Equinor Q1 2026 Earnings Call - Record Production and Trading Uplift Offset by Geopolitical Volatility

Alejandro Vigil, Analyst, Santander0: Ladies and gentlemen, thank you for standing by. Hello, welcome to Equinor Analyst Call, Q1 conference call. I would now like to turn the conference over to Bård Glad Pedersen, Senior Vice President and Head of Investor Relations. Please go ahead, sir.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, operator. Good morning to all. Welcome to the presentation of Equinor’s first quarter result. As usual, I’m here with our CFO, who will take us through the results and then take your questions. We plan to complete the session within 1 hour. With that, Torgrim, I hand it to you.

Alejandro Vigil, Analyst, Santander3: Well, thank you very much, Bård, and good morning and good afternoon to all of you. Thank you for joining us today. This quarter, war and conflict, first and foremost, are impacting people in a severe way. Energy markets are also fundamentally shifting, and we have a particular role in providing reliable energy. Against this backdrop, I’m glad to report excellent operational performance with high regularity, new fields on stream, and in this quarter, we delivered our highest production ever. This is important for energy security and for our investors. The war in the Middle East is creating high volatility and imbalances in the market. It is not clear when this conflict will be resolved or how long it will take to restore infrastructure in the region, or what the lasting impact to the markets will look like.

We will focus on what we can control and influence, maintaining cost control and capital discipline and being a reliable supplier of energy, delivering all of this in a very safe manner. A good example of this is the Gullfaks field right now. Their oil is flowing into shuttle tankers bound for European customers just as it has done for steadily 40 years. When we started the Gullfaks field in 1986, we expected to produce 1.3 billion barrels. We have now passed 2.5 billion, and we are still counting. The world needs energy it can trust, the Norwegian continental shelf is a stable oil and gas province that continues to deliver above and beyond expectations. Over to the results. This quarter, we delivered record high production, 9% up from the same quarter last year.

High regularity and new fields on the NCS, combined with record high production in the U.S., contributes to this growth. With this, we capture value from higher prices and our trading business captures value uplift from increased volatility. This quarter, the adjusted operating income was $9.8 billion, and our net income was $3.1 billion. Year to date, our cash flow from operations after tax is $6 billion. An increase in collaterals supports strong trading results during volatility, but reduces our cash flow in the quarter. I will revert to this later. Our adjusted earnings per share was $1.48, positively impacted by strong results on financial items. On the NCS, we made seven commercial discoveries, and in January, we were also awarded 35 new licenses.

With this new acreage and strong exploration results, we will continue to be a reliable energy supplier. In Brazil, we started drilling at the Raia gas field, which we expect to be on stream in 2028. Portfolio optimization continues to deliver value, and this quarter we received the first quarterly dividend of $150 million from Adura. To capital distribution. For the quarter, the board approved a cash dividend of $0.39 per share and a second tranche of the share buyback of up to $375 million. This is in line with what we indicated at our Q4 presentations. At that time, we expected to lean on the balance sheet in 2026 to maintain stable investments and competitive capital distribution. Higher prices will strengthen our cash flow, but there is still significant uncertainty.

Competitive capital distribution remains a key priority for us. As always, safety is our top priority, and our safety performance has steadily improved over time. This quarter, we have, however, seen an increase in the number of incidents, and we must continue our work to improve safety and ensure everyone working with Equinor returns home safely every day. In the quarter, we produced more than 2.3 million barrels per day. This is an all-time high, up 9% compared to same quarter last year. We are on track to deliver on our guidance of a 3% production growth for the year. Production on the NCS was up 10%, mainly driven by high regularity across the portfolio and ramp up of Johan Castberg, Halten East, and Verdande. In the U.S., we had record high production driven by Caesar Tonga offshore and our U.S. gas position onshore.

Outside of the U.S., our international production also increased, driven by Adura and Bacalhau, but it was partly offset by our reduced ownership in Peregrino. Power production was stable at 1.4 terawatt-hours. To the financials. E&P Norway’s adjusted operating income totaled $7.7 billion pre-tax and $1.7 billion post-tax. This reflects the high production and strong price realization. Crude qualities that can be used for jet fuel and diesel have seen stronger differentials, and we have benefited from this at Gullfaks and Johan Sverdrup. Normally, crude from Johan Sverdrup trades at a slight discount to Brent, but we are now seeing a premium of $5. In March, we sold cargoes at a $13 premium from Johan Sverdrup.

