Q1 2025 Equinor ASA Earnings Call
It has recovered somewhat but uncertainty do prevail.
These circumstances confirmed the importance of a strong balance sheet and resilience toward lower commodity prices.
We are well prepared for market volatility, we have a strong cash position of around $25 billion and the net debt ratio is below 7%.
Strong cost control and capital discipline remain a priority for us.
For the quarter, we delivered capital distributions in line with our CMU guiding the board approved an ordinary cash dividend of 37 cents per share.
And a second tranche of share buyback of up to 1.265 billion, including the state's share.
In total we expect to deliver $9 billion in capital distributions for the year.
Before I get to our financial results I want to address Empire wins.
And I want to be clear.
This situation is extraordinary and unprecedented.
Ecuador has over decades built a material position in the U S. A.
Core country to us.
Since the early two thousands we have invested around $60 billion.
Mainly within oil and gas.
In the first quarter, we produced around 445000 barrels of oil equivalent per day and delivered earnings of more than $500 million.
During recent years, we have.
On the invitation from authorities.
We also invested to build our renewable business in the U S.
In 2017, we signed the federal lease for Empire wind after being successful in our bid round hosted by Boeing.
Since then we have worked to mature and realize this 810 megawatt project.
The site assessment plan for the project was approved back in 2019.
And then we submitted our construction and operations plan in January of 2020.
This plan was approved by the Department of interior in February of 'twenty 'twenty four.
It was not a rush process by any means it took more than four years from submitted two approvals after extensive documentations consultations and review.
So.
Just on this approval.
And an improved offtake contract with New York, We took a final investment decision and started construction in the spring of 'twenty 'twenty four.
Project financing is a prerequisite for Empire wind and this was also secured last year.
Empire wind has already passed 30% completion.
The project invest more than $1 $2 billion in supply chain across the U S and so far our own 1500 local workers have been involved in the development.
On 16th of April we received an order from Boeing to halt all ongoing activities related to the Empire wind on the outer continental shelf.
We have we have complied with disorder.
However, the order did not include any information about the alleged deficiencies in the approval.
And our position is clear.
The stop work order is unlawful.
It is disregarding applicable law.
And the prior reviews and the valid approval of all agencies, including born and war.
So ethanol has invested in good faith and this is Noah question about the sanctity of contracts the legal protections and rights afforded through lawfully issued permits.
And the security of investments based on valid approvals granted in the U S.
Empire Wind is an important project for the north and the believe it contributes positively to New York and the United States.
So we are seeking to engage with administration to clarify the situation.
And we are considering or legal options.
In the first quarter report the halt order is treated as a subsequent event.
The current book value for Empire wind is $2 $5 billion, including the South Brooklyn Marine terminals.
The book value reflects our investments to date in the project.
Of this around $1 billion is covered by equity injections.
The remaining one and a half billion is drawn from project finance ethanol U S Holdings has provided guarantees for the equity commitment in the project financing.
If the project is forced to stops due to the U S administration's decision.
The one and a half billion dollars will be repaid from the equity commitment to the project finance lenders.
In addition, <unk>.
Various companies within the ethanol group have exposures related to the Empire wind project, including guarantees and termination fees towards suppliers.
This is an aggregated gross exposure on an external group level.
U S dollar one and a half two 2 billion.
This is before taking into account tax and any potential reductions from negotiations settlements legal actions and damages and rules of limitation of liabilities.
One thing is clear.
Over priorities.
Is to predict protect value for ignored and our investors.
And I'm of course ready to take any questions on this during the Q&A.
But now let's go through the results for the first quarter.
Yeah.
Safety.
That remains a top priority and we have a solid safety trends this quarter. The serious incident frequency was a record low at Cerro contract date.
And our total recordable injury frequency was $2 two per million hours worked for the last 12 months.
We continue to learn from any incidents and work towards improvements.
In the first quarter, we produced 2.133 million barrels per day.
We saw increased gas production.
And somewhat lower oil production than the same quarter last year when it was extraordinarily high.
On the Norwegian Continental shelf, we have good operations and several fields have near historic high regularity.
<unk> Johan Sverdrup and troll.
And see as production was impacted by the shutdown of Hammerfest LNG.
This quarter cost Berg and Halton East started production.
Field at.
At full production and will contribute 150000 barrels net to Ecuador.
For E&P U S. We are seeing the positive effect of our increased non op position in Marcellus.
We have high production and we are creating value from higher gas prices.
For E&P International production was lower as you know as you should expect.
Due to the divestment of Nigeria and Azerbaijan.
We produced one four terawatt hours this quarter and half.
Announced that we will establish a new power business area that will go live from September.
Yeah.
Now to our financial results.
Liquids prices were lower this quarter, while gas prices were higher in Europe, and the U S.
Storage is in Europe, and then the gas winter at 34% of total capacity.
