Paul Redman

Paul Redman asked how much of the EUR 4 billion cash initiative benefit from 2025 would roll over into 2026, and if the percentage of cash flow from operations (CFFO) remains the appropriate way to allocate cash flow to shareholders.

Answer

COO Guido Brusco stated that most cash initiatives were one-off but would be 'rolling' due to optimized cash management, with more disclosures expected soon. He affirmed that using CFFO as a starting point for distribution prioritizes shareholders, and while free cash flow could be an alternative, the logic of CFFO as a reference point remains, with specific percentages to be announced at the CMU.

Paul Redman asked how much of the EUR 4 billion cash initiative benefit from 2025 is expected to roll over into 2026, and whether the percentage of cash flow from operations remains the appropriate way to allocate cash flow to shareholders.

Answer

Claudio Descalzi (CEO, Eni) stated that while most cash initiatives were one-off, they would effectively roll over due to optimized cash management practices. He confirmed that cash flow from operations remains the starting point for distribution, prioritizing shareholders, and that further details on allocation percentages would be provided at the upcoming Capital Market Day.

Paul Redman of BNP Paribas Exane questioned why the CFFO guidance upgrade was not larger, given the company's sensitivities. He also asked if the 2025 working capital initiatives should be considered one-offs or if they are replicable.

Answer

CFO Francesco Gattei explained that the CFFO guidance considers a full range of variables beyond just Brent and FX, including margins in biofuels, power, and chemicals. He clarified that the cash initiatives represent a permanent improvement in managing payment and storage cycles, which will roll over into subsequent years, rather than being a one-off benefit.

Paul Redman of BNP Paribas asked if the announced cash flow mitigation measures are structural or one-offs that might reverse. He also sought an outlook for the refining business, which posted a second consecutive loss, questioning future margins and utilization.

Answer

Executive Francesco Gattei confirmed the cash initiatives are structural, involving sustainable improvements in working capital, costs, and portfolio value. For refining, Executive Giuseppe Ricci attributed the Q1 loss to weak margins and maintenance. He expects utilization to increase from Q2 and margins to improve slightly but not to become as bullish as the prior year.

Paul Redman asked how Equinor views its growth strategy going forward, considering previous guidance of flat to declining production post-2026 and reduced renewables spend, and why the MMP segment's annual guidance wasn't updated despite strong Q4 results (excluding the one-off price review).

Answer

President and CEO Anders Opedal outlined growth in integrated power from sanctioned projects, aiming for 45.5% quarter-on-quarter growth in renewables. He stated the international business is repositioned for growth towards 900 million barrels/day by 2030, while the NCS focuses on maintaining high production and growing free cash flow through exploration and efficiency. CFO Torgrim Reitan explained that excluding the price review, Q4 MMP results were around the $400 million quarterly guidance. He noted MMP results fluctuate with commodity market volatility and contango/backwardation, citing January's gas market spikes as an example of value capture.

Paul Redman asked about Equinor's growth strategy given the flat to declining production guidance for 2026+ and significant cuts in renewables spending. He also questioned why the MMP segment's annual guidance was not updated despite Q4 results (excluding the price review) being in line with quarterly expectations.

Answer

CEO Anders Opedal outlined growth from sanctioned renewables projects (45.5% Q-o-Q, 25% annual in 2025), repositioning the international portfolio for growth to 900 million barrels/day by 2030, and on the NCS, focusing on exploration (26 wells next year) and reducing time from discovery to production to maintain high production levels and grow free cash flow. CFO Torgrim Reitan confirmed that Q4 MMP results (excluding the price review) were around $400 million, in line with quarterly guidance. He explained that fluctuations are normal due to commodity market volatility and contango/backwardation, citing examples of capturing value from gas market volatility in January.

Paul Redman from Exane BNP Paribas asked about Equinor's distribution program for next year (2026), considering volatile oil and gas prices and the current debt position. He also sought confirmation on whether the guidance for this program would be announced with Q4 results or at the Capital Markets Day.

Answer

Torgrim Reitan, CFO, stated that capital distribution remains a priority, with cash dividends considered 'bankable' and share buybacks used regularly to be competitive. He mentioned peers use cash flow formulas and Equinor aims for similar competitiveness, adjusting for Norwegian tax specialties. The 2026 program will be announced with Q4 results in February. Mr. Reitan highlighted that significant Empire Wind equity investments in 2026 (offset by tax credits in 2027) will be viewed through a two-year perspective to maintain competitive distribution, and reaffirmed the net debt guiding for year-end despite the Ørsted rights issue.

Paul Redman asked about Equinor's distribution program for 2026, considering volatile oil prices, difficult gas prices, and the company's debt levels. He also sought confirmation on whether this guidance would be provided at the Q4 results or a later Capital Markets Day.

Answer

CFO Torgrim Reitan stated Equinor is prepared for lower prices, continuously working to improve free cash flow, and capital distribution remains a priority. He confirmed the cash dividend is 'bankable' and share buybacks will be regular and competitive, aligning with peers' cash flow-based formulas, albeit slightly lower due to Norwegian tax specifics. He announced that the 2026 capital distribution will be announced with the Q4 results in February. He highlighted that significant Empire Wind equity investments (~$2 billion) in 2026, offset by investment tax credits in 2027, will be viewed through a two-year perspective to ensure competitive distribution. He also noted that despite Q3 net debt at 12%, Equinor expects to remain at the low end of the 15-30% range by year-end, driven by strong operations and working capital improvements, even with Q4 tax installments and the Ørsted rights issue payment.

