.1008
1.1118
5%
EUR/USD average daily exchange rate
1.1239
1.1234
0%
1.1708
1.1198
1.0889
8%
EUR/USD period-end exchange rate
1.1708
1.0889
8%
Equinor third quarter 2020 42
Health, safety and the environment
Twelve months average per
First nine months
First nine months
Q3 2020
Q3 2019
Health, safety and the environment
2020
2019
Injury/incident frequency
2.3
2.5
Total recordable injury frequency (TRIF)
2.3
2.5
0.6
0.6
Serious Incident Frequency (SIF)
0.5
0.6
Oil spills
165
226
Accidental oil spills (number of)
116
170
317
8,850
Accidental oil spills (cubic metres)
158
8,824
First nine months
Full year
Climate
2020
2019
Upstream CO2 intensity (kg CO2/boe)
1)
8.1
9.5
1) Total scope 1 emissions of CO2 (kg CO2) from exploration and production, divided by total production (boe).
Equinor third quarter 2020 43
Reconciliation of net operating income/(loss) to
adjusted earnings
The table specifies the adjustments made to each of the profit and loss line item included in the net operating income/(loss) subtotal.
Items impacting net operating income/(loss) in the third
quarter of 2020
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Other
(in USD million)
Net operating income/(loss)
(2,019)
431
(1,328)
(1,606)
551
(67)
Total revenues and other income
(431)
(59)
(20)
-
(352)
0
Changes in fair value of derivatives
(37)
-
-
-
(37)
-
Periodisation of inventory hedging effect
(315)
-
-
-
(315)
-
Over-/underlift
(79)
(59)
(20)
-
-
-
Purchases [net of inventory variation]
104
-
-
-
(2)
107
Operational storage effects
(2)
-
-
-
(2)
-
Eliminations
107
-
-
-
-
107
Operating and administrative expenses
189
36
67
29
64
(7)
Over-/underlift
90
36
54
-
-
-
Gain/loss on sale of assets
(1)
-
-
(1)
-
-
Provisions
100
-
12
30
64
(7)
Depreciation, amortisation and net impairment losses
2,353
360
992
990
-
10
Impairment
2,524
360
992
1,162
-
10
Reversal of Impairment
(171)
-
(0)
(171)
-
-
Exploration expenses
583
5
185
393
-
-
Impairment
638
5
183
449
-
-
Reversal of Impairment
(63)
-
-
(63)
-
-
Provisions
8
-
2
7
-
-
Sum of adjustments to net operating income/(loss)
2,799
342
1,224
1,413
(289)
110
Adjusted earnings/(loss) [5]
780
773
(104)
(193)
262
43
Tax on adjusted earnings
(509)
(358)
87
0
(240)
2
Adjusted earnings/(loss) after tax [5]
271
414
(17)
(193)
22
45
Equinor third quarter 2020 44
Items impacting net operating income/(loss) in the third
quarter of 2019
Equinor
group
Exploration &
Production
Norway
Exploration &
Production
International
Exploration
& Production
USA
Marketing,
Midstream &
Processing
Other
(in USD million)
Net operating income/(loss)
(469)
2,558
325
(2,587)
(757)
(8)
Total revenues and other income
(258)
(818)
126
(10)
453
(9)
Changes in fair value of derivatives
383
(8)
-
-
392
-
Periodisation of inventory hedging effect
61
-
-
-
61
-
Over-/underlift
147
30
126
(10)
-
-
Gain/loss on sale of assets
(849)
(840)
-
-
-
(9)
Purchases [net of inventory variation]
25
-
-
-
32
(7)
Operational storage effects
32
-
-
-
32
-
Eliminations
(7)
-
-
-
-
(7)
Operating and administrative expenses
501
(5)
(57)
49
514
-
Over-/underlift
(59)
(5)
(57)
3
-
-
Provisions
560
-
-
46
514
-
Depreciation, amortisation and net impairment losses
2,186
-
56
1,924
206
-
Impairment
2,190
-
60
