Equinor ASA

Good day and welcome to the Equinor Analyst School first quarter results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. For operating assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Board Gladg Peterson, Senior Vice President and Head of Investor Relations, to begin the conference. Board, over to you.

Thank you, operator, and thank you all for calling in for the presentation of Equinor's first quarter results. I'm here together with our CFO, Torgum Reitan, As usual, he will give an introduction about our results, and then we'll open for the Q&A. I know it's a busy reporting day, and we will keep the session within one hour.

So with that, I hand it to you, Tore. Thank you, Bård, and good morning, everyone, and thank you for joining. I know you are interested in the situation we are facing on Empire Wind. I will address that. But let me start by saying that today we are reporting strong financial results for the quarter. Gas production was particularly strong in Norway and the US, capturing higher prices. We reported adjusted operating income of $8.6 billion before tax and an IFRS net income of 2.6. Cash flow from operations after tax came in strong at 7.4 billion. Adjusted earnings per share was 66 cents. Earnings per share based on net income was 97 cents, impacted by currency effects and book value gains. We are in turbulent times. The significant increase in tariffs and risk of trade wars creates uncertainty and volatility in the global economy and global supply chains. The uncertainty, combined with increased production from OPEC, led to a drop in oil prices. It has recovered somewhat, but uncertainty do prevail. These circumstances confirm the importance of a strong balance sheet and resilience toward lower commodity prices. We are well prepared for market volatility. We have a strong cash position of around $25 billion, and our net debt ratio is below 7%. Strong cost control and capital discipline remain a priority for us. For a quarter, we deliver capital distribution in line with our CMU guiding. The board approved an ordinary cash dividend of 37 cents per share, and a second tranche of share buyback of up to 1.265 billion, including the state's share. In total, we expect to deliver $9 billion in capital distribution for the year. Before I get to our financial results, I want to address Empire Wind. And I want to be clear. This situation is extraordinary and unprecedented. Equinor has over decades built a material position in the U.S., you know, a core country to us. Since the early 2000s, we have invested around $60 billion, mainly within oil and gas. In the first quarter, we produced around 425,000 barrels of oil equivalents per day and delivered earnings of more than $500 million. During recent years, we have, on the invitation from authorities, also invested to build a renewable business in the U.S. In 2017, we signed the federal lease for Empire Wind after being successful in a bid round, hosted by BOEM. Since then, we have worked to mature and realize this 810 megawatt project. The site assessment plan for the project was approved back in 2018. Then we submitted a construction and operations plan in January of 2020. This plan was approved by the Department of Interior in February of 2024. It was not a rushed process by any means. It took more than four years from submittal to approval after extensive documentation, consultations and review. So based on this approval and an improved offtake contract with New York, we took a final investment decision and started construction in the spring of 2024. Project financing is a prerequisite for Empire Wind, and this was also secured last year. Empire Wind has already passed 30% completion. The project invests more than $1.2 billion in supply chains across the U.S., and so far, around 1,500 local workers have been involved in the development. On 16th of April, we received an order from BOEM to halt all ongoing activities related to the Empire Wind on the outer continental shelf. We have complied with this order. However, the order did not include any information about the alleged deficiencies in the approval. And our position is clear. stop work order is unlawful. It is disregarding applicable law and the prior reviews and the valid approvals of all agencies, including BOEM and NOAA. So Equinor has invested in good faith. And this is no question about the sanctity of contracts, the legal protections and rights afforded through lawfully issued permits, and the security of investments based on valid approvals granted in the US. Empire Wind is an important project for Equinor, and we believe it contributes positively to New York and the United States. So we are seeking to engage with the administration to clarify the situation, and we are considering our legal options. In our first quarter report, the halt order is treated as a subsequent event. The current book value for Empire Wind is $2.5 billion, including the South Brooklyn Marine Terminal. The book value reflects our investments to date in the project. Of this, around $1 billion is covered by equity injections. The remaining 1.5 billion is drawn from project finance. Equinor U.S. Holdings has provided guarantees for the equity commitment in the project financing. If the project is forced to stop due to the U.S. administration's decision, the 1.5 billion dollars will be repaid from the equity commitment to the project finance lenders. In addition, Various companies within