Around 24 percentage points lower than last year.
In the short term, we expect balances to be tight and summer demand will be impacted by the need to fill storage was in Europe.
Uncertainty around the Asian demand and potential supply disruptions may also cause further volatility.
This quarter adjusted earnings in E&P, Norway totaled $7 4 billion before tax driven by higher gas prices.
Our international segments combined delivered more than 1 billion in adjusted operating income and their own $500 million after tax supported by higher gas production, capturing higher prices in the U S.
Our international segments combined delivered more than 1 billion in adjusted operating income and their own $500 million after tax supported by higher gas production, capturing higher prices in the U S.
Our realized gas price was actually $4.06 and this was stronger than Henry hub.
So it was a 74% increase from the same quarter last year.
The E&P international tax rate was higher due to a one off noncash effect caused by the extension of the U K E. P L periods.
<unk> came in below the guided range impacted by lower liquids and LNG trading results and the drilling of two Ccs wells. This is a one off cost and excluding this we would have been close to the lower end of the rates.
The results of our renewables business reflect lower business development and early phase cost.
Across our portfolio, we continue to focus on cost control and capital discipline.
The reported adjusted Opex and SG&A was up 11%.
This was impacted by a change in over in the lead position in the quarter increased transportation costs.
On royalties.
And adjusting for that.
The increase was 3%.
At our CMU, we said that we are targeting flat cost levels for 2025, realizing improvements to beat inflation.
This remains our target.
But this quarter group Opex and SG&A came in around 3% above this ambition, primarily due to increased maintenance and one off costs like the Ccs wells.
This quarter, our cash flow from operations was $7 4 billion after tax.
We paid one Mcf tox tax installment of $3 1 billion.
Next quarter, we will pay to equal installments.
And those will be the last payments related to the 2024 earnings.
Remember the Norwegian tax system has a dampening effect when it comes to lower prices.
If prices all over 78% will be offset by reduced taxes.
And investments are deducted immediately.
As you know there is a tax lag in there excuse me there is a lag in the tax payments.
We see through this when we decide or guiding and capital distributions.
In June we will decide the tax installments for the second half of this year based on our estimated 2035 full year earnings.
This quarter, we distributed two and a half billion to our shareholders.
Organic Capex was 3 billion and lower net cash flow was just above above 2 billion.
We have a solid financial position with our own $25 billion in cash and cash equivalents and our net debt to capital employed ratio decreased to 6.9% this quarter.
Next quarter the state's share.
Of the buyback will be booked as a finance that impacting the net debt ratio by around eight percentage points.
The actual payments and cash flow impact will be in the third quarter.
Yeah.
Finally to our guidance we maintained the guidance we communicated at our CMU in February.
So by that.
I'll leave the word to you bought.
Two to take us through the Q&A. So thank you very much.
Speaker Change: Thank you to them and they all are ready to start the Q&A. If you have a good list already signed up let me just remind you that if you press star one on your phone.
Your name to the list.
Speaker Change: The first question today goes to tailed ordinances and Sberbank EM markets, Chris Terrill.
Speaker Change: Good morning.
Speaker Change: First of all.
Speaker Change: With that.
Speaker Change: From Asia.
Speaker Change: Hal.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: What you will.
Speaker Change: No.
Speaker Change: Bye.
Speaker Change: Okay.
Speaker Change:
Speaker Change: Turbo down, Florida, but you are breaking up so we are not able to hear your question I suggest we take another woman in the interest of time and you will be the next on the list and hopefully the line will work better than.
Speaker Change: So then.
Speaker Change: Sure.
Speaker Change: Let's go to the next one on the list or not there's a bureau scherb qatada from RBC.
Speaker Change: RBC and hopefully the liners better brush.
Speaker Change: Hi can you hear me very well thank you.
Speaker Change: Good morning, everyone.
Speaker Change: Thanks for the details on Empire wind I guess, there's not much you can say given it's illegal purposes, but I just wonder if you could talk a little bit about.
Speaker Change: You know what this event as you know, making do you intend to change the way you think about the business because your geographical exposure is a lot more concentrated than your peers, obviously, Norway is the backbone of the business.
Speaker Change: But if I look beyond Norway.
Speaker Change: International has been a conscious decision to be more concentrated and obviously the U S is the second largest when you have and.
Speaker Change: And your peers are much more diversified.
Speaker Change: Does this in any way make you change that approach, let me think a little bit differently.
Speaker Change: Maybe want a bit of a more broader exposure just any comments on that would be helpful.
Speaker Change: And then the second question on backlog.
Speaker Change: Yes.
Speaker Change: Maybe a little bit.
Speaker Change: Confusion around expectations, just wanted you to clarify expectations all startup.
Speaker Change: Time to get to plateau is there any reason, we shouldn't see a ramp up go back a lot of that's in line with other Sps or as we've seen in Brazil, which is typically less than a year to get to.