1,924
206
-
Reversal of Impairment
(4)
-
(4)
-
-
-
Exploration expenses
608
-
-
608
-
-
Impairment
608
-
-
608
-
-
Sum of adjustments to net operating income/(loss)
3,062
(823)
125
2,571
1,205
(16)
Adjusted earnings/(loss) [5]
2,593
1,735
451
(16)
448
(25)
Tax on adjusted earnings
(1,516)
(1,194)
(147)
0
(187)
13
Adjusted earnings/(loss) after tax [5]
1,077
540
304
(16)
261
(13)
Equinor third quarter 2020 45
Items impacting net operating income/(loss) in the first nine
months of 2020
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Other
(in USD million)
Net operating income/(loss)
(2,434)
1,294
(2,189)
(2,953)
839
575
Total revenues and other income
(149)
53
(153)
-
(51)
2
Changes in fair value of derivatives
52
6
-
-
46
-
Periodisation of inventory hedging effect
(91)
-
-
-
(91)
-
Impairment from associated companies
2
-
-
-
-
2
Over-/underlift
(106)
47
(153)
-
-
-
Gain/loss on sale of assets
(6)
-
-
-
(6)
-
Purchases [net of inventory variation]
(403)
-
-
-
196
(599)
Operational storage effects
196
-
-
-
196
-
Eliminations
(599)
-
-
-
-
(599)
Operating and administrative expenses
406
(21)
156
31
246
(7)
Over-/underlift
123
(21)
144
-
-
-
Gain/loss on sale of assets
2
-
-
2
-
-
Provisions
282
-
12
30
246
(7)
Depreciation, amortisation and net impairment losses
4,733
1,219
1,354
1,727
422
10
Impairment
4,951
1,219
1,401
1,898
422
10
Reversal of impairment
(218)
-
(47)
(171)
-
-
Exploration expenses
1,028
5
352
671
-
-
Impairment
1,082
5
350
727
-
-
Reversal of impairment
(63)
-
-
(63)
-
-
Provisions
8
-
2
7
-
-
Sum of adjustments to net operating income/(loss)
5,615
1,256
1,709
2,429
813
(593)
Adjusted earnings/(loss) [5]
3,181
2,551
(479)
(524)
1,652
(18)
Tax on adjusted earnings
(1,704)
(1,264)
310
0
(972)
222
Adjusted earnings/(loss) after tax [5]
1,478
1,287
(170)
(524)
680
204
Equinor third quarter 2020 46
Items impacting net operating income/(loss) in the first
nine months of 2019
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Other
(in USD million)
Net operating income/(loss)
7,783
8,155
1,418
(2,278)
644
(156)
Total revenues and other income
(1,190)
(869)
(32)
(10)
(258)
(20)
Changes in fair value of derivatives
(393)
(8)
-
-
(384)
-
Periodisation of inventory hedging effect
126
-
-
-
126
-
Over-/underlift
92
117
(15)
(10)
-
-
Gain/loss on sale of assets
(1,015)
(977)
(17)
-
-
(20)
Purchases [net of inventory variation]
(48)
-
-
-
(85)
37
Operational storage effects
(85)
-
-
-
(85)
-
Eliminations
37
-
-
-
-
37
Operating and administrative expenses
710
19
97
83
510
-
Over-/underlift
13
(23)
34
3
-
-
Change in accounting policy
1)
123
42
63
18
-
-
Gain/loss on sale of assets
16
-
-
16
-
-
Provisions
557
-
-
46
510
-
Depreciation, amortisation and net impairment losses
2,070
-
(60)
1,924
206
-
Impairment
2,190
-
60
1,924
206
-
Reversal of impairment
(120)
-
(120)
-
-
-
Exploration expenses
608
-
-
608
-
-
Impairment
608
-
-
608
-
-
Sum of adjustments to net operating income/(loss)
2,150
(850)
5
2,605
374
16
Adjusted earnings/(loss) [5]
9,934
7,305
1,423
327
1,017
(139)
Tax on adjusted earnings
(6,195)
(5,221)
(521)
(0)
(496)
43
Adjusted earnings/(loss) after tax [5]
3,739
2,085
903
327
521
(97)
1) Change in accounting policy for lifting imbalances.