the Equinor Group have exposures related to the Empire Wind project, including guarantees and termination fees towards suppliers. This is an aggregated gross exposure on an Equinor Group level of USD 1.5 to 2 billion. This is before taking into account tax and any potential reductions from negotiations, settlements, legal actions and damages, and rules of limitation of liabilities. One thing is clear. Our priority is to protect the value for Equinor and our investors. And I'm, of course, ready to take any questions on this during the Q&A. But now, let's go through the results for the first quarter. Safety. That remains a top priority, and we have a solid safety trend. This quarter, the series incident frequency was record low at 0.28. And the total recordable injury frequency was 2.2 per million hours worked for the last 12 months. We continue to learn from any incidents and work towards improvements. In the first quarter, we produced 2,123,000 barrels per day. We saw increased gas production and somewhat lower oil production than the same quarter last year, when it was extraordinary high. On the Norwegian continental shelf, we have good operations, and several fields have near historic high regularity, including Johans Vørdrup and Troll. NCS production was impacted by the shutdown of Hammerfest LNG. This quarter, Kastberg and Halten East started production. These fields at full production will contribute 150,000 barrels net to Equinor. For EMP US, we are seeing the positive effect of our increased non-op position in Marcellus. We have high production, and we are creating value from higher gas prices. For EMP International, production was lower, as you should expect, due to the divestment of Nigeria and Azerbaijan. We produced 1.4 TWh this quarter, and have announced that we will establish a new power business area that will go live from September. Now to our financial results. Liquids prices were lower this quarter, while gas prices were higher in Europe and the US. Storages in Europe ended the gas winter at 34% of total capacity, around 24 percentage points lower than last year. In the short term, we expect balances to be tight, and summer demand will be impacted by the need to fill storages in Europe. Uncertainty around Asian demand and potential supply disruptions may also cause further volatility. This quarter, adjusted earnings in E&P Norway totaled $7.4 billion before tax, driven by higher gas prices. Our international segments combined delivered more than $1 billion in adjusted operating income and around $500 million after tax, supported by higher gas production capturing higher prices in the U.S. I realized US gas price was actually $4.06, and this was stronger than Henry Hub. So it was a 74% increase from the same quarter last year. The EMP international tax rate was higher due to a one-off non-cash effect caused by the extension of the UK EPL period. M&P came in below the guided range, impacted by lower liquids and LNG trading results, and the drilling of two CCS wells. This is a one-off cost, and excluding these, we would have been close to the lower end of the range. The results of our renewables business reflect lower business development and early phase costs. Across our portfolio, we continue to focus on cost control and capital discipline. The reported adjusted OPEX and HDNA was up 11%. This was impacted by a change in over-underlift position in the quarter, increased transportation costs and royalties. And adjusting for that, the increase was 3%. At our CMU, we said that we are targeting flat cost levels for 2025, realizing improvements to beat inflation. This remains our target, but this quarter, Group OPEX and SGA came in around 3% above this ambition, primarily due to increased maintenance and one-off costs like the CCS wells. This quarter, our cash flow from operations was $7.4 billion after tax. We paid one NCS tax installment of $3.1 billion. Next quarter, we will pay two equal installments. Those will be the last payments related to the 2024 earnings. Remember, the Norwegian tax system has a dampening effect when it comes to lower prices. If prices are lower, 78% will be offset by reduced taxes, and investments are deducted immediately. As you know, there is a lag in the tax payment. We see through this when we decide on guiding and capital distribution. In June, we will decide the tax installments for the second half of this year based on our estimated 2025 full-year earnings. This quarter, we distributed $2.5 billion to our shareholders. Our ground in CAPEX was $3 billion, and our net cash flow was just above $2 billion. We have a solid financial position with around $25 billion in cash and cash equivalents, and our net debt to capital employed ratio decreased to 6.9% this quarter. Next quarter, the state's share of the buyback will be booked as a finance debt, impacting the net debt ratio by around 8 percentage points. The actual payment and cash flow impact will be in the third quarter. Finally, to our guidance, you know, we maintain the guidance we communicated at our CMU in February. So, by that, I'll leave the word to you, board, to take us through the Q&A. So, thank you very much.

Thank you, Torgrim, and we are then ready to start the Q&A. We have a good list already signed up, but let me just remind you that if you press star one on your phone, you will add your name to the list. The first question today goes to Theodor Nielsen in Sparebank 1 Markets. Please, Theodor.

