Q2 2026 Equinor ASA Earnings Call

July 22, 2026

Speaker #1: Hello, and welcome to the Equinor Analyst Call for Q2. I would like to turn the call over to Bård Glad Pedersen, Head of Investor Relations. Bård, you may begin.

Operator 2: Hello. Welcome to Equinor analyst call. I would like to turn the call over to Bård Glad Pedersen, Head of Investor Relations. Bård, you may begin.

Operator: Hello. Welcome to Equinor analyst call. I would like to turn the call over to Bård Glad Pedersen, Head of Investor Relations. Bård, you may begin.

Speaker #2: Thank you, operator, and good morning, all. Thank you for joining the analyst call for Equinor's second quarter results. Our CFO, Torgrim Reitan, will, as usual, present the results before we open for a Q&A.

Bård Glad Pedersen: Thank you, operator. Good morning, all. Thank you for joining the analyst call for Equinor's Q2 results. Our CFO, Torgrim Reitan, will, as usual, present the results before we open for a Q&A. You can already now sign up for questions by pressing star one on your phone. We plan to complete the session within 1 hour in total. With that, I hand it to you, Torgrim, to take us through the results.

Speaker #2: You can already now sign up for questions by pressing *1 on your phone. We plan to complete the session within one hour in total, and with that, I hand it to you, Torgrim, to take us through the results.

Speaker #3: Thank you, Board, and good morning. Thank you for joining us, and I hope you are all enjoying your summer. Today, it is five weeks since our Capital Markets Day.

Torgrim Reitan: Thank you, Bård, good morning, and thank you for joining us, and I hope you are all enjoying your summer. Today, it is five weeks since our Capital Markets Day, where we shared with you our updated plans to deliver more energy, growing cash flow, and superior returns. We showed you an improved portfolio delivering production growth of 150,000 barrels per day to 2030, a growth in cash flow from operations of 30%, and an industry-leading 15% return on capital employed. With this, we expect to deliver over $40 billion in free cash flow towards 2030. Not to forget, we presented a breakeven after dividend of $50 per barrel. This is a reduction of this breakeven price of $10 per barrel. In the Q2, we took several concrete steps to deliver on this.

Speaker #3: We shared with you our updated plans to deliver more energy, growing cash flow, and superior returns. We showed you an improved portfolio delivering production growth of 150,000 barrels per day to 2030, a growth in cash flow from operations of 30%, and an industry-leading 15% return on capital employed.

Speaker #3: With this, we expect to deliver over $40 billion in free cash flow towards 2030. And not to forget, we presented a break-even after dividend of $50 per barrel. This is a reduction of the break-even price by $10 per barrel.

Speaker #3: In the second quarter, we took several concrete steps to deliver on this. On the Norwegian Continental Shelf, we awarded the contracts for the first wave of tieback projects. This is an important first within our new NCS 2035 operating model, aiming to double the speed of development and reduce costs by half.

Torgrim Reitan: On the Norwegian Continental Shelf, we awarded the contracts for the first wave of tieback projects. This is an important first within our new NCS 2035 operating model, aiming to double the speed of development and reduce costs by half. The contract awarded for the first wave supports these improvements. We continued to use business development as a tool to harmonize ownership across licenses. We have done this through a series of swaps with DNO, Aker BP, and Vår Energi, supporting progress on the Ringvei Vest project. Internationally, we took the final investment decision for the Greater PAJ project in Angola, where we expect to generate more than $50 per barrel in cash flow from operations. Greater PAJ is an important step in building longevity within the international E&P business and growing cash flow from operations by 80% towards 2030. We also delivered strong results in the quarter.

Speaker #3: The contract awarded for the first wave supports these improvements. We continued to use business development as a tool to harmonize ownership across licenses. We have done this through a series of swaps with D&O, Aker BP, and More Energy.

Speaker #3: Supporting progress on the Ringvei Vest project. Internationally, we took the final investment decision for the Greater Pars project in Angola, where we expect to generate more than $50 per barrel in cash flow from operations.

Speaker #3: Greater Pars is an important step in building longevity within the international E&P business and growing cash flow from operations by 80% towards 2030. We also delivered strong results in the quarter.

Speaker #3: Production grew by 3%, with well-executed turnarounds, and new fields like Airine and Cymra coming on stream during the quarter. With this, we captured value from higher prices, and our trading business captured value uplift from increased volatility, delivering strong contribution to our results this quarter.

Torgrim Reitan: Production grew by 3% with well-executed turnarounds and new fields like Eirin and Symra coming on stream during the quarter. With this, we capture value from higher prices, and our trading business captures value uplift from increased volatility, delivering strong contributions to our results this quarter. We report adjusted operating income of $11.5 billion before tax, and an IFRS net income of $4.8 billion. Year to date, our cash flow from operations after tax has been strong at $13.7 billion. This quarter, our adjusted earnings per share were $1.33. While energy markets remain impacted by geopolitical unrest, we continue to focus on what we control, our operations, how we remain robust through price cycles, and our commitment to cost and capital discipline. To capital distribution. At our Capital Markets Day, we announced a doubling of the share buyback program for 2026 from $1.5 billion to $3 billion.

Speaker #3: We report adjusted operating income of $11.5 billion before tax, and IFRS net income of $4.8 billion. Year to date, our cash flow from operations after tax has been strong, at $13.7 billion.

Speaker #3: This quarter, our adjusted earnings per share were $1.33. While energy markets remain impacted by geopolitical unrest, we continue to focus on what we control—our operations, how we remain robust through price cycles, and our commitment to cost and capital discipline.

Speaker #3: Then, to capital distribution. At our Capital Markets Day, we announced a doubling of the share buyback program for 2026, from $1.5 billion to $3 billion.

Speaker #3: We follow up this now, and for the quarter, the Board approved an ordinary cash dividend of $0.39 per share, and a third tranche of share buyback of up to $1.125 billion, including the state's share.

Torgrim Reitan: We follow up this now, for the quarter, the board approved an ordinary cash dividend of NOK 0.39 per share and a third tranche of share buyback of up to $1.125 billion, including the state share. Let's dive into our results. First, let me start with safety, our top priority. Our serious incident frequency and personal injury rate remained relatively stable in the Q2. We have seen a slight increase in both metrics this year when compared to 2025. We are working very hard to learn from incidents to improve safety and performance further. In the Q2, we produced 2,165,000 barrels per day, up 3% from the same quarter last year. On the NCS, our production is up 4%, mainly driven by new fields like Johan Castberg, Halten East, and Verdande. Now we are adding also Eirin and Symra, which came on stream this quarter.

Speaker #3: So, let's dive into our results. First, let me start with safety—our top priority. Our serious incident frequency and personal injury rate remained relatively stable in the second quarter. We have seen a slight increase in both metrics this year, when compared to 2025.

Speaker #3: We are working very hard to learn from incidents, and to improve safety and performance further. In the second quarter, we produced 2,165,000 barrels per day.

Speaker #3: Up 3% from the same quarter last year. On the NCS, our production is up 4%, mainly driven by new fields like Johan Castberg, Alton East, and Verdande. Now we are also adding Eirin and Cymra, which came on stream this quarter.

Speaker #3: Let me also highlight that we saw another quarter of strong performance from Johan Sverdrup. We have previously indicated a decline of 10 to 20% this year from that asset.

Torgrim Reitan: Let me also highlight that we saw another quarter of strong performance from Johan Sverdrup. We have previously indicated a decline of 10% to 20% this year from that asset. Based on the strong performance so far, we now expect it to be at the low end of this range. NCS production was impacted by plant turnarounds and maintenance, and also Johan Castberg coming offline for a period towards the end of the quarter and into July. Johan Castberg is now back at plateau after production resumed last week, implying that the impact will be larger in Q3 than in Q2. Internationally, the increase was driven by Adura in the UK and Bacalhau in Brazil. The growth more than offsets the decrease from our reduced ownership in Peregrino and the divestment of the onshore Argentina asset.

Speaker #3: Based on the strong performance so far, we now expect to be at the low end of this range. NCS production was impacted by planned turnarounds and maintenance, and also Johan Castberg coming offline for a period towards the end of the quarter and into July.

Speaker #3: Johan Castberg is now back at plateau, after production resumed last week. That implies the impact will be larger in the third quarter than in the second quarter.

Speaker #3: Internationally, the increase was driven by ADURA in the UK and Bacalhau in Brazil. The growth more than offsets the decrease from our reduced ownership in Peregrino, and the divestment of the onshore Argentina asset.

Speaker #3: During the first half of 2026, we have delivered, in total, a very strong production growth of 6%. Therefore, our guidance of a 3% growth for the full year is now more robust than when we started the year.

Torgrim Reitan: During H1 2026, we have delivered in total a very strong production growth of 6%. Therefore, our guidance of a 3% growth for the full year is now more robust than when we started the year. Even taking into account the issues at Johan Castberg and the plant turnarounds also in Q3. Within power, we produced 1.2 TWh this quarter. The growth is from Dogger Bank in the UK and new onshore assets. Now to our financial results. Liquids and European gas prices were higher than the same quarter last year, while US gas prices were lower. This has impacted our results across the segments. Adjusted operating income in E&P Norway totaled $9.2 billion before tax and $2.1 billion after tax.