Equinor third quarter 2020 47
Items impacting net operating income/(loss) in the second
quarter of 2020
Equinor
group
Exploration
&
Production
Norway
Exploration
&
Production
Internationa
l
Exploration
&
Production
USA
Marketing,
Midstream
&
Processing
Other
(in USD million)
Net operating income/(loss)
(472)
(104)
(548)
(332)
610
(98)
Total revenues and other income
441
57
66
-
319
(1)
Changes in fair value of derivatives
36
-
-
-
36
-
Periodisation of inventory hedging effect
288
-
-
-
288
-
Impairment from associated companies
(1)
-
-
-
-
(1)
Over-/underlift
123
57
66
-
-
-
Gain/loss on sale of assets
(6)
-
-
-
(6)
-
Purchases [net of inventory variation]
(48)
-
-
-
(145)
97
Operational storage effects
(145)
-
-
-
(145)
-
Eliminations
97
-
-
-
-
97
Operating and administrative expenses
60
(38)
(43)
(9)
149
-
Over-/underlift
(81)
(38)
(43)
-
-
-
Gain/loss on sale of assets
(9)
-
-
(9)
-
-
Provisions
149
-
-
-
149
-
Depreciation, amortisation and net impairment losses
263
-
35
-
228
-
Impairment
263
-
35
-
228
-
Exploration expenses
111
-
111
-
-
-
Impairment
111
-
111
-
-
-
Sum of adjustments to net operating income/(loss)
827
19
169
(9)
551
96
Adjusted earnings/(loss) [5]
354
(85)
(379)
(341)
1,161
(2)
Tax on adjusted earnings
291
408
144
0
(465)
205
Adjusted earnings/(loss) after tax [5]
646
323
(236)
(341)
696
203
Equinor third quarter 2020 48
Adjusted earnings after tax by reporting segment
Quarters
Q3 2020
Q2 2020
Q3 2019
(in USD million)
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
E&P Norway
773
(358)
414
(85)
408
323
1,735
(1,194)
540
E&P International
(104)
87
(17)
(379)
144
(236)
451
(147)
304
E&P USA
(193)
0
(193)
(341)
0
(341)
(16)
0
(16)
MMP
262
(240)
22
1,161
(465)
696
448
(187)
261
Other
43
2
45
(2)
205
203
(25)
12
(13)
Total Equinor consolidation
780
(509)
271
354
291
646
2,593
(1,516)
1,077
Effective tax rates on adjusted
earnings
65.3%
-82.3%
58.5%
First nine months
2020
2019
(in USD million)
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
Adjusted
earnings
Tax on
adjusted
earnings
Adjusted
earnings
after tax
E&P Norway
2,551
(1,264)
1,287
7,305
(5,221)
2,085
E&P International
(479)
310
(170)
1,423
(521)
903
E&P USA
(524)
0
(524)
327
(0)
327
MMP
1,652
(972)
680
1,017
(496)
521
Other
(18)
222
204
(140)
43
(97)
Total Equinor consolidation
3,181
(1,704)
1,478
9,934
(6,195)
3,739
Effective tax rates on adjusted earnings
53.6%
62.4%
Reconciliation of adjusted earnings after tax to net income
Quarters
Reconciliation of adjusted earnings after tax to net income
First nine months
Q3 2020
Q2 2020
Q3 2019
(in USD million)
2020
2019
(2,019)
(472)
(469)
Net operating income/(loss)
A
(2,434)
7,783
(72)
(566)
1,174
Income tax less tax on net financial items
B
707
6,353
(1,947)
93
(1,642)
Net operating income after tax
C = A-B
(3,141)
1,430
Equinor third quarter 2020 49
2,799
827
3,062
Items impacting net operating income
1)
D
5,615
2,150
582
274
342
Tax on items impacting net operating income
E
996
(158)
271
646
1,077
Adjusted earnings after tax [5]
F = C+D-E
1,478
3,739
(201)
(248)
340
Net financial items
G
(426)
489
23
(96)
196
Tax on net financial items
H
486
162
(2,124)
(251)
(1,107)
Net income/(loss)
I = C+G+H
(3,080)
2,081
1) Represents the total adjustments to net operating income made to arrive at adjusted earnings (i.e. adjusted purchases, adjusted operating
and administrative expenses, adjusted depreciation, amortisation and impairment expenses and adjusted exploration expenses, each of which
are presented and reconciled to the relevant related IFRS figure for the periods presented in this report).
Equinor third quarter 2020 50
Adjusted earnings Marketing, Midstream & Processing (MMP) break down
Quarters
Change
Adjusted earnings break down
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
292
366
194
50%
Natural Gas Europe
967
539
80%
7
(7)
(33)
N/A
Natural Gas US
(11)
(63)
82%
38
784
253
(85%)
Liquids
784
443
77%
(75)
19
33
N/A
Other
(88)
98
N/A
262
1,161
448
(42%)
Adjusted earnings MMP
1,652
1,017
62%
Adjusted exploration expenses
Quarters
Change
Adjusted exploration expenses
First nine months
Q3 2020
Q2 2020
Q3 2019
Q3 on Q3
(in USD million)
2020
2019
Change
142
97
179
(21%)
E&P Norway exploration expenditures
369
437
(16%)
143
234
219
(35%)
E&P International exploration expenditures
598
578
3%
65
76
24
>100%
E&P USA exploration expenditures
186
90
>100%
349
407
422
(17%)
1)
Group exploration expenditures
1,151
1,106
4%
2)
87
14
39
>100%
Expensed, previously capitalised exploration expenditures
200
59
>100%
(125)
(140)
(201)
(38%)
Capitalised share of current period's exploration activity
(459)
(405)
14%
575
111
611
(6%)
Impairment (reversal of impairment)
1,022
614
67%
886
393
871
2%
Exploration expenses according to IFRS
1,914
1,374
39%
(583)
(111)
(608)
(4%)
Items impacting net operating income/(loss)
3)
(1,028)
(608)
69%
302
282
263
15%
Adjusted exploration expenses
886
766
16%
1) 27 wells with activity with 11 completed in the third quarter of 2020 compared to 21 wells with 11 completed in the third quarter of 2019.
