Equinor Asa

Thank you for standing by. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ekinor Second Quarter Analyst Conference Call. All lines have been placed on mute to prevent any background noise. 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, press star one again. I would now like to turn the call over to the presenters. You may begin.

Thank you, operator. My name is Bård Glad Pedersen, and I'm heading up investor relations in Equinor. Welcome all to the analyst call for our second quarter results. As usual, I'm here together with our CFO, Torgrym Reitan, who will take us through the results before we open the Q&A. So with that, I hand it to you, Torgrym.

Thank you board and good morning and thank you for joining us and I hope that you are enjoying your summer. So let's dive into the results. So the second quarter demonstrates good progress and it confirms what we said at our capital markets day. Today we deliver solid financial results driven by continued strong operational performance. In the quarter, we report adjusted operating income of $7.5 billion before tax and an IFRS net income of $1.9 billion. Year-to-date, we have delivered cash flow from operations after tax of $7.7 billion. The taxes in the second half of 2024 will be lower. And we expect cash flow from operations to be in line with what we have said, around $17.5 billion for the year. I will revert to this. Adjusted earnings per share were 84 cents. Across the portfolio, we are making strategic progress. On the NCS, we started production from the Kristin South area earlier this month, and the partner-operated Hansfield came on stream in April. Together with our partners, we made an investment decision for the Trollfield, which will accelerate the production and maintain high gas export levels. This investment is highly valuable, with a net present value to Equinor of more than $500 million. We continue to high-grade our oil and gas portfolio. In Norway, we align our ownership interests across licenses through a swap with Petoro. Aligning ownerships will be important for accelerating production, reducing costs, and driving the full potential in key areas. In the US, we closed the swap transaction in onshore gas with EQT, creating more longevity and robustness, and reducing the break even for those assets with more than 30%, 10 million tons in injection capacity per year. Finally, for Empire Wind, we achieved a new higher strike price of $155 per megawatt hour earlier this year. We continue to move forward with the project, and our next external milestone will be the financial close. The competitive capital distribution continues, in line with what we have said at our Capital Markets Day. For the quarter, the Board approved an ordinary cash dividend of 35 cents per share, and in addition, 35% in extraordinary dividend. At CMU, we introduced a two-year share buyback program to increase predictability. The program is 10 to 12 billion in total, with $6 billion allocated this year. In line with this, we announced a third tranche of up to $1.6 billion starting tomorrow. For 2024, we expect to deliver a total capital distribution of $14 billion. Safety remains our top priority, and our long-term safety trend is positive. Our reported safety performance has never been better. But we do know that this is a race without a finishing line. In June, we presented the internal investigation report of the helicopter accident in February. We will use the report to further strengthen our work. We deliver around 3% production growth this quarter, in line with our expectations. On the NCS, we had strong operational performance and good regularity. Total production was up 5% from the same quarter last year, and gas production was up 13%, with strong contribution from Troll and Oseberg. The ramp-up of new fields like Bredablik and Hans also contributed. In addition, turnarounds were well executed, impacting production less than expected. So we have reduced the overall turnaround impact for the year to 55,000 barrels per day. For E&P International, production was up 2.5%. The buzzard field in the UK and the U.S. contributed positively. partly offset by turnarounds and lower production in Brazil. For EMP US, production was down in the quarter, as expected. US offshore was impacted by the planned turnaround on Cesar Tonga. Within our onshore gas production, we indicated there