Speaker #3: Even taking into account the issues at Johan Castberg, and the planned turnarounds also in the third quarter. Within Power, we produced 1.2 terawatt-hours this quarter.

Speaker #3: The growth is from Dogger Bank in the UK and new onshore assets. Now, to our financial results. Liquids and European gas prices were higher than the same quarter last year, while US gas prices were lower.

Speaker #3: This has impacted our results across the segments. Adjusted operating income in E&P Norway totaled $9.2 billion before tax, and $2.1 billion after tax.

Speaker #3: In our international E&P business, prices increased around 50%, but operating income almost doubled, based on production growth of 4% and increased quality in the portfolio.

Torgrim Reitan: In our international E&P business, prices increased around 50%. Operating income almost doubled based on production growth of 4% and increased quality in the portfolio. Our E&P US results were driven by high offshore production with higher prices, partly offset by lower gas prices in the US. MMP delivered NOK 777 million pre-tax, well above the guiding of NOK 400 million per quarter. This was driven by crude trading and strong performance at our refinery, Mongstad, capturing value from higher margins. Our power results reflect a strong contribution from power trading for Q2 in a row. In total, we have nearly doubled our adjusted operating income after tax compared to last year, demonstrating the improvements in the portfolio and our ability to capture value in higher price environments. This quarter, cash flow from operations was NOK 14.8 billion before tax.

Speaker #3: Our E&P US results were driven by high offshore production with higher prices, partly offset by lower gas prices in the US. M&P delivered $777 million pre-tax, well above the guidance of $400 million per quarter.

Speaker #3: This was driven by crude trading and strong performance at our refinery, Mongstad, capturing value from higher margins. Our power results reflect a strong contribution from power trading for the second quarter in a row.

Speaker #3: In total, we have nearly doubled our adjusted operating income after tax compared to last year, demonstrating the improvements in the portfolio and our ability to capture value in higher price environments.

Speaker #3: This quarter, cash flow from operations was $14.8 billion before tax. We paid $7.1 billion in taxes, including three NCS installments, summing up to around $6.4 billion.

Torgrim Reitan: We paid NOK 7.1 billion in taxes including three NCS installments, summing up to around NOK 6.4 billion. Q3, there will be two payments of NOK 23.3 billion each. Also in Q2, we received a quarterly cash distribution from Adura of NOK 150 million. The sale of the Argentina onshore assets resulted in cash proceeds of NOK 558 million in the quarter, in addition to NOK 88 million in proceeds received in Q1. We also recorded a gain of NOK 467 million during Q2. Our financial position in Scatec was partially divested, NOK 471 million during the quarter. Here we have an accumulated recorded gain of NOK 61 million. Organic CapEx was NOK 3.4 billion, and our net cash flow before distribution was +NOK 5.5 billion. This quarter, we distributed NOK 1.1 billion to our shareholders.

Speaker #3: Next quarter, there will be two payments of NOK 23.3 billion each. Also, in the second quarter, we received a quarterly cash distribution from ADURA of $150 million.

Speaker #3: The sale of the Argentina onshore assets resulted in cash proceeds of $558 million in the quarter, in addition to $88 million in proceeds received in the first quarter.

Speaker #3: We also recorded a gain of $467 million during the second quarter. Our financial position in Scatec was partially divested for $171 million during the quarter; here we have an accumulated recorded gain of $61 million.

Speaker #3: Organic COPEX was $3.4 billion, and our net cash flow before distribution was a positive $5.5 billion. This quarter, we distributed $1.1 billion to our shareholders.

Speaker #3: We strengthened our balance sheet and have a solid financial position, with around $24 billion in cash and cash equivalents. Working capital, which is not included in our cash flow from operations, decreased by $1.8 billion to $3.6 billion.

Torgrim Reitan: We strengthened our balance sheet and have a solid financial position with around $24 billion in cash and cash equivalents. Working capital, which is not included in our cash flow from operations, decreased by $1.8 billion to $3.6 billion. This is a lower level than what we usually have. Our net debt ratio decreased to 10.4% this quarter, despite 3 tax installments paid and the state's share of the buyback from last year booked as a finance debt. This state share of share buyback was paid in early July, and the cash flow impact will be as such in Q3. Now to our guidance, where there are no changes.

Speaker #3: This is a lower level than what we usually have. Our net debt ratio decreased to 10.4% this quarter, despite three tax installments paid, and the state's share of the buyback from last year booked as a finance debt.

Speaker #3: The state's share of the share buyback was paid in early July, and the cash flow impact will, as such, be in the third quarter. At current forward prices, we expect the net debt ratio to be somewhat below 10% at the end of the year.

Speaker #3: And now, to our guidance, where there are no changes. Our progress is in line with our communicated outlook, both in terms of production, CapEx, and capital distribution.

Torgrim Reitan: Our progress is in line with our communicated outlook, both in terms of production, CapEx, and capital distribution. Finally, to conclude, I will refer you back to a slide from our Capital Markets Day 5 weeks ago. The Q2 results demonstrate execution in line with the plans we presented to deliver. More energy. 150,000 barrels per day production growth to 2030. A growing cash flow. A 30% growth in cash flow from operations, and superior returns. We will continue to lead the industry on the return on capital employed, and we aim for 15% through this decade. Now, thank you very much, and I look forward to your questions. Back to you, Bård.

Speaker #3: And finally, to conclude, I will refer you back to a slide from our Capital Markets Day five weeks ago. The second-quarter results demonstrate execution in line with the plans we presented to deliver.

Speaker #3: More energy. Under 50,000 barrels of oil equivalent per day. Production growth to 2,030. Growing cash flow, a 30% growth in cash flow from operations, and superior returns will continue to lead the industry on return on capital employed, and we aim for 15% through this decade.

Speaker #3: So now, thank you very much, and I look forward to your questions. So, back to you, Brd.

Speaker #1: Thank you, Torgrim. We are ready to start the Q&A. We have a good list already, but let me remind you that you can sign up to ask a question by pressing star 1 on your phone.

Bård Glad Pedersen: Thank you, Torgrim, and we are ready to start the Q&A. We have a good list already, but let me remind you that you can sign up for asking a question by pressing star one on your phone. We ask that you limit yourselves to 2 questions each. First, we have Teodor Sveen-Nilsen from SpareBank 1 Markets. Please, Teodor, go ahead. Your line is open.

Speaker #1: We ask that you limit yourself to two questions each. First, we have Teodor Svea Nilsen from Sparebanken Markets. Please, Teodor, go ahead—your line is open.

Speaker #2: Thank you. Good morning to him and Brd. Two questions from me. First, on the cost per production: as far as I understand, there's been some trouble going to Q3.

Teodor Sveen-Nilsen: Thank you. Good morning, Torgrim and Bård. 2 questions from me. First, on the cast per production, as far as I understand, there's been some trouble going to Q3. I just wonder, specifically if you can indicate what you expect as net production to Equinor from cast per in Q3. The second question, that is all on downstream and MMP. We definitely observe the strong refinery margins going into Q3. Could you comment on the profitability of Mongstad this far in Q3 and what you expect during the H2 of this year? Thanks.

Speaker #2: Just wondering specifically if you can indicate what you expect as net production to Equinor from Costa Per in Q3. And the second question, that is all on Downstream and M&P.

Speaker #2: We definitely have seen strong refinery margins going into the third quarter. Could you comment on the profitability of Mongstad so far in the third quarter, and what do you expect during the second half of this year?

Speaker #2: Thanks.

Speaker #1: Okay, thanks, Teodor. So as far as I got, your first question was about your own cost per, right? So, we have had some issues related to the turbines, heat waste, that took three weeks—or 18 days—to get in order.

Torgrim Reitan: Okay. Thanks, Theodor. As far as I got, your first question was about Johan Castberg, right? We have had some issues related to the turbines heat waste. That took three weeks or 18 days to get in order. We had it back in production from the 13 July, meaning that the impact of that stock is around 14,000 barrels per day for next Q. That is up and running again. It is a field that is producing very well, and clearly, but it is still in a run-in period. There might always be some operational issues when you have a new field in getting there. That's the situation of Castberg.

Speaker #1: We had it back in production from the 13th of July, meaning that the impact of that stop is around 14,000 barrels per day for the next quarter.

Speaker #1: So that is up and running again. It is a field that is producing very well and clearly, but it is still sort of in a run-in period.

Speaker #1: So, there might always be some operational issues when you have a new field getting there. But that's the situation on cost per. On—

Speaker #2: Could I also ask, the 14,000—sorry, the 14,000—is that net to Equinor, or gross?

Teodor Sveen-Nilsen: Could the 14,000, sorry, the 14,000, is that net to Equinor or gross?

Speaker #1: Yeah, that is EQUINOR impact.

Torgrim Reitan: Yeah, that is Equinor impact.

Speaker #2: Okay, thanks.

Teodor Sveen-Nilsen: Okay, thanks.

Speaker #1: So then, on the M&P results, a strong result, where Mongstad is contributing well, with very high regularity. This is sort of part of the other group in the M&P reporting.

