Equinor ASA

My name is Bård Glad Pedersen, and I am heading up investor relations in Equinor. Before we start, I want to give a few safety instructions to those of us here in the room. If an emergency situation should occur, the evacuation signal is a public address and voice alarm. Please note that we only evacuate if the voice alarms tells us to do so. Then please follow the signed fire exits and messages from the guards. Exiting is at ground level and please disperse safely away from the building and further notice will be given during normalization. Today, we will have two presentations here in the plenary session. It will be our CEO, Anders Opedal, and our CFO, Torgrim Reitan. After their presentations, there will be a Q&A for analysts here in the room, and all the members of the corporate executive team are here and ready to provide answers. Later after that, we will have three breakout sessions. One with Anders and Tore Grim. One with Kjetil Hove and Philippe Mathieu, the executive vice presidents for EPN and EPI. And one with Jens Öckland and Irene Rummelhoff, the EVPs for renewables and MMP. But before all of that, we will do, as we do in all Equinor meetings, we will start with a safety moment. This will be with our EVP for safety, security and sustainability, Janneke Nilsson. And just before I hand it over to Janneke, I will remind you that the presentations here today will include forward-looking statements and non-gap measures. Then we are ready to start, and I hand it over to you, Janneke.

And thank you to your board and good morning to all of you. In Equinor, safety and security is strongly integrated in our leadership and culture. And as Bo said, we start every meeting with a safety moment. Today, I would like to share a safety moment with you addressing the link between safety, security and operational performance. On the left, you see the serious incident frequency. At the end of 24, the SIF had reduced to 0.3, a reduction of 73% since 2011. Last year, we had the best safety result ever in the company. This demonstrates how systematic effort over time gives result. Still, we can never rest. Last year was marked by a tragic helicopter accident where we lost a dear colleague. It requires continuous effort to further improve to make sure all our people are safe every day. Preventing major accidents and serious security incidents is also important for energy security. Equinox gas supply has become vital for Europe's energy security, and being a trusted energy provider is a role we take very seriously. To secure our people and assets, we need to perform well within all elements of security, with extra attention to cybersecurity, infrastructure and business continuity. We regularly test our ability to handle accidents while maintaining production. By reducing serious incidents, we protect our people and also minimize production disruptions. We can also free up capacity to improve production efficiency, maintenance and asset integrity. This is reflected in our long-term positive trend on these parameters. In 2024, Johan Sverdrup and Troll delivered a combined production efficiency close to 95%. These elements are a result of systematic work to improve safety, security and operational performance, which directly impact the energy production and our ability to secure flow from producing assets to the market. There is a strong link between safety, security and operational performance. Safety and security is integrated into everything we do, no matter what energy we produce, where we are and who we work with. We have great people in the company and also great suppliers and partners. We work closely together with authorities and together we will continue to improve. making sure all people and assets are safe every day. Now, I would like to hand it over to Anders Operahl, our CEO, to take you through our capital market update. Anders, the floor is yours.

Yes, and good morning to all of you. It's really good to see you again. I've been looking forward to today. And Jannecke, thank you very much for the clear message on safety and security. Safety is my first priority and a clear commitment for all leaders and colleagues. Safety and security is the fundamental for everything we do, also the value we create. Today, I have four messages for you. First, we are positioned to deliver industry-leading returns. We are doubling our production growth, and we are increasing our free cash flow, and we are announcing a competitive capital distribution. We demonstrate a consistent strategic direction, adapting to changing markets and take clear actions to further increase value creation for shareholders. We expect to deliver above 15% return on capital employed all the way to 2030. Returns on capital employed is in many ways the most holistic KPI and we are well positioned to deliver on an industry-leading level, on a lower price than we used last year. We expect more than 10% growth in our oil and gas production from 2024 to 2027. We have increased our production outlook by progressing on our projects and high value transactions. Over the next three years, we now expect $23 billion in free cash flow. This is a significant improvement achieved by optimizing the portfolio, cutting CAPEX and addressing cost. The stronger free cash flow enables competitive shareholder distribution, an important priority for me and a clear commitment from the board. For 2025, the board has decided on a total capital distribution of $9 billion. It represents a two cents increase in the quarterly cash dividend and $5 billion for the share buybacks. In 2024, we took actions to improve short-term financials and setting us up for further growth. I'm proud of our operational performance, industrial progress, portfolio shaping transactions and strong trading results. All this is made possible by our great people, and I would like to use this opportunity to thank all our employees for their dedicated efforts to create these results. Through strong operational performance, we delivered returns on capital employed of 21%. The cash flow from operations was $18 billion after