would be curtailments, and we saw some of that in June. For the year, we still expect containments based on our operators' commercial decisions to create higher value. Our renewables production is significantly higher than last year, mainly driven by onshore power plants in Brazil and Poland. In the UK, offshore wind production increased. At Dogger Bank A, 27 turbines have been installed. But full commercial production is now expected during the first half of 2025. And this impacts our production outlook this year. Now over to our financial results. Liquids prices remain higher than last year. And this quarter we saw an increase in European gas prices. As expected, storage levels in Europe are healthy, but the market remains fragile. Small changes can give large fluctuations. Going forward, prices will depend on the weather, European demand and competition for LNG, as well as uncertainty related to transit through Ukraine and, as always, supply-side disruptions should that happen. Our E&P Norway results were driven by strong production, delivering adjusted operating income of $6.1 billion and $1.4 billion after tax. Our international E&P segments delivered $963 million in adjusted operating income and close to 700 million after tax. The ARG reached well in Argentina, was dry, and expensed in the quarter. The overlift in the second quarter contributes to around 250 million dollars in adjusted operating income for EMP Norway, and around 170 million for EMP International. Our MMP results were driven by European piped gas and strong LNG trading, and supported by successful power trading. These results were also impacted by turnarounds at Mongstad and high activity in low-carbon solutions. Our renewables assets in operation contributed with 41 million dollars this quarter. As we continue to build our renewable business, the adjusted operating income was negative, as expected. We will continue to be disciplined and not overpay for access. This is key to building a profitable business. Since second quarter last year, adjusted OPEX and SG&A is up by 11%, driven by higher production, over-lift effects, general inflation, and increased activity in renewables and low-carbon solutions. We also see an underlying upstream cost increase of around 4%, quite in line with the production growth. We continue to maintain a strong focus on capital discipline and cost control. Then to our cash flow. This quarter, our cash flow from operations was $1.9 billion after tax. We paid the final two NCS tax installments based on 2023 results, totaling $7 billion in the quarter. For the second half of this year, we will pay three NCS tax instalments, one in the third quarter and the remaining two in the fourth quarter. Each instalment will be NOK 31.3 billion, which is lower than in the first half of the year. We expect a cash flow from operations for this year of around $17.5 billion after tax, as we said at the CMU. While gas prices currently are below our CMU price assumptions, oil prices remain somewhat higher. And the impact from the lower gas prices is softened by the Norwegian tax system. Next year, we expect to be back at around $20 billion in cash flow from operations after tax. In the quarter, we paid total capital distribution of $2.5 billion. Organic CAPEX was $2.9 billion and $5.7 billion year-to-date. After taxes, capital distribution and investments, our net cash flow came in negative, as expected, at $4.2 billion for the quarter. We have a solid financial position with $32 billion in cash and cash equivalents. And our net debt-to-capital-employee ratio increased to negative 3.4% this quarter. It is important to note that following our AGM in May, the state's share of buybacks from last year was treated as a financial debt, impacting the net debt ratio for the second quarter. However, the payment of $4 billion was done in July, which will impact the cash flow in the third quarter. We are planning for a negative net cash flow for the year, in line with what we indicated at the CMU, and we expect a positive net debt ratio by the end of the year. Finally, our guidance for CAPEX and oil and gas production remains firm. We have updated our renewables production guidance. We now expect it to grow by around 70% this year, mainly reflecting the progress on Dogger Bank A. Now I hand it back to you, Bård, and I do look forward to your questions. So thank you.

