Analyst predicts best year since 2011 – E24

However, rising gas prices in Europe are a headache for consumers For export countries like Norway, money flows to.

Carnegie analyst Oddvar Bjørgan predicts that when the year ends, oil and gas giant Equinor will make its biggest profit in a decade.

He estimates Equinor will generate adjusted profit after tax of $8.6 billion, the highest level since 2011 when oil prices were at $110 a barrel. In NOK, this corresponds to 73 billion NOK.

The reason is mostly due to gas prices in Europe, which have reached record levels.

Completely turned upside down

According to Bjørgan, Equinor’s production volume is divided into about half oil and half gas, roughly.

– But then the typical price of oil was 2 times higher than the price of gas, and then you quickly get three-quarters of oil and a quarter of gas in the results. But for now, this has been completely turned on its head. Now the price of gas is twice the price of oil.

It is estimated that current gas prices are equivalent to $200 per barrel of oil.

– As it is now, never seen before. Historically, it is very unusual for gas prices to be higher than oil prices on an energy equivalent basis.

Other analysts also expect a sharp jump in Equinor’s earnings this year. According to forecasts compiled by Bloomberg, they estimated adjusted profit after tax of $8.3 billion, up from $924 million last year.

Five times the price of gas

Prices in the gas market have seen sharp fluctuations this week. On Wednesday, the price rose for the first time by more than 30 percent. But after Russian President Vladimir Putin hinted that the country could stabilize prices by increasing gas supplies, prices fell again.

Since April, prices have increased fivefold. Part of the reason is last year’s cold winter that left little gas in storage, competition between Asia and Europe for liquefied natural gas (LNG), lower-than-normal Russian gas supplies, and lower production in countries like the UK and UK. Holland.

It’s a global bidding war in the run-up to a potentially cold winter. This isn’t just a European crisis, it’s a global situation, senior analyst Bjarne Schieldrop at SEB said on Tuesday.

Meanwhile, oil prices rose above $80 a barrel again after limited OPEC production, the highest level in three years.

Anders Holte, a Kepler Cheuvreux analyst, notes that Equinor sold gas for $5.7 per cubic foot in 2019, while the price is now $30.

Equinor published this week The company’s internal gas price for the third quarter. It shows a doubling from the second quarter, which is nearly ten times higher than it was in the third quarter last year.

Fixed costs. This obviously has a huge impact on revenue, Holt says.

– It is sufficient that the company is likely to be debt-free during the month of December. He adds that this may have his say.

– Hoax with rising gas prices

There are three elements that multiply and give good numbers. In one of the years when the price of oil was high, gas prices were so high, they sold off wind power at a fairly solid gain, says Nordea investment manager Robert Ness.

– All three spheres went abnormally, he thought.

Næss estimates that Equinor could be left with a profit of around NOK 80 billion in 2021. He thinks the year is special.

– Profits will decrease significantly in a normal year. Even if you reduce your debt to fairly small amounts by making a lot of money, it is the long-term profitability that matters for stock valuation.

Bjørgan believes that the price of oil could remain near $70 a barrel.

– But it’s probably a hoax with rising gas prices as you can see now. You have gas prices of $200 a barrel. I think it will probably go down eventually.

State-owned Equinor and Petoro account for a large share of Norway’s gas exports, and have seen a sharp rise in gas prices.

“Obviously, that’s good for Equinor, and we’re taking advantage of our opportunities in this market.” But how long those prices will last, no one knows, CFO Ulrica Fearn told E24 during the Pareto conference in September.