Our E&P International results reflect increased production and some overlift in the quarter and are impacted also by high depreciation in Adura. Results for the U.S. are driven by record high production and strong realized gas prices, particularly during the cold spell at the start of the quarter. MMP delivered close to double our quarterly guidance, $787 million before tax, mostly due to strong products and U.S. gas trading. The MMP results demonstrates how we continue to capture value from a volatile market. This is the first quarter where we report power as a separate segment or as a segment, combining renewables, flexible power, and power trading. The result came in close to zero, with strong contribution from the power trading business. Adjusted operational cost and SG&A was up 9% compared to the same quarter last year.

Underlying OpEx and SG&A, including portfolio changes, was down 6%. Adjusted for currency, it was down more than 10%, which was the ambition we set in February. We deliver cost reductions even if we have more fields on stream and we are growing production. This quarter, cash flow from operations after tax was $6 billion. In addition, I want to highlight two points. First, we have a cash inflow of around $800 million from a positive price review settlement. This is cash in, but it is not included in the cash flow from operation for the quarter. Second, we have, you know, put in cash collaterals of almost $900 million. This is to be expected during times of volatility. It supports strong trading results. However, it do reduces the cash flow from operations in the quarter.

There is a net increase in working capital of 800 million NOK in the first quarter. We paid two tax installments on the NCS this quarter, totaling 4.2 billion NOK. Next quarter, we will pay three installments of 20 billion NOK each. In June, we will determine tax payments for the second half of this year and the first half of 2027. Organic CapEx for the quarter was 3 billion NOK, in line with our CapEx guidance for the year. We have a strong cash position of 20 billion NOK. Our net debt ratio decreased to 15%. Higher prices will impact our outlook for cash flow and net debt towards the end of the year. In February, we expected a cash flow from operations of 16 billion NOK after tax in 2026.

This was based on a scenario with $65 Brent and a $9 per MMBtu for European gas. We see large movements in forward prices, you know, on a daily basis, and there is significant uncertainty, making it hard to predict our cash flow for the year. However, if we assume that Brent averages $85 per barrel this year and European gas prices of $13 per MMBtu, we expect the cash flow from operations to be around $8 billion higher for 2026. At the same time, our future tax liabilities will increase with around $4 billion due to the tax lag in Norway. This is when we measure it compared to what we expected in February.

With higher prices, we no longer expect to lean on the balance sheet this year. With the scenario of $85 oil, we expect our net debt ratio to remain fairly stable through the second quarter when we will recognize the state’s share of buybacks for 2025 as net debt. We expect it to reduce to somewhat below 15% during the second half of the year. Our guidance presented in February remains stable. There are no changes to that. For 2026, we expect $13 billion in organic CapEx and around 3% growth in oil and gas production. By that, I would like to say thank you very much for your attention, and I leave the word back to you, Bård, for the Q&A.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, Torgrim. We will then start the Q&A. Let me remind you that if you want to sign up to ask a question, you can press star 1 on your phone. We have a good list already. We’ll start with Alejandro Vigil from Santander. Please, Alejandro, your line should be open.

Alejandro Vigil, Analyst, Santander: Questions for the year. You have reiterated the NOK 1.5 billion share buyback today.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Alex, Alex. Sorry.

Alejandro Vigil, Analyst, Santander: What? Yes.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Sorry, can you hear me? We missed the start of your question because the line wasn’t open in time. Can you start over, please?

Alejandro Vigil, Analyst, Santander: Okay. Yeah. Yeah, no problem. It’s in terms of the share buybacks for the year, the guidance of $1.5 billion. This is already fixed or depending on the commodity environment, if in the second half of the year we have these higher energy prices, you will be in a position to update, to increase these buybacks. That would be the first one. The second one is about your views about the European natural gas market. We have seen, you know, relatively, I would say, relaxed energy market in Euro with forwards also relatively low versus, you know, the expectations of the situation in the Middle East.

If you can share with us your view about the situation and the outlook for the second half of the year. Thank you.

Alejandro Vigil, Analyst, Santander3: Thank you very, very much, Alejandro. First on capital distribution. We communicated at the fourth quarter, you know, a $0.39 per share and a share buyback of $1.5 billion for the years. There’s no change to that guiding. When we set that sort of we were, you know, planning to lean on the balance sheet for this year, as I have said, to remain competitive. Clearly there’s still a lot of uncertainty around this, so it is way too early to have a discussion on that. What I can say is that we expect not to lean on the balance sheet for the rest of the year with the current price outlook.