Speaker Change: Thank you okay.
Speaker Change: Thank you very much.
Speaker Change: The barrage.
Speaker Change: So on your first question.
Speaker Change: You know the situation around the Empire is both extraordinary unprecedented and we see it as sort of an unlawful act by the end by the U S State and we will treat it.
Speaker Change: Aspect.
Speaker Change: Clearly U S. S. U S is an important country to us we have invested many many years.
Speaker Change: And it generate $500 million.
Speaker Change: This quarter our search so so it it remains so I think your bigger question is about your concentration of our portfolio.
Speaker Change: Which is very much about.
Speaker Change: Our ability to take out scale effects.
Speaker Change: Synergies.
Speaker Change: And then getting into critical sites, where we do operate and where we are so so we think that makes sense and then clearly.
Speaker Change: If you look at the political risk in our portfolio compared to many others we have.
Speaker Change: Significant.
Speaker Change: <unk> share of OECD countries in there.
Speaker Change: There are risks in all countries and we need to deal with them.
Speaker Change: It should be I know this is very much boiling down to managing managing the situation around one asset and one investment.
Speaker Change: Then on Buffalo.
Speaker Change: So start up is planned plant for 2025, and and and the ramp up.
Speaker Change: It is expected to go.
Speaker Change: Yes.
Speaker Change: Plan. It is on location commissioning is ongoing.
Speaker Change: And who is also on its way so things are moving according to plan.
Speaker Change: So there should not be.
Speaker Change: Confusion out there I hope so so we are confident in the development of the of the assets. So thank you and the rush.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Let's try a T.
Speaker Change: Are those the same Nielsen again transport of wound care markets in the hopes of allowing this pattern.
Speaker Change: So operator, please open the line for the hotel World.
Speaker Change: Theodoor Please press star one.
Speaker Change: [laughter].
Speaker Change: Oh, I'm, sorry to tell all of her.
Speaker Change: Sounds like Youre, breaking up Troyer novel Interrupter, if it picks up again.
Speaker Change: [laughter].
Speaker Change: Wow.
Speaker Change: Alright.
Speaker Change: So they're terrible, but we are not able to hear so either you need to find a better line and we will put you on the list or if not you're of course, operator Youre welcome to call me or any member of the IR team. After I don't even try to respond to your questions.
Speaker Change: Let's now turn to you on the Larson.
Speaker Change: From a BG.
Speaker Change: So in Angola.
Speaker Change: Please go ahead.
Speaker Change: Yeah. Thanks, a lot for taking my question I was a little bit about the sustainability of your dividend.
Speaker Change: Capital distributions.
Speaker Change: You don't make any change to the guidance.
Speaker Change: Distribution of 9 billion in total about 25, but just wonder is 35.
Speaker Change: At $9 billion, regardless of oil and gas prices or is that at some point pricing should we expect lower capital distribution also about 25 and also then maybe is it possible to give some indication for 'twenty shake that's what it takes if oil price dataset, yeah nowhere 62 at current levels.
Speaker Change: Its dividend.
Speaker Change: Is it sustainable at current oil and gas price levels.
Speaker Change: Or.
Speaker Change: And if yes what.
Speaker Change: Level should we expect dividends to how much risk if you could just talk a little bit about this lease great. Okay. All right no. Thanks, Thanks John.
Speaker Change: So it's very important for us to be competitive when it comes to capital distributions.
Speaker Change: And.
Speaker Change: And it's sort of a little bit of a.
Speaker Change: Data points, we have distributed $45 billion over the last three years of capital distribution.
Speaker Change: And I hope that is red has a strong commitment to distribute capital in the $9 billion this year as well.
Speaker Change: You should see that as a very very firm.
Speaker Change: I said at the capital markets day that say you know it is important to run with a solid balance sheet and a lot of liquidity and that the debt.
Speaker Change: That enables us to see through the sort of volatility as such when we make decisions and then we sort of.
Speaker Change: This hard on capital distributions. So you should take the $9 billion as us as a very very strong commitment from from oversight.
Speaker Change: So on sort of a lower price environment.
Speaker Change: And just want to remind you of some.
Speaker Change: Sensitivities.
Speaker Change: We have said you know our cash flow from operations around $20 billion for 2025 and was based on $70 oil and a $13 gas in Europe.
Speaker Change: If you if you assume a $10 lower oil price.
Speaker Change: Which is 60.
Speaker Change: And a $2 lower.
Speaker Change: Gas, which is 11 that would reduce cash of operations of around $2 billion take it from 20 to 18 of search creating still significant room for for capital distribution.
Speaker Change: It is very important for us to be competitive.
Speaker Change: We have the cash dividend that is going to.
Speaker Change: <unk> be growing.
