Equinor shares fall despite Q4 profit beat, rising output

By Nora Buli and Nerijus Adomaitis

LONDON/OSLO (Reuters) -Equinor reported a smaller than expected fall in fourth-quarter profit on Wednesday and joined many rivals in promising higher oil and gas output while scaling back renewables, but its shares fell amid some disappointment over shareholder payouts.

The Norwegian oil and gas producer said its adjusted earnings before tax for October-December fell to $7.90 billion from $8.56 billion a year earlier. That beat the $7.71 billion expected in a poll of 24 analysts compiled by Equinor.

Equinor's Oslo-listed shares closed down 4.1%, underperforming a 0.3% rise for Europe's oil and gas index. Year-to-date, the shares are up 0.4%, lagging a 6% gain in European petroleum stocks.

Jefferies analyst Giacomo Romeo said Equinor's planned payout to shareholders in 2025 was lower than expected, while spending cuts on renewables were anticipated.

The ordinary cash dividend for the fourth quarter was raised to $0.37 per share from $0.35 in the third. Including share buybacks, Equinor plans to return to shareholders a total of $9 billion this year.

Chief Executive Anders Opedal told Reuters the capital distribution was "competitive".

"Equinor is well positioned for further growth and competitive shareholder returns ... Our oil and gas production outlook is increased to more than 10% growth from 2024 to 2027," he said.

In 2030, the company expects to produce around 2.2 million barrels of oil equivalent per day in oil and gas, up from the previous plan of 2 million, Equinor said in a statement.

At the same time, the company scaled back plans for renewable energy capacity expansion, in line with European peers Shell and BP.

"Inflation, interest rates, supply chain issues and regulatory uncertainty reduce the pace of energy transition ... We adapt to these realities, both phasing and prioritising investments to maximize returns, Opedal told an investor presentation.

The company reduced its 2030 target for renewable energy capacity to between 10-12 gigawatts from 12-16 gigawatts previously, and scrapped plans to spend more than 50% of its gross capital on renewables and low-carbon solutions by 2030.

It also reduced organic capital spending plans for 2025 to $13 billion, down from guidance of $14 billion to $15 billion a year ago.

"The result of the above change appears to be a business that has moderated the pace of its transition, which should in theory mean more robust cash flows over time," RBC Capital Markets analyst Biraj Borkhataria said in a note to clients.

In 2025, Equinor's plans to increase oil and gas production by 4% from 2024, as new fields are set to come on stream.

Kjetil Hove, Equinor's head of Norwegian operations, told Reuters he expected the Johan Sverdrup oilfield, the largest in Europe, to produce at around 720,000 barrels of oil equivalent per day in 2025, close to the levels in 2023-2024.

Its Troll gas field, which hit a record output last year, was also expected to continue producing at elevated levels this year, he added.

Equinor in 2022 overtook Russia's Gazprom as Europe's biggest supplier of natural gas when Moscow's invasion of Ukraine upended decades-long energy ties. Norway now meets around one-third of the continent's demand.

(Reporting by Nora Buli in London and Nerijus Adomaitis in Oslo; Editing by Gwladys Fouche, Subhranshu Sahu and Kim Coghill and Mark Potter)