Good morning. Thank you for taking my questions. First of all, how does it look like going forward? What do you expect we'll know?

Theodore, I'm sorry, but you are breaking up, so we are not able to hear your question. I suggest we take another one in the interest of time, and you will be the next on the list, and hopefully the line will work better then. So then, let's go to the next one on the list, and that is Biraj Burkattaria from RBC, and hopefully the line is better, Biraj.

Hi, can you hear me?

Very well, thank you.

Morning, everyone. Thanks for the details on Empire Wind. I guess there's not much you can say given it's a legal process. But I just wondered if you could talk a little bit about what this event is making you in terms of change, the way you think about the business. Your geographical exposure is a lot more concentrated than your peers. Obviously, Norway is the backbone of the business and the home ground there. But if I look beyond Norway, the international footprint, it's been a conscious decision to be more concentrated. And obviously, the U.S. is the second largest footprint you have, and your peers are much more diversified. Does this in any way make you kind of change that approach, make you think a little bit differently, make you think you maybe want a bit of a more broader exposure? Just any comments on that would be helpful. And then the second question is on Bacalao. There's maybe a little bit of confusion around expectations there. I just wanted you to clarify expectations on, you know, startup and time to get to Plateau. Is there any reason – We shouldn't assume a ramp-up for baccalaureate. That's in line with other FPSOs we've seen in Brazil, which is typically less than a year to get the full plateau. Thank you.

Okay. Thank you very much, Biraj. So, on your first question. You know, the situation around the empire is, you know, both extraordinary and unprecedented. And we see it as sort of an unlawful, you know, act by the US state and we will treat it. Clearly, the U.S. is an important country to us. We have invested many, many years. And, you know, it generated $500 million this quarter as such. So, it remains so. I think your bigger question is about your concentration of a portfolio. which is very much about our ability to take out scale effects and synergies and getting into critical size where we do operate and where we are. So we think that makes sense. And clearly, if you look at the political risk in our portfolio compared to many others, we have a significant high share of OECD countries in there. You know, there are risks in all countries, and we need to deal with them the way it should be. I know this is very much boiling down to managing the situation around one asset and one investment. Then on Bacalao. So startup is planned for 2025, and the ramp-up is expected to go as planned. It is on location. Commissioning is ongoing. And hookup is also on its way. So things are moving according to plan. So there should not be confusion out there, I hope. So we are confident in the development of the assets. So thank you, Viraj.

Thank you, Biraj. Let's try Theodor Sven Nilsen again from Sparebanken Markets and hope that the line is better. So, operator, please open the line for Theodor.

Theodor, please first start one.

No, I'm sorry, Theodore. It sounds like you're breaking up. Try and I will interrupt you if it breaks up again. Sorry, Theodore, but we are not able to hear you. So either you need to find a better line and we will put you on the list. Or if not, you are, of course, happy to. You are welcome to call me or any other member of the IR team after and we will try to respond to your question. Let's then turn to Jon Olaysen from ABG Sundal Collier. Jon, please go ahead.

Thanks a lot for taking my question. I want a little bit about the sustainability of your dividend and total capital distribution. You don't make any change to the guided capital distribution of 9 billion in total for 2025. I just wonder, is 25 safe at 9 billion, regardless of oil and gas prices? Or is that at some oil price, should we expect a lower capital distribution also for 25? And also then, maybe is it possible to give some indication for 26, if oil price stays at, yeah, now we're at 62 at current levels. Is dividend sustainable at current oil and gas price levels? And if yes, at what level should we expect dividend to become at risk? If you could just talk a little bit about this, please.