tax. higher than we indicated at the start of the year. And our capital distribution was exactly as promised. Strong production, especially from the Norwegian continental shelf, contributed to the results. In our international upstream business, 2024 was a year of change, with large transactions, improving growth and cash flow. In our renewables and low carbon solution business, we adapted to market challenges. Across our segments, we spent last year optimizing portfolio of assets and projects for strong value creation. We face three global trends impacting energy markets. Energy demand is growing. We expect higher production growth. Market and political uncertainty is high. We are robust and set up to create value from volatility. The pace of the energy transition is uneven. We have the flexibility to adapt. We are well positioned to create value in this context. First, energy demand is growing. Global oil demand grows and expected above 100 million barrels through this decade. For gas, we expect demand to increase and stay above today's level all the way to 2050. Asia drives demand short term, and we see U.S. increasing going forward. This impacts the tight European gas market. lower storage levels than last year, creates potential for higher prices and volatility. And the market balance will be driven by weather, renewables production, as well as competition for LNG. For power, we foresee significant growth towards 2050, creating renewables and flex power opportunities and reduced demand for hydrocarbon over time. The second trend is the geopolitical tension, tariffs and increased commodity markets and certainty. Oil demand is increasing, but slow growth in Asia and higher supply from non-OPEC countries adds uncertainty to the price outlook. Our response is not new, but highly effective. Robustness and resilience. We combine a strong financial position with a competitive and flexible project portfolio. Our marketing and trading business is also well positioned to capture value from volatility and market inefficiencies. Through the last decade, with all the volatility and uncertainty we experienced, we delivered returns well above peers. The third global trend is the uneven pace of the energy transition, moving fast in some markets, slow in most. Even the massive renewable growth is currently energy addition, not energy transition. Inflation, interest rates, supply chain issues and regulatory uncertainty reduces the pace of the energy transition. Segments like offshore wind and hydrogen are impacted. We adapt to these realities, both facing and prioritizing investments to maximize returns. To underline that value creation is at the core of our decision making, we now retire the gross Calpex ambition. In our view, the energy transition must be balanced and financially sustainable. We are increasing our free cash flow generation and expect to deliver $23 billion from now to 2027. From 2024 to 2027, we expect a free cash flow growth above 50%. The largest driver is an $8 billion COPX reduction. We reduce our investments in renewables and low carbon solutions by 50% in this period compared to last year's outlook. In addition comes project financing of Empire Wind and the establishment of a joint venture in the UK. On operational cost, we take forceful action to offset inflation and maintain a stable cost level, all while growing production. This drives long-term resilience. On top of this comes our continuous improvement and scaling of technology. We apply AI across exploration, concept selection, operation and maintenance, and create significant value. As an engineer, I could, of course, talk a lot more about it, but let me just give you one example. We use AI in the planning of the Johannes Sverdrup tree project, and then we generated over a million alternative field layouts and well trajectories. And this added $12 million in value to the project. So, well, not that big, but remember, we have more than 50 projects on the Norwegian continental shelf, and the true value creation comes when we do scale this up to all the projects. The improved free cash flow strengthens our capacity for competitive shareholder distribution. For 2025, total distribution will be $9 billion. A competitive, predictable and growing cash dividend has the highest priority when I allocate capital. Our dividend policy is to grow the annual cash dividend per share in line with underlying earnings, and this remains firm. Last year, we set an ambition to grow the quarterly cash dividend with two cents on an annual basis. We delivered on this in 2025, and you should expect us to continue doing that in the coming years. We have a clear commitment to deliver competitive capital distribution, and we will use share buybacks to do this. The stronger free cash flow we present today provides substantial capacity to deliver. We have previously indicated a base level of $1.2 billion annually in share buybacks. This is not sufficient to be competitive in the current environment. We therefore remove this as a guiding because we plan to do more. To have flexibility to adapt and make sure we are competitive, we are not providing an exact guiding on long term level. We will revert to this for the individual years. We have a clear commitment to be competitive, a strong track record and a stronger free cash flow supporting distribution capacity. We now expect to grow our oil and gas business and production by more than 10% by 2027. We also increased our expected production in 2030 to around 2.2 million barrels per day, up from 2 million in last year's outlook. We continue to cut CO2 emissions from our production to reduce cost and increase value creation. Our organic reserve replacement ratio came in above 110 last year, and including transactions, we achieved more than 150%. With this, we strengthen our long-term value creation. Our international upstream segment is on track to become close to a million barrels per day business. And we expect the free cash flow to grow from $1.3 billion last year to more than $5 billion in 2030. The Bacalao FBSO is sailing to Brazil, expected on stream