Normally we do announce the dividend and share buyback, you know, at the fourth quarter presentation and, you know, that should be the starting point for any discussions around this. From the AGM, we have the mandate to change during the year, but that is not the normal approach as such. With all this uncertainty around us, you know, important for me to say that any share buyback beyond sort of the base will have to be based on money that we have already earned in a way. This is, you know, clearly too early to have a discussion on that topic. What is important for me to say is that being competitive in our capital distribution will have priority in the capital allocation going forward.

That was the first question. Let me see. The second one was on the natural gas market. Yeah, it’s a very important question. At the outset, when we started this year, clearly we expected a softer gas market for 26 and 27, based on more LNG coming to the market. You know, with the closing of the Strait, 20% of that global LNG is shut in. The situation is very different.

The main attention has been on the oil market, but I think equally important is actually the natural gas market because when the Strait of Hormuz opens, you know, we do believe that it will take, you know, maybe half a year for oil to get back to normal. For gas, it will take much longer. QatarEnergy has said that 70% of the export capacity from the Gulf is damaged and will take 3-5 years to repair as such. We currently we don’t see that glut of LNG through this decade as sort of we were expecting just half a year ago.

This is a little bit of a topic that, you know, clearly we are very occupied with. I do think the world will see this more clearly in a bit. When it comes to the European situation in itself, I mean, the storage levels are at 30% currently. That is 6% below season normal. In the sort of the curves or also the market doesn’t give incentives to inject for the time being. We believe that, you know, gas storages will likely not reach the 80% target that is set. Meaning that going forward, the European gas market will be vulnerable, you know, for weather events, for operational issues.

When you, in addition, add that sort of there is 32 BCM of Russian gas that will leave the market over these 2 years, it’s clear there is quite a lot of additional LNG that needs to come to Europe to satisfy the necessary demand. Clearly an area to watch. We take the role as a reliable energy supplier extremely important, for us it’s important to produce at maximum and deliver natural gas to Europe in a situation like this.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, Alejandro Vigil, for your question.

Alejandro Vigil, Analyst, Santander3: Thank you. Bye.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you. The next one is Biraj Borkhataria from RBC. Biraj, please go ahead with your question.

Biraj Borkhataria, Analyst, RBC: Hi there. Hopefully you can hear me. Just had one question, and it’s about your Ørsted holding. You’re obviously now kind of in the black or close to the black on the investment, you’ve moved from not wanting a board seat to then suggesting you’d want a board seat and then not nominating a board member. I just want to understand, you know, do you still see this as a long-term strategic holding, as you previously said, or has something changed here? Then related to that, are you in discussions around a, you know, potential JV with them? Should we expect an update with the CMD? Thank you.

Alejandro Vigil, Analyst, Santander3: Thanks, Biraj. There is no change in the way that we view sort of our ownership position in Ørsted. We see ourself as a long-term industrial owner. We do believe, as we have said earlier, that this industry is now coming out of its first crisis, and there is consolidation needed. We do believe that a collaboration between the two companies has the potential to create shareholder value, both for Ørsted’s shareholders and Equinor’s shareholders. This remains firm. Ørsted is a great company. What I would like to say is that when it comes to board position, you know, clearly the timing for that needs to be right. We informed Ørsted that we would not nominate a board member this year.

You know, our, you know, approach to this ownership is the same, a long-term industrial owner.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, Biraj. Next one is Alastair Syme from Citi. Alastair, please, your line is open.

Alastair Syme, Analyst, Citi: Thanks both. Can you talk a little bit about activity levels in the U.S. onshore? Appreciate you know, this is a non-operated position, but, you know, how many rigs running in Eagle Ford and Marcellus, and any thoughts on ambitions to increase? Then as a follow-up, I think later on this year, you know, Germany’s looking to move forward with its tenders on 9 GW of gas-fired power. Is this a tender that might fit with Equinor’s strategy in this area? Thank you.

Alejandro Vigil, Analyst, Santander3: Okay. Thanks, Alastair. Our onshore position in the U.S. is now fully concentrated in the Marcellus play, and we are not operating any longer. We are together with EQT in Marcellus. That produces, you know, very well. Production there increased by 17,000 barrels per day, and we are now at 320 barrels per day. That is good, and EQT is a good operator. This is, as you know, the area in the U.S. with the lowest break even, around $1 for that production, well situated in sort of future demand to data centers and gas to power and all of that.