Okay. All right. Thanks, Jon. So, it's very important for us to be competitive when it comes to capital distribution. and sort of a little bit of data points we have distributed 45 billion dollars over the last three years of capital distribution and i hope that is read as a strong commitment to to to distribute capital and the nine billion dollar this this year as well you should see that as very firm. I said at the Capital Markets Day that, you know, it is important to run with a solid balance sheet and a lot of liquidity, and that enables us to see through sort of volatility as such when we make decisions and when we sort of decide on capital distribution so you should take the nine billion dollars as a very very strong commitment from from our side so on sort of a lower price environment I just want to remind you of some sensitivities. We have said, you know, a cash flow from operations around $20 billion for 2025. That was based on a $70 oil and a $13 gas in Europe. If you assume a $10 lower oil price, which is 60, and a $2 lower gas, which is 11, that would reduce cash flow operations of around $2 billion, take it from 20 to 18 as such. creating still significant room for capital distribution. It is very important for us to be competitive. We have the cash dividend that is going to be growing, and we want you to think about that as bankable. Then on top of that, we will use share buyback. And we will see to that we are competitive compared to your peer group, you know, through the cycle and all of that. The last point I would like to make around a low-price environment. is that the Norwegian tax system, it has a significantly dampening effect because as oil price and gas prices drops, 78% of the exposure is picked up by the tax bill. There is a lag in tax payments of six months, but clearly we are seeing through that when we put together our guiding and capital distribution as such. So we do see the Norwegian tax system to be a dampening effect and enabling us to manage very well in a low-price environment. And then, of course, I mean, you know our cost base and you know our return on capital employed. You know, it costs us $2 all in cash to get to Europe without gas, selling into an $11 market. So this is a business that works well in a low-price environment, and we stay committed to our capital distribution. So thanks, John.

May I have one quick follow-up on that?

Yes, please.

When you talk about low-price environment, in your view, what is a low-price environment? Because, I mean, you said that you have break-even for new projects. Your new projects are break-even at below $40? Yes. Is 62 a low-price environment in your view? When do we come into a medium or high-price environment?

Both you and me, John, have lived long enough to know that we should never have a very strong view on what is a low price and what is a high price. My job is to make ourselves as robust as we can to a volatile price. And clearly, we are prepared for significantly lower prices than we see currently. both through flexibility in our spending, a strong balance sheet, significant liquidity, and a tax system that actually helps on the way down as well. We'll see to that. We are well prepared to manage all of that. Maybe the last point I would like to make is that navigating through rough waters It is important to have control of your own spending. And since we are operating most of our investments ourselves, we are sort of the captain of our spending program, makes us able to actually make the decisions necessary to make the adjustments that we have to do in a way. So we are prepared for significantly worse, not believing necessarily in that, but our job is to be prepared.

Thank you very much.

Thank you, Jon. Next in line is Peter Lowe from Redburn Atlantic. So, Peter, please go ahead.

Hi. Thanks for taking my questions. The first was on Empire Wind and the impact of the pause on the CapEx budget. I thought you had a reasonably significant amount of investment this year going into Empire. Given your halting work, would a portion of that not drop out? Can you perhaps just talk about the dynamics there? And then a second question actually on CapEx. You alluded in your previous answer to kind of potentially some flexibility in a lower price environment. Can you talk a bit about kind of where that flexibility could potentially come from and at what price level you might look to revisit your spending plans in the coming years?

Thanks. Thanks, Peter. So first of all, on Empire. Our main focus is to manage that situation, getting clarity as quickly as we can, and taking the actions that is prudent in the current environment to protect the value of the asset and the value for our shareholders. very, very top priority. When we know more, we will revert to guiding implications as such, but it is too early to conclude on that as such. But it is a high priority for us to clarify the situation and take the necessary actions as such. When it comes to CAPEX, so I just want to remind you on what we did on the Capital Markets Day. We actually have reduced our investments over the next three years by $5 billion. And also the cost reduction is targeted at $2 billion. So we sort of put that forward at the Capital Markets Day. for us it's important to be ahead of the game as such to to set up a business that works in a low price environment on sort of further flexibility there are some flexibility in 2025 but you know most of the investment program is related to ongoing projects coming 2026 and 2027 there is significant flexibility opening up as well and those are discussions we have currently what are we going to do with the flexible part of the investments and and and being well aware that when we start a project you sort of lock up your sort of capacity as always it's always a bad idea to stop ongoing projects

Thank you. Thank you, Peter. Next one is Johan Charenton from Bernstein. So, Johan, please.