Torgrim Reitan: On the M&P results, a strong result where Mongstad is contributing well with very high regularity. This is part of the other group in the M&P reporting. It clearly creates significant value at the current refinery margins. To say a little bit about the refinery situation and the margin in Europe, clearly the oil market is tight, but the product market is even tighter. If you look at the SPC margin for Q2, it was actually at some $25 per barrel, which is very significant. We do not give a specific margin for Mongstad, but clearly it is significantly above what it costs to run it to break even. So far into this quarter, it continues to deliver strong results. I encourage you to follow the general refinery margins going forward, and that will directly impact the Mongstad delivery.

Speaker #1: So, it clearly creates significant value at the current refinery margins. To say a little bit about the refinery situation and the margin in Europe: clearly, the oil market is tight, but the product market is even tighter.

Speaker #1: And if you look at the FCC margin for the second quarter, it was actually at some $25 per barrel, which is very significant.

Speaker #1: We don't give a specific margin for Mongstad, but clearly, it is significantly above what it costs to run it—a break-even. So far into this quarter, it continues to deliver strong results.

Speaker #1: So, I mean, I encourage you to follow the general refinery margins going forward, and that will directly impact the Mongstad delivery.

Speaker #2: Thank you. Thank you, Teodor. Next on my list is Birage Borkataria from RBC. Birage, please go ahead. Hi there. Just one question for me.

Bård Glad Pedersen: Thank you. Thank you, Teodor. Next one on my list is Biraj Borkhataria from RBC. Biraj, please go ahead.

Biraj Borkhataria: Hi there. Just one question from me. Your partner, BP, gave up their stake, and you were targeting FID in 2027. Are you comfortable to push that project forward at 100%, or would you look to farm it down before progressing it? Maybe you could just talk a little bit about the Canadian support for that project, because it looks like there is quite a lot of movement, and sentiment change on the politics side in Canada recently. Thank you.

Speaker #2: Your partner, Badenode, gave up their stake and you were targeting FID in 2027. So, are you comfortable to push that project forward at 100%, or would you look to farm it down before progressing it?

Speaker #2: And maybe you could just talk a little bit about the sort of Canadian support for that project, because it looks like there's quite a lot of movement and a sort of sentiment change on the political side in Canada, recently.

Speaker #2: Thank you.

Speaker #1: Okay, thank you. Thank you very much, Birage. Yeah, so BP is sort of handing over the ownership in that asset to ourselves. There will ultimately be a minimum payment for us for this share.

Torgrim Reitan: Okay. Thank you. Thank you very much, Biraj. Yeah. BP is handing over the ownership in that asset to ourselves. There will be ultimately a minimum payment for us for this year, subject to a final investment decision, but a minimum one compared to the size of the opportunity here. The timeline, there is no change to that. We aim to sanction it in 2027. Then, we are working on bringing in another partner with us in this project. It is an attractive one, fully supported by the Canadian government. As you would understand in the current environment, energy security for all countries are very high on the agenda, and the same goes for Canada. This is an attractive investment opportunities that we look forward to realizing together with the Canadian government and potentially additional partners.

Speaker #1: Subject to a final investment decision, but a minimal one compared to the size of the opportunity here. So, the timeline—there's no change to that.

Speaker #1: We aim to sanction it in 2027, and we are working on bringing in another partner with us in this project. It is an attractive one, fully supported by the Canadian government.

Speaker #1: And as you would understand, in the current environment, energy security for all cultures is very high on the agenda, and the same goes for Canada.

Speaker #1: So, this is an attractive investment opportunity that we look forward to realizing together with the Canadian government and, potentially, additional partners.

Speaker #2: Thank you, Birage. Next. Thank you. The next one is Santander, Alejandro Virgil. Alejandro, please go ahead with your question.

Bård Glad Pedersen: Thank you, Bjørge.

Torgrim Reitan: Thank you.

Bård Glad Pedersen: Thank you. The next one is Santander, Alejandro Vigil. Alejandro, please go ahead with your question.

Speaker #3: Yes, thank you for taking my questions. I missed the beginning because I had some problems, so I don't know if someone asked about the European natural gas market—your expectation for the second half of the year in general, and how you see the balance of demand and supply in the market.

Alejandro Vigil: Yes. Thank you for taking my questions. I missed the beginning because I had some problems, so I don't know if someone asked about the European natural gas market, your expectation for H2 of the year in general, how you see the balance of demand supply in the market. The second question is related to that. We are seeing a very strong energy commodity environment, very strong cash flow. Your leverage now probably would be below 10%, according to your comments. Is there any room for additional buybacks this year above the NOK 3 billion that you are guiding now? Thank you.

Speaker #3: And the second question is related to that. We are seeing a very strong energy commodity environment, very strong cash flow; your leverage now probably would be below 10% according to your comments.

Speaker #3: Is there any room for additional buybacks this year above the $3 billion that you are guiding now? Thank you.

Speaker #1: Okay, thank you very much, Alejandro. That is a very important and large question. So let me take the first one first, on the European gas situation.

Torgrim Reitan: Thank you very much, Alejandro. These are very important and large questions. Let me take the first one first on the European gas situation. It is a vulnerable situation, and we might enter the autumn and winter with large uncertainties. Clearly, the fact that the Strait of Hormuz is where it is, shuts in around 20% of the global LNG, and restricts the global flows of LNG. That directly impacts Europe because currently around 30% of the supply will have to come from LNG and Europe will compete, particularly with Asia for that. When we combine that with a storage situation in Europe where the storage filling is at 53%, which is more than 15 percentage points below a normal situation or the average, it leaves us at, it is a fairly tight situation.

Speaker #1: So it is a vulnerable situation, and we might enter the autumn and winter with large uncertainties. Clearly, the fact that the Hormuz Strait is where it is sort of shuts in around 20% of the global LNG and restricts the global flows of LNG.

Speaker #1: And that directly impacts Europe, because currently around 30% of the supply will have to come from LNG, and Europe will compete particularly with Asia for that.

Speaker #1: And then when we combine that with a storage situation in Europe, where the storage filling is at 53%, which is more than 15 percentage points below a normal situation or the average, it leads ourselves to a fairly tight situation.

Speaker #1: So, we do assume or expect—I mean, say that the situation around hormones is normalizing and we are back to sort of regular flows of LNG.

Torgrim Reitan: We do assume or expect, I mean, say that the situation around the Strait of Hormuz is normalizing and we are back to regular flows of LNG. Still, we do not believe that Europe will get to 80% storage filling before the winter, and we will be below that. That is the situation. Also worth mentioning is that Russian gas will leave Europe. I mean, this year, LNG is going to be stopped, and next year, the remaining piped gas. There will be even more LNG that needs to come to Europe. First of all, we do hope the situation settles and that we can get back to normal. We just need to be prepared for volatility and uncertainty in the European gas market.

Speaker #1: Still, we do not believe that Europe will get to 80% storage filling before the winter, and we'll be below that. So, that is the situation.

Speaker #1: Also worth mentioning is that Russian gas will leave Europe. I mean, this year, LNG is going to be stopped, and next year the remaining piped gas.

Speaker #1: So there will be even more LNG that needs to come to Europe. So, first of all, we do hope the situation settles and that we can get back to normal.

Speaker #1: But we just need to be prepared for volatility and uncertainty in the European gas market. You would know that, sort of, we are very well placed to provide reliable energy into a situation like that, which we take very, very seriously.

Torgrim Reitan: You would know that we are very well-placed to provide reliable energy into a situation like that, which we take very seriously. We have a cost of gas of $2 per MBtu. We are currently selling into a close to $20 market. Just illustrating how important the Norwegian gas is for Europe. We are the largest energy provider to Europe, and we will continue to take that very seriously. Your second question, strong cash flow leverage and the potential for additional share buyback. We aim to run with a very solid balance sheet. We have currently a net debt ratio of 10.4%. Based on the forward curve as they looked a couple of days ago, we expect it to be somewhat lower than 10% by year-end, and with a strong cash flow naturally.

Speaker #1: We have a cost of our gas of $2 per MMBtu, but are currently selling into a market close to $20. This just illustrates how important Norwegian gas is for Europe.

Speaker #1: We are the largest energy provider to Europe, and we'll continue to take that very, very seriously. Then your second question: strong cash flow, leverage, and potential for additional share buyback.

Speaker #1: So we aim to run with a very solid balance sheet. We currently have a net debt ratio of 10.4%. Based on the forward curve, as it looked a couple of days ago, we expect it to be somewhat lower than 10% by year-end.

Speaker #1: And with a strong cash flow, naturally. And we intend to run with a very solid balance sheet, particularly in a high-price environment, to build the balance sheet to be able to manage low-price environments well as such.

Torgrim Reitan: We intend to run with a very solid balance sheet, and particularly in high price environment, to build balance sheet, to be able to manage low price environments well as such. The question related whether there is a potential for more share buyback this year. The answer to that is no. When we entered this year, we expected, of course, much lower oil and gas prices than what we have seen. The way we have distributed or used that additional cash is, first and foremost, we have increased our investment into oil and gas with $1 billion. Into more in Norway, more internationally, actually adding to the production outlook in 2030. Secondly, we are strengthening the balance sheet. As we entered 2026, the plan was to lean on the balance sheet. We will no longer need to do that. We are actually strengthening the balance sheet.

