Equinor Posts Deep 2020 Loss, Sells US Assets

Oslo, (UrduPoint / Pakistan Point News - 10th Feb, 2021 ) :Norwegian energy giant Equinor reported Wednesday a deep loss for 2020 as the coronavirus pandemic slashed demand and prices and announced it was divesting its loss-making US assets.

Equinor was the latest oil group to fall heavily into the red in 2020, reporting a net loss of $5.5 billion compared to a profit of $1.8 billion in 2019.

That is the biggest annual loss ever reported by the group, according to financial news site e24.no.

Equinor said it was selling off its interests in the Bakken oil field straddling the US states of North Dakota and Montana to Grayson Mill Energy, backed by EnCap Investments, for around $900 million.

After a series of ill-fated investments, Equinor has accumulated more than 200 billion kroner ($23.7 billion) of losses in the US in recent years.

A large share of that stems from the Bakken field which, in the fourth quarter of 2020, contributed around 48,000 barrels of oil equivalent per day to Equinor's production.

"Equinor is optimising its oil and gas portfolio to strengthen profitability and make it more robust for the future," chief executive Anders Opedal said in a statement.

"By divesting our Bakken position we are realising proceeds that can be deployed towards more competitive assets in our portfolio," he added.

Analysts at RBC Europe questioned the timing of the operation.

"Given the weak performance from its US assets in recent years, and multiple rounds of impairments, we believe the company was under pressure to retrench from its international expansion efforts," they said in a note.

"Clearly it is not a good time to be selling upstream assets," they added.

Equinor's adjusted operating income, which excludes one-off items and is its preferred indicator, fell to $3.9 billion from $13.5 billion a year earlier.

Sales dropped 29 percent to $45.8 billion in 2020.

Like its peers, Equinor was hard hit by the coronavirus pandemic and the ensuing economic crisis in 2020, as Brent oil prices briefly dropped below $20.

Oil prices even fell into negative territory at one point early last year as the pandemic saw governments worldwide impose harsh lockdown restrictions.

In the last few months however prices have recovered steadily, with Brent crude now back above $60 after producers cut output and the global economy shows signs of a rebound.

Owned 67-percent by the Norwegian state, Equinor was able to mitigate some of the damage by cost-cutting, yielding savings of $3.7 billion in 2020.