© Reuters. FILE PHOTO: Equinor’s logo is seen at the company’s headquarters in Stavanger, Norway December 5, 2019. REUTERS/Ints Kalnins/File Photo
By Nerijus Adomaitis
OSLO (Reuters) – Equinor on Wednesday posted a record $74.9 billion adjusted operating profit for 2022, more than double its previous high, as gas prices soared and fourth-quarter results beat expectations, boosting its share price by 7%.
The Norwegian oil and gas producer’s adjusted earnings before tax and interest for October-December rose to $15.1 billion from $15 billion a year earlier, beating the $14.4 billion predicted in a poll of 25 analysts compiled by Equinor.
Equinor raised its regular quarterly dividend and said it expected to see an annual cash flow from operations after tax of around $20 billion per year for the rest of the decade.
Net profit for the year was $28.7 billion, up from $8.6 billion a year earlier. The company joined global oil and gas majors such as ExxonMobil (NYSE:), Shell (LON:) and BP (NYSE:) in reporting record bottom lines.
Sparebank 1 Markets analyst Teodor Sveen-Nilsen expected investors to focus on Equinor’s dividends and share buybacks.
“We expect the share to outperform peers today,” he said in a note to clients.
The majority state-owned company last year became Europe’s largest supplier of as Russia’s Gazprom (MCX:) cut deliveries amid the West’s support for Ukraine, sending European gas prices to all-time highs.
Gas prices have tumbled in the new year, however, and Equinor’s Oslo-listed stocks have fallen 9% year-to-date, underperforming a 1.3% rise in European petroleum stocks.
GRAPHIC: Equinor adjusted earnings hit record high in 2022 – https://www.reuters.com/graphics/EQUINOR-RESULTS/dwpkdelejvm/chart.png
“On the back of strong earnings, outlook, and balance sheet, we step up capital distribution to (an) expected $17 billion in 2023,” chief executive Anders Opedal said in a statement.
RBC analyst Biraj Borkhataria said in a note the quarterly earnings beat was due to better than expected results in Equinor’s refining and trading operation, which was boosted by LNG and gas sales.
Equinor said it would pay a regular quarterly dividend of $0.30 per share, up from $0.20, and make an additional, extraordinary payment of $0.60 per share for four consecutive quarters, totalling about $11 billion in dividends this year.
The board reaffirmed a regular share buyback plan of $1.2 billion per year and said it would make an extraordinary buyback in 2023 of $4.8 billion, for a total of $6 billion.
Equinor’s overall oil and gas production fell by 2% year-on-year to 2.04 million barrels of oil equivalent per day (boed) in 2022 but is expected to grow by 3% in 2023, the company said.
Gas output from its Norwegian fields was up by 8% on a year earlier as the company focused on replacing lost Russian supplies to Europe, while oil output declined by 6%, it added.
Equinor’s previous adjusted earnings record amounted to $36.2 billion in 2008, when the price of North Sea oil had risen to record highs.
The company, which makes most of its profit in Norway, where oil firms are subject to a tax rate of 78%, said it expected to pay a record $49.9 billion in taxes for 2022.
Equinor said it expected capital spending for 2023 at between $10 billion and $11 billion, broadly in line with a previous plan. It raised it spending projection for the next three years to $13 billion per year from $12 billion seen before.
“The combination of this (of dividend and share buybacks) is likely to be well ahead of market expectations, and signals a strong message to the market on intentions to pay out to shareholders,” RBC’s Borkhataria said.