later this year. We closed several large transactions focusing on our international portfolio in core markets. In the US, we deepened our onshore gas position. This increased our production outlook with around 80,000 barrels oil equivalent per day in a growing market. And after 40 years here in UK, we write the next chapter. creating the largest operator together with Shell. We supply one third of UK's gas, and given the winter season, let me assure you, we can provide stable supply of gas for decades to come. And let's move to the source of that gas, the Norwegian continental shelf. I know you are interested in Johan Sverdrup. Sverdrup delivered record oil production last year, more than any single field, any single year, on the Norwegian continental shelf ever. At my recent visit at the Sverdrup field, I got an update from our people describing how they systematically keep production high and increase recovery, and they continue to succeed. We now expect 2025 Sverdrup production to be close to the level of the last two years. And with extensive recovery effort, including the phase three project, we increased the recovery factor ambition to 75%, up from 65% when we took the investment decision. We continue to invest and develop our NCS portfolio. With new volumes from 19 projects, we maintain high and stable production towards 2027. Actually, a slight increase. We continue to improve recovery around our hubs. Last year, Toll had record production after almost 30 years in production. and we extend the plateau of our gas plants, Kolsnes and Hammerfest LNG. We expect to maintain production in Norway at a high level of 1.2 million barrels per day all the way to 2035. This is driven by projects now in planning or execution, increased recovery efforts and infrastructure-led exploration. These are volumes with short lead time, low cost and low emissions. We expect to deliver around 12 billion dollars in cash flow from operations after tax all the way to 2035. We invest in renewables and low carbon solutions to create shareholder value for decades to come. We are taking firm actions in response to challenges in the offshore wind industry. To increase value creation, we have high-graded the project portfolio and reduced spending. Towards 2027, we expect to invest around $5 billion in these segments. The value-driven prioritization impacts the pace of growth, and we expect a production capacity at 10 to 12 gigawatt installed in 2030, including our share in Ørsted and Skartek. This is down from 12 to 16 gigawatt. So far, we are delivering above 10% equity return on our current in renewable assets in operations. Our focus on returns is persistent, and we will continue developing our portfolio to deliver 10% equity returns full cycle. This includes the development of the Empire Wind project in the US, a project in a challenging market with returns under pressure and uncertainty. The project execution is progressing well. We are working to de-risk the project. Last year, we won a 30% higher strike price and secured financing of the project. All future CAPEX is covered by the project financing and the tax credits. Moving forward is the best way to create and protect shareholder value. Not doing that would impact cash flow negatively due to substantial cancellation fees. We still plan to bring in a partner at the right time, but reflecting the uncertain timing of this, our CAPEX and cash flow outlook presented today do not assume any farm down. This is a potential upside. As of now, expected lifecycle returns are close to the double digit portfolio requirement we present today. In low carbon solutions, different technologies are progressing at different pace. Carbon capture and storage projects have many similar traits as oil and gas, and our capabilities are in place. The regulatory framework are progressing and customers are interested. We are ready, but will only execute if we get long-term commitment from our customers. We have accessed storage capacity of 60 million tons of CO2 per year, adding 20 million last year, and maintain our ambition. We have a focused strategy to deliver competitive shareholder returns based on three pillars, oil and gas, renewables, and low-carbon solutions. Building on our strength and technology leadership, we invest to develop a resilient business and create long-term value as energy markets change. We see power from renewable sources and low carbon value chains as an important part of future energy systems. We have the people, skills and ability to build industry over time. Taking responsibility for cutting our own emissions is our most important contribution to address climate change. We have an industry leading low level of emissions from production and maintain our ambition of net 50% reduction by 2030. Continued effort to cut emissions while producing oil and gas reduces cost, increases returns and increases the competitiveness. As I said earlier, the energy transition is currently moving slower than expected. We adjust to the market situation and opportunity set. Today, we make the following changes. We lower our renewables ambition for 2030. We introduce a range for our net carbon intensity ambitions. And we retire our gross CAPEX ambition. But our strategic direction remains the same. We continue to reduce emissions and build profitable business in renewables and low carbon solutions towards our net zero ambition. So to end, let me remind you of the key takeaways. First, we are positioned to deliver our industry leading return. We are doubling our expected production growth. We are increasing our free cash flow. And finally, this enables us to deliver a competitive capital distribution for 2025. And as demonstrated today, we have substantial capacity for 2026 and beyond. So I look forward to your question later when my great colleagues in the Corporate Executive Committee will also join. But first, I will hand over to our CFO, Togrim Reitan, and he will give you more details on our outlook and also, of course, the fourth quarterly results. So, Togrim, the stage is yours, and thank you very much for the attention.