Equinor ASA reported second-quarter (Q2) adjusted earnings of $350 million compared to $3.15 billion in the same period in 2019. Adjusted earnings after tax were $650 million compared to $1.13 billion in second-quarter 2019.
Net operating income was negative $472 million in the quarter compared to positive $3.521 billion in second-quarter 2019. The decrease was primarily due to lower liquids and gas prices in the E&P reporting segments. The decrease was partially offset by strong results from liquids trading in the marketing, midstream, and processing segment.
In the quarter, net operating income was negatively impacted by impairments of $374 million and positively impacted by a net gain on sale of assets of $139 million.
Financial results were impacted by the COVID-19 pandemic and very low commodity prices, while after tax results were positively impacted by temporary tax changes in Norway and trading operations in volatile markets captured significant value, the company said in a release.
Equinor delivered total equity production of 2.01 million boe/d in the second quarter, on par with the same period last year, with strong growth in liquids production on the NCS. Adjusting for portfolio transactions and government-imposed curtailments, this represents a production growth of more than 4% compared to second-quarter 2019. Flexibility in some gas fields was used to defer significant production. Successful ramp-up of new fields, including Johan Sverdrup, as well as new well capacity, contributed to growth in production.
At the end of the quarter, the company has completed 15 exploration wells with 6 commercial discoveries and 2 wells under evaluation. At the end of the quarter, 17 wells were ongoing.
Adjusted exploration expenses in the quarter were $282 million compared to $235 million in the same quarter of 2019. The increase was mainly due to higher drilling costs and a higher portion of exploration expenditure capitalized in earlier years being expensed this quarter. A higher portion of exploration expenditures being capitalized in the quarter partially offset the increase.
Organic capital expenditures are estimated at $8.5 billion for 2020, $10 billion for 2021, and $12 billion annual average for 2022-2023. Exploration expenses of $1.1 billion are expected for 2020, excluding signature bonuses and field development costs.
For 2019–2026, production growth is expected to come from new projects resulting in around 3% compound annual growth rate. Scheduled maintenance activity is estimated to reduce equity production by around 30,000 boe/d for the full year of 2020.