Speaker #1: Then the question related with sort of the is the potential for more share buyback this year. The answer to that is no. We entered when we entered this year, we expected of course a much lower oil and gas prices than what we have seen.

Speaker #1: The way we have distributed or used that additional cash is, first and foremost, we have increased our investment into oil and gas with $1 billion.

Speaker #1: Into more in Norway, more internationally, actually adding to the production outlook in 2030. Secondly, we are strengthening the balance sheet. As we entered 2026, the plan was to lean on the balance sheet.

Speaker #1: We will no longer need to do that. We're actually strengthening the balance sheet, and the third priority is to double the share buyback for the year.

Torgrim Reitan: The third priority is actually to double the share buyback for the year. We think this is the best way to create shareholder value and allocate capital in this environment. From next year, there is a new framework in place, and we look forward to discuss that with you at our Q4 results in February 2025.

Speaker #1: So, we think this is the best way to create shareholder value and allocate capital in this environment. From next year, there is a new framework in place, and we look forward to discussing that with you at our fourth-quarter results in February next year.

Speaker #2: Thank you, Alejandro.

Bård Glad Pedersen: Thank you, Alejandro.

Speaker #1: Thank you.

Torgrim Reitan: Thanks.

Speaker #2: Next question is from Henri Patrickot at UBS. Henri, please, your line is open.

Bård Glad Pedersen: Next question is Henri Patricot from UBS. Henri, please, your line is open.

Speaker #3: Yes, thank you, Bernhard. Two questions from me, please. First, just to come back to the question on European gas and perhaps more specifically for Equinor, given the much higher prices that we're seeing at the moment.

Operator 1: Yes. Thank you, Bård. Two questions from me, please. The first one, coming back to the question on European gas and maybe more specifically for Equinor, given the much higher prices that we're seeing at the moment. I was wondering if there's any flexibility on your side to increase natural gas production in H2 and exports to the European market. Secondly, thank you for the update on Johan Sverdrup production for the year. Good to see the good performance continues in Q2. I was hoping you could elaborate on what is driving the outperformance and the new guidance seems to imply that there should be still quite a large drop in H2 versus H1. Could we still see even further outperformance in H2 from Johan Sverdrup?

Henri Patricot: Yes. Thank you, Bård. Two questions from me, please. The first one, coming back to the question on European gas and maybe more specifically for Equinor, given the much higher prices that we're seeing at the moment. I was wondering if there's any flexibility on your side to increase natural gas production in H2 and exports to the European market. Secondly, thank you for the update on Johan Sverdrup production for the year. Good to see the good performance continues in Q2. I was hoping you could elaborate on what is driving the outperformance and the new guidance seems to imply that there should be still quite a large drop in H2 versus H1. Could we still see even further outperformance in H2 from Johan Sverdrup?

Speaker #3: I was wondering if there's any flexibility on your side to increase natural gas production in the second half of the year, and exports to the European market.

Speaker #3: And secondly, thank you for the update on Nuremberg's drop in production for the year. It's good to see the strong performance continues in the second quarter.

Speaker #3: I was hoping you could elaborate on what is driving the outperformance. And the new guidance seems to imply that there should still be quite a large drop in the second half of the year versus the first half.

Speaker #3: It's good to see continued strong performance in the second half of the year following Nuremberg's drop. Thank you.

Operator 1: Thank you.

Henri Patricot: Thank you.

Speaker #1: Okay. Thank you very much, Henri. So, when it comes to the overproduction of gas to Europe, we are already producing at maximum. So in the short term, there are no additional overall volumes that can be made available.

Torgrim Reitan: Okay. Thank you very much, Henri. When it comes to the overproduction of gas to Europe. We are already producing at maximum. In the short term, there's no additional sort of overall volumes that can be made available. When that is said, we have flexibility in our production system, and we have flexibility in our transportation system. We will be able to get the natural gas to where it is needed the most and where the price is highest. Typically, what we have seen over the last year is that German prices have been higher than British prices, so more gas has actually gone to Germany in those periods. We will continue to optimize around the volumes that we have to provide Europe with gas where it is needed the most.

Speaker #1: With that said, we have flexibility in our production system, and we have flexibility in our transportation system. So we will be able to get the natural gas to where it is needed the most and where the price is highest.

Speaker #1: So, typically, what we have seen over the last year is that German prices have been higher than British prices. So more gas has actually gone to Germany in those periods.

Speaker #1: So, we will continue to optimize around the volumes that we have, to provide Europe with gas where it is needed the most. Second point on this one is that you are all well aware that we keep all our exposure to natural gas prices floating.

Torgrim Reitan: Second point on this one is that you're all well aware of that we keep all our exposure to natural gas prices floating, and we also keep it very exposed to the prompt. We have a 70% exposure to day-ahead prices and 30% to month-ahead. Meaning volatility in prices will happen. We will be able to steer our gas to where that volatility is and capture the values from that as such. We will expect, and we do expect more volatility during the next year within that market. On Johan Sverdrup. Clearly we are using a lot of effort and all our competence to make the most out of Johan Sverdrup, and it continues to deliver better than we had planned. At the point of sanctioning, we expected a recovery rate of 65%.

Speaker #1: And we also keep it very exposed to the prompt. We have a 70% exposure to day-ahead prices and 30% to month-ahead. So, meaning, if volatility in prices happens, we will be able to steer our gas to where that volatility is and capture the values.

Speaker #1: From that as such, we will expect, and we do expect, more volatility during the next year within that market. Then, on Johan's ladder up, clearly we are using a lot of effort and all our competence to make the most out of Johan's ladder up.

Speaker #1: And it continues to deliver better than we had planned. At the point of sanctioning, we expected a recovery rate of 65%. Now, it's actually 75% that we look at.

Torgrim Reitan: Now it's actually 75% that we will get, and we increased the plateau level, and we have been able to reduce decline more than we have expected. If I should point to two sort of activities or technologies that are really making a big difference here. The first one is our ability to manage water, because as a field matures, you start to produce more and more water, and then you need efficiently to manage that. That has gone very well. As we manage water very efficiently, we make room for more oil production. That is a very important activity. The second one is well placement. We have now started to retrofit wells with multilaterals, wells that already have been produced and skilled, and then splitting into several wells from one wellbore.

Speaker #1: And we increased the plateau level, and we have been able to reduce decline more than we had expected. If I should point to two sorts of activities or technologies that are really making a big difference here...

Speaker #1: The first one is our ability to manage water, because as a field matures, you start to produce more and more water. And then you need to manage that efficiently.

Speaker #1: That has gone very well. So, as we manage water very efficiently, we make room for more oil production. So, that is a very important activity.

Speaker #1: The second one is sort of well placement. So we have now started to retrofit wells with multilaterals—wells that already have been produced and sealed—and then splitting into several wells from one wellbore.

Speaker #1: That has also continued to deliver very well, and we will continue with more of those during the year. So, the first half of the year has gone very well.

Torgrim Reitan: That has also continued to deliver very well, and we will continue with more of those during the year. H1 of the year has gone very well. We will continue to do our very best with Johan Sverdrup, and we will see how that goes in Q2.

Speaker #1: We will continue to do our very best with Johan's ladder-up, and we'll see how that goes in the second quarter.

Speaker #2: Thank you, Henri, for those questions. Michaela de la Vigna from Goldman Sachs is up next. Michaela, please go ahead.

Bård Glad Pedersen: Thank you, Henri, for those questions. Michele Della Vigna from Goldman Sachs is up next. Michele, please go ahead.

Speaker #4: Thank you very much. And good to see the contribution of the Adura joint venture this quarter. I was wondering if you could elaborate a bit there. The company certainly has a lot of space to gear up and finance itself.

Michele Della Vigna: Thank you very much, and good to see the contribution of the Adura joint venture this quarter. I was wondering if you could elaborate a bit there. The company certainly has a lot of space to gear up and finance itself. What should we expect in terms of dividend from it in the next 12 months? Secondly, you are ramping up more frontier high-impact exploration. I was just wondering if you could lay out by the end of the year what should be the high-impact wells we should be looking forward to. Thank you.

Speaker #4: What should we expect in terms of dividend from it in the next 12 months? And then, secondly, you are ramping up more frontier, high-impact exploration.

Speaker #4: I was just wondering if you could lay out, by the end of the year, what should be the high-impact wells we should be looking forward to.

Speaker #4: Thank you.

Speaker #1: Okay, thanks, Michaela. So first, on Adura—so we are very satisfied with having set up that company together with Shell. Clearly, it's transforming our cash flow amount out of the UK from actually a negative cash flow due to investments to a positive contribution.

Torgrim Reitan: Thanks, Michele. First on Adura. We are very satisfied with having set up that company together with Shell. Clearly transforming our cash flow out of the UK from actually a negative cash flow due to investments, to a positive contribution. We have received NOK 150 million in capital distribution in Q1, and we have also received that now in Q2. Over 2026 and 2027, we expect more than NOK 1 billion in capital distribution altogether from Adura. You asked a question about there is potential to gear up the company. Adura has raised around GBP 3 billion in debt. It is already fairly levered to an appropriate level as such, giving them even more capacity to make business. On the exploration activities. Clearly, exploration activity is very important to us. We are drilling 120 wells per year.