It remains a very strategic asset for us. When it comes to offshore wind and, you know, auctions in Europe, I would say that Europe in general is an area where clearly there is quite a bit of support for this, driven by energy security now much more than decarbonization. I just want to repeat what we said at the fourth quarter, that our priority within the renewable space is to finalize and conclude the projects that we have under development in the U.S., in U.K. and Poland. The bar for further capital commitments into the offshore wind space is very high, and that also goes for the Ørsted position.

Alastair Syme, Analyst, Citi: Talking. My second question is actually on the gas-fired power in Europe, sorry, in Germany, rather, but not offshore wind.

Alejandro Vigil, Analyst, Santander3: Maybe I misheard you, Alastair. Yeah, no, I mean, we have nothing particular to mention in that regard. Clearly we do see that Europe and Germany in particular needs to sort of invest into the sort of the electricity, you know, system and grid. We follow that situation clearly.

Alastair Syme, Analyst, Citi: Okay. Thanks very much.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Okay, thank you, Alastair. Next one on my list is Teodor Sveen-Nilsen from SpareBank 1 Markets. Teodor, please go ahead.

Alejandro Vigil, Analyst, Santander2: Good morning to you, and thanks for taking my questions. Two questions from me. First on price differentials. We know that that was, you know, a pretty good realized oil price in Q1. In Q2, we have, of course, seen even higher dated Brent prices. Just wonder if you can share what you’ve seen on the realized prices for specific cargoes so far in Q2. Second question, that is on the potential postponing maintenance the upcoming summer season, the upcoming maintenance season, given the high energy prices we currently are seeing.

Alejandro Vigil, Analyst, Santander3: Thanks, Teodor. Strong price realizations in the quarter. First of all, you know, we do not hedge our production, neither on the gas side or nor on the oil side. We want to be exposed to the volatility as such, and that is what we benefit from in this price environment. When it comes to the oil on the NCS, we achieved close to a 3-dollar premium to Brent in the first quarter. Normally, we trade at a discount to Brent in general. This is driven by a few things. One is that the demand for certain qualities have really increased because many of them replace well sort of the Middle Eastern quality.

As an example, Johan Sverdrup now trade at a $5 premium to Brent. Normally, it is a discount. We actually sold cargoes at $13 premium to that. Johan Castberg, the new one, is also another one. We’re sort of we had premiums above $20 actually to difference. Gullfaks is a third one. Clearly we are able to take out quite a bit from the differentials. You know, there has been quite a bit of difference between sort of the physical delivery, you know, the dated versus the front month, and that has moved up and down, the differential was very high in March. We delivered or we sold or lifted a lot of volumes in March as such.

It’s an example that sort of through trading and through marketing, we are able to take out value through sort of dislocations in the market. Going into April and all of that, it’s too early to be specific, but clearly, the demand for sort of our oil is, you know, still very high. What we have seen is sort of that the curve has calmed up somewhat. The differentials between, you know, the physical delivery and front month is less than it was, you know, in March as well. We’ll have to wait and see, Teodor, on where this end. We will be specific on price realizations in the consensus invite to the quarter.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: The second quarter on.

Alejandro Vigil, Analyst, Santander3: Yeah. Oh, yeah, yeah. Thanks, thanks, Bård. Yeah. The answer to that is no, Theodore. You know, maintenance programs on our installations are major industrial projects that take a massive amount of planning, involvement of suppliers. Clearly, we do not want to disturb any of that. The most important is to do that effectively and safely.

Alejandro Vigil, Analyst, Santander2: Understood. Thank you.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, Teodor Sveen-Nilsen. We go to the next question, and that is Henri Patricot from UBS. Henri, please, go ahead.

Henri Patricot, Analyst, UBS: Yes. Thank you, Bård. Hello, everyone. Two questions from my side. The first one, just on the production, you have very strong performance in the first quarter, but you’ve kept the guidance unchanged at plus 3% for the year. Just wondering to what extent there is, you know, upside to the rest of the year because it’s, you know that it was a slightly higher production on average in 2025 versus Q1 2025. Still the guidance for 2026 implied, you know, drop over the rest of the year. Just trying to understand what’s driving that. Secondly, you mentioned the cost reduction.

