Equinor : Q2 2023 report

2023 Second quarter

Financial statements and review

				SECOND QUARTER	CONDENSED INTERIM FINANCIAL
2		CONTENTS	2023 REVIEW	STATEMENTS AND NOTES	SUPPLEMENTARY

Contents

SECOND QUARTER 2023 REVIEW		CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES		SUPPLEMENTARY
Equinor second quarter 2023	3	Condensed interim financial statements and notes	16		Supplementary disclosures	33
Group review	5		Consolidated statement of income	17		Forward-looking statements	51
Outlook	7		Consolidated statement of comprehensive income	18		End notes	52
Supplementary operational disclosures	8		Consolidated balance sheet	19
Exploration & Production Norway	10		Consolidated statement of changes in equity	20
Exploration & Production International	11		Consolidated statement of cash flows	21
Exploration & Production USA	12		Notes to the Condensed interim financial statements	22
Marketing, Midstream & Processing	13
Renewables	15

Equinor second quarter 2023

				SECOND QUARTER	CONDENSED INTERIM FINANCIAL
3 Equinor second quarter 2023	CONTENTS	2023 REVIEW	STATEMENTS AND NOTES	SUPPLEMENTARY

Equinor second quarter 2023

Equinor delivered adjusted earnings* of USD 7.54 billion and USD 2.25 billion after tax in the second quarter of 2023. Net operating income was USD 7.05 billion, and net income was USD 1.83 billion.

Anders Opedal, president and CEO of Equinor ASA:

"Equinor delivered solid earnings in a quarter affected by turnarounds and energy prices down from the extraordinary levels last year. We have increased the production capacity on Johan Sverdrup and achieved record production from the field. Our international

"In the quarter we made good progress on our project portfolio. Together with our partners, we took the final investment decision on the BM-C-33 project in Brazil. Development of two subsea tie-back fields on the NCS were approved, both are expected to quickly contribute to new production to the market with low costs and

Financial and operational performance

• Solid earnings and cashflow from operations,
•	reflecting lower prices
Strong liquids production
•	NCS gas production impacted by planned
	maintenance and shutdown at Hammerfest LNG and

Strategic progress

• Increased capacity at Johan Sverdrup
• Final investment decision for BM-C-33 in Brazil
• Acquisition of Rio Energy (announced in July) and closing of Suncor and Wellesley transactions

portfolio had strong production in the quarter. We continue with significant capital distribution and expect a total distribution of 17 billion dollars in 2023."

emissions from production. Last week we entered into an agreement to acquire the renewables company Rio Energy, and we expect first power from Dogger Bank during the summer."

Nyhamna

• High tax and capital distribution payments

reflecting strong 2022 results

Competitive capital distribution

• Ordinary cash dividend of USD 0.30 per share, continued extraordinary cash dividend of USD 0.60 per share and third tranche of share buy-back USD 1.67 billion.

Health, safety and the environment	Twelve months average	Full year
per Q2 2023	2022
Serious incident frequency (SIF)	0.3	0.4
	First half	First half
	2023	2022
Upstream CO2 intensity (kg CO2/boe)	6.8	6.8
Absolute scope 1+2 GHG emissions (million tonnes CO2e)	5.8	5.4

	Quarters	Change	Financial information		First half
Q2 2023	Q1 2023	Q2 2022	Q2 on Q2 (unaudited, in USD million)	2023	2022	Change
7,051	12,517	17,733	(60%)	Net operating income/(loss)	19,569	36,125	(46%)
7,543	11,973	17,566	(57%)	Adjusted earnings*1)	19,516	35,435	(45%)
1,829	4,966	6,762	(73%)	Net income/(loss)	6,795	11,476	(41%)
2,246	3,514	5,283	(57%)	Adjusted earnings after tax*1)	5,760	10,770	(47%)
1,857	14,871	8,520	(78%)	Cash flows provided by operating activities	16,728	24,291	(31%)
(356)	9,716	9,680	N/A	Cash flow from operations after taxes paid*	9,360	25,428	(63%)
(10,758)	4,201	6,628	N/A	Net cash flow*	(6,558)	19,317	N/A
					Operational information
70.3	73.8	106.9	(34%)	Group average liquids price (USD/bbl) [1]	71.9	102.0	(30%)
1,994	2,130	1,984	1%	Total equity liquids and gas production (mboe per day) [4]	2,062	2,045	1%
947	1,163	325	>100% Total power generation (GWh) Equinor share	2,110	837	>100%
345	524	325	6%	Renewable power generation (GWh) Equinor share	869	837	4%

