OSLO (AFP) – Norwegian energy giant Equinor reported yesterday a deep loss for 2020 as the coronavirus pandemic slashed demand and prices and announced it was divesting its loss-making United States (US) assets.
Equinor was the latest oil group to fall heavily into the red in 2020, reporting a net loss of USD5.5 billion compared to a profit of USD1.8 billion in 2019.
That is the biggest annual loss ever reported by the group, according to financial news site e24.no.
Equinor said it was selling off its interests in the Bakken oil field straddling the US states of North Dakota and Montana to Grayson Mill Energy, backed by EnCap Investments, for around USD900 million.
After a series of ill-fated investments, Equinor has accumulated more than NOK200 billion (USD23.7 billion) of losses in the US in recent years.
A large share of that stems from the Bakken field which, in the fourth quarter of 2020, contributed around 48,000 barrels of oil equivalent per day to Equinor’s production. “Equinor is optimising its oil and gas portfolio to strengthen profitability and make it more robust for the future,” Chief Executive Anders Opedal said in a statement.
“By divesting our Bakken position we are realising proceeds that can be deployed towards more competitive assets in our portfolio,” he added.
Analysts at RBC Europe questioned the timing of the operation.
“Given the weak performance from its US assets in recent years, and multiple rounds of impairments, we believe the company was under pressure to retrench from its international expansion efforts,” they said.
“Clearly it is not a good time to be selling upstream assets,” they added.
Equinor’s adjusted operating income, which excludes one-off items and is its preferred indicator, fell to USD3.9 billion from USD13.5 billion a year earlier. Sales dropped 29 per cent to USD45.8 billion in 2020.
Like its peers, Equinor was hard hit by the coronavirus pandemic and the ensuing economic crisis in 2020, as Brent oil prices briefly dropped below USD20.