Hi, everyone. So, I would like to ask about the MMP business and if you're able to tell us what was the contribution for cash flow or contribution to cash flow from MMP in the first quarter. And this quarter as well, you had the working capital relief.

um is that possible to understand whether at the end of the quarter you have reached what you would consider as a normalized level for working capital okay oh thanks thanks joan so on the mmp results a few few data points so so the result in the quarter 253 million dollars impacted by two wells CO2 wells into the Smea-Heia reservoirs. Adjusting for that, the result would have been close to the lower end of the range. Then, LNG trading is lower than normal. That is due to Melkeøya, the LNG facility in the Arctic. has been done for maintenance for part of the quarter. And then in general, you know, within the trading environment, there is a little bit of a risk off for the time being. So there has been lower than normal result from that. On working capital. So let me first say that sort of the guiding that we have on cash flow from operations, that is excluding, excluding working capital movements. So it's sort of a clean number in a way, not disturbed by working capital movements. In this quarter, we there was a freeing up of working capital of 1.6 billion dollars as such so so i mean so that actually adds to the cash flow in the quarter and of course whether this is normal or not it was you know i would say the end of fourth quarter it was higher than normal This is a fair level of working capital, but you should expect that it moves depending on whether there are contango in the market or there are special situations as such. Volatility in general creates results, but it also takes working capital. So if you see volatility and if you see changes in the curves, I mean, you'll see working capital movements as such. But it's a fair level, I would say. All right. Thanks, Johan.

Thanks. Thank you.

Thank you. Next one is Matt Lofting from JP Morgan. Matt, please, your mic should be open.

Thanks for taking the questions. Most of mine have been asked. I'll perhaps just ask you two follow-ups. First on MPI wind. I just wonder if you could share any thoughts on what situation or duration of the halt would be required in order to trigger a write down of the two and a half billion book value as we move through 2025 and in particular sort of then get to year-end impairment testing into the second half. And then second, perhaps just coming back on MMP and some of the comments, Torbjorn, that you just made, I just wondered the extent to which in the current environment that the industry as a whole is seeing moderated trading conditions in terms of the opportunities and spreads that are there versus a sort of a more temporary risk-off approach.

Thank you. Okay. All right. Thanks, Matt. On Empire Wind and then your question on sort of consequences for our accounts. As you would understand, what is happening now around the project is dramatic. It is extraordinary and unprecedented in a way. We will do impairment testing related to the second quarter results. There are so many outstanding topics yet still with the project, so it's too early to say anything about what the consequences might be to it. And hopefully we will be able to create more clarity around the situation by the second quarter. So there is a reason why we are very transparent on the economic exposure to you. to hopefully that will put you in a situation to be prepared and have an opinion about that. Your second question related to MMP and sort of the moderate trading opportunities. Yes, you know, I think in general, the risk, you know, across the various markets are, sort of new type of risks i mean the the whole world is is sort of used to deal with macro uncertainty and maybe geopolitical turmoil but what we currently see is sort of a different type of risk as such and that makes everyone more careful in sort of taking risks so that we see a risk of across across that What we do in this difficult environment to trade in, what is actually quite interesting to note is that if we see sort of increased tariffs or trade wars or whatever you call it, it might change the trade flows. And that creates opportunities normally, and we are well positioned with our shipping fleet, various oil qualities, and our ability to realize higher prices. So, I mean, traders can make value in situations with uncertainty. I think the fact is that... the world needs to get used to what we are talking about currently, to be fair. So, actually, this quarter, quite good trading around refineries, actually, and the qualities we have on the liquid side. All right, that was a long answer, but it's a complex topic. Thanks, Matt.

Thank you. Thanks, Matt. Then we'll turn to Bank of America, Chris Coupland. Chris, your mic is open.

Hi there. Thank you. I hope you can hear me okay. Just two to tidy up for me. One more on MMP. I was wondering whether you could give us a little bit of your thinking when you issued your trading updates a few weeks ago. And I didn't really read into that trading update, the weak results that you ended up reporting below the lower end of the usual quarterly range. So, Maybe you can talk us through the visibility you had at that time and your thinking behind how to use that trading update in order to guide consensus. And then lastly, just because it's an answer that I enjoy asking you every time, also today that's 260 crowns or so. If it was a good investment at 400, why wouldn't you buy more today?

thanks thanks chris um so um on your question on mmp um you know chris it's it's a good question um and and what we try to do in a trading update is to give you sort of some steer on the direction, and then we clearly recognized that there are a lot of moving parts that are just hard to analyze and hard to model as such. This time around, there was a lot of transactions very late in the quarter. that we were not able to pick up, you know, as part of the trading update as such. So, that's sort of, you know, on your question related to the trading update. The best advice I can give is to have a close and good dialogue with our Investor Relations Department around these topics. Then on Ørsted, we hold 10% of the shares. We are an industrial and long-term owner. Clearly, the share price of Ørsted is impacted by the industry realities within offshore wind. So that is clearly reflected in the price. You know, if we sort of see beyond that and what they have, they have a quality portfolio of producing assets delivering significant EBITDA and a good return on capital employed. So we see this as a quality company with a quality portfolio. clearly impacted by the reality that surrounds this industry for the time being. So thanks.