2) 42 wells with activity with 26 completed the first nine months of 2020 compared to 42 wells with 32 completed in the first nine months of
2019.
3) For items impacting net operating income/(loss), see Reconciliation of net operating income/(loss) to adjusted earnings in the
Supplementary disclosures.
Equinor third quarter 2020 51
Calculation of capital employed and net debt to capital employed ratio
The table below reconciles the net interest-bearing debt adjusted, the capital employed, the net debt to capital employed ratio
adjusted including lease liabilities and the net debt to capital employed adjusted ratio with the most directly comparable financial
measure or measures calculated in accordance with IFRS.
Calculation of capital employed and net debt to capital employed ratio
At 30
September
At 30 June
At 31
December
At 30
September
(in USD million)
2020
2020
2019
2019
Shareholders' equity
34,084
35,587
41,139
40,983
Non-controlling interests
24
23
20
16
Total equity
A
34,108
35,610
41,159
40,999
Current finance debt
5,277
5,463
4,087
4,375
Non-current finance debt
32,193
31,647
24,945
24,401
Gross interest-bearing debt
B
37,471
37,110
29,032
28,776
Cash and cash equivalents
7,844
9,700
5,177
6,838
Current financial investments
10,563
9,319
7,426
7,203
Cash and cash equivalents and financial investment
C
18,407
19,020
12,604
14,041
Net interest-bearing debt [10]
B1 = B-C
19,064
18,091
16,429
14,735
Other interest-bearing elements
669
832
791
878
Normalisation for cash-build up before tax payment (50% of Tax Payment)
259
-
-
670
Net interest-bearing debt adjusted normalised for tax payment, including
lease liabilities [5]
B2
19,992
18,923
17,219
16,283
Lease liabilities
4,218
4,154
4,339
4,383
Net interest-bearing debt adjusted [5]
B3
15,774
14,768
12,880
11,899
Calculation of capital employed [5]
Capital employed
A+B1
53,172
53,700
57,588
55,734
Equinor third quarter 2020 52
Capital employed adjusted, including lease liabilities
A+B2
54,100
54,532
58,378
57,282
Capital employed adjusted
A+B3
49,883
50,378
54,039
52,898
Calculated net debt to capital employed [5]
Net debt to capital employed
(B1)/(A+B1)
35.9%
33.7%
28.5%
26.4%
Net debt to capital employed adjusted, including lease liabilities
(B2)/(A+B2)
37.0%
34.7%
29.5%
28.4%
Net debt to capital employed adjusted
(B3)/(A+B3)
31.6%
29.3%
23.8%
22.5%
1) Cash and cash equivalents adjustments regarding collateral deposits classified as cash and cash equivalents in the Consolidated
balance sheet but considered as non-cash in the non -GAAP calculations as well as financial investments in Equinor Insurance
AS classified as current financial investments.
2) Adjustment to net interest-bearing debt for cash build-up in the first quarter and the third quarter before tax payment on 1 April
and 1 October. This is to exclude 50% of the cash build-up to h ave a more even allocation of tax payments between the four
quarters and hence a more representative net interest-bearing debt.