Thank you, Tore Grim. We are then ready to start the Q&A, and I see that we have a good list of questions already, so that is good. Just a reminder that if you want to add your name to the list, you can press star one on your phone. We will try to keep it within the hour since we started. So the first question is Martin Ratz from Morgan Stanley. So Martin, please go ahead.

Wondering whether the overlift in this quarter will be mirrored in an underlift maybe next quarter or the quarter thereafter. And also, if that is just a volume effect or if there's also a sort of a price slash revenue element to it. Can you sort of talk a little bit about that? And then secondly, last quarter... You mentioned that European industrial gas demand was starting to show a bit of a sign of life. I think you mentioned something like up 5% on a weather-adjusted basis. But just listening to your comments now and also other comments that you made this morning, maybe that has reversed. I was wondering if you could give us an update on that.

all right no thank you very much martin so yeah so this this quarter we had an overlift um situation both within um you know the ncs assets and also internationally as such so just want to remind you that that on the ncs we had a similar underlift in the last quarter as we have an over lift in the current quarter. So there's no sort of carry forward or effect of that. It will fluctuate from quarter to quarter. And the same goes for international EMP. That sort of, that fluctuates from overlift to underlift, you know, across quarters. So there is no sort of things that is carried forward related to this overlift, more than sort of a natural rhythm of production. In Norway, the overlift, you know, came across a large set of assets. And internationally, the overlift was related to Angola and Azerbaijan mainly. On your question on industrial gas demand in Europe, yes, we see that continues. We see approximately a 10% growth or increase in sort of industrial gas demand in Europe. And of course, it is very glad to see that. And the total in industrial gas demand in that market, we see that to be around 100 BCM on an annual basis. So it's sort of... is sort of clearly an addition to the demand. When that is said, you know, there are other drivers that are, I would say, argue more important in sort of the price setting in Europe, and that is particularly the demand from Asia. So clearly, that is something to watch very, very closely. And China we see this year has an 8% growth in demand. So that is important to follow on. And that brings me into the concept of weather, because weather clearly means a lot for both storage levels and demand and what have you. And this summer, we see that it is a warm summer in Asia and China, and that actually increases demand for gas to power and air conditioning, actually impacting demand of energy. So weather is actually playing a role also in the summer. Then I would like to draw your attention also towards Ukraine and the transit of Russian gas to Ukraine currently around 13 BCM is coming in that direction. And sort of Ukrainian government has said that they want to end that transit by year end. So, you know, we'll see, but also an area to watch when we sort of try to get our hands around sort of demand supply balances in the European gas markets.

Wonderful. Thank you very much.

Thank you, Martin. The next question is Theodor Sve Nilsen in Sparbank & Markets. Theodor, please go ahead.

Good morning. Thanks for taking my questions. First, on your production guidance for oil and gas, at the first quarter presentation, I think you Made some comments around that we should expect lower production. I've definitely seen that during second quarter. So how do you think around the total production guidance for the year being flat year over year? Do you still see some downside risk to that? So that's the first question. Second question, that is on renewable. I know that you recently made some reorganization in your renewable business uh and that you may be looking to reduce the project portfolio somewhat i just wonder uh how that will impact your long-term target so um 35 to 60 terawatt hours production by by 20 38 it looks a little bit ambitious now so so any thoughts around that and the reorganization would be useful thanks

Thanks, Theodore. So first on production guidance. What we have seen this quarter is a strong operational performance in where we produce, and also that maintenance has gone very effectively and smoothly. So that is one element into it. The other one is that, you know, we have finalized the close the equity transaction, which actually adds a little bit of volume into the mix. And then, you know, the reason why we said, you know, about a little bit of, downside the last quarter that was linked to curtailment of US gas production, which we expected. We still expect some of that, but we do see a robustness in our production. So we say, you know, we actually stand firm on the guidance that we have. I think when we talk about production, I just want to make you aware of sort of the turnaround program this summer, because in the second quarter, We have had a production turnaround of around 55 barrels per day. In the third quarter, it will be significantly higher. It will be 125,000 barrels per day as such. So this is a little bit contrary to the way it was last year, where it was the second quarter that had the highest turnaround. So just for your modeling, so you're aware of that, there is a significant turnaround program happening in this quarter. But taking all of that into account, production guidance remains firm. Then on renewables and targets and ambitions and all of that. We will build a renewables and low carbon business on top of our oil and gas business, which will continue to invest $10 billion a year, as you are very well aware of. It is very important for us that the investments we are doing are creating value, that they are robust and that they are profitable. So capital discipline needs to be the headline on the way we conduct and build our business. Anders has said this for a long time, that if he has to choose or we have to choose between delivering between value creating projects or volume targets, it will be value creating projects. So that is very sure. More specifically, the projects we have ongoing are moving forward. And they will contribute clearly to growing the renewables production. And we are moving in line with sort of towards the ambitions that we have set. But clearly, we will focus very much on reducing costs, you know, where we can, and focus our efforts and investments into where we see that the value creation is happening. So, yeah. So, thanks. Okay, thank you.

Thank you, Theodor. Next question is from Biraj Burkartaria from RBC. Biraj, please, the line is open.

Hi, everyone. Thanks for taking my questions. I've got two. The first one's on the Rose Bank sale. You've talked about setting down your interest rates. in the past, but then suspended the sale due to the change in government. I was wondering if you had so far any clarity on fiscal changes, particularly around whether there could be any retroactive changes in the UK oil and gas taxes, because I suppose that would have quite a significant impact on the economics, both for you and also for the potential buyers. So any color around your confidence in the fiscal regime there would be helpful. And then the second question is just on Empire Wind. Has there been any update on the project financing progress there? Are you still expecting that by year end? Thank you.

