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Investing.com -- Equinor’s second-quarter trading update on Tuesday fell about 5% short of consensus expectations for adjusted operating income after tax, with lower production and weaker prices across several segments ahead of full results due July 23.
The Norwegian energy company reported adjusted operating income after tax below the consensus estimate of $1.9 billion.
In the Exploration and Production Norway segment, Equinor’s realized liquid prices ranged between $64.8 and $66.8 per barrel, down from $73.8 in the first quarter and just under the consensus estimate of $65.8.
Realized gas prices were $10.6 per million British thermal units, compared with $12.6 in the previous quarter and slightly above the $10.3 consensus.
Production data through May showed a 0.8% decline in liquids and a 12.6% decline in gas compared with the previous quarter.
Consensus had expected a 5.4% increase in liquids and a 6.5% decline in gas. The period included the startup of the Johan Castberg field and a turnaround at the Hammerfest LNG plant, which began April 24.
In the Exploration and Production International segment, realized liquid prices fell to a range of $58 to $62 per barrel from $68.3 in the first quarter.
Consensus was $62.1. Production is expected to be lower on a quarterly basis, with consensus at 233,000 barrels of oil equivalent per day, compared with 244,000 in the prior quarter.
Equinor classified its Peregrino asset in Brazil and its U.K. operations as “held for sale,” which means these assets were not subject to depreciation during the period. In the first quarter, depreciation for these assets was $355 million.
The Exploration and Production USA segment reported realized liquid prices of $55 to $57 per barrel, compared with $61.2 in the first quarter and a consensus of $55.9. Gas prices also declined.
Offshore production increased quarter over quarter, while onshore production remained flat.
Total (EPA:TTEF) production is expected to be 357,000 barrels of oil equivalent per day, down from 366,000 in the first quarter.
Depreciation is expected to rise to approximately $150 million due to updated estimates for future abandonment costs. Depreciation in the first quarter was $370 million.
In the Marketing, Midstream and Processing segment, adjusted earnings are projected to range between $400 million and $800 million, up from $253 million in the previous quarter but below the consensus estimate of $659 million.
The company said it experienced weak crude trading and the extended Hammerfest LNG turnaround, which had an estimated negative impact of $80 million during the quarter.
Equinor paid NOK35.2 billion in Norwegian Continental Shelf taxes in the quarter through two expected installments.
Under a revised payment schedule requiring 10 installments per year, the company expects to pay NOK19.97 billion in each of the next two installments during the third quarter.
Other cash flow activity included a $1.75 billion bond issuance and $335 million in merger and acquisition inflows.
Equinor’s market capitalization was NOK757.8 billion, or $75.3 billion, as of the most recent closing price of NOK259.40, said analysts at Jefferies in a note. The brokerage maintained a restricted rating on the company.