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1. Company Snapshot

1.a. Company Description

Equinor ASA, an energy company, engages in the exploration, production, transportation, refining, and marketing of petroleum and petroleum-derived products, and other forms of energy in Norway and internationally.It operates through Exploration & Production Norway; Exploration & Production International; Exploration & Production USA; Marketing, Midstream & Processing; Renewables; and Other segments.The company also transports, processes, manufactures, markets, and trades in oil and gas commodities, such as crude and condensate products, gas liquids, natural gas, and liquefied natural gas; markets and trades in electricity and emission rights; operates refineries, terminals and processing, and power plants; and develops low carbon solutions for oil and gas.


In addition, it develops wind, and carbon capture and storage projects, as well as offers other renewable energy.As of December 31, 2021, the company had proved oil and gas reserves of 5,356 million barrels of oil equivalent.Equinor ASA has collaboration agreements with Vårgrønn; and RWE Renewables and Hydro REIN.


The company was formerly known as Statoil ASA and changed its name to Equinor ASA in May 2018.Equinor ASA was incorporated in 1972 and is headquartered in Stavanger, Norway.

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1.b. Last Insights on EQNR

Equinor's recent performance has been impacted by several negative drivers. The company's withdrawal from Australian offshore wind projects, including the Novocastrian Offshore Wind Farm, has been a significant blow to its renewable energy ambitions. Additionally, the company's Q2 earnings miss and revenue decrease year-over-year have raised concerns. Furthermore, the volatility in oil prices and the pullback in 2025 have also affected the company's performance. Equinor's decision to award an EPC contract to SLB for a major subsea production system in the Fram Sør field may not be enough to offset these challenges.

1.c. Company Highlights

2. Equinor's Q3 Earnings: Strong Operational Performance Amidst Challenging Market Conditions

Equinor reported adjusted operating income of $6.2 billion before tax, while net income was negative $0.2 billion, impacted by net impairments due to lower long-term oil price outlook. The company's earnings per share (EPS) came in at $0.37, significantly lower than analyst estimates of $5.97. Revenue growth was driven by a 7% increase in production, with Johan Sverdrup delivering near 100% regularity and Johan Castberg producing at a plateau with a premium to Brent of around $5.

Publication Date: Oct -30

📋 Highlights
  • Production Growth:: Equinor's production increased by 7% YoY, reaching 2.13 million barrels per day, driven by strong performance from Johan Sverdrup and Johan Castberg.
  • Adjusted Operating Income:: Q3 adjusted operating income was $6.2 billion before tax, though net income turned negative (-$0.2 billion) due to $754 million net impairments linked to lower oil price outlooks.
  • Strong Cash Flow:: Year-to-date cash flow from operations after tax hit $14.7 billion, with $9.1 billion in operational cash flow, underpinning $9 billion in total capital distributions (dividends + buybacks).
  • Renewables Cost Efficiency:: Operating costs in the Renewables segment fell by 50% YoY, despite $754 million impairments, reflecting improved project execution and reduced early-phase expenses.
  • Financial Resilience:: Equinor maintained a low net debt-to-capital employed ratio of 12.2%, with $22 billion in cash and $1.266 billion allocated to the 2025 share buyback program.

Operational Highlights

The company's operational performance was strong, with production reaching 2,130,000 barrels per day, 7% higher than the same quarter last year. The Norwegian Continental Shelf (NCS) saw even stronger production growth of 9%, driven by Johan Castberg, Johan Sverdrup, and strong performance at Brent. Equinor also made significant progress in its Renewables business, with operating costs decreasing by around 50% compared to the third quarter last year.

Financial Position and Capital Distribution

Equinor's financial position remains solid, with a net debt to capital employed ratio of 12.2% and more than $22 billion in cash and cash equivalents. The company approved an ordinary cash dividend of $0.37 per share and a fourth and final tranche of the share buyback program for 2025, of up to $1.266 billion, bringing the total capital distribution for the year to around $9 billion.

Valuation and Outlook

With a P/E Ratio of 7.7 and a Dividend Yield of 9.58%, Equinor's valuation appears attractive. The company's ROIC of 7.47% and ROE of 5.38% indicate a stable return profile. As the company navigates the challenging market conditions, its strong operational performance and solid financial position should help it weather the storm. Analysts estimate next year's revenue growth at -7.9%, but Equinor's diversified portfolio and cost discipline should help it remain competitive.

Renewables and Growth Projects

Equinor is making significant progress in its Renewables business, with high project activities and a focus on capital discipline. The company's investment in Ørsted and its plans to nominate a candidate for the Board reflect its commitment to creating value in the Renewables space. The Empire Wind project is 55% complete, despite some challenges with the installation vessel, and is expected to reach first power production in 2027.