Speaker Change: And we want you to think about that as bankable.
Speaker Change: Then on top of that we will use share buyback and we will see to that we are competitive and compare to our peer group you know.
Speaker Change: You know a true through the cycle and all of that.
Speaker Change: The last point I would like to make around around.
Speaker Change: A low price environment.
Speaker Change: Is that.
Speaker Change: Sure.
Speaker Change: Dinner, which in Texas them.
Speaker Change: It is it has a significantly dampening effect, because as oil prices and gas prices drops.
Speaker Change: 8% of the exposure is picked up by by the tax Bill there is a lag in tax payments of six months, but clearly we are seeing to that when we put together, our guiding and capital distribution a search. So so so so we do see it in our region tax system to be.
Speaker Change: A dampening effect and enabling us to manage very well in a low price environment and then of course I mean, you know you know our cost base and you know over.
Speaker Change: Our return on capital employed.
Speaker Change: It causes $2 all in cash to get to Europe at a gas selling into an 11 dollar market. So this is a business that works well in a low low low price environment, and we stay committed to our capital distributions. So thanks, Sean.
Speaker Change: May I have one quick follow up on that.
Speaker Change: Zero.
Speaker Change: Yep.
Speaker Change: Can you talk about low price environment in your view what is the low price environment.
Speaker Change: Because I mean, you said that you have break even for new projects.
Speaker Change: New projects are a breakeven below $40.
Speaker Change: Fix it to a low price environment.
Speaker Change: When do we come into a more medium or high priced at.
Speaker Change: Yeah.
Speaker Change: So both you and your image on the have live long enough to know that the way we should never have a very strong view on what is a low price in what is a high price my job is to make ourselves as robust as we can to a volatile price and clearly we are prepared for significantly lower prices than we see currently.
Speaker Change: Both through sort of flexibility in our spending and our strong balance sheet significant liquidity.
And and a tax system that sort of actually helps.
Speaker Change: On the way down as well so so so we will see to that you know we are well prepared to manage all of that and maybe the last point I would like to make is that.
Speaker Change: Navigating through.
Speaker Change: Through through rough waters. It is important to have control of your own spending and since we are operating most of our investments ourselves. We are sort of the captain of our spending program makes us able to actually make the decisions necessary to do to make the adjustments that we have to do anyway. So so we are prepared for.
Speaker Change: Significantly worse, not believing necessarily in that but our job is to be prepared.
Speaker Change: Thank you very much. Thank you. Your next in line is Peter low from Redburn Atlantic. So Peter Please go ahead.
Peter Low: Hi, Thanks for taking my questions.
Peter Low: First one is on Empire wind and the impact of the pause on the Capex budget.
Peter Low: I thought you had a reasonably significant demand from investment in share getting into a car.
Peter Low: Giving you a whole thing what would a portion of that not drop out could you, perhaps just talk about the dynamics there.
Peter Low: Then my second question actually on Capex kind of you alluded in your previous answer to kind of potentially some flexibility in a lower price environment can you talk a bit about kind of where that flexibility could potentially come Hoffman and at what price level you might look to revisit.
Peter Low: Youre spending patterns in the coming years. Thanks, Okay. Thanks Peter.
Peter Low: So first of all on Empire.
Peter Low: Our main focus is to manage that situation.
Peter Low: Getting clarity.
Peter Low: As quickly as we can and and taking the actions that that that you know is prudent in the current environment to protect the value of the of the assets and the value for our shareholders. So that is very very top priority. When we know more we will revert to.
Peter Low: You are guiding implications as such but it is too early to.
Peter Low: To conclude on that search, but it is a high priority for us to clarify the situation and take the necessary actions as such.
Peter Low: When it comes to two two capex.
Peter Low: So just want to remind you on what we did.
The capital markets day, we actually have reduced our investments over the next three years by.
By $5 billion and also the cost reduction is targeted at $2 billion. So we sort of put that forward at the capital markets day. So for US. It's important to be ahead of the game has such to set up a business that works in a low price environment.
Peter Low: On sort of further flexibility there are some flexibility in 2025.
Peter Low: You know most of the investment program is related to ongoing projects coming in 2026 and 2027, there is significant flexibility opening up as well and those are discussions. We have currently what are we going to do with the flexible part of the investments and we're being better.
Peter Low: Bear that when we start a project you sort of look.
Peter Low: Look.
Peter Low: Your sort of capacity as always it's always a bad idea to stop ongoing projects.
Speaker Change: Thank you. Thank you Peter next form this young Sheldon Tom from Bernstein, So Johan please.
Tom: Hi, everyone. So we'd like to ask about the MMP business and if youre able to tell us what was the contribution.
Speaker Change: For cash flow are all contribution.
Tom: Contribution to cash flow kind of MLP in the past quarter.
Tom: Quarter as well.
