Equinor ASA Q4 2024 Earnings Report

Equinor ASA EPS Results

• Actual EPS: $0.63
• Consensus EPS: $0.82
• Beat/Miss: Missed by -$0.19
• One Year Ago EPS: N/A

Equinor ASA Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $24.40 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Equinor ASA Announcement Details

• Quarter: Q4 2024
• Date: 2/5/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, February 5, 2025
• Conference Call Time: 4:00AM ET

Equinor ASA (NYSE:EQNR), an energy company, engages in the exploration, production, transportation, refining, and marketing of petroleum and other forms of energy in Norway and internationally. It operates through Exploration & Production Norway; Exploration & Production International; Exploration & Production USA; Marketing, Midstream & Processing; Renewables; and Other segments. The company also transports, processes, manufactures, markets, and trades in oil and gas commodities, such as crude and condensate products, gas liquids, natural gas, and liquefied natural gas; trades in power and emissions; operates refineries, terminals and processing, and power plants; and develops low carbon solutions for oil and gas. In addition, it develops carbon capture and storage projects; provides transportation solutions, including pipelines, shipping, trucking, and rail; and develops and explores for renewable energy, such as offshore wind, green hydrogen, and solar power. The company was formerly known as Statoil ASA and changed its name to Equinor ASA in May 2018. Equinor ASA was incorporated in 1972 and is headquartered in Stavanger, Norway.

Equinor ASA Q4 2024 Earnings Call Transcript

Presentation

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

My name is Bor Glad Teversen, and I am heading up Investor Relations in Acunut. 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.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

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 Hoepedal and our CFO, Torgrim Reitam. After their presentations, there will be a Q and A for analysts here in the room. And all the members of the corporate executive team are here and ready to provide answers.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Later after that, we will have three breakout sessions. One with Anders and Turgen one with Sjertil Hoove and Filip Mateo, the Executive Vice Presidents for EPN and EPI and one with Jens Ochklon and Irene Rumelof, the EVPs for renewables and MMP. But before all of that, we will do as we do in all, like in all meetings, we will start with a safety moment. This will be with our EVP for Safety, Security and Sustainability, Janneke Nielsen. 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 GAAP measures.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Then we are ready to start, and I hand it over to you, Janneke.

[Jannicke Nilsson, Executive VP - Safety, Security & Sustainability at Equinor]

And thank you to your board, and good morning to all of you. In Equinox, safety and security is strongly integrated in our leadership and culture. And as Paul 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.

[Jannicke Nilsson, Executive VP - Safety, Security & Sustainability at Equinor]

At the end of 'twenty four, the SIP had reduced to 0.3, percent, a reduction of 73% since 2011. Last year, we had the best safety results ever in the company. This demonstrates how systematic efforts over time gives results. Still, we can never rest. Last year was marked by a tragic helicopter accident where we lost a dear colleague.

[Jannicke Nilsson, Executive VP - Safety, Security & Sustainability at Equinor]

It require 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. Equinor 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 regular test our ability to handle accident while maintaining production.

[Jannicke Nilsson, Executive VP - Safety, Security & Sustainability at Equinor]

By reducing serious incident, 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 'twenty four, Johan Sverdlov and Proll 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.

[Jannicke Nilsson, Executive VP - Safety, Security & Sustainability at Equinor]

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 Opearl, our CEO, to take you through our capital market update.

[Jannicke Nilsson, Executive VP - Safety, Security & Sustainability at Equinor]

Anders, the floor is yours.

[Anders Opedal, President & CEO at Equinor]

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.

[Anders Opedal, President & CEO at Equinor]

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. And we demonstrate a consistent strategic direction, adapting to changing markets and take clear actions to further increase value creation for shareholders.

[Anders Opedal, President & CEO at Equinor]

We expect to deliver above 15% return on capital employed all the way to 2,000 and 30. Returns on capital employed is 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 23,000,000,000 in free cash flow.

[Anders Opedal, President & CEO at Equinor]

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 $9,000,000,000 It represents a $0.02 increase in the quarterly cash dividend and $5,000,000,000 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.

[Anders Opedal, President & CEO at Equinor]

All this is made possible by our great people, and I would like to use this opportunity to thank all our employees for the dedicated efforts to create these results. Through strong operational performance, we delivered returns on capital employed of 21%. The cash flow from operations was $18,000,000,000 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.

[Anders Opedal, President & CEO at Equinor]

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.

[Anders Opedal, President & CEO at Equinor]

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.

[Anders Opedal, President & CEO at Equinor]

We are well positioned to create value in this context. First, energy demand is growing. Global oil demand grows and expected above 100,000,000 barrels through this decade. For gas, we expect demand to increase and stay above today's level all the way to 2,050. Asia drives demand short term, and we see U.

[Anders Opedal, President & CEO at Equinor]

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.

[Anders Opedal, President & CEO at Equinor]

For Power, we foresee significant growth towards 02/1950, 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 uncertainty. 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.

[Anders Opedal, President & CEO at Equinor]

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.

[Anders Opedal, President & CEO at Equinor]

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 CapEx ambition. In our view, the energy transition must be balanced and financially sustainable.

[Anders Opedal, President & CEO at Equinor]

We are increasing our free cash flow generation and expect to deliver $23,000,000,000 from now to 2027. From 2024 to 2027, we expect a free cash flow growth above 50%. The largest driver is an $8,000,000,000 CapEx reduction. We reduced our investments in renewables and low carbon solutions by 50% in this period compared to last year's outlook. In addition, KOM's project financing of Empire Wind and the establishment of a joint venture in UK.

[Anders Opedal, President & CEO at Equinor]

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.

[Anders Opedal, President & CEO at Equinor]

We use AI in the planning of the Johan Sverdrup three project and then we generated over 1,000,000 alternative fill layouts and well trajectories. And this added $12,000,000 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 $9,000,000,000 A competitive, predictable and growing cash dividend has the highest priority when I allocate capital.

[Anders Opedal, President & CEO at Equinor]

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 $0.02 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.

[Anders Opedal, President & CEO at Equinor]

We have previously indicated a base level of $1,200,000,000 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.

[Anders Opedal, President & CEO at Equinor]

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 02/1930 to around 2,200,000 barrels per day, up from 2,000,000 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.