Thank you, Biraj. On Rosebank, we acquired 40% of Rosebank together with other assets in the UK from Suncor last year. So currently we hold 80% in that asset. So that is higher than we like to be in assets like this. And we said earlier this year that we plan to farm down part of that. So that's clearly dialogues that we have with other companies related to that asset. On your specific question on sort of change of government in the UK and tax uncertainty, We are a very significant energy investor in the US and have a close dialogue on all levels with the government. And they are very much aware of the needs for our industry. In the manifesto they put forward, after the election, they have some statements that we clearly recognize. One is that they want to create an attractive investment climate for industry. And also they really would like to focus on growth and energy transition. Our expectation is that any changes to the tax system need to be balanced and business-friendly. In particular, that means capital allowances towards tax. What we read out of the manifesto is that they will work on changes that safeguard a business-friendly environment as such. This is very important, and they are very much aware of that. So, Bedros Bank is a great asset, low breakeven. We plan to start it up in 2027, and it's going to be an important part of our cash flow towards the end of this decade. Let's see, that was the first one, Biraj. There was a wrong answer on that one. But then we had the second one, and that was Empire Wind. So Empire Wind. So we said at the Capital Markets Day that this year is the year of de-risking the Empire Wind project. renegotiating the price contract with the state of New York, getting in place sort of project financing and levering, and then thirdly, farming it down. So a little bit of an update on these topics for you. One is that we got sort of the contract, you know, the price increased from 118 to $155 per megawatt hour. The project finance is underway. So the bank group is coming together and we plan for a sort of a financial close um towards the end of this year and that will be sort of the next sort of uh official you know you know uh milestone uh for this project and then thirdly farming on the asset will be important for us and and currently uh we hold it hundred percent it hundred it is hundred percent um consolidated in our accounts. And that is also reflected in sort of the CAPEX guidance that we have put forward. And if I remember right, we said it had in isolation and in CAPEX impact of $1.2 billion this year, and 1.5 next year. So, you know, if we successfully are able to farm down that assets, and you know, have it off balance sheet, reported complex will naturally be lower as such. So it is progressing according to plan.

Thank you and thank you Biraj. The next question is Lydia Rainford from Barclays. Lydia, please go ahead with your question.

Thank you. And good morning. I actually have two questions. And actually, just picking up on the low-carbon spend and evolution there, it's obviously, if you're talking about the idea that we need to be disciplined and we've got to be value-creating, I mean, at some point, you have to go, actually, the low-carbon spend actually is probably too much that we put in there that we just can't spend all of that money. And then secondly, on the cash return side, can I just ask how you're thinking about this? Because obviously you've got $14 billion this year that goes out, and obviously that's quite a big part of your market cap. It's a little bit less next year, and then it's lower in kind of 2026. I mean, when we think about 2026 and the guidance you've already given, and I know this is a little bit way out, but are we thinking about that as a minimum level? Or I'm just trying to get a sense of actually what's the underlying cash return to shareholders at this point?

Thanks, Lydia. It was a little bit hard to hear you on your first question. I know it was related to low carbon solution and capital discipline, but maybe you can repeat that.

Thanks. I'm sorry. I'll do it a little bit slower as well. I was just thinking, I mean, at some point, you've talked about it needs to be value creating earlier in the call. At what point do you go, actually, we just can't spend all this money we allocated to low carbon because the projects are becoming more expensive or there just aren't those value creation opportunities? So, effectively, do you struggle to spend the low carbon budget that you've got?