Speaker #1: So, we have received $150 million in capital distribution in the first quarter, and we have also received that now in the second quarter.

Speaker #1: Over the first, over 2026 and 2027, we expect more than a billion dollars in capital distribution altogether from Adura. And then you asked a question about the potential to gear up the company.

Speaker #1: Adura has raised around £3 billion in debt, so it is already fairly levered to an appropriate level as such, giving them even more capacity to make business.

Speaker #1: Then on the exploration activities. So clearly, exploration activity is a very important to us. We have a drilling 120 wells per year. Many of these wells are sort of wells close to infrastructure on the Norwegian continent itself, but actually 20% of the wells in Norway are towards standalone opportunities.

Torgrim Reitan: Many of these wells are sort of wells close to infrastructure on the Norwegian Continental Shelf, but actually 20% of the wells in Norway are towards standalone opportunities. There is a continued flow of sort of opportunities with higher impact and a higher sort of upside, but of course higher risk as well. Internationally, the program this year is mainly within ILX opportunities in Angola. Similar type of opportunities that we see in Norway. We have lined up several high-impact opportunities internationally. If I should mention a few, it is actually Brazil where we intend to drill a few high-impact opportunities through 2027 and 2028, among others, the neighboring block to Boomerang in the southern part. Excited, and we will see where this brings us.

Speaker #1: So there is a continued flow of opportunities with higher impact and a higher upside, but, of course, higher risk as well.

Speaker #1: Internationally, the program this year is mainly within ILX opportunities in Angola, similar to the type of opportunities that we see in Norway. And then, we have lined up several high-impact opportunities internationally.

Speaker #1: And if I should mention a few, it is actually Brazil, where we intend to drill a few high-impact opportunities through ‘27 and ‘28; among others, the neighboring block to Bumerang in the southern part.

Speaker #1: So excited, and we'll see where this brings us.

Speaker #4: Thank you.

[Analyst]: Thank you.

Michele Della Vigna: Thank you.

Speaker #2: Thank you. Thank you, Michaela. Next one is Martin Ratz from Morgan Stanley. Martin, your line is open.

Bård Glad Pedersen: Thank you, Michele. Next one is Martijn Rats from Morgan Stanley. Martin, your line is open.

Speaker #5: Yeah, good morning. So, two questions from me, if I may. I briefly wanted to ask you about the production guidance, because I don't think I've fully understood what you said.

Martijn Rats: Good morning. Two questions from me, if I may. I briefly wanted to ask you about the production guidance because I don't think I've sort of fully understood what you said. As in you said that with the results achieved in H1, the full-year production guidance is now better underpinned. I just want to make sure I've got that correct. But also if, given the result of H1, doesn't the full-year production guidance now imply sort of a deceleration or like a sequential decline into H2, suggesting perhaps that there may be some upside? I was hoping you could clarify that. The other point I wanted to pick you up on is the gas price realizations in the US. They had fallen more, at least in, we modeled and I was hoping you could say a few things about it.

Speaker #5: As in, you said that with the results achieved in the first half, the full-year production guidance is now better underpinned. I just want to make sure I've got that correct.

Speaker #5: But also, if given the result of the first half, doesn't the full-year production guidance now imply a sort of deceleration or a sequential decline into the second half?

Speaker #5: Suggesting, perhaps, that there may be some upside. I was hoping you could clarify that. And the other point I wanted to pick up on is the gas price realizations in the United States.

Speaker #5: They'd fallen more, at least, than we modeled. And I was hoping you could say a few things about it. There seems to be a lot of basis risk and a lot of very local circumstances going on.

Martijn Rats: There seems to be a lot of basis risk and a lot of very local circumstances going on. Last quarter you called that position very strategic, and look, it's only one quarter, so that's probably the case. I was wondering if you could say a few things about whether that position is still sort of developing as you initially expected.

Speaker #5: Last quarter, you got that position very strategic. And look, it's only one quarter, so that's probably the case. But I was wondering if you could say a few things about whether that position is still sort of developing as you initially expected.

Speaker #1: Okay, okay. Thank you, thank you, Martin. So, first on production guidance: very strong operations in the first half of the year, and better than we planned for when we started the year.

Torgrim Reitan: Okay. Thank you, Martijn. First on production guidance. Very strong operations in the H1 of the year and better than we planned for when we started the year. Clearly coming out of good regularity across operations, super delivery from operational organizations and also the ramp-up of new fields have gone well. We talked about Johan Sverdrup as one example. So far this year, 6% growth in a way. I just want to say that it was actually the growth for the year was planned to be sort of tilted towards the H1 of the year based on sort of the ramp-ups of Bacalhau, Johan Castberg and new startups as such. That was always the plan.

Speaker #1: So, clearly coming out of good regularity across operations and operational organizations. Also, the ramp-up of new fields has gone well. We talked about Johan’s project as one example.

Speaker #1: So so far this year, 6% growth in a way. I just want to say that it was actually planned for being the growth for the year was planned to be sort of tilted towards the first half of the year, based on sort of the ramp ups of bacalhau, Johan Casper, and you startups.

Speaker #1: As such, that was always the plan. But we also say that the expectation for the full year is more robust. However, we have decided not to increase the production guidance at this stage.

Torgrim Reitan: We also say that sort of the expectation for the full year is more robust we have decided not to increase the production guidance in a way. Clearly we will follow this very closely and we will revert in the Q3 on production naturally. We'll see. We'll keep it as it is, but it is a more robust guidance. The second, the gas price realization if you look at the quarter as such, Henry Hub came in at $2.9 per barrel. Our average gas price in the North was $2.3, a discount of $0.6, which is actually lower than it normally is. It is a little bit higher than that normally. In general, we are located in the most attractive acreage and basin, with very low unit production cost.

Speaker #1: So, but clearly, we will follow this very closely, and we will revert in the third quarter on production, naturally. So we'll see; we'll keep it as it is.

Speaker #1: But it is a more robust guidance. Yeah, the second. Yeah, the gas price realization in the—yeah. So if you look at the quarter as such, Henry Hub came in at $2.90 per MMBtu.

Speaker #1: Our average gas price in the North was $2.30, so a discount of $0.60, which is actually lower than it normally is. It's usually a little bit higher than that.

Speaker #1: In general, we are located in the most attractive acreage and basin, with very low unit production costs. So, this continues to be a very strong contributor to our results as such.

Torgrim Reitan: This continues to be a very strong contributor to our results as such. Prices were down compared to last quarter, last year, by 16%, still making significant value out of it.

Speaker #1: So prices were down compared to the same quarter last year by 16%. But we are still making significant value out of it.

Speaker #2: Thank you, Fergus Kneave from Rothschild. Fergus, your line is open.

Bård Glad Pedersen: Thank you, Martin. Next one is Fergus Neve from Rothschild. Fergus, please, your line is open.

Speaker #5: Yeah. Morning, everyone. Thanks for taking my question. Just the one from me. So, looking at MMP, which delivered another strong quarter—given the volatility we saw, I was just wondering if you were able to comment on the drivers of the relative mix within the results between gas, oil, and refining.

Fergus Neve: Morning, everyone. Thanks for taking my question, just the one from me. Looking at MMP, which delivered another strong quarter, given the volatility we saw, I was just wondering if you were able to comment on the drivers of the relative mix within the results between gas, oil, and refining, and the movements in those quarter-on-quarter. Whether you could also comment at all on what you've seen in terms of volatility in gas and oil markets in the current quarter, noting that you've already commented a little on the refining side of things. Thanks a lot.

Speaker #5: And the movements in those quarter-on-quarter. And then, whether you could also comment at all on what you've seen in terms of volatility in the gas and oil markets in the current quarter, noting that you've already commented a little on the refining side of things.

Speaker #5: Thanks a lot.

Speaker #1: Thanks, Fergus. So, another strong quarter from the Marketing and Trading organization. We talked about refinery and Mongsta as key contributors. The other one that sticks out this quarter is the crude trading.

Torgrim Reitan: Thanks, Fergus. Another strong quarter from the marketing and trading organization. We talked about refinery and Mongstad as a key contributor. The other one that sticks out this quarter is the crude trading, with significant contributions to the results, and larger than what you should expect. LNG is also doing better than expected. While sort of the normal gas trading is on par with what you should expect as such. That doesn't stick out as something special. Typical drivers for the results in MMP going forward is clearly volatility, means a lot. Geographical dislocations, meaning that there are arbitrage opportunities geographically, both on the oil side and on the gas side, are key drivers. Of course, if there are things on the curve that gives us opportunities with time arbitrage as well. We have guided on a normal quarter of around NOK 400 million per quarter.

Speaker #1: With significant contributions to the results, and larger than what we saw last year, LNG is also doing better than expected, while sort of the normal gas trading is on par with what you should expect as such.