3. NewsRoom

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How Investors May Respond To Aker BP (OB:AKRBP) Strengthening Its North Sea Resource Base With New Finds

05:07

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Sector Update: Energy Stocks Mixed Friday Afternoon

Dec -05

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Equinor, Aker BP discover hydrocarbons at two North Sea prospects

Dec -05

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Equinor Makes Two Large Gas Discoveries in Norway’s North Sea

Dec -05

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Update: Equinor, Aker BP Report New North Sea Oil, Gas Discoveries

Dec -05

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Is Equinor Now a Value Opportunity After Recent Share Price Weakness?

Dec -05

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Equinor, Aker BP Report New North Sea Oil, Gas Discoveries

Dec -05

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Equinor begins production from Verdande field offshore Norway

Dec -05

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.14%)

6. Segments

Marketing, Midstream & Processing (MMP)

Expected Growth: 4.3%

Equinor’s Marketing, Midstream & Processing operations will see growth driven by increased demand for natural gas in Europe, expansion into new markets, and strategic partnerships, as well as investments in digitalization and energy transition initiatives.

Exploration & Production Norway (EPN)

Expected Growth: 4.5%

Equinor's oil and gas exploration and production in Norway is driven by increasing demand for low-carbon energy, and the country's vast hydrocarbon resources. Norway's stable and predictable regulatory environment and high investment in digitalization also contribute to the growth.

Exploration & Production International (Excluding E&P USA)

Expected Growth: 5.5%

Equinor’s international oil and gas exploration and production growth is driven by increasing energy needs, strategic acquisitions, and a strong focus on digitalization and low-carbon solutions, positioning the company for long-term sustainable growth.

Exploration & Production USA (E&P USA)

Expected Growth: 2.5%

Equinor ASA's oil and gas exploration and production in the United States is driven by increasing energy demand, favorable regulatory environment, and strategic partnerships with major oil companies, supporting a moderate growth rate. The company's focus on cost reduction and operational efficiency will enhance its competitiveness.

Other

Expected Growth: 5.5%

None

Renewables (REN)

Expected Growth: 13.4%

Equinor ASA's Renewables segment is driven by government support, declining costs, and increasing demand for clean energy, leading to a strong growth outlook.

Eliminations

Expected Growth: 2.5%

Equinor ASA's employee eliminations segment growth is driven by the company's restructuring efforts, focusing on cost reduction, and streamlining operations to improve profitability.

7. Detailed Products

Crude Oil

Equinor ASA is a major producer of crude oil, with operations in several countries including Norway, the UK, and Brazil.

Natural Gas

Equinor ASA is a significant producer of natural gas, with operations in several countries including Norway, the UK, and Algeria.

LNG (Liquefied Natural Gas)

Equinor ASA is a major producer of LNG, with operations in several countries including Norway and Algeria.

Refined Products

Equinor ASA refines crude oil into various petroleum products such as gasoline, diesel, and jet fuel.

Renewable Energy

Equinor ASA is investing in renewable energy sources such as wind and solar power.

Carbon Capture and Storage (CCS)

Equinor ASA is a leader in CCS technology, which captures and stores CO2 emissions from industrial sources.

Energy Storage

Equinor ASA is investing in energy storage solutions such as batteries and hydrogen fuel cells.

8. Equinor ASA's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Equinor ASA is medium due to the availability of alternative energy sources such as solar and wind power. However, the high demand for oil and gas in the energy market reduces the likelihood of substitutes.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of negotiating power of individual customers in the energy market. Equinor ASA has a diverse customer base, which reduces the dependence on a single customer.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of a few large suppliers of equipment and services in the energy industry. However, Equinor ASA's large scale of operations and diversified supply chain reduce the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the energy industry, including high capital requirements and regulatory hurdles. Equinor ASA's established brand and economies of scale also deter new entrants.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several large players in the energy industry, including ExxonMobil, Royal Dutch Shell, and BP. The industry is highly competitive, and companies compete on price, quality, and innovation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 39.60%
Debt Cost 5.64%
Equity Weight 60.40%
Equity Cost 5.64%
WACC 5.64%
Leverage 65.57%

11. Quality Control: Equinor ASA passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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PKN ORLEN

A-Score: 6.7/10

Value: 8.7

Growth: 3.3

Quality: 4.6

Yield: 8.1

Momentum: 9.0

Volatility: 6.7

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Repsol

A-Score: 6.7/10

Value: 7.1

Growth: 5.6

Quality: 2.5

Yield: 8.8

Momentum: 8.0

Volatility: 8.3

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Eni

A-Score: 6.4/10

Value: 7.5

Growth: 4.8

Quality: 3.2

Yield: 8.8

Momentum: 5.0

Volatility: 9.3

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Shell

A-Score: 6.0/10

Value: 6.9

Growth: 4.1

Quality: 4.5

Yield: 6.2

Momentum: 5.5

Volatility: 9.0

1-Year Total Return ->

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Equinor

A-Score: 5.8/10

Value: 8.3

Growth: 6.0

Quality: 5.0

Yield: 7.5

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

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BP

A-Score: 5.7/10

Value: 6.2

Growth: 2.9

Quality: 2.7

Yield: 8.8

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

235.6$

Current Price

235.6$

Potential

-0.00%

Expected Cash-Flows