Okay, great, Lydia. Currently, the project that has matured the most is the Northern Light project. That is well supported by government and has a return that is absolutely appropriate. Currently, we're working in the UK on carbon capture and storage projects, which are mature. It is the Net Zero Teesside and the Net Endurance storage project as well. So those are moving forward, and they are providing a return that is sort of appropriate as such. Beyond that, clearly quite a bit of work ongoing on CCS storage side and also CO2 gathering and transportation. We are in discussion building a CO2 pipeline. from the continent to the norwegian continental shelf we see that that it will still take some government to support to lift all of this but we do believe that is going to build a meaningful and constructive return business in a way. I would say within the low carbon solutions, the hydrogen type of universe is not moving forward as quickly and sort of there are still work to be done before we see a clear roadmap to returns in the longer term there. On cash returns or capital distribution, $14 billion this year, that's right. That should translate into 18 or 19% directly yield. We have said that next year, we have sort of the cash return, 35 cents per share is growing by 2 cents per year. uh and uh and then 1.2 in sort of a standard share buyback and then on top of that additional share buyback so so so in total between four and six uh billion dollars next year and then your question was so what about 2026 and you know this is not the time and place to to give you specifics on that lydia but what i can say that you know we have the the the the ordinary cash dividend. We have $1.2 billion in sort of standard share buyback. And then, you know, we have said that we intend to use capital distribution to bring, you know, or gearing and balance sheet back to sort of, you know, in better balance as such. But we will come back on this on the capital markets day in February. And clearly, capital distribution to have that competitive is a key priority for us as leaders.

Brilliant, thank you.

Thank you, Lydia. The next question is Johan Charenton from Bernstein. Johan, please, the line is open.

Yes, good afternoon, Togrim. I would like to ask about an update on M&A activities overall. I have three questions related to this. First, can you please tell us how many assets are classified as held for sale as of June? The second question is in relation to Rosebank. Are you able to say what is the impact of Rosebank on the group capex this year if i remember correctly this year's plan found on was reflected in the full year capex guidance earlier this year and then the third question is about basically any color you could provide on the timing for closing deals that have been announced but that have yet to complete and what is the overall impact on cash flow please

the last one was closing on azerbaijan oh yeah okay right okay thanks thanks juan um yeah so first it was a very specific question on on held for sale and m a so currently it is the azerbaijan asset that is classified as health for sale in addition to that you know we we did a swap you know, a value-neutral swap with Petoro this quarter, you know, in various licenses. And the one leg of that swap, which we are divesting, is classified as held for sale for the time being. On the Rose Bank. So, yes, we said that in the early of the year, that we were planning to divest Rose Bank and part of Sparta. But we also said this quarter that our CAPEX, $13 billion remains firm. And I just want to say that sort of that guiding, we see that as a robust for progress of planned divestments as such. So we are comfortable delivering on what we have promised. And then the last question was closing of Azerbaijan, right? Yes, so we have both Nigeria and Azerbaijan. as assets we have actually signed an agreement on and moving towards closing. You know, I won't promise anything. They are progressing. And as you know, we have still some outstanding topics in sort of discussions with government, but it is progressing and is getting closer to closing of those transactions.

Thank you.

Thank you.

Thank you. The next one is Peter Love from Redburn. So, Peter, please go ahead.

Thank you. The first one was just on Dogger Bank. Can you talk a bit about what the issues have been there that have led to the delays that have resulted in you kind of reducing the power output guidance this year? And then the second was just, can we get an update on some of your upcoming major project startups in oil and gas? For example, Casberg, is that still on track for first oil this year? Anything on Bacalao and its startup next year? Thanks.

Thanks, Peter. On Doggebank, the operator of that development is SSE. They should be the one that actually provides an in-depth explanation to this. Currently, there are 27 turbines. fully or partly installed. And there are seven turbines in production for the time being. It is somewhat slower than planned. And one of the reasons behind it is actually it has been a very windy summer. So, I mean, it's proving it's a good location as such, but that is part of the reason as such. It is progressing and we expect it to be sort of fully in production in the second half of this year. On major projects, so Johan Castberg first, which currently sits in a fjord. It has sort of left the yard on the west coast of Norway and sits in sort of the fjord and doing commissioning work. uh planning to to sail away to the barren sea in in august and and on track to sort of come into production by by the end of this year or in fourth quarter, I search. There's still significant work, but it is progressing well. It is the expected production in 2025. is around 80,000 barrels per day. So it's a significant contributor to our production. You also mentioned Bacalao, also progressing. Well, you know, the vessel currently sits in Singapore in the yard and sort of, you know, subsea work in Brazil is ongoing. We expect first oil in 2025 as such. So it is also progressing. And then, you know, we have spoken about Rosebank as another sort of large development. And then there are two more a little bit longer out in time, Raya in Brazil, planning coming on stream in 28 and also sparta in gulf of mexico in in 28 so actually you know five very large you know green field developments you know moving forward and they are moving forward according to to plan thank you thank you peter the next one is kim first year from hsbc kim please go ahead