Paul Redman sought more clarity on the urgency of the Empire Wind situation, asking about the specific weather window and if missing it could lead to project abandonment. He also asked if the new power business would pursue organic or inorganic growth.

Answer

Torgrim Reitan, an Equinor executive, reiterated the situation is urgent and complex, with sensitivities to contractor availability and commercial requirements like project financing, not just the weather window. He stated they are preparing for all outcomes. Regarding the power business, he clarified that the current plan is to combine existing assets for synergy, with no inorganic moves currently planned.

Paul Redman from BNP Paribas asked for a year-over-year comparison of Q3 turnaround impacts to gauge the severity of the guided 125,000 boe/d. He also questioned whether a slowdown in renewables spending, under the 'value over volume' strategy, would result in lower overall CapEx or a reallocation to other business areas.

Answer

Executive Torgrim Reitan clarified that the Q3 turnaround impact of 125,000 boe/d is significantly higher than the 38,000 boe/d in the same quarter last year, but reiterated that the full-year production guidance remains firm. On capital allocation, he stated there are no current plans to change the CapEx guidance, explaining that the 'value over volume' discipline primarily affects early-phase decisions, like not overbidding in lease rounds, rather than the ongoing investment program.

Paul Redman of BNP Paribas Exane asked for the key assumptions underlying the forecast for flat net debt levels, including price and asset sale inflows. He also inquired about the sensitivity of the $13 billion CapEx guidance to a change in the NOK/USD exchange rate.

Answer

EVP & CFO Torgrim Reitan explained that the stable net debt forecast is based on current forward prices, stable working capital, and the assumed closing of at least one Peregrino transaction this year. On CapEx, he confirmed the $13 billion guidance is maintained. While acknowledging that roughly 30% of investments are in NOK, creating some FX pressure, he stated the company is managing this through portfolio efficiencies.

Paul Redman of BNP Paribas Exane asked for the key assumptions (price, working capital, Peregrino inflows) behind the guidance for gearing to remain flat. He also inquired about the sensitivity of the $13 billion CapEx guidance to a change in the NOK/USD exchange rate.

Answer

EVP & CFO Torgrim Reitan stated the flat gearing outlook is based on current forward prices, stable working capital assumptions, and the expected closing of at least one Peregrino transaction this year. For CapEx, he confirmed the $13 billion guidance uses an 11 NOK/USD rate and noted that while roughly 30% of investments are exposed to NOK, the company is working hard to manage this and maintain the guidance.

Paul Redman asked about inventory levels in the U.S. and where imports are expected to fade quicker (seamless or welded), and where inventories are currently higher.

Answer

Guillermo Moreno, President of U.S. Operations, stated that imports have been higher for welded pipes than seamless, and the increase in ground inventories has also been higher for ERW (welded) than seamless. He expects both seamless and welded inventories on the ground to decrease going forward. Paul Redman also inquired about a press release indicating the largest shareholder's inclusion in the buyback process, asking if this represents a change in positioning. Paolo Rocca, Chairman and CEO, confirmed that the controlling shareholder informed the company they may start selling shares but will not go below a certain threshold, noting that such movements above 1% would be publicly disclosed.

Paul Redman asked about U.S. inventory levels, specifically whether imports are expected to fade quicker for seamless or welded pipes, and where inventories are higher. He also inquired about any changes in the controlling shareholder's (Techint Group) positioning regarding participation in the buyback process.

Answer

President of U.S. Operations Guillermo Moreno stated that imports and ground inventories have been higher for welded pipes (ERW) than for seamless, but both are expected to decrease going forward. Chairman and CEO Paolo Rocca confirmed that the controlling shareholder has informed the company they may start selling shares but will not go below a certain threshold, with movements above 1% being publicly disclosed.

Paul Redman asked for OMV's outlook on working capital movements for the second half of 2024, noting its importance for future distributions. He also questioned whether the new feedstock trading desk in Singapore is intended to be a profit center or purely for procurement.

Answer

CEO Alfred Stern clarified that the Singapore trading desk's primary purpose is to secure feedstock for OMV's plants, not to operate as a standalone profit center at this stage. CFO Reinhard Florey explained the H2 working capital outlook, expecting a cash outflow in Q3 for gas storage, followed by an inflow in Q4. He anticipates a slight positive net working capital for the full second half, assuming neutral price development.

Paul Redman of BNP Paribas asked for OMV's outlook on working capital movements for the second half of 2024, noting its importance for the distribution program. He also sought to clarify if the new feedstock trading desk in Singapore is intended to be a profit center or purely a procurement arm for OMV's operations.

Answer

CFO Reinhard Florey explained that H2 working capital will be influenced by seasonal gas storage, with an increase in Q3 and a release in Q4. Overall, he expects a slight positive net working capital result for the second half, assuming neutral price development. CEO Alfred Stern clarified that the Singapore trading desk is currently in start-up mode with the primary task of securing competitively priced feedstock for OMV's sustainable fuel plants.