[Anders Opedal, President & CEO at Equinor]

And including transactions, we achieved more than 150%. With this, we strengthened our long term value creation. Our international upstream segment is on track to become close to 1,000,000 barrels per day business, And we expect the free cash flow to grow from $1,300,000,000 last year to more than $5,000,000,000 in 02/1930. The Bacalao FPSO is sailing to Brazil, expected on stream later this year. We closed several large transactions focusing our international portfolio in core markets.

[Anders Opedal, President & CEO at Equinor]

In The U. S, 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 forty 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.

[Anders Opedal, President & CEO at Equinor]

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 Sverdrupil, 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 twenty twenty five Sverdrup production to be close to the level of the last two years.

[Anders Opedal, President & CEO at Equinor]

And with extensive recovery effort, including the Phase III 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 MCS portfolio with new volumes from 19 projects we maintained 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 thirty years in production. And we extend the plateau of our gas plants, Kolsnes and Hammerfest LNG.

[Anders Opedal, President & CEO at Equinor]

We expect to maintain production in Norway at high level of 1,200,000 barrels per day all the way to 2,035. 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 $12,000,000,000 in cash flow from operations after tax all the way to 02/1935. We invest in renewables and low carbon solutions to create shareholder value for decades to come.

[Anders Opedal, President & CEO at Equinor]

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 $5,000,000,000 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 02/1930, including our share in Oersted and Skatek. This is down from 12 to 16 gigawatt.

[Anders Opedal, President & CEO at Equinor]

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 U. S, a project in a challenging market with returns under pressure and uncertainty. The project execution is progressing well.

[Anders Opedal, President & CEO at Equinor]

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 cancellations fees.

[Anders Opedal, President & CEO at Equinor]

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 life cycle 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.

[Anders Opedal, President & CEO at Equinor]

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 60,000,000 tonnes of CO2 per year, adding 20,000,000 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.

[Anders Opedal, President & CEO at Equinor]

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 emission from production and maintain our ambition of net 50% reduction by 02/1930. Continued effort to cut emissions while producing oil and gas reduces cost, increases returns and increases the competitiveness.

[Anders Opedal, President & CEO at Equinor]

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 02/1930, we introduce a range for our net carbon intensity ambitions, and we retire our gross CapEx ambition. But our strategic direction remains the same.

[Anders Opedal, President & CEO at Equinor]

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.

[Anders Opedal, President & CEO at Equinor]

And finally, this enable 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, Torgrim Reiten, and he will give you more details on our outlook and also, of course, the fourth quarterly results. So, Torgrim, the stage is yours, and thank you very much for the attention.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So thank you very much on this, and good morning, everyone. Very good to see you all again here in Bistrof, London. So first, I'll share some reflections on the Capital Markets Day material before I go into the quarterly results and full year results. So you have heard on this say that we are taking firm actions. We are improving all our key metrics, and then we are committed to provide a competitive capital distribution.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So I will provide more details into how we are going to continue to deliver industry leading returns, how we are going to improve our free cash flow significantly, how we are going to increase our production and by all of this, improve the resilience of the company. So let's start with talking about the framework for how we would like to create shareholder value. First, all the key metrics, they have improved. And that is even with a lower price tag. Our Oil and Gas production continues to deliver very well around $20,000,000,000 in cash flow from operations.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Then we have taken firm actions to reduce our organic CapEx. We now expect that to be $13,000,000,000 per year over the period twenty five to twenty six. And after project financing of Empire Wind, the number will be even lower. Then we are resilient to lower prices. So our cash neutral price after all reinvestments is now at $50 per barrel.

[Torgrim Reitan, Executive VP & CFO at Equinor]

That is $5 lower than last year. And then clearly, we are going to run with a very solid balance sheet as you are very well aware of. So that brings me to the center of this slide, and that is what we sold for and how we do think it is best to create shareholder value, very, very important to us. So first, return on capital employed. That is the metric.

[Torgrim Reitan, Executive VP & CFO at Equinor]

It captures everything and that has always been front and center in the way we operate and run this company. So we will continue to deliver on industry leading returns. Then free cash flow. Improving free cash flow and $23,000,000,000 is what we now expect to provide over the next three years. So that, the $23,000,000,000 leads me naturally into capital distribution.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So let me start with our track record. From 'twenty two to 'twenty four, we returned $45,000,000,000 We made extraordinary earnings in 'twenty '2 and 'twenty three, and then we chose to share that with our shareholders and pay that back. For '25, the Board is proposing a quarterly cash dividend of $0.37 per share, and this is almost 6% up from last year. On top of this, we expect to do a share buyback for $5,000,000,000 leading to a total distribution of $9,000,000,000 for the year. The first tranche of $1,200,000,000 that starts tomorrow.

[Torgrim Reitan, Executive VP & CFO at Equinor]

In 'twenty five, we are still returning extraordinary earnings and cash from previous years. And the total distribution is around 45% of expected cash flow from operations. So our capital structure and balance sheets are normalizing. So going forward, it will be our strong free cash flow that support a sustainable capital distribution. Our starting point will always be to deliver a predictable and growing cash dividend.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Then we will use share buybacks to get to a competitive level in total distribution. So we are well aware of the approach of our peers, both in Europe and U. S, and we are confident that we will be competitive towards that. So let's look at how this all comes together. The blue bars show you a solid and stable cash flow, around $20,000,000,000 on average over the next three years.

[Torgrim Reitan, Executive VP & CFO at Equinor]

This is the average and it is fairly stable. This year, we expect around $20,000,000,000 but with a fall in gas price assumptions, we expect it to be a little bit lower next year before the cash flow again is growing and increasing in 'twenty seven. For 'twenty five to 'twenty seven, we plan for around SEK 13,000,000,000 in annual organic CapEx. But remember, a $3,000,000,000 project financing of Empire Wind came in place last year at competitive terms, and that will be drawn upon going forward. We have hedged an all in interest rate for that project of around 5%, and that equals around 4% after tax.

[Torgrim Reitan, Executive VP & CFO at Equinor]

When excluding the Empire Wind investments, which are covered by the financing, CapEx will be around SEK11 billion this year. Average CapEx for SEK26 billion and SEK27 billion will be around 12.5%. So we aim to draw quite a bit on the financing in 2025%, also covering parts of the CapEx in 2026. Then we expect the tax credit from Empire Wind to be received in full in 2027 after production start up. And that is important because this means that all remaining CapEx for Empire Wind will be covered by project financing and the tax credit.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So the renewable CapEx you see behind me here is largely related to projects in execution. Beyond this, we have flexibility. So let me say a few words also on the outlook towards 02/1935. Last year, we spent quite a bit of that. So I just want to give you a brief update.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So return on capital employed, we expect that to be around 15% also in 02/1935. And the Oil and Gas activities, expect that to provide $20,000,000,000 in cash flow from operations also in 02/1935. However, the contribution from renewables and low carbon solutions will be lower in 02/1935 than we said last year. That is due to the lower investment levels that we are now planning for. From 2024 to 2025, we expect more than a 50% growth in the free cash flow.