Thanks. Chris, we are happy to take any feedback on the trading update. I just want to remind you that we did say that you should expect an impact from the CCS wealth that we now report. And we did also say that you should expect relatively weak results from LNG trading that we saw, but happy to discuss this further. Thank you. Thank you, Chris. Then next on the line is James Carmichael from Berenberg.

Hi. Morning, guys. Just another one on Empire Wind. Obviously, you're sort of, I guess, following up on your question. You're obviously an interested observer in what's going on with airport portfolio in the U.S. Have you got any sort of indication on why it's It's only Empire Wind that's received this halt order at this stage, and I guess you must be concerned that others might follow. I don't know if there's much you can say on that, but any thoughts would be interesting. And then just on the power business that you're setting up in September, I think it said, maybe just a bit of colour, I guess, on the assets that are going into that business and the rationale for setting that up would be helpful. Thank you.

okay thanks thanks james yeah when it comes to to to further sort of stop work orders in the u.s you know no i i'm not in a position to to comment on that naturally and then clearly there are you know rumors you know around these topics all the time I think the best one to ask is actually actually the US federal government about their ideas around those assets and industries and and hopefully they can provide some clear answers to that then when it comes to to your question on On the power business, clearly, we have power assets in two business areas currently, within the renewables and within the MMP business. Clearly, these assets belong more together to take a more fully approach to the power markets secondly we do see that that going forward there will be a good and strong link between you know the gas market and the power market and and having you know a gas fire power plant as part of the power power business area is is important so the assets that that we are talking about is is you know the triton asset we have power assets also in also in the uk and and and clearly there is you know trading opportunities as well so thanks thank you james thank you james uh next one on my list is martin ratz from morgan stanley martin please go ahead with your question

Yeah, good morning. I also have two, including on Empire Wind, I'm afraid. If the project is not sort of permanently halted, but say there is a relatively positive outcome where at one point you could sort of go ahead, there would still be, I would imagine, a risk that you miss this year's weather window. And so I wanted to ask how much of a delay can you have in the project? I would imagine it's probably not more than a few weeks or a few months before this year's weather window is lost. And also if this year's weather window is lost and the whole thing, like all the cash flows shift a year into the future, what would be the NPV impact of such a delay? That's one thing I wanted to ask. And then, just perhaps a bit of a technicality, but earlier on you talked about potential tax losses that this might generate. Are Equinor's sort of holdings in the United States across both the offshore wind and the upstream Are they structured in such a way that if there are any tax losses, say, in Empire Wind, that they are available to the E&P business? Or is that legally so separate that it's hard to kind of move these taxes around? I was wondering if you could say a few things about that.

Okay, thanks, Martin. I love the details of your questions here, so let's get to that. First of all, when it comes to Empire Wind, the project is progressing well. But the way these projects go is that sort of everything hangs together. It's a timeline. There are suppliers. There are commitments and all of that. So when you run projects like this, you are dependent on that sort of it runs. And this project is in a critical phase. I mean, we are sort of, you know... on time and schedule and works well but it is a it is in a critical phase because we are about to start you know the offshore installation and the installation window is now in a way so so so so it is a matter of urgency to get clearance on the situation. And the US authorities, they are very well aware of the urgency and the need for clarity, and that we are also, we are considering all optionalities, including taking legal steps to protect our situation and and the value of our shareholders. So, you know, it is too early to talk about NPV impact. What we have shared is sort of the gross exposure and the gross exposure in a stop case. And I think that is, you know, something that is important for us to share, but clearly very important to urgency get clearance and make decisions on the way forward on this project. On your second question on the tax losses available to upstream, yes. So that is in place and you know there is a common structure overseeing all the U.S. activities here where this is consolidated and can be used.

Okay, wonderful. Thank you.

Thank you, Martin. Next on my list is T.D. Cohen, Jason Gabelman. Jason, please go ahead.

