Equinor on Friday reported a drop in second-quarter operating profit but a strong performance from its refinery and trading business helped to counter a coronavirus-led slump in oil and gas prices allowing the group to beat forecasts.
The Norwegian oil and gas company reported an 89% slump in adjusted earnings before interest and tax (EBIT) to $350 million in the April-June quarter, compared with $3.15 billion in the year-ago period.
A poll of 25 analysts compiled by Equinor had forecast an adjusted operating loss of $200 million.
Equinor's three oil exploration and production businesses, E&P Norway, E&P International and E&P USA, made losses, but profits increase at its refinery and trading division.
Chief Executive Officer Eldar Saetre said he saw pressure on oil prices increasing as OPEC+ is set to ease record cuts imposed after oil prices crashed due to the COVID-19 impact.
He also told Reuters that there was still a lot of flexible production, such as U.S. shale, which could come back quickly to the market.
Saetre said he expected European gas demand to return to pre-pandemic levels in 2021 after the company deferred "significant volumes" of gas production in the quarter as prices fell by almost 60% from a year ago.
The Norwegian government has imposed oil output limits from June to December this year, backing efforts by the OPEC+ and others to support prices.
Analysts at Sparebank 1 Markets said the performance was driven by exceptional results from crude and liquids trading, extracting value from the market "contango" and selling crude to Asia at higher prices in the forward market.
Equinor shares were up 1.7% by 0923 GMT, outperforming a wider European oil and gas index, which was down 0.5%.
Equinor's total oil and gas output was flat at 2 million barrels of oil equivalent, despite production cuts at home and abroad, helped by the ramp-up of its Johan Sverdrup oilfield. Adjusted for transactions and curtailments, output rose by 4%.
Equinor gave no production guidance for 2020, but reiterated its goal of increasing output by 3% per year from 2019 to 2026.
The majority state-owned company maintained a quarterly dividend of $0.09 per share, identical to the first quarter but down from $0.27 in October-December. Capital spending guidance for this year was unchanged at $8.5 million.
Equinor has also kept its long-term price assumptions, which include crude oil price of $80 a barrel in 2030, unchanged, unlike other European majors.
It plans to update the price outlook, which could impact assets values, in the third quarter.
(Editing by Terje Solsvik/Rashmi Aich/Jane Merriman)