[Torgrim Reitan, Executive VP & CFO at Equinor]

We have reduced our CapEx by $8,000,000,000 over the next three years. In addition, we are forcefully addressing costs, driving significant improvements into the free cash flow. Insulation has been challenging across our industry. We have worked very hard to fight this. And I must say, it is encouraging to see that in the fourth quarter, we have almost stopped the underlying cost increase.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Going forward, we aim to keep cost flat while delivering strong production growth. In Renewables and Low Carbon Solutions, we are cutting costs with around 20%. And we're doing that by prioritizing our early phase activities. So in total, the estimated impact is around $2,000,000,000 in cost savings towards $27,000,000,000 And all of this are important background and drive the $23,000,000,000 in free cash flow over the next three years. Getting capital allocation right is key to create shareholder value.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So our highest priority will always be to deliver a predictable and growing base dividend. Further, then we will continue to create value by investing into a high return portfolio. And as you have seen today, we are ready to use the flexibility. We are ready to use the flexibility in our investment program to ensure a competitive free cash flow and a sustainable capacity for our distribution. So out of the $23,000,000,000 in free cash flow, the surplus cash after paying or growing base dividend is around $11,000,000,000 So this is setting us up well to deliver a competitive share buyback program.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So we are well prepared to deal with lower prices. First of all, we run with a solid balance sheet, and we will continue to do that. And as you can see on the graph to the right, our cash flow is resilient. If gas prices in Europe is reduced by $2 per M2, our cash flow from operations will be reduced by $800,000,000 going from 20,000,000,000 to 19,200,000,000.0. And here, the Norwegian tax system is key.

[Torgrim Reitan, Executive VP & CFO at Equinor]

It is a neutral. It is a linear. It is a net profit tax. So that means if prices comes down, 78% will be offset by reduced taxes. And then investments on the NCS are deducted immediately.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So today, we invest around $6,000,000,000 annually on the Norwegian concentric sales. After tax, that is actually less than $1,500,000,000 So please keep that in mind when you compare our investment programs with others. Our portfolio of low breakeven projects ensures robustness and also the significant flexibility in our investment program is key here. Less than half of our CapEx is sanctioned from '27 and going forward. And then we operate most of it ourselves and we are in control.

[Torgrim Reitan, Executive VP & CFO at Equinor]

In addition, we are well prepared to handle volatility. Our M and P business has consistently delivered within or above the increased guiding range. We use our flexible assets to capture value from volatility, from price spikes and geographical arbitrage opportunities. And And as you know, we have access to all the major gas hubs in Europe and this cellular gas based on 70 day ahead and 30% month ahead. And that is important because that means when there is volatility, when there are price spikes, we will take advantage of it and the money will find its way to our earnings.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Our Oil and Gas business has become even better, and we get more out of the $10,000,000,000 in investments now than we have done earlier. So now we expect growth of more than 10% towards 2027. That is double of what we indicated last year. And production in 02/1930 is up from 2,000,000 barrels per day to 2,200,000. Furthermore, free cash flow has improved from Oil and Gas and unit production cost is down.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So an even better program with quality growth from a project portfolio with low breakevens below $40 per barrel, high returns around 30 percent real internal rate of return, short payback time of around two point five years and then low carbon emissions of less than six kilo per barrel. Our IGV with Shell is a good example of how we use different structures, setting up a specialized entity. The IGV will be self financed. It will cover rosebank CapEx. It will derisk or deferred tax assets, and it will add to our production growth.

[Torgrim Reitan, Executive VP & CFO at Equinor]

And last but not least, it will increase our free cash flow. We have created value in all different phases the renewable industry has lived through. We entered offshore wind early. We secured leases at very low cost, and that is in the projects that we are currently executing. Then we remained disciplined when market heated up, and we did not overpay for CBRE leases.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Instead, we took advantage of market conditions and we farmed down and achieved capital gains of around $2,000,000,000 We have experience with cycles, and we know that something good always comes out of a downturn. And we do believe that offshore wind industry will come out of this difficult time stronger and more robust. So we will be remain disciplined. And as you see, we have reduced our CapEx significantly. And by the actions we are currently taking, we are well positioned to create value also now.

[Torgrim Reitan, Executive VP & CFO at Equinor]

The challenging situation within offshore wind is also reflected in the valuation of Oersted. Last year, we acquired a 10% stake. The share price has continued to come down since then, but we have a long term perspective on this holding. And this is a more capital efficient way to increase our exposure to offshore wind. And today, you see that we are reducing our own CapEx to renewables.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So we will focus on improving returns in our existing portfolio, building longer term optionality at low cost and continue to deliver double digit returns. So let me turn to the fourth quarter and full year results. Last year, we had our best ever safety results. But as you heard from Janneke, this is a race without a finishing line, and we need to continue to improve. For the year, we delivered 21% return on capital employed and $18,000,000,000 in cash flow from operations after tax.

[Torgrim Reitan, Executive VP & CFO at Equinor]

For the quarter, we report adjusted operating income of $7,900,000,000 before tax and an IFRS net income of $2,000,000,000 Adjusted earnings were $0.63 per share. In the quarter, international production was impacted by a hurricane and curtailments in The U. S, partly offset by new wells in Angola and The UK. For the year, we had strong operational performance and delivered in line with our production guiding. We had record high renewables production in the quarter, mainly driven by onshore port plants in Brazil.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Then to the financials. Adjusted earnings in E and P Norway totaled SEK6.8 billion before tax, driven by strong operational performance. Our international segments delivered close to CHF500 million in total and was impacted by under lift and one off effects. Our marketing and midstream segment delivered solid results, driven by strong LNG and gas trading. Our organic OpEx was $12,100,000,000 for the full year in the low end of our guiding.