Thinking you could elaborate on what’s working for you in terms of driving cost reduction, exactly which part of the business. Thank you.

Alejandro Vigil, Analyst, Santander3: Thanks, Henri. First, on the production guidance, 3% production growth, we expect for the year. In the first quarter, you know, clearly we are very proud of what the organization has done on the quality of the operations. Very high production efficiency and regularity, and the new fields coming in are performing well, and ramping up as they should. In the first quarter, we have produced more than we had in our plans. But, you know, it is way too early to make any changes to the guidance. We are moving into the second and third quarter, where we will have turnarounds. In the second quarter it’s a 75,000 barrels per day, you know, program. In the third quarter, a 40,000 barrels per day.

We all know that that contains some uncertainty as well. I can leave with you that the production has, you know, gone very well in the first quarter. On cost, there is a 9% growth in reported cost that is driven by, you know, record production and more fields in production. That is natural. However, you know, we have the transportation costs have increased, you know, driven by shipping rates and also energy costs, and also currency. The strengthening of the Norwegian kroner has a certain impact on that.

If you sort of take away, you know, those type of elements that is not related to underlying performance, and also we have royalties in there, the underlying there is a cost reduction of 6%. That is without currency changes actually. Meaning that we are putting more fields in production, we are growing our production while we are reducing the cost. This is just a result of a systematic work over many years. Associated comment is that the unit production cost, we expect that to be reduced from $6.6 per barrel to $6 during the year. You know, just improving the quality and underlying profit of our earnings.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, Henri. Next one in the line is Matthew Lofting, from JPMorgan. Matt, please go ahead.

Matthew Lofting, Analyst, JPMorgan: Hi. Thanks for taking the questions. Torgrim Reitan, given your earlier comments on gas and hopefully now a better balance sheet outcome for 2026, you were very clear earlier around needing to maintain the baseline on maintenance, et cetera, which makes full sense. I just wondered whether you see the merit yet in higher CapEx to fund an acceleration in Norwegian or non-Middle East, as it were, located production, or is it simply too early to be able to take that view and warrant any capital allocation revisions at this point? Then secondly, I just wanted to ask you about production. I mean, Q1 looked very strong in terms of the operational performance. I think you termed it earlier as putting the company on track for 3% full year growth rather than ahead.

Do you see any upside emerging to the 3% growth for this year? Thank you.

Alejandro Vigil, Analyst, Santander3: Thanks, Matt. You know, in February, we guided on a significant improvement in the free cash flow, driven by both lower cost and a high-graded investment program as such. There is no, excuse me, there is no changes to that. We have a program that is very consistent with our production growth ambitions and so on. There are no news into that. What is very important for us when we consider the investment program is to see to that it is high-graded, that it has, you know, the maximum profitability that we can get out of the program, and that will remain the case even if sort of prices goes up.

I mean, we are living in seldom times with a lot of uncertainty. We need to be prepared for that, things can be very different again. We will remain disciplined. On production, it was a strong first quarter production, better than assumed in sort of the 3% guiding. It’s too early to do anything with it due to sort of uncertainty going forward and particularly related to the turnaround programs.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thanks, Matt. Next question is John Olaisen from ABG. John, please, your line is open.

John Olaisen, Analyst, ABG: Thank you so much for taking my question. Many of your competitors are talking a lot about international exploration going forward. You seem to be standing out as one of the companies that have reduced international exploration. If I’m right, you’re only planning for 2 exploration wells in 2026, and that’s 2 ILX wells in Angola. I just wonder if you could talk a little bit about your ambitions when it comes to international exploration and maybe a little bit about details about your drilling plans for 2026, please.

Alejandro Vigil, Analyst, Santander3: Okay. Thanks, John. Yeah, I think I’ll start with a little bit of highlights on how we think about international business. Over the last few years, we have streamlined that, you know, significantly into fewer countries and focusing on sort of where we see that we can create the most values. Clearly, we have done some divestments and acquisitions to support that. Currently, we are looking at higher international production growth, you know, reaching 950,000 barrels per day in 2030, and a growing cash flow, lower unit production cost, and lower CO2 emissions. Over the years, we have actually been able to make this into something better than a few years back.