Tom: Working capital we need.
Speaker Change: Is it possible to understand whether at the end of the quarter you reach what you will consider as a normalized level of working capital. Okay. Thanks. Thank you Ron so on the MMP results.
Speaker Change: A few a few data points.
Speaker Change: So so the result in the quarter $253 million.
Speaker Change: Impacted by two wells C O two wells into this mayor Hey, a resource.
Speaker Change: So adjusting for that the result would have been close to the lower end of the lower end of the.
Speaker Change: The range.
Speaker Change: And then you know LNG trading is a slower than normal.
Speaker Change: That is due to that snow melt chaos, the LNG facility in the Arctic.
It has been down for maintenance for PAH.
Speaker Change: Part of the quarter.
Speaker Change: And then in general you know within the trading environment.
Speaker Change: There is a little bit of a risk off for the time being so there has been lower than normal result from from.
Speaker Change: From that.
Speaker Change: On working capital.
Speaker Change:
Speaker Change: So.
Speaker Change: Let me first say that sort of the guiding that we have on cash flow from operations that is excluding excluding working capital movements really sort of a clean number in a way not disturbed by working capital movements in this quarter.
Speaker Change: There was a freeing up of working capital of one six.
Speaker Change: Billions of dollars of search so so I mean, so that actually adds to the cash flow in the quarter and of course, whether this is normal or not it was you know I would say the end of fourth quarter it was higher than normal.
This is a fair level of working capital, but you should expect that it moves depending on whether they're a contango in the market or or or or or the or there are special situations as such volatility in general creates results, but there's also takes working capital. So if you see volatility.
Speaker Change: And if you say changes in the curves I mean, you'll see working capital movements as such but is a fair level I would say alright. Thanks John.
Speaker Change: Thank you Sandra Thank you our next.
Matt: Next one is Matt lofting from Jpmorgan.
Speaker Change: Christy or Mike should be open.
Speaker Change: Thanks for taking the questions. Most of mine have been asked our practice I'll ask you to two follow ups first on Empire wind.
Speaker Change: I just wonder if you could share any thoughts on.
Speaker Change: How what situational duration episodes of the hold.
Speaker Change: Would be required in order to trigger.
Speaker Change: A write down of the two and a herculean book value.
Speaker Change: As we move through 2025 and in particular, so that they can get to year.
Speaker Change: Year end.
Speaker Change: Impairment testing into the second half.
Speaker Change: And then second perhaps just coming back on MMP and some of the comments that you just made.
Speaker Change: I just wanted to the extent to which.
Speaker Change: In the current environment.
Speaker Change: The industry as a whole is seeing moderated trading conditions in terms of the opportunities and spreads that are there.
Speaker Change: This is a sort of a more temporary.
Speaker Change: Risk off approach.
Speaker Change: Okay.
Alright, Thanks, Matt.
Speaker Change: On the.
Speaker Change: On Empire Wind and then your question on sort of.
Speaker Change: Consequences for for our accounts.
Speaker Change: So as you would understand what is happening now around the project.
Speaker Change: Is dramatic it is extraordinary and unprecedented in a way. So so so we will do.
Speaker Change: Impairment testing.
Speaker Change: Related to the second quarter results.
Speaker Change: There are so many outstanding topics, yet still with the project. So its too early to say anything about about what the consequences might be to it and hopefully we will be able to create more clarity around the situation by the second quarter. So there is a real.
Speaker Change: Reason why we are very transparent on the on the economic exposure to U two two hopefully that.
Speaker Change: We'll put you in a situation to two to two <unk>.
Speaker Change: To be prepared and have an opinion.
Speaker Change: How about that.
Speaker Change: Your second question related to MMP and sort of moderated trading opportunities yes.
Speaker Change: Yes, you know I think in general.
Speaker Change: The the risk you know across the various markets are.
Speaker Change: Sort of new type of risks I mean, the whole world is sort of used to deal with macro uncertainty and maybe Julie geopolitical.
Speaker Change: Turmoil Theres lot. We currently see it is sort of a different type of risk associated that makes everyone more carefully and sort of taking risks that we see a risk of a cross.
Speaker Change: Across that what we do.
Speaker Change: He is a difficult environment to a 222 traded what is actually quite interesting to note is that <unk>.
Speaker Change: If we see sort of.
Speaker Change: Increased tariffs or trade war or whatever you call. It it might change the trade flows.
Speaker Change: And that creates opportunities normally and we are well positioned with our shipping fleet various oil qualities.
Speaker Change: And our ability to realize higher prices. So so I mean traders can.
Speaker Change: They can make.
Speaker Change: Make value in situations with uncertainty.
Speaker Change: I think the fact is that.
Speaker Change: Yes.
Speaker Change: The world needs to get used to what youre talking about correctly to be fair. So there's actually quite a this quarter quite good trading around refinery is actually on the qualities. We have on the liquid side alright.