[Torgrim Reitan, Executive VP & CFO at Equinor]

For the fourth quarter, NCS tax payments totaled $5,800,000,000 And for the first half of twenty twenty five, we expect three installments of NOK 35,000,000,000 each. Our balance sheet is robust with over 23,000,000,000 in cash. Our net debt ratio is 11.9%. However, it is important to note that for trading business, they took advantage of market situations around year end and working capital increased as a function of this. So we do expect a lower net debt by the end of first quarter.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So as you have seen, we have delivered on our guiding for 2024. And then let me take you through the guiding for 2025. We expect organic CapEx of $13,000,000,000 for the year and $11,000,000,000 after project financing. We are investing for growth in Oil and Gas, and we do expect a production growth around 4% this year, well on track to deliver the 10% in by 2027. So to conclude my presentation.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Based on our consistent strategy and the firm actions we are taking, we are in a good position to deliver premium returns, a stronger free cash flow and a competitive capital distribution. So thank you very much for your attention. And then I'll leave the word to you, Board, to guide us through the Q and A session. So thank you very much.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Thank you, Toregrim, and thank you, Anders, for your introductions. We are now ready to start the presentation. And as I said, also the full CEC team is ready to answer. We have also participants online, but we will start here in the room. And so I will try to take notes and note hands.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

So I'll start with that. And I think we'll start with the first question, Martin Ratz from Morgan Stanley. And please, the rest, if you can keep your hands up, I can take notes while you, Martin, ask your question.

[Martijn Rats, Analyst at Morgan Stanley]

It's Martin Raskin, thanks for the presentation. I've got two questions, if I may. Relative to the presentation from last year, of course, the strategy for renewables and low carbon is quite different. And given that these things don't turn all a dime, I would imagine that your thinking on this probably started to change relatively soon after last year's presentation. So, we call the numbers and that makes a little sense.

[Martijn Rats, Analyst at Morgan Stanley]

But I was wondering if you can perhaps tell a little bit the story of how did this discussion come about within the company? What are the things that started to change your minds at some point in 2024 and how did that then develop into the plans that you are now presenting? So there's the story behind these changes. And the second one is perhaps a little bit more technical, but I was wondering if you could say a bit with the guidance that you're now given, what do you expect the trajectory for the balance sheets to be? Are we still tracking into that sort of range for gearing into sort of 15% to 30% range?

[Martijn Rats, Analyst at Morgan Stanley]

Where is the comfort zone? What's the path for the balance sheet? Thank you.

[Anders Opedal, President & CEO at Equinor]

Okay. Thank you. Two very good questions. So as we said, we have taken clear actions during 2024. We have in last year's outlook, we have had also added potential winning bids in the offshore wind industry.

[Anders Opedal, President & CEO at Equinor]

We anticipated kind of lower bid levers and kind of higher returns in some of those projects. That did not happen and we deliberately did not win those bids. And then kind of this CapEx is then, of course, removed. We also went into take a close look at our onshore business and high graded our portfolio. You probably have seen that we guided on around $13,000,000,000 in CapEx for 2024.

[Anders Opedal, President & CEO at Equinor]

We ended up at $12,100,000,000 and a substantial part of that was actually not executing projects in our onshore portfolio.

[Anders Opedal, President & CEO at Equinor]

So this has been

[Anders Opedal, President & CEO at Equinor]

a kind of ongoing development throughout the whole year. And then looking also into our early phase portfolio, we saw that we had in several countries not a route to profitable projects, and that's why we stopped those projects as well before we went into the bidding process. A little bit similar on low carbon solutions. As I said in my speech, different technologies moves at different pace and particularly on hydrogen. We see that customers are coming later to the table to commit to long term contracts and then kind of we are facing projects.

[Anders Opedal, President & CEO at Equinor]

When it comes to the balance sheet, we anticipated on the positive territory by year end and we said we added 5% to the transactions. We have also used MMP have used the time well lately to kind of do value creation in using the balance sheet. And that's why you see it's a little bit higher in the year end. We expect it to be a little bit lower end of first quarter. And then coming towards the end of the year, we will be around the lower level of the guided range.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Thank you. The next one on my list is Biraj Borktoria from RBC.

[Biraj Borkhataria, Analyst at Royal Bank of Canada]

Hi, thanks for taking my question. So first one is Boson spare drop, which I'm sure we're happy to talk about. But you previously talked about the declines coming through sort of in and around year end or early twenty twenty five. You put eight wells on stream I think last year. The move today to sort of extending the plateau, is that a result of the performance of the latest wells or something kind of fundamentally changed in your understanding of the reservoir there?

[Biraj Borkhataria, Analyst at Royal Bank of Canada]

Just some color on that would be helpful. And then second question is on sort of major investments you have. You've got two different projects, Rosebank in The UK, Empire Wind in The U. S. You've taken on quite a lot of policy risk in different ways.

[Biraj Borkhataria, Analyst at Royal Bank of Canada]

In The UK, obviously, the right to produce is a question mark and then Empire Winded. It seems like based on the headlines that the $2,000,000,000 of tax credits could be at risk. So could you just talk a bit about why you continue to push ahead with both of those, Whether it was possible to pause given the uncertainty and how you're thinking about that upside downside risk?

[Anders Opedal, President & CEO at Equinor]

Yes. Thank you. On the Sverdrup, and Kjeti will give a much deeper detail into this also in the breakouts. But this is really good work by all people onshore and offshore on the Stradro field. It's about delivering these wells and while drilling, seeing potential to kind of change the trajectory and kind of have longer pay zones, enabling higher production from the wells that we're actually drilling.

[Anders Opedal, President & CEO at Equinor]

And going forward, we will also do retrofitting into kind of multilaterals and so on. So this is one also the reason why we are able to keep up the high production. We are producing water on the field, but the team has worked really hard to see how can you really separate oil and water at high speed such that you can kind of maintain high oil production while you're also able to remove the water. This is about the separation process and so on. So it's a combination of many, many actions, both on the platforms, on the reservoir understanding and also drilling the wells and getting in very good results from these wells.

[Anders Opedal, President & CEO at Equinor]

Then Rosebank and Empire, yes, The political landscape is changing in many countries. We see a much more polarized views on energies, and it's shifting as elections take place. We welcome the latest verdict on the ruling on the Rosebank because this enable us to continue doing the projects while this is up for a new requirements for the environment impact assessment. We think we have a good project, it's progressing well. And this is also a project that provides growth in UK, but we see the paralyzed debate around it.

[Anders Opedal, President & CEO at Equinor]

So it is a political risk, but we are confident that this project will move forward. On Empire, just to kind of go for not having too long answer, go to the tax credit. When we took investments decisions on this, the tax credits were already in place. This was put in place in previous Trump administration. To make those changes, it required Congress approval.