Speaker #1: So that doesn't stick out as something special. What we typically see as the typical drivers for the results in MMP going forward is clearly volatility. It means a lot.

Speaker #1: Geographical dislocations mean that there are arbitrage opportunities geographically, both on the oil side and on the gas side. These are key drivers. And then, of course, if there are things on the curve, that gives us opportunities with time arbitrage as well.

Speaker #1: We have guided on a normal quarter of around $400 million per quarter. That remains intact. And we have also said that, over time, we expect to increase our guiding to around $500 million as such.

Torgrim Reitan: That remains intact. We have also said that over time, we expect to increase our guiding to around NOK 500 million as such. This is a special quarter, clearly driven by events in the world, geopolitical events, we just need to be prepared that the results within this segment will fluctuate as such.

Speaker #1: So this is a special quarter, clearly driven by events in the world—geopolitical events. And we just need to be prepared that the results within this segment will fluctuate as such.

Speaker #2: Thank you, Fergus. Next up is Nash Kiwi from Barclays. Nash, please go ahead.

Bård Glad Pedersen: Thank you, Fergus. Next up is Nash Kiwi from Barclays. Nash, please go ahead.

Speaker #6: Hey, good morning, everyone. Thanks for taking my questions. I have two left, please. The first one is on Brd Nord. It's a very big, over $10 billion capex project.

Nash Kiwi: Hey, good morning, everyone. Thanks for taking my questions. I have two left, please. The first one is on Bay du Nord. It's a very big, over $10 billion CapEx project. I wonder how sensitive the project economics to the current service cost inflation, and could you remind us what return threshold are you requiring before sanctioning it next year? My second question is on NCS. One of your Norwegian peers reported about 6% to 7% CapEx inflation for its two large growth projects. I wonder if the NCS CapEx cost is a concern for Equinor as well, and if you can comment on how you have been managing the cost, please. Thank you.

Speaker #6: I wonder how sensitive the project economics are to the current service cost inflation? And could you remind us what return threshold you are requiring before sanctioning AGE next year?

Speaker #6: And then my second question is on NCS. One of your Norwegian peers reported about 6% to 7% capex inflation for its two large growth projects.

Speaker #6: I wonder if the NCS capex cost is a concern for Equinor as well, or if you can comment on how you have been managing the cost, please.

Speaker #6: Thank you.

Torgrim Reitan: Thank you, Nash. The first question was related to Bay du Nord. It is a very significant project and large project, with a large CapEx, nine to $10 billion. We have worked over time to significantly improve that over the last three years to now be a very robust and a good project. Cost has, we have been able to limit cost increases, and we have actually scaled down the scope of the development, and maintain a very attractive returns as such. This is a returns well above what we set as a threshold for investments. On the Norwegian Continental Shelf, your question was more in general, how we manage cost and all of that.

Speaker #1: Yeah, thanks. Thank you, Nash. So the first question was related to Brd Nord. It is a very significant project, and a large project, with a large capex—$9 to $10 billion.

Speaker #1: We have worked over time to significantly improve that over the last three years, to now be a very robust and good project. So, cost has sort of—we have been able to limit cost increases.

Speaker #1: And we have actually scaled down the scope of the development, and maintained very attractive returns as such. So this is a sort of return well above what we set as a threshold for investments on the Norwegian continental shelf.

Speaker #1: And your question was more in general about how we manage cost and all of that. I think it's sort of, I mean, you know as well, and you know that we have a very, very diligent way of continuing to improve our business and improve our projects, and taking out scale, synergies, and all of that.

Torgrim Reitan: You know us well, you know that we have a very diligent way of continue to improve our business and improve our project and taking out scale and synergies and all of that. There is one key number that we often use, and that is the break even related to new developments. That is now below $40 per barrel. That has actually remained at that level over many, many years, even if we have, say, 5% inflation one year, 10% the next year, and 5%. There is an underlying drive to improve and take out cost in the system. We have been able to maintain that even if we have seen inflation. Second point is that clearly we are a very large developer, particularly in Norway.

Speaker #1: And there is one key number that we often use, and that is sort of the break-even, related to new developments. So that is now below $40 per barrel.

Speaker #1: And that has actually remained at that level over many, many years, even if we have, say, 5% inflation one year, 10% the next year, and 5%.

Speaker #1: So there is an underlying drive to improve and take out cost in the system. We have been able to maintain that, even though we have seen inflation.

Speaker #1: The second point is that, clearly, we are a very large developer, particularly in Norway. So we have been able to get contracts on frame contracts, long-term contracts, and develop things on a portfolio level.

Torgrim Reitan: We have been able to get contracts on frame contracts, long-term contracts, and developing things on a portfolio level. Last point I would like to make is everything that we now do around NCS 2035, where we do a massive standardization and massive simplification of the new developments. We expect that to lead to reduced CapEx, not increased, but reduced CapEx by 50% through this portfolio. Even with inflation, we will be able to reduce our investment levels on the Norwegian continental shelf. This is a key part of what we discussed with you on the Capital Markets Day, we will continue to come back to this topic as we progress.

Speaker #1: The last point I would like to make is about everything that we now do around NCS 2035, where we are undertaking massive standardization and simplification of new developments.

Speaker #1: And we expect that to lead to reduced capex—not increased, but reduced capex—by 50% through this portfolio. So even with inflation, we will be able to reduce our investment levels on the Norwegian continental shelf.

Speaker #1: This is a key part of what we discussed with you during Capital Markets Day, and we will continue to come back to this topic as we progress.

Speaker #2: Thank you, Nash. Next is Matt Lofting from JP Morgan. Matt, please go ahead with your questions.

Bård Glad Pedersen: Thank you, Lars. Next is Matt Lofting from JP Morgan. Matt, please go ahead with your questions.

Speaker #6: Thanks for taking the questions and the update. Two quick ones from me. First, just on gas—I wondered, Torgrim, if you could just add any perspectives on the demand baseline that you're seeing in Europe currently, perhaps particularly the industry segment, which has tended over the last few years to be a bit more sensitive to price and supply.

Matt Lofting: Thanks for taking the questions and the update. Two quick ones from me. First, just on gas, I wondered, Torgrim, if you could just add any perspectives on the demand baseline that you're seeing in Europe currently, perhaps particularly the industry segment, which has tended over the last few years to be a bit more sensitive to price and supply uncertainty. Second, just within the sort of the moving parts on gearing, I wondered if you could just expand on the working cap baseline and sort of ex price effects, perhaps what you're expecting there for the H2. If I heard right earlier, I think you said that the inventory baseline was a bit lower at this point in the year than would normally be the case. Thanks.

Speaker #6: Uncertainty. And then second, just within the sort of the moving parts on gearing, I wondered if you could just expand on the working cap baseline and sort of ex-price effects, perhaps.

Speaker #6: What you're expecting there for the second half of the year, if I heard right earlier—I think you said that the inventory baseline was a bit lower at this point in the year than would normally be the case.

Speaker #6: Thanks.

Speaker #2: Okay, thank you very much, Matt. So, when it comes to the industrial demand for natural gas in Europe, that has come down after the war in Ukraine.

Torgrim Reitan: Okay. Thank you very much, Matt. When it comes to the industrial demand for natural gas in Europe, that has come down after the war in Ukraine. We actually see some 25% down on the industrial demand. Lately, fairly stable, actually, but there is a reduction in demand. When that is said, the European gas market, if you look at sort of what is needed of new gas to the market, that is actually growing. There's a growing need for gas in Europe, even if sort of demand industrially has come down. We do expect that the LNG share of the market will have to grow from around 30% today to actually 50% by 2030. Even with that, we see a rather tight situation over the next few years. Second question on gearing and working capital as such.

Speaker #2: So we actually see some 25% down on the industrial demand. Lately, fairly stable, actually, but there is a reduction in demand. With that said, the European gas market—if you look at what is needed in terms of new gas to the market—that is actually growing.

Speaker #2: So, there's a growing need for gas in Europe, even if industrial demand has come down. We do expect that the LNG share of the market will have to grow from around 30% today to actually 50% by 2030.

Speaker #2: So even with that, we see a rather tight situation over the next few years. Then, second question on gearing and working capital as such.

Speaker #2: So, we saw a reduction in working capital for the second quarter of $1.8 billion. Working capital level is now at $3.6 billion, which is lower than normal. It comes from a reduction in inventories and also a reduction in accounts receivable.

Torgrim Reitan: We saw a reduction in working capital for Q2 of NOK 1.8 billion, and working capital level is now at 3.6. That is lower than normal. It comes from reduction in inventories and also a reduction in account receivables as such. We have also actually fewer cargoes in transit at the end of the quarter due to that they're shorting sailing distances, the current trading that we are doing. Going forward, we don't provide a guiding on the working capital, the absolute price level is clearly an important determinator of the working capital. In general, you could say that if prices are low, working capital should be low. If prices increase significantly, working capital is expected to be higher, actually net debt then will go down. Those things hang together. Working capital clearly will also fluctuate somewhat, it will.

Speaker #2: As such, we also have fewer cargoes in transit at the end of the quarter, due to the shorter sailing distances. The current trading that we are doing.