Speaker Change: Alright that was a long answer, but it's a it's a complex topic. Thanks, Matt.
Chris Coupland: Thank you Thanks, Mark London Turnkey Bank of America, Chris Coupland, Chris Your market is open.
Chris Coupland: Hi, there. Thank you hope you can hear me okay.
Chris Coupland: Just to tie up for me.
Chris Coupland: One more on MMP I was wondering whether you could give us a little bit of your thinking.
Chris Coupland: You issued your trading update a few weeks ago.
Chris Coupland: And I didn't really read into that trading I think the weak results that you ended up reporting.
Chris Coupland: Below the low end of the usual quarterly range. So maybe you can talk us through the visibility you have at that time.
Chris Coupland: And we were thinking behind how to use that trading update.
Chris Coupland: In order to guide consensus.
Chris Coupland: And then lastly, just because it's been a couple by enjoy asking you every time.
Chris Coupland: Today, that's 260 crowns also if it was a good investment at 400.
Chris Coupland: Why wouldn't you buy more today.
Thanks, Thanks, Chris.
Chris Coupland: Hi.
Chris Coupland: So.
Chris Coupland: On your question on MLP.
Yeah.
Chris Coupland: You know, Chris it's a good question.
Chris Coupland: And and what we tried to do in a trading update is to give you sort of sums.
Tom: Tom steer on the direction and then it clearly clearly.
Tom: Clearly recognize that there are a lot of moving parts that are <unk>.
Tom: Just hard to analyze and hard to model as such.
Tom: And what this time around there was a lot of transactions and very late in the quarter.
Tom: We were not able to pick up you know.
Tom: As part of their trading.
Tom: State a search so so that's sort of.
Tom: You know on your question related to the to the trading of data and the best advice I can give you is to have a close and good dialogue with our investor relation Department.
Tom: Around the store.
Speaker Change: Opex then on them on Earth's stead, yeah. So we hold 10% of the shares we are an industrial and long term owner.
Speaker Change: Clearly then the share price of understood is impacted by the industry realities within offshore wind.
Speaker Change: So that is clearly reflected in the price you know if we sort of see beyond that and what they have they have a quality portfolio of producing assets delivering significant EBITDA and a good return on capital employed so we see this as a quality company with a quality portfolio.
Speaker Change: Palio.
Speaker Change: Clearly impacted by the reality that surrounds this industry for the time being so thanks.
Speaker Change: Thanks.
Speaker Change: So we are happy to take any feedback on the trading update I just want to remind you that we did say that you should expect an impact from the Ccs well report.
Speaker Change: A report on we did also say that you should expect relatively weak results from from LNG trading up.
Speaker Change: We saw but happy to discuss this further.
Speaker Change: Great Okay. Thank.
Chris: Thank you Chris.
Speaker Change: Next on the line Mr. James Carmichael from bear in bulk.
Chris: Hi.
Speaker Change: Good morning, guys.
Chris: One of them.
Chris: Obviously, you sort of I guess following up on your answer question Europe's an interested observer.
Chris: And what's going on with them earlier in the U S. If you got any sort of indication on why.
Chris: It's only Empire wind.
Chris: This whole daughter at this.
Chris: Our stage and I guess it must be consumed.
Chris: Others might follow don't as much you can say on that but any thoughts.
Chris: Interesting and then.
Chris: Just on the power business that you're setting up in.
Chris: <unk> timber.
Chris: I think you said, maybe just a bit of color I guess on the assets going into that business and the rationale.
Chris: Setting up.
Chris: That'd be helpful. Okay. Thanks, Thanks, James Yeah, when it comes to <unk>.
Chris: Two.
Chris: To further sort of stop work orders in the U S.
Chris: No I am not in a position to do to comment on that naturally and then clearly there are you know.
Chris: Rumors.
Chris: Around these topics all the time I think the best one to ask is actually actually.
Chris: In the U S federal government about their ideas around.
Chris: Those assets and in industries and hopefully they can provide some clear answers to that.
Chris: Then when it comes to to your question on <unk>.
Chris: On the power business.
Chris: Clearly, we have power assets in them.
In into two business areas currently within the renewables and within the MMP.
Chris: MMP business.
Chris: You know Kelly these assets belong more together to take a more fully.
Chris: Our approach to the power markets.
Chris: Secondly, we do see that.
Chris: That going forward, there will be a good and strong link between.
Speaker Change: No the gas market and the power market.
Chris: And having no gas.
Chris: Gas fired power plant as part of the power power business area is is.
Chris: He is important so the assets that are that we're talking about is.
Chris: Yes.
Chris: And assets we have.
Chris: Power assets also in.
Chris: Also in the U K and I clearly this trading opportunities as well.
Chris: Thank you very much.