[Anders Opedal, President & CEO at Equinor]

So we don't think this will be up for change very rapidly. But of course, anything changing political landscape is a political risk. And that's why I said in my speech, it's so important that we constantly improve our project, have a robust balance sheet to ensure that we are robust as a company, while energy policies may change during investment period. We advocate, I have to add this, we advocate to all governments that we talk to that predictability and stability in regulatory framework, it's important. Otherwise, energy companies like us and others will cannot invest in those countries.

[Anders Opedal, President & CEO at Equinor]

So that is a key message we're sending to our politicians in different countries.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Thank you, Anders. The next one on my list is Theodor Sver Nielsen from Sbarbanken Markets. Danvers, Trime.

[Teodor Nilsen, Equity Research Analyst at SpareBank 1 Markets]

Two questions. First, on your target to grow production to 2,200,000 barrels per day by 02/1930, definitely positive move. Could you just take us through where you expect that growth will come from? How much is organic growth and how much is in inorganic growth? Second question, that is on Empire.

[Teodor Nilsen, Equity Research Analyst at SpareBank 1 Markets]

You have listed or actually changed your guidance for return requirements for renewable to 10% nominal equity return. How does the Empire project sit compared to that guidance? And also in Empire, would you see a positive NPV, although you assume that tax credits will be canceled in that scenario?

[Anders Opedal, President & CEO at Equinor]

Yes. So let's divide the questions. So Torbjorn, but the 2,200,000 barrels per day where the growth is coming from, it's, of course, now the growth that we have talked about before, the Bacalao project, the Raya project, the Sparta project that will come on stream in this period. In addition to that, we have added 80,000 barrels oil equivalent from the transactions we did in U. S.

[Anders Opedal, President & CEO at Equinor]

Onshore. And also the IGV for The UK will increase our production with 35,000 to 40,000 barrels a day on average towards 2,030. And then the fantastic work that is being done on the Norwegian continental shelf keeping the production, but also add to such that we have a consistent and a growing production 2.2 compared to the outlook two point zero that we had last year. And then maybe a little bit on Empire and returns, Morgan?

[Torgrim Reitan, Executive VP & CFO at Equinor]

Thank you very much, Anders and Teodor. Just to be on what you say, Anders, the plan doesn't assume any inorganic activity. So that is based on sort of an organic development of the company. I would say it's actually a very firm and good plan. And compared to last year, we actually had assumed some divestments in the portfolio.

[Torgrim Reitan, Executive VP & CFO at Equinor]

There are no divestments assumed to drive sort of the free cash flow and all of that. So this is truly an organic plan. On Empire Wind, yes. So if we talk about lifecycle return on that project, that is close to 10% nominal equity returns. And clearly, there are a couple of things that we need to remember here.

[Torgrim Reitan, Executive VP & CFO at Equinor]

One is that it takes into account the farm dam that we did with BP. And we also need to remember that BP actually has covered half of the development cost in a period here. And thirdly, the project has been significantly derisked during the year with sort of a 30% higher price, financed at competitive terms as such. And this altogether a $7,000,000,000 investment into these projects, $2,000,000,000 has been sort of invested, and the remaining $5,000,000,000 will be covered by project financing and the ITC, the tax credits. So I mean, it's sort of that's sort of where the money come from.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So when we sort of make our decisions on what to do with this project, it's okay. So that is sort of the way forward. And then of course, we need to think about, okay, so what is the alternative? And if we should sort of do something with it, it would trigger significant cancellation costs. So it is better as we see it for our owners that we actually bring these projects through.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So it's a derisked project, it's progressing well. And of course, there are remaining uncertainties as such. On your specific questions on sort of how the NPV would look like without ITC, there are two levels of ITC. It's sort of a 30%, which is sort of has been there for a long time. And then it's a 10% related to local content in The U.

[Torgrim Reitan, Executive VP & CFO at Equinor]

S, which has been decided by Congress and all of that. And there is a very long and strong history in The U. S. Of grandfathering projects if there are going to be changes for things going forward. So we feel that, that is sort of the best assumption here.

[Torgrim Reitan, Executive VP & CFO at Equinor]

When that is said, there is remaining uncertainty in the project. We need to understand that. And altogether, it is, has been a challenging project, but close to 10% equity return. So this is not great.

[Anders Opedal, President & CEO at Equinor]

It is okay. Yes. And when it comes to project execution, so far, it's progressing well. We have all the contracts in place. We have all the suppliers in place, and we have a great team in place in New York running this project.

[Anders Opedal, President & CEO at Equinor]

But as you said, also uncertainty going forward. Thank you.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

I have Lydia Rainford from Barclays on my list up here in the front.

[Lydia Rainforth, MD & Energy and Energy Transition Equity Research at Barclays Corporate & Investment Bank]

Thank you, and good morning. I'd like to ask, obviously, you presented a picture of longevity of cash flow and probably further out than anybody else that we've seen. And part of that is actually keeping the cost base flat with growing production. So can you just talk how you actually do that? So that's actually really impressive progress on costs.

[Lydia Rainforth, MD & Energy and Energy Transition Equity Research at Barclays Corporate & Investment Bank]

And then the second one is just on, I think, Todd, you talked a number of times about it being competitive distribution. What do you actually mean by that? Are we thinking about dividend yields versus other paying out a percentage of cash flow? And part of that, I guess, is then if you have a choice between buying back your own shares versus putting more money into all shared or to rights issues stuff, how do you think about that just from a capital allocation standpoint?

[Anders Opedal, President & CEO at Equinor]

Thank you. When it comes to cost, first of all, I would say it was very encouraging to see that the cost development year on year on the fourth quarter was very good and there was a flat underlying cost with some reduction due to one off effects. And this is because we have worked on cost for a while. And particularly when we talk about Norwegian continental shelf, for instance, is our scale, our scale of operations that we're able to kind of add more volumes, new projects into the same operating model. We are able to scale up the technologies and all the improvements goes to many of these platforms and operations.

[Anders Opedal, President & CEO at Equinor]

On the international business, has been focusing on the reduced cost that we would see now from the IGV, but also moving from operated Utica to the non op Marcellus, which is a much more cost efficient place to produce oil and gas due to scale effects from expand energy. When it comes to renewables and low carbon solutions, as I mentioned earlier, it's about the early phase projects. Take high grading all the early phase projects to ensure that we are able to only move forward with those that we think have a possible way to make the necessary return. But at the same time not removing so many that we don't have optionality for the future. So it's a balancing act there about creating optionality at the same time reducing the cost.