	30 June	31 December	%-point
Net debt to capital employed adjusted*	2023	2022	change
Net debt to capital employed adjusted*	(35.1%)	(23.9%)	(11.2)
Dividend
(USD per share)	Q2 2023	Q1 2023	Q2 2022
Ordinary cash dividend per share	0.30	0.30	0.20
Extraordinary cash dividend per share	0.60	0.60	0.50

In the first six months of 2023 Equinor settled shares in the market under the share buy-back programmes of USD 0.9 billion and USD 3.6 billion for the Norwegian government's share of the 2022 programme and the first tranche of the 2023 programme.

• For items marked with an asterisk throughout this report, see Use and reconciliation of non-GAAP financial measures in the Supplementary disclosures

1) Restated. For more information, see Amended principles for Adjusted earnings in the section 'Use and reconciliation of non-GAAP financial measures' in the Supplementary disclosures.

Equinor second quarter 2023

				SECOND QUARTER	CONDENSED INTERIM FINANCIAL
4 Equinor second quarter 2023	CONTENTS	2023 REVIEW	STATEMENTS AND NOTES	SUPPLEMENTARY

Production and operations

Equinor delivered total equity production of 1,994 mboe per day for the second quarter, slightly above the 1,984 mboe per day in the same quarter of 2022. Increased capacity for Johan Sverdrup to 755,000 boe per day, and high production from the Peregrino field in Brazil contributed to the strong liquids production in the quarter. This was partially offset by gas production on the NCS reduced by planned maintenance, the temporary shutdown of Hammerfest LNG and fields connected to the third-party operated Nyhamna gas process facility.

Power production from renewable energy sources was 345 GWh in the quarter, up from 325 GWh for the same quarter last year. The increase was mainly driven by production from the floating wind farm Hywind Tampen on the NCS and new solar plants in Poland. Including gas-to-power production in the UK, total power production ended at 947 GWh for the quarter.

Strategic and industrial progress

Equinor progressed the project portfolio with the final investment decision for the BM-C-33 project in Brazil and received approval for the development of the subsea tie-back fields Irpa and Verdande on the NCS.

Equinor completed 7 exploration wells offshore with

3 commercial discoveries in the quarter. 10 wells were ongoing at the quarter end.

At the world's largest offshore wind farm Dogger Bank in the UK, the first turbine components are being loaded out and first power is expected during summer. Full commercial production for Dogger Bank A is expected in third quarter 2024.

Equinor continues to develop low-carbon value chains in collaboration with industrial partners. In the quarter Equinor agreed with Engie to cooperate and explore co-investments in decarbonised thermal power production in France, Belgium and the Netherlands.

Solid financial results impacted by lower prices

Equinor realised a price for piped gas to Europe of USD 11.5 per mmbtu and realised liquids price was USD 70.3 per bbl, down by 58% and 34%, respectively, compared to the second quarter 2022.

Equinor delivered solid adjusted earnings* at USD 7.54 billion and USD 2.25 billion after tax. This is down from the same quarter last year mainly due to the lower prices for liquids and gas.

The Marketing, Midstream & Processing (MMP) segment delivered solid results, in the upper half of the updated guided range for adjusted earnings* of 400-800 million, in a market characterised by lower prices and volatility than the same quarter last year. The result was driven by crude and gas trading and optimisation.

Cash flow provided by operating activities before taxes paid and working capital items amounted to USD 10.5 billion for the second quarter. Based on the strong 2022 earnings Equinor paid two NCS tax instalments, totalling at USD 10 billion. In the second half of the year NCS tax instalments are related to expected 2023 results and consist of three instalments of around USD 3.75 billion(1), of which one is to be paid in the third quarter.

Organic capital expenditure* was USD 2.29 billion for the quarter, and total capital expenditures were USD 4.35 billion. After taxes, capital distribution to shareholders and investments, net cash flow* ended at negative USD 10.8 billion for the second quarter.