Chris Coupland: Thank you James.
Speaker Change: Next one on my list. This martijn rats from Morgan Stanley Martin. Please go ahead with your question.
Martijn Rats: Yes, good morning.
Speaker Change: I also have two including on Empire wind up afraid.
Speaker Change: If the project is not sort of permanently halted per se. There is a relatively positive outcome, where at one point you could sort of go ahead that would still be I would imagine.
Speaker Change: A risk that you missed this year's weather window, and so I wanted to ask how much of a delay can you have in the project I would imagine.
Speaker Change: It's probably not more than a few weeks or a few months before this year's weather window is loss and also if this year's weather window is lost in the whole thing.
Speaker Change: All the cash flows shift a year into the future what would be the NPV impact of such a delay.
Speaker Change: That's one thing I wanted to ask and then I can just perhaps a bit of a technicality, but earlier on you talked about potential tax losses that this might generate.
Speaker Change: Our Akron or sort of holdings in the United States across both the offshore wind in the upstream are they structured such a way that.
Speaker Change: If there are any tax losses say in Empire wind.
Speaker Change: Are available.
Speaker Change: To the E&P business or it's.
Speaker Change: Legally separate it's hard to kind of move this tax office around I was wondering if you could say if you think about that okay. Thanks, Martin I love the details of your questions here, So, let's let's get to that.
Speaker Change: First of all it is.
Speaker Change: And when it comes to Empire wind.
Speaker Change: The project the project is progressing well.
Speaker Change: The way these projects go with those sort of everything hangs together. It's a timeline there are suppliers there are commitments and all of that so when you run projects. Like this you are dependent on that sort of it runs.
Speaker Change: And this project is in a in a critical phase I mean, we are sort of.
Speaker Change: On time and scheduled in brooksville, but it is it is in a critical phase because we are about to start.
Speaker Change: Offshore installation and their installation window is now in a way. So so so so it is a matter of urgency.
Speaker Change: To get clearance on the situation and the U S authorities, they are very well run very.
Speaker Change: Very well aware of the urgency and the need for clarity.
Speaker Change: And that.
Speaker Change: That we are also cosmere considering all.
Speaker Change: Optionality is including take taking legal steps to protect protect all situations and.
Speaker Change: And the value of our shareholders.
Speaker Change: So so.
Speaker Change: So you know it is too early to talk about NPV impact what we have shared is sort of the gross exposure.
Speaker Change: And the gross exposure in a stop case and I think that is something that is important for us too.
Speaker Change: 222 share, but but.
Speaker Change: But.
Speaker Change: Very important to urgency get clearance and make decisions on the way forward on this project on.
Speaker Change: On your second question on the tax losses.
Speaker Change: Available to assume yes.
Speaker Change: So so that is the.
Speaker Change: That is in place and you know there is a.
Speaker Change: Common structure overseeing all the U S activities here, where I mean this is consolidated.
Speaker Change: It can be used.
Speaker Change: Okay wonderful thank you.
Speaker Change: Thank you.
Jason Gammel: Next on my list is TD Cohen, Jason Gammel, Jason. Please go ahead.
Jason Gammel: Yeah, Hey, Thanks for taking my question I'm afraid I'm going to stay on topic with Empire wind.
Jason Gammel: I'm wondering.
Jason Gammel: Two weeks since you've got on the stop order notice if you had any engagement with U S authorities.
Jason Gammel: And as you know.
Jason Gammel: Your chances, it's really the government that's dictating the timeline of a potential restart or if there's things you can do proactively.
Speaker Change: To move that along and my second question unrelated to Empire wind.
Speaker Change: It looks like your U S gas realizations have been quite strong. So I'm wondering one what's driving that and two if there is an appetite to acquire.
Speaker Change: More.
Speaker Change: Acreage.
Speaker Change: In the lower 48.
Speaker Change: Gas exposure. Thanks, Okay. Thanks. Thanks.
Jason Gammel: Thanks, Jason so.
Speaker Change: Yeah. So.
Speaker Change: The government in the U S. They have not shared with US the reason for the stop work authority.
Speaker Change: So.
Speaker Change: So it is a situation where you know we don't understand why what we do know is that sort of.
Speaker Change: Yeah.
Speaker Change: What has happened and we see that as lawful.
Speaker Change: Lawful I mean, we have permits and approvals.
Speaker Change: You know dating back one year ago, and we have always assumed that.
Speaker Change: That.
Speaker Change: United States of America will honor contracts and permits they have issues in a way. So this is an unlawful action by them and we are going to treat it like that so I just want to be very clear on that.
Speaker Change: We are engaging on on all levels that we can and we use a massive.
Speaker Change: A massive effort in all channels and channels to get the dialogue that is needed to create the necessary clarity we have been extremely clear with them that this is of urgency we have.
Speaker Change: A little time, and we will consider legal actions.