[Anders Opedal, President & CEO at Equinor]

When it comes to and your question is really about capital allocation. And as I said, our first priority is the cash dividend and grow the cash dividend in line with the long term underlying earnings. That is the first priority when we look at capital allocation. And you should kind of expect us to continue doing that going forward. Then we have said, we want to be competitive and Torgrim mentioned in his speech, but we are aware of our competitors.

[Anders Opedal, President & CEO at Equinor]

And but we don't want to use a percentage of cash flow from operations directly because you know with the tax legs on the Norwegian continental shelf that will be a very volatile cash distribution or capital distribution. So to be able to have a more stable and predictable, we're focusing on how can we maximize and increase free cash flow, creating the necessary capital distribution capacity. And then I think you have seen over the last years that we have been competitive in this respect.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Can I build on that on and relate that to M and A activity? Because, I mean, we are pretty active when it comes to M and A. You have seen that last year, divesting some and acquiring some. And Lida, you should expect that to continue in a way. So that is about high grading the portfolio.

[Torgrim Reitan, Executive VP & CFO at Equinor]

And as you have seen, what we have done improves free cash flow and it actually improves capital distribution capacity. And that has been very important for us when we sort of shape the portfolio. So going forward, M and A will be very, very much focused on value creation and also ensuring that we can serve our investors with a competitive capital distribution. The rest of the world, we have done 10%. I mean, there's not much more to say than that.

[Torgrim Reitan, Executive VP & CFO at Equinor]

But

[Torgrim Reitan, Executive VP & CFO at Equinor]

it

[Torgrim Reitan, Executive VP & CFO at Equinor]

is also important to say that sort of we will run with a very solid balance sheet, and we have no problem running below 15% to 30% net debt. That range was put in place when we were above to get onto it. I mean, super happy to run with a conservative balance sheet. Ensuring capital distribution capacity, ensuring capacity to do value creative M and A, if that should be something that we would like to do. So just to so we have that crystal clear that this is not either or.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Thank you. We will go with Johan Saranton from Bernstein there, and

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

then we will take one call from the line.

[Yoann Charenton, Analyst at Bernstein]

Thank you. So I would like to ask a question about the capital distribution. I believe and correct me if I'm wrong, but that's the first time that Equinor is offering buybacks that would exceed dividend this year. How important is this in addressing the need for your distribution to be competitive having buyback exceeding dividend? And on the same points, what sort of commodity price environment do we need next year, so in 2026, for you to continue to offer this buyback exceeding dividend going forward?

[Anders Opedal, President & CEO at Equinor]

So last year, we provided with a two year guidance for our capital distribution because we were coming back from a very high commodity environment with a lot of excess cash that we have returned back to our shareholder, but approaching a normalization where capital distribution will have to be sourced from our free cash flow and distribution capacity. That's why we guided on our share buyback between four to six and we're now providing five, which is, as you said, a higher level than the cash flow. We don't have the cash dividend. We don't have a kind of a rule of this. The cash dividend is about SEK4 billion.

[Anders Opedal, President & CEO at Equinor]

And next year, we will source the share buyback to be competitive from our free cash flow that we have provided with to today. So no kind of percentage that share buybacks need to be higher or lower. It's about, you should see this as a total framework for being a competitive distribution, the growing cash dividend and share buybacks to ensure that we are competitive. And the commodity environment. You have seen, we will focus in any commodity environment to have sufficient free cash flow to be competitive to distribute shareholder distribution.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Thank you. We will take a caller and then we'll revert back to this room. So please open the line.

[Operator]

John Olesen, ABG. Please go ahead.

[John Olaisen, Head of Research at ABG Sundal Collier]

Thanks a lot for taking my question, ladies and gentlemen. I wonder I have two questions, if I may, very quickly. Is guidance impacted by The U.

[John Olaisen, Head of Research at ABG Sundal Collier]

K, is it a joint venture with Shell in The U. K? Or are you assuming CapEx investments CapEx and production like proportional to your stake in the joint venture? That's my first question. And the second question is regarding exploration.

[John Olaisen, Head of Research at ABG Sundal Collier]

I noticed that you are now seeing 25 to 30 wells sorry, 175 wells between now and 02/1930 in Norway. This is closer to 30 wells per year compared to previous guidance of 20 to 30. I just want to say that a correct observation. And secondly, the exploration spending between now and 02/1930, how does it look in dollar terms? And if it's included in the CapEx guidance, please?

[Anders Opedal, President & CEO at Equinor]

The question was about so let me say a little bit about exploration because your observation is right. I think we in 2021, we said that we will increase the exploration activity on the Norwegian continental shelf will be around 20 to 30. Well, but Cetil, however, and his team really worked on how are we able to move this more towards 30 than to 20. So we have a lot of prospect to drill, and we have the heavy capacity to work on this going forward. Torbjorn,

[Anders Opedal, President & CEO at Equinor]

for the CapEx?

[Torgrim Reitan, Executive VP & CFO at Equinor]

Yes. Thank you very much, Jan. On sort of the exploration and whether that is taken into account in CapEx, that is based on assumption of capitalization of that exploration, which links to sort of expectation to deliveries. And on the NCS, eighty percent of that program is related to closed infrastructure exploration, meaning a very high degree of capitalization. So most of that is taken care of into sort of the investment program.

[Torgrim Reitan, Executive VP & CFO at Equinor]

You had a question on the IGB. I'm not I didn't perfectly get it, John, but a few words. I mean, it is a fiftyfifty joint venture. So we will sort of, as an owner, take part in that. But this will be deconsolidated from our balance sheet.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So we will not report CapEx related to it. However, we will receive dividend coming out of this. And clearly, what we have agreed with Shell is that that will have a priority as sort of we set up and build the new company as such. So this is clearly improving our free cash flow, and it is also improving productions. So this is very good for our cash flow over the next few years.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Okay. We will take a question in the room. I have Mikael Dela Wigna from Goldman Sachs on that side. Mikael, you'll get the microphone.

[Michele Vigna, Managing Director at Goldman Sachs]

Thank you very much. And congratulations on a very strong pipeline of startups for the next three or four years. As we look beyond it, as you start to plan for growth in 02/1930 and beyond, especially if I look at international projects, there's not a huge amount of pre FID projects. There's Bay Du Nord. I'm wondering after such a successful restructuring of your international portfolio, if perhaps it's the time again to look for more countries and more entry opportunity and if you see this as the right time to do it or perhaps better to wait for the next downturn?