Exploration is an integrated part of how we think about, you know, developing the international business. You know, the exploration will be first and foremost focused on areas where we currently are, you know, Brazil, Angola, U.S., to mention a few. This year it is a rather, you know, limited program focusing on Angola and ILX opportunities, you know, great opportunities though. Going forward, clearly, you know, focus will be more on Brazil, where, you know, you might be aware that we hold the neighboring lease to BP’s Bumerangue asset in Brazil, and also a couple of interesting prospects close to the Raia development further north as interesting. Those are concrete opportunities that we are developing, and then, like, there are more opportunities as well.

Exploration will have priority. Doing significant step-outs, you know, on frontier exploration beyond the countries where we are, we will be careful with.

John Olaisen, Analyst, ABG: Well, thank you. My second question is regarding Dogger Bank, as I noticed that Dogger Bank B has started production. I just wonder when do you expect Dogger Bank C to start production, and also what is the status of potential Dogger Bank D, E, et cetera? It is a fine question. Thank you.

Alejandro Vigil, Analyst, Santander3: Thanks, John. Yes. You know, there has been delays on Dogger Bank A, as you would know. That is now, you know, more and more getting back to where it should be. Dogger Bank B installation is on track, that is moving forward as planned. When it comes to Dogger Bank C, the transition pieces, you know, those things are ongoing. Those were actually completed. Those are actually done half a year ago. You know, we do expect Dogger Bank C to be completed, you know, around 2 years time as such.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, John. Next one on my list is Naisheng Cui from Barclays. Nash, your mic is open.

Naisheng Cui, Analyst, Barclays: Thanks, Bard, and good morning, Torgrim. Two questions from me, please. First, congratulations on record high production number, but could I ask about safety, please? I wonder if you could provide some color why the safety data in slide three of the presentation deteriorated during Q1. It’s not really a pushback from me, but I just want to hear Equinor’s plan to produce at a very high level in a safe and sustainable manner, please. The second question is on your new power segment. This is the first quarter that you officially have had this new power segment. I wonder what have surprised you both positively and negatively. Thank you.

Alejandro Vigil, Analyst, Santander3: Thank you. Thank you, Nash. Safety is our first priority, and if you look at sort of the development over the last years, it has been a very, very positive development, you know, for this. What we see recently is the sort of the things are flattening out statistically, and then we have seen some more incidents as such. But clearly we are seen as a very safe operator and I would say that sort of that I see no risks sort of this having an impact on production efficiency.

You know, an associated point is sort of the technical integrity of an aging, you know, fleet of platforms is something that we follow very, very closely, and that technical integrity is actually higher than sort of, you know, than it has been for many years. The underlying quality in the operations is very high, but this is something that we follow very, very closely. The new power segment reported, you know, close to zero this quarter. What we do see is positive development on underlying cost and business development activities and all of that. Then, you know, clearly a strong contribution from the power trading, you know, in the quarter. This is going in the right direction, and we are all looking forward to positive results in the future.

Naisheng Cui, Analyst, Barclays: Thank you.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thanks. Thank you, Nash. It’s Redburn, Fergus Mavor. Fergus, please, take your question.

Fergus Mavor, Analyst, Redburn: Brilliant. Thank you very much for taking my questions. Just one question from me today, please. I saw some press reports recently about awards being granted for the FEED studies at Bay du Nord, which is obviously an exciting project. I was just hoping you might be able to give us some color on where you are kind of on the project, what currently, what current timelines you’re working to, and when we might kind of expect an FID if the FEED projects go to plan.

Alejandro Vigil, Analyst, Santander3: Thank you very much. Bay du Nord is, you know, a very important development. This is a project that we have worked for quite a while, and it is now getting closer to a concept select, and that is what we plan for this year. This is a large development. We own 60% in the asset and sort of all together investment levels of $9 billion-$10 billion on a 100% basis. You know, production plateau a little bit below 200,000 barrels per day. Very importantly, with a low tax rate as such. This will have a significant contribution to cash flow from operations in the 2030s. Technology-wise, this is ready.

It is, you know, 500 km offshore. It is dark and it is cold. I would argue that as a company we do have certain experience in those waters.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, Fergus.

Alejandro Vigil, Analyst, Santander3: Great. Thank you.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you. Next is Paul Redman from BNP Paribas. Paul, please, your line is open.

Alejandro Vigil, Analyst, Santander1: Hi. Thank you very much. First question is just on cash flow this quarter. You had 2 big cash impacts. You had the collaterals, you had the price review. Can you just talk to us about how you expect these collaterals to play out through the year, whether you expect a reversal? On the price review, do we expect anything else later on the year? Secondly, on Ørsted, you talk about collaboration with the 2 companies. Is that collaboration with a 10% equity stake, or do you need a greater equity stake? Sorry, 1 last one with a clarification. You said $8 billion of CFO upside, I think at higher prices of $85 a barrel, $13 TTF. Can you just walk me through?