Equinor third quarter 2020 53
Net adjusted financial items 2020
Interest
income
and other
financial
items
Net
foreign
exchange
gains
(losses)
Gains
(losses)
derivative
financial
instrument
s
Interest
and other
finance
expenses
Net before
tax
Estimated
tax effect
Net after
tax
Net adjusted financial items in the third quarter of 2020
(in USD million)
Financial items according to IFRS
235
(131)
39
(343)
(201)
23
(178)
Foreign exchange (FX) impacts (incl. derivatives)
(1)
131
0
0
130
2
0
Interest rate (IR) derivatives
0
0
(39)
0
(39)
0
0
Fair value adjustment financial investments and other
(97)
0
0
0
(97)
0
0
Subtotal
(99)
131
(39)
0
(6)
0
(6)
Adjusted financial items
136
0
0
(343)
(207)
23
(184)
Net adjusted financial items 2019
Interest
income
and other
financial
items
Net
foreign
exchange
gains
(losses)
Gains
(losses)
derivative
financial
instrument
s
Interest
and other
finance
expenses
Net before
tax
Estimated
tax effect
Net after
tax
Net adjusted financial items in the third quarter of 2019
(in USD million)
Financial items according to IFRS
180
295
208
(343)
340
196
536
Foreign exchange (FX) impacts (incl. derivatives)
2
(295)
0
0
(293)
0
0
Interest rate (IR) derivatives
0
0
(208)
0
(208)
0
0
Fair value adjustment financial investment
(20)
0
0
0
(20)
0
0
Adjusted financial items excluding FX and IR derivatives
161
0
0
(343)
(182)
196
14
Equinor third quarter 2020 54
USE AND RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Non-GAAP financial measures are defined as numerical measures that either exclude or include amounts or certain accounting items
that are not excluded or included in the comparable measures calculated and presented in accordance with GAAP (i.e. IFRS).
Management considers adjusted earnings and adjusted earnings after tax together with other non-GAAP financial measures as
defined below, to provide a better indication of the underlying operational and financial performance in the period (excluding
financing), and therefore better facilitate comparison s between periods.
The following financial measures may be considered non-GAAP financial measures:
●
Adjusted earnings
order to separate out effects that management considers may not be well correlated to Equinor’s underlying operational
performance in the individual reporting period. Management considers adjusted earnings to be a supplemental measure to
Equinor’s IFRS measures, which provides an indication of Equinor’s underlying operational performance in the period and
facilitates an alternative understanding of operational trends between the periods. Adjusted earnings include adjusted revenues
and other income, adjusted purchases, adjusted operating expenses and selling, general and administrative expenses, adjusted
depreciation expenses and adjusted exploration expenses
●
Adjusted earnings after tax
to operating income taking the applicable marginal tax into consideration. Adjusted earnings after tax excludes net financial items
and the associated tax effects on net financial items. It is based on adjusted earnings less the tax effects on all elements included
in adjusted earnings (or calculated tax on operating income and on each of the adjusting items using an estimated marginal tax
rate). In addition, tax effect related to tax exposure items not related to the individual reporting period is excluded from adjusted
earnings after tax. Management considers adjusted earnings after tax, which reflects a normalised tax charge associated with its
operational performance excluding the impact of financing, to be a supplemental measure to Equinor’s net income. Certain net
USD denominated financial positions are held by group companies that have a USD functional currency that is different from the
currency in which the taxable income is measured. As currency exchange rates change between periods, the basis for measuring
net financial items for IFRS will change disproportionally with taxable income which includes exchange gains and losses from
translating the net USD denominated financial positions into the currency of the applicable tax return. Therefore, the effective tax
rate may be significantly higher or lower than the statutory tax rate for any given period. Adjusted taxes included in adjusted
earnings after tax should not be considered indicative of the amount of current or total tax expense (or taxes payable) for the
period
Adjusted earnings and adjusted earnings after tax should be considered additional measures rather than substitutes for net operating
income/(loss) and net income/(loss), which are the most directly comparable IFRS measures. There are material limitations
associated with the use of adjusted earnings and adjusted earnings after tax compared with the IFRS measures as such non-GAAP
measures do not include all the items of revenues/gains or expenses/losses of Equinor that are needed to evaluate its profitab ility on
an overall basis. Adjusted earnings and adjusted earnings after tax are only intended to be indicative of the underlying developments
in trends of our on-going operations for the production, manufacturing and marketing of our products and exclude pre-and post-tax
impacts of net financial items. Equinor reflects such underlying development in our operations by eliminating the effects of certain
items that may not be directly associated with the period's operations or financing. However, for that reason, adjusted earnings and
adjusted earnings after tax are not complete measures of profitability. These measures should therefore not be used in isolation.