[Michele Vigna, Managing Director at Goldman Sachs]

And then if I may go back to Empire Wind. I know there have been a lot of questions, but one of the risks that could potentially come through is for tariffs on equipment that is largely imported from Europe. I'm just wondering if you see that as a potential risk or if perhaps you're already largely done with the sourcing of that equipment? Thank you.

[Anders Opedal, President & CEO at Equinor]

Thank you very much. Yes, we have worked really hard over the last years to optimizing the EPI portfolio and restructuring by both doing acquisitions and divestments. And Philippe is working really hard also to see what is the next step between from 02/1930 and beyond in this portfolio. We do have exploration, particularly in Angola, where we see kind of we can add similar type of IOR techniques and kind of infrastructure led exploration. So that is something.

[Anders Opedal, President & CEO at Equinor]

And then we will always kind of be there to see kind of similar back to your questions about M and A, but if we can see really value creating free cash flow deals kind of adding to longevity, we will look into it, of course, as we always do. So we have quite a lot of focus over the next years to work with longevity in the EPI, but it needs to create long term value and not only kind of a lot of CapEx coming very early. Good questions around tariffs. It's kind of we follow the new flow. It's a fluent kind of market in terms of tariffs coming and not coming.

[Anders Opedal, President & CEO at Equinor]

But for the Empire Wind, we have a lot of supply chain in The U. S. And several of those debt equipment is already made, for instance, the cable and so on, but also a substantial part coming from Europe, for instance, the VTGs that will be produced in Europe by Vestas. So clearly, this is on our radar, but it's too early to say any potential impacts.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Thank you. Then we have Peter Lowe from Redburn here in the middle of the room. Peter, if you raise your hand, I will see you with the mic.

[Peter Low, Partner at Redburn Atlantic]

Hi. Yes, thanks for taking the question. The first was on the operating cash flow guidance. I think you did 18,000,000,000 in 2024 and that was at $81 a barrel. I think in 2025, you're guiding to 20,000,000,000 at a $70 a barrel assumption.

[Peter Low, Partner at Redburn Atlantic]

Can you perhaps just walk through kind of where that improvement comes from year over year? And then the second question was perhaps just to get some perspectives on the European gas market. We started the year with pretty high pricing, a pretty tight environment. And kind of how do you see that unfolding as we kind of move through 2025 and beyond?

[Anders Opedal, President & CEO at Equinor]

So now I want you, Torbjorn, to take the first question. And then I would like to draw also my excellent team. So if you and Erna could say a little bit more about our gas outlook short term and then the medium term.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Yes. Thanks, Peter.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So

[Torgrim Reitan, Executive VP & CFO at Equinor]

the cash flow from operations in 'twenty four was $17,900,000,000 and that was sort of realized oil price around $80 as you say and European gas price of $11 So the assumptions that we use for 2025 is $70 oil, but certain gas in a way. So the price impacts between those years are sort of equaling out in reality terms. So I mean the price impact between those numbers is very limited. However, but it will move from 17.9 to around '20. And that is driven by production growth.

[Torgrim Reitan, Executive VP & CFO at Equinor]

It is driven by cost improvements as you have seen. And then on the CapEx side, you have seen that we are taking down investments in renewable significantly. And also, there is an element of project financing sort of for 2025, taking down CapEx spending from 13,000,000,000 to 11,000,000,000 in sort of for 2025. So that sort of gives you sort of the mechanics when it comes to free cash flow movement. The cash flow from operations is very much driven by production growth and cost improvements and better underlying operations.

[Irene Rummelhoff, Executive Vice President of Marketing, Midstream & Processing at Equinor]

Well, a few words on the gas prices. I think we've seen them rise quite rapidly recently. It's due to the end of the Ukraine transits, but also maybe more importantly, the rumors, I guess, or indications that Germany, in particular, will force storage filling in the summer. So I think we're up for an exciting year. We can easily see significant price spikes, I guess, when you get into the summer.

[Irene Rummelhoff, Executive Vice President of Marketing, Midstream & Processing at Equinor]

There's high AC demand in Asia, warm weather, coinciding with regulated storage filling, I think we're up for some excitement. Beyond that, you have to get into 'twenty six, 'twenty seven, I guess, before you see significantly new supply. So it's going to be tight up until then. Then the big question is, of course, will Asian demand growth keep pace with new supply? And the big unknown is what's going to happen, I guess, with Russian volumes if there is some kind of settlement between Ukraine and Russia.

[Irene Rummelhoff, Executive Vice President of Marketing, Midstream & Processing at Equinor]

I think the lack The way we see it, It's probably going to be APCM through Nord Stream 2. Nord Stream 1 is permanently destroyed. We don't expect volumes to come through Poland. We do expect Ukraine to bring another 30 yes, 28. So maybe an additional Russian volume potential of 35.

[Irene Rummelhoff, Executive Vice President of Marketing, Midstream & Processing at Equinor]

But if you contrast that to the LNG imports last year into Europe, which was $125,000,000, it's not really that significant. So I think strong markets next couple of years, then some more uncertainty. Let's come to the Q and A or the breakout and we'll give you a lot more interest in.

[Anders Opedal, President & CEO at Equinor]

Thank you. And it's just one number I found very striking when we're looking into the gas market because the storage level coming out of this winter will be around 42%. And if you kind of have then, you want to go back to 90% storage level, actually Europe needs to attract two thirty more LNG cargos than last year, which represent around 20% increase. And I think that's kind of demonstrate a little bit the competition for LNG we will see between Europe and Asia over the summer.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Okay. We will try to cover a few more. I ask you to limit it to one question here so that we can capture as many as possible. I'll have Hendrik Patekoe from UBS first and then Chris Kuplen from Bank of America.

[Henri Patricot, Executive Director at UBS Group]

Yes. Thank you. Just one follow-up on the financial framework. I think at our agreement, you said that going forward, the free cash flow is what would be used, excess free cash flow will be used for shareholder returns. So should you think that with the net debt back within your gearing range probably by the end of this year, you would no longer use the balance sheet to pay extra shareholder returns to stay competitive?

[Henri Patricot, Executive Director at UBS Group]

It would only be from free cash flow. Is that the right way to think about it? Or would you let net debt gearing move a bit higher within the range?