I don’t know whether my math is wrong. I’m not sure that works with your sensitivities, but happy to be proved wrong.

Alejandro Vigil, Analyst, Santander3: Okay. No, thanks. All right, there were at least three questions in here. Let me take the cash flow first and the collaterals. You know, collaterals is a function of volatility in the market, and it’s a function of that we really would like to take advantage of that volatility and trade it, and we don’t hedge and so on. As volatility increase, we need to put collaterals behind the trades that we make. In this quarter, collaterals increased by, you know, $900 million, which is just natural business. When volatility comes down again, collateral will be reduced, and that will sort of improve cash flow again. This is normal business.

I just want to give you a data point, and that is, you know, during the energy crisis, you know, with the war on Ukraine, at the maximum, we had collaterals of $10 billion, you know, in our balance sheet, enabling us to trade in an environment where very few could trade. We made huge, you know, returns on that, and we didn’t lose $1 in sort of that. This is what we do, and this is for us to be able to benefit from volatility both on the gas and the oil side.

On Ørsted, the collaboration, you know, I don’t want to, you know, be too specific on this, clearly the 10% ownership share that we have, we are satisfied with that, and there’s a high bar to commit more capital into offshore wind, and that also goes with the position in Ørsted. When that is said, we do believe that this industry will need consolidation to be, you know, to improve profitability and risk management as such. The last question was on the price sensitivity.

What I gave you was sort of specifics for 2026, which is the $8 billion in improved cash flow from operations if you assume $85 oil and $13 gas. However, you know, there is a tax lag related to we pay taxes with a 6 months delay in Norway. There is $4 billion that sort of, you know, it builds sort of tax liability for the future beyond 2026. We have in our material, you know, price sensitivities where, which we issue, and we say that with a $10 change in the oil price, that will change cash flow from operations with $1.2 billion, and a $2 on gas will lead to a $0.8 billion improvement in the cash flow from operations.

Those are sort of adjusted for the tax lag. I think that is maybe the difference in your calculations because those numbers are after tax and adjusted for any tax lag impact. I know this is complicated, but it is important to understand and Investor Relations will be more than ready to discuss this further with you later on.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, Paul. I can confirm the latter point. Next one on my list is Jason Gabelman from TD Cowen. Jason, please go ahead.

Jason Gabelman, Analyst, TD Cowen: Yeah. Hey, thanks for taking my question. Just one for me. As you think about the cash windfall you’re likely to receive this year and kind of declining production growth as you look out to the 2030s, is there any appetite to, you know, M&A, in order to increase the potential production growth opportunities you have into next decade? Thanks.

Alejandro Vigil, Analyst, Santander3: Thanks Jason. You know, the investment program that we have put in place and that we are guiding on enables us to actually build this business, you know, step by step, you know, beyond this decade. We are aiming for a production on the Norwegian Continental Shelf in 2035 on the same level as in 2020. Internationally, you know, we are growing our production towards 950,000 barrels per day in 2030. Our power business is also growing based on sort of, you know, the guided investments that we have. I mean, we are not dependent on M&A to deliver, you know, high quality growth through the next decade.

When that is said, M&A is an active tool that we use to high grade our portfolio. And I can give you a couple of examples. We have exited, you know, Nigeria and Azerbaijan, two countries, you know, clearly declining and we received, you know, a good price for that. We have made two acquisitions into Marcellus, in the U.S., creating longevity and a robust portfolio for the long term in the U.S. As heard, we have created, you know, Adura, you know, the company in the U.K. where we have sort of combined with Shell our upstream assets, significantly improving our cash flow and actually growth outlook as well.

My point being that going forward, you should expect us to continue to use M&A activity, actively to continue to high grade the portfolio, create value, and also provide longevity into the business.

Bård Glad Pedersen, Senior Vice President and Head of Investor Relations, Equinor: Thank you, Jason, for your question. This time we actually managed to get through all questions within the hour, so I’m sure that’s welcome on a busy day. Thank you all for your questions, for calling in. As always, the IR team remains available if there are any topics that you would like to follow up during the day or later in the week. Have a good day, everybody, and thank you for calling.