November 27, 2022

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Equinor expects $1 billion profit on financial gas contracts - E24

Equinor expects $1 billion profit on financial gas contracts – E24

The oil company expects “significantly higher” results than is typical for a division that trades oil and gas.

The image shows the Troll A platform in the Troll Field, an oil field in the northern part of the North Sea. Equinor is the factor. Troll A on block 31/6. Condeep platform in concrete.
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Equinor uses financial contracts, so-called derivative contracts, in the oil and gas trade.

These contracts can lead to losses and gains as the book value of these contracts is affected by changes in market prices.

The trade takes place in the marketing segment called MMP, and on Friday Equinor reports the expected result in the third quarter.

The oil company expects a profit of between $200 million and $500 million, Equinor states in connection with the oil company’s collection of earnings estimates from analysts.

This corresponds to between 2.2 and 5.4 billion NOK at today’s exchange rates.

According to Equinor, financial tools are used to manage price risk in gas contracts, as well as to geographically optimize pipeline and LNG sales.

LNG is a liquefied, refrigerated gas that is transported by sea.

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Expect higher than normal results

The positive impact of financial contracts is on top of Equinor’s expectations of results in marketing.

Here, Equinor expects an adjusted result of between 250 million and 500 million under normal market conditions.

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Equinor notes that in the third quarter, price volatility in the European gas and energy market has been historically high.

The results are expected to be “significantly higher” than the top of the time period, $500 million, according to the document.

This quarter, the result is positively affected by the fact that the Equinor liquefied natural gas (LNG) plant in Hammerfest has returned to production, but the company notes that there is still a loss of methanol production from natural gas at Tjeldbergodden and the oil-related gas contract.

The Company provides information relating to the collection of estimates from analysts. Equinor will present the results of the entire business on October 28.

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I got up to $97.5 a barrel

At the same time, Equinor expects the following rates:

The price per barrel for production at the Grid Control Terminal is expected to end at around $95.5 to $97.5 per barrel in the third quarter.

At the same time, the expected price in international production is $94.6 to $96.6 per barrel, according to Equinor.

In the United States, which is designated as a separate region, the price is expected to range between $75 and $79 a barrel.

However, negative earnings are expected within the renewable energy sector. Equinor notes that the business is growing and that project development continues to spend.

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