Speaker #2: Going forward, we don't provide a guiding on the working capital, but the absolute price level is clearly an important determinant of the working capital.

Speaker #2: So, in general, you could say that if prices are low, working capital should be low. If prices increase significantly, working capital is expected to be higher.

Speaker #2: But actually, net debt then will go down. So, I mean, those things hang together. But working capital clearly will also fluctuate somewhat—it will.

Speaker #2: Thanks, Matt. Next up is Chris Coupren from Bank of America. Chris, your line is open.

Bård Glad Pedersen: Thanks, Matt. Next up is Chris Kuplent from Bank of America. Chris, your line is open.

Speaker #6: Yeah, thank you very much. Torgrim, two quick questions I've got left. Firstly, could you update us on the proceeds still to come from the Peregrino disposal?

Chris Kuplent: Thank you very much. Torgrim, two quick questions I've got left. Firstly, could you update us on the proceeds still to come from the Peregrino disposal? Any update you can give us on timing. A second question, remembering 2022 and 2023, how much flex is there or how much appetite is there to use flex for pulling forward tax payments into the year? What's your current thinking there around the Well, the flexibility that you do have in the Norwegian system. Thank you.

Speaker #6: And any update you can give us on timing? And a second question: remembering '22 and '23, how much flex is there, or how much appetite is there, to use flex for pulling forward tax payments into the year?

Speaker #6: What's your current thinking there around, well, the flexibility that you do have in the Norwegian system? Thank you.

Speaker #2: Thank you very much, Chris. So, Peregrino, we have the debt in two tranches. We own 60%, so there's a 40% part and a 20% part.

Torgrim Reitan: Thank you very much, Chris. Peregrino, so we have divested that in two tranches. We own 60%, so it's a 40% part and it's a 20% part. The 40% is we have received the funds. The total headline consideration is NOK 3.5 billion as such. The first transaction, the 40%, that is sort of all settled and we have received the money for that. The second transaction is sort of the remaining 20%. This is currently classified as held for sale in our books. There are still some ongoing things related to that part. We do expect that transaction to close maybe towards the end of this year, early next year. Of course, we are not in full control of everything around that process. That is what we do expect.

Speaker #2: The 40% is we have received the funds. I mean, the total headline consideration is 3 and a half billion dollars as such. So the first transaction, the 40%, that is sort of all settled, and we have received the money for that.

Speaker #2: The second transaction is for the remaining 20%. This is currently classified as held for sale in our books, and there are still some ongoing matters related to that part.

Speaker #2: And we do expect that transaction to close maybe towards the end of this year or early next year. But of course, we're not in full control of everything around that process.

Speaker #2: So, that is what we do expect. Yeah.

Speaker #6: And just to check on the number, Torgrim, is most of that item held for sale, backed up by Peregrino?

Chris Kuplent: Just to check on the number, Torgrim. Is most of that item held for sale backed up by Peregrino?

Torgrim Reitan: Yes, that's right.

Speaker #2: Yeah, so that is—yes, that's right. That's right. So that is—it means that sort of revenue, cost, and production is reported as normal, but we don't report depreciation for it as it's sort of held for sale.

Chris Kuplent: Okay.

Torgrim Reitan: That means that sort of revenue cost and production is reported as normal, but sort of we don't report the appreciation for it as it's sort of held for sale. Your second question about sort of the tax payment for this going forward, and I guess you think about Norway. In the H1 of the year, we paid sort of each installment was around NOK 20 billion, and we have now indicated to the state that we will pay NOK 23 billion per installment. There are two installments in the Q3 and three installments in the Q4. It's an increase of some 16% or something like that. When we set that and we have to inform the tax man that what we're going to pay, we made a judgment of sort of increase and higher prices, as such.

Speaker #2: Then your second question about, sort of, the tax payment for this going forward—and I guess if you think about Norway—in the first half of the year, we paid, sort of, each installment was around NOK 20 billion, and we have now indicated to the state that we will pay NOK 23 billion per installment.

Speaker #2: There are two installments in the third quarter, and three installments in the fourth quarter. So it's an increase of some 16%, or something like that.

Speaker #2: So, when we set that, and we have to inform the taxman what we're going to pay, we made that judgment, sort of the increase and higher prices as such.

Speaker #2: So, there are no plans to make adjustments to that. However, there is an opportunity to increase it at a point in August, but we have no concrete plans for that currently.

Torgrim Reitan: There are no plans to make adjustments to that. However, there is an opportunity to increase it at a point in August, but we have no concrete plans for that currently.

Speaker #2: Thank you. Chris, next is Sadnam Ali from HSBC. Sadnam, please go ahead.

Bård Glad Pedersen: Thank you, Chris. Next one is Sadnan Ali from HSBC. Sadnan, please go ahead.

Speaker #7: Hi there, thanks for taking my questions. Just a couple on unit production costs, please. Firstly, in February with the full-year results, you had a target to reduce your unit production cost to $6 per barrel for 2026, specifically.

Sadnan Ali: Hi there. Thanks for taking my questions. Just a couple on unit production cost, please. Firstly, in February with the full year results, you had a target to reduce your unit production cost to $6 per barrel for 2026 specifically. It looks like that was removed with your Q1 results in May. I just wanted to ask what led to that target being removed quietly if it was? Secondly, and related, at the June CMD, you introduced a $6 per barrel unit production cost target, averaging over 2026 to 2030. For your international portfolio specifically, you're expecting a 30% reduction to under $5.5 per barrel, but what about for NCS specifically? Can you share what your current unit production cost is for the NCS and how you think about that trajectory out to 2030, please?

Speaker #7: But it looks like that was removed with your first-quarter results in May. So I just wanted to ask what led to that target being removed quietly, if it was.

Speaker #7: And secondly, and related, at the June CMD, you introduced a $6 per barrel unit production cost target, but averaged over 2026 to 2030. For your international portfolio specifically, you're expecting a 30% reduction, under $5.50 per barrel.

Speaker #7: But what about for NCS specifically? Could you share what your current unit production costs are for the NCS, and how you think about that trajectory out to 2030, please?

Speaker #2: All right, thanks, Sadnam. So clearly, unit production cost is a very important metric for us, and we follow that very closely. We had a slide, actually, in the Capital Markets Day presentation deck showing that we are at around 6, while our peers are around 8.

Torgrim Reitan: All right. Thanks, Sadnan. Clearly, unit production cost is a very important metric for us, and we follow that very closely. We have a slide actually in the Capital Markets Day presentation deck showing that we are at around 6 while our peers are around 8. We continue to operate on a very competitive cost level. The $6 UPC for 2026, that is sort of a combined number across the portfolio, and it's sort of approximately what we do expect for 2026. The EPI and EPN is broadly on the same level as such. In our Capital Markets Day, we said $6 per barrel towards 2030, and 5.5 for international. Clearly, broadly the same level in Norway and international towards 2030. It is, while we're at it, this is clearly a key metric to measure when it comes to cost.

Speaker #2: So, we continue to operate at a very competitive cost level. The $6 UPC for 2026 is a combined number across the portfolio.

Speaker #2: And it's sort of approximately what we do expect for 2026. The EPI and EPN are broadly on the same level as such. Then in our Capital Markets Day, we said $6 per barrel towards 2030.

Speaker #2: And 5 and a half for International. So, clearly, broadly the same level in Norway and International towards 2030. While we're at it, this is clearly a key metric to measure when it comes to cost.

Speaker #2: But we have also set a target for the year that we are going to reduce our operating costs and administrative costs, SG&A, by 10% compared to last year.

Torgrim Reitan: We have also set a target for the year that we are going to reduce our operating costs and administrative costs, SG&A, by 10% compared to last year. If you study our numbers, you actually see that there is an increase of 11% year to date or in the Q2. I just want to provide a bit some color to that, because that is very much driven by increased transportation costs related to higher production and also higher operating and maintenance costs due to more assets under operations. If we strip out sort of transportation cost and royalty, actually a reduction of 6% compared to last year. If you then strip out currency impact, as we don't have an impact over, it's actually -10%.

Speaker #2: So, if you study your numbers, you actually see that there is an increase of 11% year to date, or in the second quarter. And I just want to provide you with some color on that, because that is very much driven by increased transportation costs.

Speaker #2: It related to higher production, and also higher operating and maintenance costs due to more assets under operations. If we strip out transportation cost and royalty, we actually have a reduction of 6% compared to last year.

Speaker #2: And if you then strip out currency impact that we don't sort of have an impact over, it's actually minus 10%. So, we are on track to deliver on this, and this is clearly something that we follow very diligently as such.

Torgrim Reitan: We are on track to deliver on this, and this is clearly something that we follow very diligently as such.

Speaker #2: Thank you. Sadnam, I have a few left on my list. Let's try to cover as many as possible before we close at half past, as planned.

Bård Glad Pedersen: Thank you, Sadan. I have a few left on my list. Let's try to cover as many as possible before we close at half past as planned. John Leisner, you are next, from ABG Sundal Collier. John, please go ahead.

Speaker #2: Euno Lyson, you are next, from ABG Sundal Collier. Euno, please go ahead.

Speaker #6: Thank you. Thanks for taking my question. Two questions. First, Ronko Dorfield has experienced technical issues that have hampered production over the last three quarters.

