Equinor sells U.S. Bakken shale assets, posts report decline for 2020

OSLO (Reuters) – Norway’s Equinor has agreed to provide its belongings in the U.S. Bakken shale oil province soon after a ten years of multibillion-dollar losses and criticism for weak expense conclusions.

Equinor will offer the belongings in the states of North Dakota and Montana to Grayson Mill Strength, a enterprise backed by non-public fairness organization EnCap Investments, for about $900 million.

The Bakken location was designed through final decade’s U.S. shale growth, and at this time makes extra than a million barrels of oil a working day, about 50 percent the peak arrived at in late 2019.

The area has a higher for every-barrel cost of output and trader needs for money self-discipline have brought about producers to throttle again output due to the fact the coronavirus pandemic erupted.

“Equinor is optimising its oil and fuel portfolio to improve profitability and make it extra strong for the future,” CEO Anders Opedal claimed in a assertion.

“We are realising proceeds that can be deployed toward a lot more competitive belongings in our portfolio,” he included.

Opedal declined to say no matter whether Equinor prepared to provide more international belongings, but additional it was happy with its remaining U.S. functions.

“We even now have a fantastic situation in the Marcellus and also in the U.S. Gulf of Mexico,” he advised Reuters. “We will also concentration on our functions in Brazil and Britain, and search for to enhance our global enterprise as operators or companions.”

An exit from the Bakken, which the Norwegian business entered in 2011 by buying Brigham Exploration Enterprise for $4.7 billion, follows the sale of its operated belongings in the Eagle Ford for $325 million to Repsol in November 2019.

Between 2007 and 2019, Equinor recorded an accounting reduction of $21.5 billion on its over-all U.S. activities, together with $9.2 billion owing to impairments of onshore shale and other assets, a organization-commissioned report by accountants PwC has shown.

Norwegian lawmakers have urged the govt, as Equinor’s greatest shareholder, to just take a additional energetic position, and Electrical power Minister Tina Bru has demanded a lot more transparency from Equinor.

Equinor separately documented a record once-a-year net decline of $5.5 billion for 2020, as the pandemic weighed on oil and gasoline selling prices and led to significant writedowns.

It also slash its prepared funds expenditure for 2021-2022.

The firm options to spend $9 billion to $10 billion in each and every of the two a long time, as opposed with its former steering of $10 billion in 2021 and $12 billion in 2022, partly afflicted by a rise in the Norwegian currency in opposition to the greenback, it mentioned.

Equinor documented adjusted fourth-quarter working income of $756 million, mostly in line with analysts’ forecasts, and will pay a quarterly dividend of $.12 for each share, one particular cent up from the third quarter, but down from $.27 a calendar year earlier.

The dividend was modest, Citi analysts mentioned in a be aware to customers, leaving Opedal with money firepower to accelerate the company’s growth into renewable strength.

Equinor’s shares ended up down 2.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} at 1245 GMT, underperforming a flat Oslo benchmark stock index.

UNDERESTIMATED COMPLEXITY

Equinor created 48,000 barrels of oil equivalent per working day from its 242,000 acres in the Bakken in the fourth quarter, about 15{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} of its U.S. output.

Most of the losses accrued onshore in the United States in excess of the last ten years had been caused by lower-than-expected oil and gasoline selling prices, the corporation has said.

That is not distinctive to Equinor, and quite a few other oil firms that invested in shale took a hit when oil price ranges crashed in 2014, the PwC report released very last Oct reported.

On the other hand, Equinor underestimated the complexity of working U.S. onshore belongings and management did not tackle issues in a well timed way, it added.

Because 2013, the firm has modified its system to emphasis on benefit instead than expansion, and suggests it has preset most of the problems relevant to its onshore U.S. operations.