Hi, Fulgham. Thanks for taking my questions. I've got two, please. First one is, I was wondering if there has been any progress on this thing and on Beidinor. Both of these were previously put on hold, but there seems to have been some movement on engineering procurement lately. And maybe just some general comments you can offer on the cost and contracting environment in the offshore. And secondly, I see that you've acquired a small lithium project in the US. It's a very small amount, but I just wondered how serious you are about lithium. One of your US peers seems to be quite serious about it. So any comments you can offer there would be helpful. Thank you.

Okay, thanks, Kim. So on visiting and Beidouinor, those are two projects sort of where we have said, you know, they need to do some more work before they are ready. And sort of we have had good success with that, you know, over the years to say, you know, push things back to improve them further. So both of them are progressing. Visiting, we are maturing that towards a final investment decision in 2026. And that work is progressing. On Beidouinor, also progressing well. And we do hope and expect to... to bring that forward to a concept select not too far into the future. We have an ongoing drilling program in those waters, and that hopefully can prove up even more volumes there. In the contracting environment, it is generally a rather tight market, and we see clearly inflation. But in the projects which are sanctioned, we have good control. The non-sanctioned projects, we are not immune, so we see more exposure there. As a large investors and operator, clearly we were able to steer this on a portfolio level and limit the exposure to... to inflation as such. So we have what we need, but clearly we are not immune to inflation. On lithium, yes, we made an acquisition into standard lithium earlier this year. We see synergies between what we already do and this, particularly with the subsurface and sort of activities and and we do see lithium as a sort of an interesting interesting commodity for the future as such and taking an early early and small position into that that line of business thank you and thank you kim next one on the list is jono lyson from abg you please

Good afternoon. Thanks for taking my question. Two very quick questions. First, could you please elaborate on the dry well you had in Argentina in 2002? Was the result so disappointing that you will give up exploration of the area, or do you plan further exploration while it's in the area, please? That's my first question.

Okay, thanks, thank you. Yeah, so the Argridge well was dry. It was a frontier, you know, exploration well with naturally lower expectation for discovery as such. So that's the way it is. You know, the license that Argridge sits in is called CAN100, which is a very significant and large acreage. But clearly we have not made up our mind on the way forward, and we will clearly analyze and consider what we will do here. We have covered the area with seismic, and we have good overview on the area.

Okay, so no conclusion as of now, whether you're going to drill more or abandon it?

No, we haven't made a decision. I mean, clearly still analysing, but the well was dry.

Thank you. My second question is related to the renewable business. Given the equity accounting practice, only a small portion of the underlying net debt from that part of the business is reflected in your balance sheet. But is it possible to give an indication of the size of your balance sheet debt related to the renewable business, please?

Yes, that is $3.54 billion. Okay. 3.54 at the end of the quarter.

Right, that's very accurate. Is that number given in the report?

No, it is not written in the report, but we are happy to provide it in calls and discussions on an ongoing basis on the size of it.

Jon, thank you. You have had your two questions, and I have a lot on the list. Thank you. Thank you, Jon. The next one is Henry Patrykow from UBS. Henry, please.

Thank you, everyone. Two questions, please, from my side. The first one in MMP and the other subsection in MMP, which was a more negative question. number this quarter. You mentioned developing low-carbon projects. I was wondering if that's something that we should expect to be an increasingly negative for the drag on earnings in MMP, or was that quarter particularly weak, just at the sense of performance to expect next two quarters in that particular quarter? And then secondly, a follow-up on Dogger Bank. So you mentioned some delays to phase A. I was wondering what the implications you see for phases B and C for the projects and whether we should expect some delays here as well and effectively full capacity of the project a bit later than expected. Thank you.