John Leisner: Thank you, and thanks for taking my question. Two questions. First, the Roncador field has experienced technical issues that has hampered production over the last 3 quarters. Could you tell us what is the issue, and when do you expect that to be solved? That was question number 1. Number 2 is related to Adura. The results jumped from NOK -90 in Q1 to NOK +90 in Q2. In Q2, you said that the higher depreciation principles or higher depreciation due to change of principles had lowered the results. I just wonder now, have the depreciation charges or principles been changed again? Just wonder, so two questions.

Speaker #6: Could you tell us what the issue is and when you expect that to be solved? That was question number one. Number two is related to Adura.

Speaker #6: The results jumped from minus $90 in Q1 to plus $90 in Q2. And in Q2, you said that the higher depreciation, or higher depreciation due to change of principles, had lower results.

Speaker #6: I just want to know, have the depreciation charges or principles been changed again? I just wonder. So, two questions.

Speaker #2: Okay. So if we take the Adura question first—you're right. It goes from minus 94, to minus 91, to plus 94.

Torgrim Reitan: If we take the Adura question first. You're right. It goes from NOK -91 to NOK +94. I think first of all, that is driven by higher realized prices in Q2. That is an important parameter. Also in Q1, there were some one-offs related to establishment of the new company, and there are no changes in depreciation principles through all of this. When that is said, we have received a dividend of NOK 150 million, both in Q1 and Q2, which is higher than the reported earnings or net profit in a way. That leads to that the dividend or the capital distribution received is not part of the cash from operations that we have reported. It is a subtraction to the investment cash flow as such. That's the way it's treated accounting-wise.

Speaker #2: So, I think, first of all, that is driven by higher realized prices in the second quarter. That is an important parameter. Also, in the first quarter, there were some one-offs related to the establishment of the new company.

Speaker #2: And there are no sort of changes in depreciation principles through all of this. With that said, we have received a dividend of $150 million both in the first quarter and the second quarter.

Speaker #2: Which affects the reported earnings, or net profit, in a way. So, that leads to the dividend or the capital distribution received not being part of the cash flow from operations that we have reported.

Speaker #2: It is a subtraction to the investment cash flow as such. That's the way it's treated, accounting-wise. Now, actually, the cash flow from operations is a tad stronger than what you should read through the first glimpse of this number.

Torgrim Reitan: Actually, the cash flow from operations is a tad stronger than what you should read through the first glimpse of this number. When it comes to Roncador, there have been some operational issues. We are not operating here, and I think it's better for Petrobras to respond to that. Clearly, we are supporting them and are working very closely with them. Thanks, Jon.

Speaker #2: When it comes to Ronka Door, there have been some operational issues. But we are not operating there, and I think it's better for Petrobras to respond to that.

Speaker #2: Clearly, we are supporting them, and I'm working very, very closely with them. So, thanks, Euno. Thank you, Euno. Next one is Jason Gableman from TD Cowen.

Bård Glad Pedersen: Thank you, Jon. Next one is Jason Gabelman from TD Cowen. Jason, please go ahead.

Speaker #2: Jason, please go ahead.

Speaker #7: Yeah. Hey, thanks for taking my question. Just one quick one from me. I'm wondering if the lower gas prices in the US have impacted or have opened up the acquisition window a bit more.

Jason Gabelman: Yeah. Hey, thanks for taking my question. Just one quick one from me. I'm wondering if the lower gas prices in the US have impacted or have opened up the acquisition window a bit more. I know you've been focused on expanding your non-Appalachia footprint. Just any thoughts there would be great. Thanks.

Speaker #7: I know you've been focused on expanding your non-Appalachia footprint, so any thoughts there would be great. Thanks.

Speaker #2: Thanks, Jason. Yeah, I mean, we do believe that natural gas is an attractive commodity to be part of going forward, both in Europe but also in the US.

Torgrim Reitan: Thanks, Jason. Yeah. We do believe that natural gas is an attractive commodity to be a part of going forward, both in Europe, but also in the US. You have seen us doing some significant transactions and acquisition in the space over the last couple of years, bringing the position up to a very significant one. Going forward, we will first and foremost be interested in creating the maximum value out of it. Then if there are opportunities, we will always consider that, but nothing to say around that. In general, when it comes to M&A, we have been very active over the last few years, both selling and investing. In the international portfolio, it's massively hydrated while actually bringing back $4 billion in net proceeds over the last years as such. We will continue to look for ways to hydrate our international activities.

Speaker #2: And you have seen us doing some significant transactions and acquisitions in the space over the last couple of years, bringing the position up to a very significant one.

Speaker #2: So, going forward, I mean, we will first and foremost be interested in sort of creating the maximum value out of it. And then, if there are opportunities, I mean, we will always consider that.

Speaker #2: But nothing to say around that. In general, when it comes to M&A, we have been very active over the last few years, both selling and investing.

Speaker #2: And in the international portfolio, it has been massively high-graded, while actually bringing back $4 billion in net proceeds over the last years as such.

Speaker #2: So, we will continue to look for ways to high-grade our international activities. Thank you, Jason. Let's try to squeeze in one more—Ahmed Ben Salem from Oddo.

Bård Glad Pedersen: Thank you, Jason. Let's try to squeeze in one more. Ahmed Ben Salem from Oddo. Please go ahead.

Speaker #2: Please go ahead.

Speaker #4: Hi, thanks for taking my question. It's on production growth. So, following the startup of Bacalhau and Johan Castberg, which project do you see as a key driver of production growth over the next three to five years?

Ahmed Ben Salem: Hi. Thanks for taking my question. It is on production growth. Following the startup of Bacalhau and Johan Sverdrup, which project do you see as a key driver of production growth over the next three to five years? What do you see as the main risk to delivering this project on time and on budget? Thank you.

Speaker #4: And what do you see as the main risk to delivering this project on time and on budget? Thank you.

Torgrim Reitan: Okay. Thanks, Ahmed. In such a large portfolio, there are so many projects coming on stream. Of course, ramp-up of Johan Sverdrup is on plateau, but ramp-up of Bacalhau is important. I am very glad to report that the wells are working very well on Bacalhau. We now have three producers on Bacalhau, and we have two gas injectors in place, and we are about to finish the fourth producer also. We do expect Bacalhau to come on plateau by the end of the year, actually. A very significant contributor in the short term. If you sort of stretch a little bit further out, we have Raia in Brazil coming on stream in 2028. We have also Sparta in 2028 in the Gulf of Mexico, Rosebank and Jackdaw in the UK, typically in 2027.

Speaker #2: Okay, thanks, Ahmed. It's such a large portfolio, and there are so many projects coming on stream. Of course, ramp-up of Johan Castberg is on plateau, but ramp-up of Bacalhau is important.

Speaker #2: So I'm very glad to report that the wells are working very well on Bakalau. So we now have three producers on Bakalau, and we have two gas injectors in place, and we are about to finish the fourth producer also.

Speaker #2: So, we do expect Bakalau to come on plateau by the end of the year, actually. So, a very significant contributor in the short term.

Speaker #2: If we sort of stretch a little bit further out, we have Raia in Brazil coming on stream in 2028. We also have Sparta in 2028 in the Gulf of Mexico.

Speaker #2: Rosebank and Jekto in the UK, typically in 2027. And then we have the Paresh development in Angola that we recently sanctioned, also towards 2028 as far as I remember.

Torgrim Reitan: We have Paz development in Angola that we recently sanctioned also towards 2028, as far as I remember. Those are sort of the large contributors. On the Norwegian continental shelf, there are 65 projects underway on ILX opportunities in various ways. That will be a continued feed-in of new tie-in opportunities on the NCS, maintaining the production levels towards 2030. As you might remember, we increased the production outlook in 2030 by 100,000 barrels per day in Norway as such. It is a very large portfolio, and we are working very hard to realize this and create value.

Speaker #2: Yeah. So those are sort of the large contributors. On the Norwegian continental shelf, there are 65 projects underway on ILX opportunities in various ways.

Speaker #2: So that will be a continued feed-in of new tie-in opportunities on the NCS, maintaining the production level towards 2030. And as you might remember, we increased the production outlook in 2030 by 100,000 barrels per day in Norway as such.

Speaker #2: So it's a very, very large portfolio, and we're working very hard to realize this and create value. Thank you, Ahmed, and thank you all for calling in and for your questions.

Bård Glad Pedersen: Thank you, Ahmed, and thank you all for calling in and for your questions. We are a couple of minutes on overtime, so I apologize for that. As usual, the investor relations team remain available, so feel free to reach out to any of us during the day or later in the week if there are other topics that you want to discuss further. Thank you all for joining, and have a good rest of the day.

Speaker #2: We are a couple of minutes into overtime, so I apologize for that. As usual, the Investor Relations team remains available, so feel free to reach out to any of us during the day or later in the week if there are other topics that you want to discuss further.

Speaker #2: Thank you all for joining, and have a good rest of the day.

Operator 2: This concludes today's call. You may now disconnect.

Operator: This concludes today's call. You may now disconnect.

Q2 2026 Equinor ASA Earnings Call

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