●
Return on average capital employed after tax (ROACE)
investors about performance during the period under evaluation. Equinor uses ROACE to measure the return on capital employed,
regardless of whether the financing is through equity or debt. The use of ROACE should not be viewed as an alternative to income
before financial items, income taxes and minority interest, or to net income, which are measures calculated in accordance with
GAAP or ratios based on these figures. For a reconciliation for adjusted earnings after tax, see Reconciliation of net operating
income/(loss) to adjusted earnings as presented earlier in this report
●
Capital employed adjusted –
this measure is defined as Equinor's total equity (including non-controlling interests) and net
interest-bearing debt adjusted
●
Net interest-bearing debt adjusted
equivalents and current financial investments, adjusted for collateral deposits and balances held by Equinor's captive insurance
company and balances related to the SDFI
●
Net debt to capital employed
,
Net debt to capital employed adjusted, including lease liabilities
and
employed ratio adjusted
– Following implementation of IFRS 16 Equinor present s a “net debt to capital employed adjusted”
excluding lease liabilities from the gross interest -bearing debt. Comparable numbers are presented in the table Calculation of
capital employed and net debt to capita l employed ratio in the report include Finance lease according to IAS17, adjusted for
marketing instruction agreement
●
Organic capital expenditures
– Capital expenditures, defined as Additions to PP&E, intangibles and equity accounted
investments in note 2 Segments to the Condensed financial interim statements, amounted to USD 2.0 billion in the third quarter of
2020. Organic capital expenditures are capital expenditures excluding acquisitions, recognised lease assets (RoU assets) and
other investments with significant different cash flow pattern. In the third quarter of 2020, a total of USD 0.3 billion are excluded in
the organic capital expenditures. Forward-looking organic capital expenditures included in this report are not reconcilable to its
Equinor third quarter 2020 55
most directly comparable IFRS measure without unreasonable efforts, because the amounts excluded from such IFRS measure to
determine organic capital expenditures cann ot be predicted with reasonable certainty
●
Free cash flow for the third quarter 2020
flows provided by operating activities before taxes paid and working capital items (USD 3.3 billion), taxes paid (negative USD 0.1
billion), cash used in business combinations (USD 0.0 billion), capital expenditures and investments (negative USD 1.7 billion),
(increase) decrease in other items interest bearing (USD 0.0 billion), proceeds from sale of assets and businesses (USD 0.0
billion), dividend paid (negative USD 0.3 billion) and share buy -back (negative USD 1.0 billion), resulting in a free cash flow of
USD 0.2 billion in the third quarter of 2020
●
Free cash flow for the first nine months of 2020
Cash flows provided by operating activities before taxes paid and working capital items (USD 10.2 billion), taxes paid (negative
USD 2.7 billion), cash used in business combinations (USD 0.0 billion), capital expenditures and investments (negative USD 6.0
billion), (increase) decrease in other items interest bearing (USD 0.0 billion), proceeds from sale of assets and businesses,
including USD 0.3 billion received from the Lundin divestment included in (increase)/decrease in financial investments (USD 0.3
billion), dividend paid (negative USD 2.0 billion) and share buy-back (negative USD 1.1 billion), resulting in a free cash flow of
negative USD 1.3 billion in the first nine months of 2020
Adjusted earnings
adjust for the following items:
●
Changes in fair value of derivatives:
embedded derivatives, required to be carried at fair value. Also, certain transactions related to historical divestments include
contingent consideration, are carried at fair value. The accounting impacts of changes in fair value of the aforementioned are
excluded from adjusted earnings. In addition, adjustments are also made for changes in the unrealised fair value of derivatives
related to some natural gas trading contracts. Due to the nature of these gas sales contracts, these are classified as financial
derivatives to be measured at fair value at the balance sheet date. Unrealised gains and losses on these contracts reflect the
value of the difference between current market gas prices and the actual prices to be realised under the gas sales contracts. Only
realised gains and losses on these contracts are reflected in adjusted earnings. This presentation best reflects the underlying
performance of the business as it replaces the effect of temporary timing differences associated with the re-measurements of the
derivatives to fair value at the balance sheet date with actual realised gains and losses for the period
●
Periodisation of inventory hedging effect:
Commercial storage is hedged in the paper market and is accounted for using the
lower of cost or market price. If market prices increase above cost price, the inventory will not reflect this increase in value. There
will be a loss on the derivative hedging the inventory since the derivatives always reflect changes in the market price. An
adjustment is made to reflect the unrealised market increase of the commercial storage. As a result, loss on derivatives is