Yeah, hey, thanks for taking my questions. I'm afraid I'm going to stay on topic with Empire Wind. I'm wondering, since it's been about two weeks since you've gotten the stop order notice, if you've had any engagement with U.S. authorities and if you know your senses it's really the government that's dictating the timeline of a potential restart or or if there's things you could do proactively um to to move that along and my second question unrelated to empire wind um it looks like your u.s gas realizations have been quite strong so i'm wondering one what's driving that and two if there's an appetite to acquire um more uh acreage um in the lower 48 uh with uh gas exposure thanks okay thanks thanks uh thanks jason so

Yeah, so the government in the US, they have not shared with us the reason for the stop work authority. So it is a situation where, you know, we don't understand why, what we do know, is that what has happened, we see that as unlawful. I mean, we have permits and approvals dating back one year ago, And we have always assumed that the United States of America will honor contracts and permits they have issued in a way. So this is an unlawful action by them, and we are going to treat it like that. So I just want to be very clear on that. We are engaging on all levels that we can, and we use massive efforts in all channels to get the dialogue that is needed to create the necessary clarity. We have been extremely clear with them that this is of urgency, we have little time, and we will consider legal actions as such. On the U.S. gas realization, with a little bit more of a pleasant theme, we have a realized gas price in North America of $4.06. Henry Hub came in at $3.65. So this is actually quite a significant, you know, addition to that. Normally, the Northeast trades at a discount to Henry Hub. So this is mainly linked to the way that we market and sell our gas because, you know, we keep title even if it's operated by Xpand. We have title to the gas and we market and trade and sell it ourselves. We are not selling our gas. We are not hedging it. We keep our position open to volatility in the market. What we have seen in the Northeast is periods of cold spells and very high natural gas prices. The way we market and trade, we will be able to capture that. That is what you have seen in this quarter. That goes to a broader theme about what you should expect coming out of our gas machine. We want to keep our gas exposure. you know close in time in in europe we we sell or gas 70 day ahead and 30 months ahead meaning that when there is volatility when there are high prices we will capture it and it will go into the earnings and the cash flow of the company and that's that's what we have seen in the us this quarter this this doesn't happen every quarter i just want to say that but when it happens we'll be there

Thank you, Jason. Please go ahead, Jason. You can take one follow-up.

Sorry, just on the question on appetite to acquire more US gas.

Thanks, Jason. We made two acquisitions with EQT last year into that, at a time when gas prices were actually quite a bit lower than where they are today. So that has increased our production. out of the U.S. with 80,000 barrels per day as such. So it's very good to see that that is coming in well in the first quarter. Going forward, you know, I can't comment on that, but clearly we do believe in natural gas in the long term, both in Europe and also elsewhere. So thanks.

Thank you, Jason. Next one is Paul Redman from BNP Paribas. Paul, please, your line is open.

Hi, guys. I might as well follow the trend and stick with Empire Wind. But I just want to ask for some clarity on the urgency. So when is the weather window for offshore installation? And just to be really clear, if you miss that weather window, could we be in a situation where Equinor decides not to progress with the asset because the cost implications are just too high to generate the returns you want from this project? And secondly, just on the new power business area, do you think you've got the organic assets that you need to develop the growth of this business, or are you looking inorganically for more power assets at the moment? Okay.

So, thanks, Paul. You know, the Empire Wind project is urgent. It is a very extraordinary situation, and there has been created a very significant uncertainty about the way forward of this project. And the questions we are facing is, of course, you know, What about spending money in a situation with that significant uncertainty? This needs to be clarified very quickly. The construction schedule is sensitive to contractor availability, the weather window, and commercial requirements as well. This project is also dependent on project financing to work. And as you would understand, lenders are very uncertain about the way forward. So this is much more than about a weather window, which is crucial, but it's much more complex as such. So we just want to have clarity as quick as possible, and we are preparing for all outcomes. Second question on the new power business. Yeah, so I mean, there are currently assets that sits in different business areas that belong together. And the decision made is to combine them because they clearly, there are synergies there as such. There are no plans for any inorganic moves as such, but of course, we can't comment on what might come in the future in any part of the business as such, but it's not part of the current plans.

Thank you. Thank you, Paul. That completes the list on our end, and we have managed to do it within the hour. I want to thank all of you for calling in and for your questions, and then remind you that the investor relations team is, of course, always available for follow-ups later today or during the week. Thank you all for calling in, and have a good rest of the day.