[Torgrim Reitan, Executive VP & CFO at Equinor]

Yes. No, no. Thanks. It's this year is sort of the last year with sort of extraordinary elements from the past. So it has taken a little bit of time to share those magnificent results with our shareholders.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So going forward, it will be on an ongoing business type of considerations related to capital distribution. So I mean excess cash or surplus cash, as we say, is clearly a number that you should have a look at as sort of the framework for the way we think about capital distribution. However, this is not mathematically plus minus one. It is just providing us with a sufficient capacity to be competitive. And then, of course, the balance sheet is always there, but sort of it is in a place now where we think it's sort of right to operate and we are not in a we have no plans to re lever more than we are currently in a way.

[Torgrim Reitan, Executive VP & CFO at Equinor]

So this is actually a business that from now on will sort of be an ongoing business and the capital distribution capacity over time needs to come out of the way that we run our business. When that is said, and as Irene hinted to, there might be periods with price spikes again. And clearly, we will see to that we are true to that we are competitive in our capital distributions in those type of price environments

[Torgrim Reitan, Executive VP & CFO at Equinor]

as well.

[Anders Opedal, President & CEO at Equinor]

But as I said, when Torbjerg with this, I'll kind of clearly tell you how we will steer the company going forward in terms of providing sufficient distribution capacity through free cash flow.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Chris Kippen from Bank of America.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

Yes.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

Thank you.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

I'd like to focus on inorganic. And you mentioned there are no inorganic CapEx numbers in your slide pack and also no disposals. Does that mean you feel happy, you're not going to repeat what you did just recently and use your balance sheet for more M and A? Does it mean that M and A needs to be, if you like, self funded? So any inorganic growth needs to be at least nearer term funded with inorganic, I.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

E, with disposals? And if you could maybe give us a little bit of an insight into the hurdle rates you are using. Feel free to use the latest acquisition that you made. How that 10% acquisition is giving you a comparable competitive return? You mentioned 10% for Empire Wind.

[Christopher Kuplent, Analyst at Bank of America Merrill Lynch]

Thank you.

[Anders Opedal, President & CEO at Equinor]

Yes. I think, Torgrim, well, alluded a little bit earlier to how we think around inorganic investments. You can think about the hurdle rate in between. But I think you should look at what we have done recently, both being in divestments and in acquisition and really looking at how we constantly improve our business by doing both of those elements. And I think it's the kind of the balance over time you need to take a look at.

[Anders Opedal, President & CEO at Equinor]

If you could in one way of looking at is that we have divested in Azerbaijan in Nigeria and then reinvested in U. S. Onshore gas, high grading the portfolio, creating more longevity and creating kind of free cash flow in that respect. So it's not only one single acquisitions or disposals. It's the totality over time you will have to look and kind of to evaluate and how we then actually kind of are improving our business by doing so.

[Torgrim Reitan, Executive VP & CFO at Equinor]

Okay. When it comes to sort of hurdle rates and the way we think about hurdle rates is that we use the same approach within M and A as we used on Johan Sverdrup and other places. I mean, they need to clearly provide an additional return to our cost of capital assets. So that is the starting point. When it comes to M and A, it is very I mean, clearly, we do a lot of fundamental analysis as companies do and see to whether there's an underlying value in the company or assets that is sort of higher than what we are willing to pay.

[Torgrim Reitan, Executive VP & CFO at Equinor]

But then, of course, it's also important that you that we take into account that we have a sufficiently good timing on acquisition and divestiture. And I would argue that in the past, we have a pretty good track record for actually working countercyclical. When it comes to Oersted, the 10% that we acquired clearly justify is very well justified when you compare it to the underlying values. And then of course, the share price has come down since then. We are very well aware of that.

[Torgrim Reitan, Executive VP & CFO at Equinor]

But we are a long term investor in the company. And that company is typically a $4,000,000,000 EBITDA company in a way. It has a good return on capital employed. So the underlying delivery of the company is good. And that is sort of where we sort of do our evaluations and all of that.

[Torgrim Reitan, Executive VP & CFO at Equinor]

And then of course, we need to be patient and we are sure that when sort of the offshore wind industry sort of comes through this troubling time, Versted is a good and competitive company, a company that we would like to be partly owner of.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Thank you, Anders and Torgrim, and thank you for everybody asking questions. We did not manage to get fully to the bottom of the list, but we are on overtime. Anders and Torgrim will be in breakout sessions as well. So there will be opportunity to discuss further and ask additional questions. The breakouts will start immediately after this, so you have time to fill your cup and then move to your rooms.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

Those of you who have signed up for the breakouts, you have a letter on your main tag, A, B or C. That's an indication of which room you should go through. And then there will be three groups of CEC members that will rotate between the rooms so that you all get to talk to all of them. Each session will be around half an hour, so a good opportunity to discuss. Then we will end also the breakout sessions at 12:30 and serve some lunch outside of this.

[BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor]

So with that, Anders, I leave it to you to close this session.

[Anders Opedal, President & CEO at Equinor]

Yes. Thank you very much. And as always, thank you for the good and challenging questions. As I said, we are on track to deliver industry leading returns. We are doubling the production growth and free cash flow increases and a competitive capital distribution.

[Anders Opedal, President & CEO at Equinor]

Firm strategy, but taking clear actions to improve the value for our shareholders. So thank you very much. Looking forward to the break up session.

Participants

Analysts

• BÃ¥rd Glad Pedersen, SVP - Investor Relations at Equinor
• Jannicke Nilsson, Executive VP - Safety, Security & Sustainability at Equinor
• Anders Opedal, President & CEO at Equinor
• Torgrim Reitan, Executive VP & CFO at Equinor
• Martijn Rats, Analyst at Morgan Stanley
• Biraj Borkhataria, Analyst at Royal Bank of Canada
• Teodor Nilsen, Equity Research Analyst at SpareBank 1 Markets
• Lydia Rainforth, MD & Energy and Energy Transition Equity Research at Barclays Corporate & Investment Bank
• Yoann Charenton, Analyst at Bernstein
• John Olaisen, Head of Research at ABG Sundal Collier
• Michele Vigna, Managing Director at Goldman Sachs
• Peter Low, Partner at Redburn Atlantic
• Irene Rummelhoff, Executive Vice President of Marketing, Midstream & Processing at Equinor
• Henri Patricot, Executive Director at UBS Group
• Christopher Kuplent, Analyst at Bank of America Merrill Lynch