Equinor maintains a strong financial position with adjusted net debt to capital employed ratio* at negative 35.1% by the end of the second quarter, from negative 52.3% at the end of the first quarter of 2023.

Competitive capital distribution

The board of directors has decided an ordinary cash dividend of USD 0.30 per share, and to continue the extraordinary cash dividend of USD 0.60 per share for the second quarter of 2023, in line with communication at the Capital Markets Update in February.

Expected total capital distribution for 2023 is around USD 17 billion, including a share buy-back programme

of USD 6 billion. The board of directors has decided to initiate a third tranche of the share buy-back programme for 2023 of USD 1.67 billion. The third tranche will commence on 27 July and end no later than 26 October 2023.

The second tranche of the share buy-back programme for 2023 was completed on 12 July 2023 with a total value of around USD 1.67 billion.

All share buy-back amounts include shares to be redeemed by the Norwegian State.

1. NOK 37.5 bn, USD estimate based on a USD/NOK exchange rate assumption of 10.

Equinor second quarter 2023

			SECOND QUARTER	CONDENSED INTERIM FINANCIAL
5 Group review	CONTENTS	2023 REVIEW	STATEMENTS AND NOTES	SUPPLEMENTARY

Group review

		Quarters		Change	Financial information	First half
	Q2 2023	Q1 2023	Q2 2022	Q2 on Q2 (unaudited, in USD million)	2023	2022	Change
	22,872	29,224	36,459	(37%)	Total revenues and other income	52,096	72,852		(28%)
	23,133	28,520	36,292	(36%)	Adjusted total revenues and other income*1)	51,653	72,881		(29%)
	(15,821)	(16,707)	(18,727)	(16%)	Total operating expenses	(32,527)	(36,727)	(11%)
	(10,676)	(11,262)	(13,885)	(23%)	Adjusted purchases* [5]	(21,939)	(27,666)	(21%)
	(2,752)	(2,849)	(2,390)	15%	Adjusted operating and administrative expenses*	(5,602)	(4,840)	16%
					Adjusted depreciation, amortisation and net
	(2,232)	(2,198)	(2,149)	4%	impairments*	(4,430)	(4,482)	(1%)
	71	(238)	(301)	N/A	Adjusted exploration expenses*	(167)	(458)	(64%)
	7,051	12,517	17,733	(60%)	Net operating income/(loss)	19,569	36,125		(46%)
	7,543	11,973	17,566	(57%)	Adjusted earnings*1)	19,516	35,435		(45%)
	2,842	2,051	1,713	66%	Capital expenditures and Investments	4,893	4,328		13%
	1,857	14,871	8,520	(78%)	Cash flows provided by operating activities	16,728	24,291		(31%)
	(356)	9,716	9,680	N/A	Cash flows from operations after taxes paid*	9,360	25,428		(63%)

	Quarters	Change			First half
Q2 2023	Q1 2023	Q2 2022	Q2 on Q2 Operational information	2023	2022	Change
1,994	2,130	1,984	1%		Total equity liquid and gas production (mboe/day)	2,062	2,045	1%
1,861	2,011	1,842	1%		Total entitlement liquid and gas production (mboe/day)	1,936	1,900	2%
947	1,163	325	>100%		Total Power generation (GWh) Equinor share	2,110	837	>100%
345	524	325	6%	Renewable power generation (GWh) Equinor share	869	837	4%
78.4	81.3	113.8	(31%)	Average Brent oil price (USD/bbl)	79.8	107.6	(26%)
70.3	73.8	106.9	(34%)	Group average liquids price (USD/bbl)	71.9	102.0	(30%)
10.23	17.36	25.53	(60%)	E&P Norway average internal gas price (USD/mmbtu)	14.12	27.68	(49%)
1.41	2.80	6.25	(77%)	E&P USA average internal gas price (USD/mmbtu)	2.22	5.21	(57%)

1) Restated. For more information, see Amended principles for Adjusted earnings in the section 'Use and reconciliation of non-GAAP financial measures' in the Supplementary disclosures.

For the items impacting net operating income/(loss), see Use and reconciliation of non-GAAP financial measures in Supplementary disclosures.

Equinor second quarter 2023