Equinor's Q2 oil output drops 9% on year on gas prioritization, maintenance

Norway's Equinor produced 9% less oil than a year earlier in the second quarter at 873,000 b/d, including a 5% drop in its Norwegian production, as the state-controlled company prioritized gas and was affected by regular seasonal maintenance, its Q2 report showed July 27.

Equinor stuck with its guidance of a 2% increase in oil and gas production in 2022. Its overall oil and gas production for the quarter was flat compared with a year earlier at 1.84 million b/d of oil equivalent.

It also slightly trimmed its estimate of the impact of scheduled maintenance activity to 40,000 boe/d for the year from 45,000 boe/d.

Its Norwegian oil production, at 576,000 b/d, dropped less than its overseas production: its US oil production was down 10% at 123,000 b/d and other overseas oil output down 18% at 174,000 b/d.

Contrastingly, Equinor's Norwegian gas production rose 18% on the year at 767,000 boe/d, partly reflecting regulatory decisions designed to ease Europe's energy crisis.

Equinor's Norwegian output was affected by maintenance, notably at the flagship Johan Sverdrup and Ekofisk fields. In addition, producers have stopped reinjecting gas at some fields as a means of maintaining oil output levels, directing the gas to market instead.

The company operates key fields that contribute to the Platts Dated Brent benchmark, as well as the dominant Johan Sverdrup field, although it is completing the sale of minority stakes in the Ekofisk area -- operated by US upstream company ConocoPhillips -- to independent Sval Energi.

Third-quarter production numbers would be affected by a brief strike by offshore managers that took place at the start of July, it said.

Overseas, Equinor said it had exited its Russian business as planned in response to the invasion of Ukraine, including Angara -- a new joint venture with state-owned Rosneft from which the Norwegian company derived 12,000 b/d of oil in 2021.

Offshore Brazil, the Peregrino heavy oil project came back on stream in July following the replacement of faulty risers, prolonged by the pandemic. A second development phase is due on stream in Q3, Equinor said.

With a 68% increase in Equinor's realized price for upstream liquids, the company's net profit more than tripled year on year to $6.76 billion in the quarter and it further increased its financial cushion, achieving a net debt ratio of negative 38.6%. However, its operating profit was down slightly from the first quarter despite higher oil prices, with the company highlighting rising cost pressures.

"Equinor puts its best effort into securing safe and reliable deliveries of energy to Europe, whilst continuing to invest in the energy transition," CEO Anders Opedal said.

"Equinor continues to provide high gas production from the Norwegian continental shelf, including volumes from Hammerfest LNG, now safely back in production. Solid operational performance and high production combined with high prices resulted in strong financial results."

Platts assessed Dated Brent at $109.53/b on July 26, continuing to track well above front-month Brent crude futures, S&P Global Commodity Insights data showed.