Okay, thanks, Henry. So the MMP result came in at 521, which is sort of within the guided range. And I'm happy to see that MMP have been able to deliver within or above the guided range. all since we introduced sort of the increased guiding. So I would argue that they continue to deliver, you know, strong result across the business. You know, this quarter, you know, LNG trading and gas trading in particular is worth mentioning. However, sort of the other areas within within M&P delivered fairly around sort of what you should expect this quarter. The asset that has sort of been under maintenance is Mongstad and refinery. So that is sort of very limited results from sort of that part of the business. But when that is in operations, they provide typically a meaningful part into the business. the earnings from M&P. So I would say that M&P is sort of fair. On your question on low carbon spending, clearly we are in a growth phase and clearly there are business development and early phase costs. We have taken that well into account into our guiding when we put forward. The cost that we do spend here is specific project-related cost, it's not administration or general cost. They are linked to projects, but projects which are in an early phase, so you don't book it as investments, you have to book it as operational cost as well. Right. The second question was Dogger Bank B and C. So they are planned to come sort of following each other with sort of one year between them. So it's sort of a, you know, long-term, you know, operational sort of... We do it one after the other and all of that. They are planning to come with one year between them. I'm not in a position to say whether what we see now is impacting them, but what we do see is that Dogger Bank B We expect first power in first half of 25 and full power first half of 26. And Dogger Bank C, first power first half in 25. first first half 26 and then full power first half in in 27 which is one year after what we expect from dog bank a so that's sort of the latest update i have on this sec as operator is the one that really need to to to provide with with more details here thank you thank you thank you for your question and the next one is michelle de la vigna from goldman sachs michelle please the mic is open

Thank you very much, and congratulations on the good delivery. I will be quick. Two questions. First, I was wondering, on Johan Sverdrup, if you could provide us a little bit of an update, one more quarter of goods production. When do you expect the field to start declining, if this has been pushed back into next year? And secondly, we've heard of some disruptions in the offshore wind supply chains, especially in the UK. I was just wondering if you are finding it difficult to get, especially the vessels, or if effectively this is just normal course of business. Thank you.

Okay, thanks, Michele. On Johan's roadmap, progressing according to plan. As you remember, we sort of increased the production plateau level earlier this year to 755,000 barrels per day. And we expected to come off that sort of increased plateau level. towards the end of this year or or next year so the key here is is to drill wells to manage sort of and manage you know water water and water handling so all of that is is progressing you know according to plan two new wells this quarter we plan 10 new wells during the year then it will be around 41 wells drilled on johansfordrup Next year, we will launch a drilling campaign focusing on multilaterals as well. And then we have, you know, Johan's world of phase three, where we plan for a concept select in the fourth quarter and start by end, you know, 27 on the phase three here. You know, I just want to say, you know, this is what we do. I mean, this is absolutely the core competence of the company and here we apply All the competence and technology and sort of deep knowledge that we have and managing reservoirs is sort of Equinor at its best and we apply that at Johan's World Rope and it's progressing well and it continues to deliver as we expect. uh you had one more offshore wind supply chain yeah i think it's takes too much to give a full answer on that um we are we are sort of well on the projects that are ongoing but clearly there are supply chain issues within offshore wind we do recognize that but for our own projects we are we are good thank you michaela paul redman from bmp paribas paul please

Hi, Paul, are you there?

Yes, can you hear me? Sorry.

Can you hear me now? Thank you, Paul.

Perfect. On turnarounds quickly, you've gone into 125 MBOED for 3Q24. If I look at 3Q23, what was the planned maintenance? And you also have a number for what unplanned maintenance impacted you last quarter. I'm trying to just see whether 125 MBOED is more or less year on year. And then second, when we talk about value over volume in the renewable division, just building a little bit on Lydia's question, if there's areas where you think that you could slow down capital, do I see that as capex out of the plan, or would you see a reallocation into other parts of the business? Thank you very much.

