Equinor halts U.S. land activities as part of $3B cost-reduction plan

OSLO - Equinor presented an updated outlook for 2020 and an approximately $3 billion action plan to strengthen the financial resilience in a market impacted by the COVID-19 and low commodity prices. Equinor says the company can be organic cash flow neutral before capital distribution in 2020 with an average oil price around $25/bbl for the remaining part of the year.

The main elements of the action plan are:

• Reducing organic capex for 2020 from $10-11 billion to approximately $8.5 billion, a reduction of around 20%.
• Reducing exploration activity for 2020 from approximately $1.4 billion to approximately $1 billion.
• Reducing operating costs for 2020 by approximately $700 million compared to original estimates.

Reductions in organic capex are driven by a strict process of prioritization where flexibility of cost and schedule for sanctioned and non-sanctioned projects have been reviewed. Within U.S. onshore activities, drilling and completion activities are being halted to produce the volumes at a later period, reducing investments significantly for 2020.

These cost reductions come in addition to the already announced suspension of buy-back under the share buy-back program until further notice. The second tranche of around $675 million, including the Norwegian State share, intended to be launched from around 18 May to 28 October 2020, will not be executed as previously planned.

"Equinor is in a strong financial position to handle market volatility and uncertainty. Our strategy remains firm, and we are now taking actions to further strengthen our resilience in this situation with the spread of the corona virus and low commodity prices," says president and CEO of Equinor ASA, Eldar Sætre.

"We have implemented measures to reduce the risk of spreading the corona virus and have so far been able to maintain production at all our fields. Safe operations remain our first priority in this situation," says Sætre.

Equinor has over the past years realized significant improvements and is today a stronger and more robust company. In 2014 Equinor needed an average oil price of around $100/bbl to be organic cash flow neutral before capital distribution. With the measures now being implemented, Equinor can be organic cash flow neutral before capital distribution in 2020 with an average oil price around $25/bbl for the remaining part of the year.