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Equinor's Q2 adjusted income slumps on higher field maintenance costs


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Equinor's Q2 adjusted income slumps on higher field maintenance costs

Oil and natural gas major Equinor ASA, formerly known as Statoil ASA, reported a 15% decline on the year in its second-quarter adjusted income due, in part, to higher maintenance and administrative costs at its Norwegian fields.

On an International Financial Reporting Standards basis, the company's net income during the second quarter was $1.22 billion, down from $1.44 billion in the same period of 2017.

Adjusted earnings before interest and taxes totaled $4.3 billion, up 43% from $3 billion during the same period in 2017. The company's adjusted earnings after tax rose 31% to $1.70 billion in the second quarter, from $1.5 billion in the first quarter.

In IFRS terms, net operating income reached $3.84 billion in the second quarter, compared to $3.24 billion in the previous year.

"Higher prices for both liquids and gas, coupled with high production, contributed to the increase. Due to increased maintenance and some quarter and field specific items, underlying operating costs and administrative expenses per barrel are slightly up compared to the same quarter last year, adjusted for new fields in production," the company said in a July 26 earnings release.

In the second quarter Equinor's equity production totaled 2 million barrels of oil equivalent per day, up almost 2% from the same period a year earlier, boosted by stronger output in the United States.

Scheduled maintenance activity is estimated to pull down third-quarter production by approximately 80,000 boe/d. In total, maintenance is estimated to reduce equity production by around 35,000 boe/d for the entire year. Nonetheless, for 2018, the company is maintaining its outlook for a 1% to 2% uptick in production for the year.

For the first six months, Equinor's capital expenditures were $4.6 billion and are expected to be about $11 billion for the full year.

Due to acquisitions and working capital increase, Equinor's net debt ratio rose to 27.2% in the second quarter, from 25.1% in the first quarter.

The company changed its name to Equinor in mid-May amid its re-branding transition. Equinor plans to invest 15% to 20% of its total spending in new energy solutions by 2030.