Okay. So, good. So, turnarounds, you know, we expect 125%. 1,000 barrels per day in the third quarter this year, and last year it was 38 in the same quarter. I'm not sure I really got your question, and that was related to unplanned maintenance. We had some prolonged maintenance related to troll last year, But I think that impacted the fourth quarter more than the third quarter. But I think maybe you should call investor relations afterwards to get more specifics on that. But my point is, it is sort of a significant program we have in the next quarter, but production guiding remains firm. On value over volume, well, you know... we are planning to invest 10 billion dollars into our oil and gas activities and that sort of remains firm it has a high priority in the capital allocation project and a capital allocation process and sort of if we should you know make any changes yeah you know i mean we have we we have a guiding out there and sort of There's no sort of... Well, let me put this differently. I mean, we are not in a position where we want to change anything related to our CAPEX guiding for the time being. Things are progressing according to our plan. and in the value over volume process, value over volume considerations, that is typically impacting more the early phase activities than ongoing investment programs. You have seen that we haven't won in lease rounds recently, That is because we just find them to be too expensive. That is not impacting for short-term investments. It's more the longer-term investment that it will have an impact on. I have not an update to give you on this for the time being, Paul. But clearly, we are not starting new projects unless we see that they are value-creative.

Thank you. Next one is Chris Coupland from Bank of America. Chris, please go ahead.

Thank you for taking my question, Bård, and I'll try and keep it short. One remaining. Torbjörn, would you mind updating us what kind of macro deck was prevalent when these new tax installments were set for the second half? That's it. Thank you.

Yeah, great, Chris. So that will typically be, you know, close to forward prices that we are sort of, you know, in earlier this spring. So I don't have the number, Chris, particularly, but I think it would be around... I think if you have a look at sort of the forward prices early June, I think that is a good estimate for sort of the assumptions we do for those calculations.

And I can't remember exactly what it is.

But have a look at that and you'll find the answer.

That's fine. Thank you very much.

Thank you. Let's move on to Jason Gabelman from TD Cohen. Jason, please, the mic is open.

Yeah, hey, thanks for taking my question. Just one quick one for me. Next year, you have a $2 billion range for shareholder distributions. Can you just talk about what the factors are when you consider the low end or the high end of the range? Is it commodity prices? Is it things like Empire Wind Farm Down? Is there kind of one or two items that could tilt the balance to the low end or the high end for next year? Thanks.

All right, okay. Thanks, Jason. Yeah, so between $4 and $6 billion in share buyback next year. So it is not linked to any farm down or Empire Wind or anything like that. We haven't made up our mind yet, and we will communicate that on the capital markets day. But typically parameters to consider is the strength of the balance sheet and sort of the macro outlook at that point in time of search. Those are the two major parameters that will sort of go into that consideration.

Thank you. We are fast approaching the hour, but let's take one final one. And that is Matt Lostinau from JP Morgan. Matt, please.

Hi, guys. Thanks for the update. Just one question left, please. I just wanted to ask you about full-year operating cash flow generation. It struck me that the run rate in the first half looked somewhat light at sub-8 billion pre-working cap relative to the 17.5 or so I think that you'd referenced in Feb for the full year. Obviously, cash tax is expected to be lower in the second half, but equally you're signaling a heavier turnaround effect, certainly in 3Q. So how do you sort of see the run rate gap second half versus first half? And absent of higher gas prices, where does that additional cash generation come from? Thanks.

Okay. Thanks, Matt. So you're right, 7.7 the first half and then 17.5. for the full year. So it's sort of higher, you know, towards the end. We see actually a relatively flat cash flow from operations before tax, you know, through the four quarters this year. And the shift in tax payment is actually the major explanation to this. And I would say that sort of should explain absolutely most of it. So, you know, the production is... You know, the... We are getting back quite a bit of US production in the second half of the year, and that has a very low tax associated with it. So that clearly helps on the after-tax cash flow. compare that to the after-tax cash flow of maintenance on NCS, which has a large tax coverage, if you like. But the major explanation here is actually tax payments.

thank you and thank you everybody for uh calling in and for your questions we are just above uh one hour as usual let me remind you that the ir team remain available if there are any follow-up questions so thank you and have a good rest of the day