Equinor ASA

Hello and welcome to Equinor Analyst Call Q2. I would like to turn the call over to Bård Glad Pedersen, Head of Investor Relations. Bård, you may begin.

Thank you, operator, and good morning, all. Thank you for joining the analyst call for Equinor's second quarter results. Our CFO, Torgrim Reitan, will, as usual, present the results before we open for a Q&A. You can already now sign up for questions by pressing star one on your phone. We plan to complete the session within one hour in total. And with that, I hand it to you, Torgrim, to take us through the results.

Thank you, Bård, and good morning, and thank you for joining us, and I hope you are all enjoying your summer. Today, it is five weeks since our Capital Markets Day, where we shared with you our updated plans to deliver more energy, growing cash flow and superior returns. We showed you an improved portfolio, delivering production growth of 150,000 barrels per day to 2030. A growth in cash flow from operations of 30% and an industry-leading 15% return on capital employed. With this, we expect to deliver over $40 billion in free cash flow towards 2030. And not to forget, we presented a break-even after dividend of $50 per barrel. This is a reduction of this break-even price of $10 per barrel. In the second quarter, we took several concrete steps to deliver on this. On the Norwegian continent itself, we awarded the contracts for the first wave of tieback projects. This is an important first within our new NCS 2035 operating model, aiming to double the speed of developments and reduce costs by half. The contracts awarded for the first wave supports these improvements. We continued to use business development as a tool to harmonize ownership across licenses. We have done this through a series of swaps with DNO, Aker BP and Vår Energi, supporting progress on the Ringvei Vest project. Internationally, we took the final investment decision for the Greater Parsh project in Angola, where we expect to generate more than $50 per barrel in cash flow from operations. Greater Parsh is an important step in building longevity within the international E&P business and growing cash flow from operations by 80% towards 2030. We also delivered strong results in the quarter. Production grew by 3% with well-executed turnarounds and new fields like Eirin and Symra coming on stream during the quarter. With this, we capture value from higher prices and our trading business captures value uplift from increased volatility, delivering strong contribution to our results this quarter. We report adjusted operating income of $11.5 billion before tax, and an IFRS net income of $4.8 billion. Year-to-date, our cash flow from operations after tax has been strong at $13.7 billion. This quarter, our adjusted earnings per share were $1.33. While energy markets remain impacted by geopolitical unrest, we continue to focus on what we control, our operations, how we remain robust through price cycles, and our commitment to cost and capital discipline. Then to capital distribution. At our capital markets day, we announced a doubling of the share buyback program for 2026 from one and a half to $3 billion. We follow up this now, and for the quarter, the board approved an ordinary cash dividend of 39 cents per share and a third tranche of share buyback of up to $1.125 billion, including the state's share. So let's dive into our results. First, let me start with safety, our top priority. Our serious incident frequency and personal injury rate remained relatively stable in the second quarter. We have seen a slight increase in both metrics this year when compared to 2025. We are working very hard to learn from incidents to improve safety and performance further. In the second quarter, we produced 2,165,000 barrels per day, up 3% from the same quarter last year. On the NCS, our production is up 4%, mainly driven by new fields like Johan Kastberg, Halten East, and Verdande. Now we are adding also Eirin and Sumra, which came on stream this quarter. Let me also highlight that we saw another quarter of strong performance from Johan Sverdrup. We have previously indicated a decline of 10 to 20% this year from that asset. Based on the strong performance so far, we now expected to be at the low end of this range. NCS production was impacted by planned turnarounds and maintenance, and also Johan Casberg coming offline for a period towards the end of the quarter and into July. Johan Casberg is now back at Plateau after production resumed last week, implying that the impact will be larger in the third quarter than in the second quarter. Internationally, the increase was driven by Aduara in the UK and Bacalao in Brazil. The growth more than offsets the decrease from our reduced ownership in Peregrino and the divestment of the onshore Argentina assets. During the first half of 2026, we have delivered in total a very strong production growth of 6%. Therefore, our guidance of a 3% growth for the full year is no more robust than when we started the year. Even taking into account the issues at Johan Casberg and the planned turnarounds also in the third quarter. Within power, we produced 1.2 terawatt hours this quarter. The growth is from Dogger Bank in the UK and new onshore assets. Now to our financial results. Liquids and European gas prices were higher than the same quarter last year, while US gas prices were lower. This has impacted our results across the segments. Adjusted operating income in EMP Norway totaled $9.2 billion before tax and $2.1 billion after tax. In our international E&P business, prices increased around 50%, but operating income almost doubled, based on production growth of 4% and increased quality in the portfolio. Our E&P US results were driven by high offshore production with higher prices, partly offset by lower gas prices in the US. M&P delivered $777 million pre-tax, well above the guiding of $400 million per quarter. This was driven by crude trading and strong performance at our refinery, Mongstad, capturing value from higher margins. Our power results reflect a strong contribution from power trading for the second quarter in a row. In total, We have nearly doubled our adjusted operating income after tax compared to last year, demonstrating the improvements in the portfolio and our ability to capture value in higher price environments. This quarter, cash flow from operations was $14.8 billion before tax. We paid 7.1 billion in taxes, including three NCS installments, summing up to around 6.4 billion dollars. Next quarter, there will be two payments of 23.3 billion Norwegian kroner each. Also in the second quarter, we received a quarterly cash distribution from Aduara of 150 million dollars. The sale of the Argentina onshore assets resulted in a cash proceeds of 558 million dollars in the quarter in addition to 88 million in proceeds received in the first quarter. We also recorded a gain of 467 million during the second quarter. Our financial position in Skatek was partially divested for $171 million during the quarter. Here we have an accumulated recorded gain of $61 million. Organic CapEx was $3.4 billion, and our net cash flow before distribution was positive $5.5 billion. This quarter, we distributed $1.1 billion to our shareholders. We strengthened our balance sheet and have a solid financial position with around 24 billion dollars in cash and cash equivalents. Working capital, which is not included in our cash flow from operations, decreased by 1.8 billion dollars to 3.6 billion. This is a lower level than what we usually have. Our net debt ratio decreased to 10.4% this quarter, despite three tax installments paid and the state's share of the buyback from last year booked as a finance debt. This state's share of share buyback was paid in early July, and the cash flow impact will be as such in the third quarter. At current forward prices, we expect the net debt ratio to be somewhat below 10% at the end of the year. And now to our guidance, where there are no changes. Our progress is in line with our communicated outlook, both in terms of production, CAPEX, and capital distribution. And finally, to conclude, I will refer you back to a slide from our capital markets day five weeks ago. The second quarter results demonstrate execution in line with the plans we presented to deliver. More energy, 150,000 barrels per day production growth to 2030. A growing cash flow, a 30% growth in cash flow from operations. and Superior Returns. We will continue to lead the industry on the return on capital employed, and we aim for 15% through this decade. So now, thank you very much, and I look forward to your questions. So back to you, Bård.