Speaker Change: As such.
Speaker Change: On the U S gas realizations was a little bit more of a pleasant theme.
Speaker Change: We have them.
Speaker Change: Our realized gas price in North America of Portola and six cents.
Speaker Change: Henry hub came in at 365. So this is actually quite a significant.
Speaker Change: Additionally to that normally the north east trades at a discount to Henry hub. So this is mainly linked to the way that we market and sell or gas because we keep title even if it's operated by expand.
Speaker Change: We have title to the gas and the market and trade and sell it ourselves we.
Speaker Change: We are not selling or gas, we're not hedging it.
Speaker Change: So we keep the keep our position open to volatility in the market and what we have seen in in the northeast is periods of cold spells and very high natural gas prices and the way we market and trade, we will be able to capture that and that is what you have seen in this quarter. So that goes in.
Speaker Change: To a broader theme about what you should expect coming out of or gas gas machine, we want to keep our gas exposure.
Speaker Change: Close in time in Europe, we sell our gas, 70% day ahead, and 30% multi head, meaning that when there is volatility when there are high prices, we will capture it and they will go into the earnings and the cash flow of the company and that's that's what we have seen in the U S. This quarter.
Speaker Change: This doesn't happen every quarter, just want to say that but when it happens we'll be there.
Speaker Change: Thank you, Jason and just on the well.
Speaker Change: Please go out there Theres Nugatory controller.
Speaker Change: No sorry, just on the question on appetite to acquire more Oh, yeah, Yeah U S cash.
Speaker Change: Yes.
Speaker Change: Well you know we made two acquisitions with EQT last year into that.
Speaker Change: At a time when gas prices were actually quite a bit lower.
Speaker Change: And then where they are today.
Speaker Change: So that has increased.
Speaker Change: Increased oil production.
Speaker Change: Most of the U S.
Speaker Change: Is it the 80000 barrels per day of search so it's very good to see that that is coming in well in the first quarter going forward.
Speaker Change: I can't comment on that but clearly we do believe in natural gas in the long term both in Europe.
Speaker Change: And also answered so thanks.
Jason Gammel: Thank you Jason.
Speaker Change: Jason.
Speaker Change: Next one is.
Speaker Change: Paul Rudman from BNP portable.
Speaker Change: Paul Please your line is open.
Speaker Change: Hi, guys. The Mazda follow the trend in the state with Empire.
Speaker Change: I just wanted to ask for some clarity on the urgency. So when is the weather window offshore installation and just be really clear if you Miss that weather window could we be in a situation, where Ecuador decides not to progress with the asset because they can put the cost implications are just too high to generate the return.
Speaker Change: Do you want for this project.
And secondly, just on the new power business area.
Speaker Change: Do you think you've got the organic assets that you need.
Speaker Change: The growth of this business.
Speaker Change: Or are you looking inorganically for more power assets at the moment okay.
Speaker Change: So thanks.
Speaker Change: Thanks, Paul.
Speaker Change: No.
Speaker Change: The Empire Wind project is urgent it is a very extraordinary situation and that has been created a very significant uncertainty about the way forward of this project.
Speaker Change: And.
Speaker Change: And the questions. We are facing is of course you know.
Speaker Change: You know a lot about spending money in a situation, where we had that significant uncertainty. So this needs to be clarified very quickly.
Speaker Change: They're the whole.
Speaker Change: The the you know the.
Speaker Change: Construction schedule is sensitive to contractor availability.
Speaker Change: The weather window.
Speaker Change: And actually commercial requirements.
Speaker Change: As well. This project is also dependent on project financing to work and as you would understand lenders are are very uncertain about the way forward. So this is much more than about when the weather window, which is crucial but it's much more complex as a show we just want to have.
Speaker Change: Clarity as quick as possible and we are preparing for.
Speaker Change: For all outcomes.
Speaker Change: And second question on the new power business.
Speaker Change: Yeah, So I mean.
Speaker Change: There are no and I mean.
Speaker Change: There are currently.
Speaker Change: Assets that sits in different business areas that belong together and the decision made is to combine them because they they clearly there are significant synergies there is search.
Speaker Change: So there are no sort of there's no sort of plans for for any inorganic moves searched but of course I mean, that's.
Speaker Change: We can't comment on what might come in the future in any part of the business as such but it's not part of the.
Speaker Change: Part of the.
Speaker Change: Currently.
Speaker Change: Thank you thank.
Speaker Change: Thank you Paul.
Speaker Change: That completes.
Speaker Change: Completes the list on our end and we have managed to do it within the hour.
Speaker Change: Well I want to thank all of you for calling in and for your questions.
Speaker Change: Questions.
Speaker Change: Remind you that the Investor Relations team is of course always are available for follow up later today or during the week. Thank you all for calling in and have a good rest of the day.