Equinor sells U.S. Bakken shale belongings, posts document reduction for 2020

OSLO (Reuters) – Norway’s Equinor has agreed to sell its assets in the U.S. Bakken shale oil province right after a ten years of multibillion-dollar losses and criticism for very poor investment decisions.

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

The Bakken region was developed all through past decade’s U.S. shale increase, and currently creates much more than a million barrels of oil a working day, around 50 percent the peak arrived at in late 2019.

The location has a high per-barrel price of creation and trader calls for for capital self-control have caused producers to throttle again output since the coronavirus pandemic erupted.

“Equinor is optimising its oil and gasoline portfolio to fortify profitability and make it additional sturdy for the upcoming,” CEO Anders Opedal stated in a statement.

“We are realising proceeds that can be deployed in direction of extra competitive assets in our portfolio,” he extra.

Opedal declined to say regardless of whether Equinor planned to sell additional overseas assets, but added it was pleased with its remaining U.S. functions.

“We even now have a superior place in the Marcellus and also in the U.S. Gulf of Mexico,” he explained to Reuters. “We will also emphasis on our operations in Brazil and Britain, and look for to make improvements to our international enterprise as operators or companions.”

An exit from the Bakken, which the Norwegian firm entered in 2011 by buying Brigham Exploration Firm 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 loss of $21.5 billion on its total U.S. pursuits, including $9.2 billion thanks to impairments of onshore shale and other property, a enterprise-commissioned report by accountants PwC has revealed.

Norwegian lawmakers have urged the governing administration, as Equinor’s largest shareholder, to take a a lot more energetic function, and Vitality Minister Tina Bru has demanded much more transparency from Equinor.

Equinor separately reported a history yearly web decline of $5.5 billion for 2020, as the pandemic weighed on oil and gas costs and led to substantial writedowns.

It also slice its prepared capital expenditure for 2021-2022.

The enterprise plans to spend $9 billion to $10 billion in every of the two years, in contrast with its former guidance of $10 billion in 2021 and $12 billion in 2022, partly influenced by a increase in the Norwegian forex against the dollar, it mentioned.

Equinor claimed modified fourth-quarter running financial gain of $756 million, mainly in line with analysts’ forecasts, and will pay back a quarterly dividend of $.12 for each share, one particular cent up from the 3rd quarter, but down from $.27 a calendar year earlier.

The dividend was modest, Citi analysts mentioned in a observe to shoppers, leaving Opedal with money firepower to accelerate the company’s enlargement into renewable power.

Equinor’s shares were being down 2.1{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} at 1245 GMT, underperforming a flat Oslo benchmark inventory index.

UNDERESTIMATED COMPLEXITY

Equinor developed 48,000 barrels of oil equivalent for each 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 amassed onshore in the United States about the final 10 years have been prompted by lower-than-predicted oil and gas costs, the corporation has reported.

That is not exceptional to Equinor, and many other oil corporations that invested in shale took a hit when oil rates crashed in 2014, the PwC report posted past October claimed.

Nonetheless, Equinor underestimated the complexity of operating U.S. onshore assets and administration did not deal with problems in a timely method, it extra.

Given that 2013, the business has transformed its strategy to concentration on worth rather than expansion, and states it has fixed most of the troubles connected to its onshore U.S. operations.