matched by a similar adjustment for the exposure being managed. If market prices decrease below cost price, the write-down of
the inventory and the derivative effect in the IFRS income statement will offset each other and no adjustment is made
●
Over/underlift
: Over/underlift is accounted for using the sales method and therefore revenues were reflected in the period the
product was sold rather than in the period it was produced. The over/underlift position depended on a number of factors related to
our lifting programme and the way it corresponded to our entitlement share of production. The effect on income for the period is
therefore adjusted, to show estimated revenues and associated costs based upon the production for the period to reflect
operational performance and comparability with peers. Following the first quarter of 2019, Equinor changed the accounting policy
for lifting imbalances. Adjusted earnings now include the over/underlift adjustment
●
The
operational storage
is not hedged and is not part of the trading portfolio. Cost of goods sold is measured based on the
FIFO (first-in, first-out) method, and includes realised gains or losses that arise due to changes in market prices. These gains or
losses will fluctuate from one period to another and are not considered part of the underlying operations for the period
●
Impairment and reversal of impairment
are excluded from adjusted earnings since they affect the economics of an asset for
the lifetime of that asset, not only the period in which it is impaired or the impairment is reversed. Impairment and reversal of
impairment can impact both the exploration expenses and the depreciation, amortisation and impairment line items
●
Gain or loss from sales of assets
is eliminated from the measure since the gain or loss does not give an indication of future
performance or periodic performance; such a gain or loss is related to the cumulative value creation from the time the asset is
acquired until it is sold
●
Eliminations (Internal unrealised profit on inventories)
:
Volumes derived from equity oil inventory will vary depending on
several factors and inventory strategies, i.e. level of crude oil in inventory, equity oil used in the refining process and level of in-
transit cargoes. Internal profit related to volumes sold between entities within the group, and still in inventory at period end, is
eliminated according to IFRS (write down to production cost). The proportion of realised versus unrealised gain will fluctuate from
one period to another due to inventory strategies and consequently impact net operating income /(loss). Write-down to production
cost is not assessed to be a part of the underlying operational performance, and elimination of internal profit related to equity
volumes is excluded in adjusted earnings
●
Other items of income and expense
are adjusted when the impacts on income in the period are not reflective of Equinor’s
underlying operational performance in the reporting period. Such items may be unusual or infrequent transactions but they may
also include transactions that are significant which would not necessarily qualify as either unusual or infrequent. Other items are
carefully assessed and can include transactions such as provisions related to reorganisation, early retirement, etc.
●
Change in accounting policy
reflective of Equinor’s underlying operational performance in the reporting period
For more information on our use of non-GAAP financial measures, see section 5.2 Use and reconciliation of non-GAAP financial
measures in Equinor's 2019 Annual Report and Form 20-F.
Equinor third quarter 2020 56
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements that involve risks and uncertainties. In some cases, we use words such as
"ambition", "continue", "could", "estimate", “intend”, "expect", "believe", "likely", "may", "outlook", "plan", "strategy", "will", "guidance",
“targets”, “in line with”, “on track”, “consistent” and similar expressions to identify forward-looking statements. Forward -looking
statements include all statements other than statements of historical fact, including, among others, statements regarding Equinor’s
plans, intentions, aims, ambitions and expectations with respect to the Covid -19 pandemic including its impacts, consequences and
risks; Equinor’s USD 3 billion action plan for 2020 to strengthen financial resilience; Equinor’s response to the Covid-19 pandemic,
including anticipated measures to protect people, operations and value creation, operating costs and assumptions; the commitment to
develop as a broad energy company; future financial performance, including cash flow and liquidity; the share buy-back programme,
including its suspension; accounting policies; production cuts, including their impact on the level and timing of Equinor’s production;
plans to develop fields; changes to Norway ’s petroleum tax system; market outlook and future economic projections and assumptions,
including commodity price assumptions; organic capital expenditures through 2023; intention to mature its portfolio; estimates
regarding exploration activity levels; ambition to keep unit of product ion cost in the top quartile of its peer group; scheduled
maintenance activity and the effects on equity production thereof; completion and results of acquisitions and disposals ; expected
amount and timing of dividend payments; and provisions and contingent liabilities.
You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those
anticipated in the forward-looking statements for many reasons.
