Equinor reveals $3bn COVID-19 action plan – 4C Offshore

Equinorhas launched a USD 3 billion action plan to strengthen the financial resiliencein a market impacted by the COVID-19 and low commodity prices. The Norwegianenergy company also updated its outlook for 2020.

Equinor stated that it can be organic cash flow neutral before capitaldistribution in 2020 with an average oil price around USD 25 per barrelfor the remaining part of the year.

The main elements of its action plan to achieve this includes reducingorganic CAPEX for 2020 from USD 10-11 billion to around USD 8.5 billion,a reduction of around 20%. The plan includes efforts to reduce explorationactivity for 2020 from around USD 1.4 billion to around USD 1 billion.The action plan will also cut operating costs for 2020 by around USD 700million, compared to original estimates.

Reductions in organic CAPEX are driven by a strict process of prioritisation,where flexibility of cost and schedule for sanctioned and non-sanctionedprojects have been reviewed. Within US onshore activities, drilling andcompletion activities are being halted to produce the volumes at a laterperiod, reducing investments significantly for 2020.

These cost reductions come in addition to the already announced suspensionof buy-back under the share buy-back programme until further notice. Thesecond tranche of around USD 675 million, including the Norwegian Stateshare, intended to be launched from around 18 May to 28 October 2020, willnot be executed as previously planned."Equinor is in a strong financial position to handle market volatilityand uncertainty. Our strategy remains firm, and we are now taking actionsto further strengthen our resilience in this situation with the spreadof the corona virus and low commodity prices," says presidentand CEO of Equinor ASA, Eldar Stre"We have implemented measures to reduce the risk of spreading thecorona virus and have so far been able to maintain production at all ourfields. Safe operations remain our first priority in this situation,"added Stre.

The announcement follows news last week that Equinor established a temporarycorporate project to handle both short-term immediate response and long-termimplications of COVID-19. The project will be headed by EVP Pl Eitrheimreporting directly to Eldar Stre.

Equinor has already implemented measures to limit the spread of the Coronavirusand to ensure business continuity, including reducing and delaying non-criticaltasks at fields and plants, implemented procedures for working from homeand taken strict travel restrictions and quarantine measures.Equinor ASA operates a number of offshore wind arms off the coast of theUK and Germany. Last year it securedContracts for Differencefor three projects it is developing with SSE Renewables. The projects areto have a combined capacity of 3.6 GW and are located more than 130 kmoff the east coast of the UK, in the North Sea. The company is also developingthe HywindTampen floatingoffshore wind farm. The array is designed to reduce emissions from oiland gas production. It is also developing projects in Poland and the UnitedStates.

By 2026, Equinor expects its renewable production capacity to stand at4-6 GW, a ten-times increase on its current capacity. By 2035, the companyexpects to further increase its installed renewables capacity to 12-16GW, depending on project opportunities.

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Equinor reveals $3bn COVID-19 action plan - 4C Offshore