These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risks and
uncertainties because they relate to events and depend on circumstances that will occur in the future. There are a number of factors
that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking
statements, including levels of industry product supply, demand and pricing, in particular in light of recent significant oil price volatility
triggered, among other things, by the changing dynamic among OPEC+ members and the uncertainty regarding demand created by
the Covid-19 pandemic; the impact of Covid-19; levels and calculations of reserves and material differences from reserves estimates;
unsuccessful drilling; operational problems; health, safety and environmental risks; natural disasters, adverse weather conditions,
climate change, and other changes to business conditions; the effects of climate change; regulations on hydraulic fracturing; security
breaches, including brea ches of our digital infrastructure (cybersecurity); ineffectiveness of crisis management systems; the actions of
counterparties and competitors; the development and use of new technology, particularly in the renewable energy sector; inability to
meet strategic objectives; the difficulties involving transportation infrastructure; political and social stability and economic growth in
relevant areas of the world; an inability to attract and retain personnel; inadequate insurance coverage; changes or uncertainty in or
non-compliance with laws and governmental regulations; the actions of the Norwegian state as majority shareholder; failure to meet
our ethical and social standards; the political and economic policies of Norway and other oil-producing countries; non-compliance with
international trade sanctions; the actions of field partners; adverse changes in tax regimes; exchange rate and interest rate
fluctuations; factors relating to trading, supply and financial risk; general economic conditions; and other factors discussed elsewhere
in this report. Additional information, including information on factors that may affect Equinor’s business, is contained in Equinor’s
Annual Report on Form 20-F for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission
(including section 2.11 Risk review - Risk factors thereof). Equinor’s 2019 Annua l Report and Form 20-F is available at Equinor’s
website www.equinor.com. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we
cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. Moreover,
neither we nor any other person assume responsibility for the accuracy and completeness of these forward-looking statements. Any
forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, we
undertake no obligation to update any of these statements after the date of this report, whether to make them either conform to actual
results or changes in our expectations or otherwise.
We use certain terms in this document, such as “resource” and “resources” that the SEC’s rules prohibit us from including in our filings
with the SEC. U.S. investors are urged to closely co nsider the disclosures in our Form 20-F, SEC File No. 1-15200. This form is
available on our website or by calling 1-800-SEC-0330 or logging on to www.sec.gov.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our
future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of the forward-looking statements. Unless we are required by law to update
these statements, we will not necessarily update any of these statements after the date of this report, either to make them conform to
actual results or changes in our expectations.
Equinor third quarter 2020 57
END NOTES
1. The group's
average liquids price
(NGL).
2. The
refining reference margin
is a typical average gross margin of our two refineries, Mongstad and Kalundborg. The reference margin
will differ from the actual margin, due to variations in type of crude and other feedstock, throughput, product yields, freight cost, inventory, etc.
3.
Liquids volumes
4.
Equity volumes
production sharing agreement (PSA)
share in a field.
Entitlement volumes
, on the other hand, represent Equinor’s share of the volumes distributed to the partners in the field,
which are subject to deductions for, among other things, royalty and the host government's share of profit oil. Under the terms of a PSA, the
amount of profit oil deducted from equity volumes will normally increase with the cumulative return on investment to the partners and/or
production from the licence. Consequently, the gap between entitlement and equity volumes will likely increase in times of high liquids prices.
The distinction between equity and entitlement is relevant to most PSA regimes, whereas it is not applicable in most concessionary regimes
such as those in Norway, the UK, the US, Canada and Brazil.
5. These are
non-GAAP figures.
details.
6. Transactions with the
Norwegian State.
shareholder of Equinor and it also holds major investments in other entities. This ownership structure means that Equinor participates in
transactions with many parties that are under a common ownership structure and therefore meet the definition of a related party. Equinor
purchases liquids and natural gas from the Norwegian State, represented by SDFI (the State's Direct Financial Interest). In addition, Equinor
sells the State's natural gas production in its own name, but for the Norwegian State's account and risk as well as related expenditures are
refunded by the State. All transactions are considered priced on an arm’s -length basis.
7. The production guidance reflects our estimates of
proved reserves
Commission (SEC) guidelines and additional production from other reserves not included in proved reserves estimates. The growth
percentage is based on historical production numbers, adjusted for portfolio measures.
8. The group's
average invoiced gas prices
include volumes sold by the MMP segment.
9. The internal
transfer price
10. Since different legal entities in the group lend to projects and others borrow from banks, project financing through external bank or similar
institutions is not netted in the balance sheet and results in over-reporting of the debt stated in the balance sheet compared to the underlying
exposure in the group. Similarly, certain net interest-bearing debt incurred from activities pursuant to the Marketing Instruction of the
Norwegian government are off-set against receivables on the SDFI. Some interest-bearing elements are classified together with non- interest
bearing elements, and are therefore included when calculating the net interest-bearing debt.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authoris ed.
EQUINOR ASA
(Registrant)
Dated: 29 October, 2020
By: ___/s/ Lars Christian Bacher
Equinor third quarter 2020 58
Name: Lars Christian Bacher
Title: Chief Financial Officer