Equinor 1Q24 results | Climate Transition Analysis

Equinor’s 1Q24 results showed strong growth in its renewable segment, with renewable power production increasing 48% on 1Q23.

To meet its target to double renewable power production in FY24, however, the company must increase production by 17% each quarter from 2Q24-4Q24.

Our view

Equinor’s results depict a narrative of growth and commitment to renewables however, it still lacks the necessary disclosure to verify the progress or credibility of its low-carbon strategy. 

Investors engaging with Equinor should ask for:

1) Disclosure of the dollar value of capex for Renewables & Low carbon solutions that forms the basis for its capex target, including a reconciliation between Renewable capex disclosed in its results.

2) Information on how Equinor will meet its net carbon intensity target (-20% by FY30) given low carbon energy is expected to be only a minor component of its portfolio (4.8% of sales by FY30).

3) When the business expects renewables to form a significant part of its portfolio (>20%).

4) Unique capabilities in building out an integrated power business. 

Key findings

• 01 Renewable generation up 48%, but ramp up needed to hit target

  • Renewable generation increased by 48% from 1Q23 to 774 GWh, primarily due to the the startup of onshore renewable plants in Brazil (mainly from the Rio Energy acquisition) and Poland.

  • The company confirmed its target to more than double FY23’s renewable power production to >4,000 GWh in FY24. Generation will need to grow more than 17% each quarter over 2Q24-4Q24 to reach this target, compared to quarterly growth of 12% in 1Q24.

• 02 Oil and gas push continues with weak earnings

  • For Equinor’s combined E&P segments, adjusted post-tax earnings declined 23% from 1Q23.

  • Despite lower earnings, combined E&P capex was up 23% from 1Q23 to $2.49bn, and oil and gas production increased 2% to 2,160 kboe/d. FY24 production guidance remains unchanged, with the company targeting stable oil and gas production on FY23 (2,082 kboe/d).

  • At its capital markets day, Equinor upgraded its production outlook to 5% between FY23-FY26 (2.19 Mboe/d), before maintaining at 2 Mboe/d by FY30. Equinor previously indicated it would maintain FY22 production levels (2 Mboe/d) to FY30.

• 03 Renewables capex down, Low-Carbon Solutions an enigma

  • Despite group capex increasing 6% to $3.36bn from 1Q23, Equinor’s Renewables segment capex declined 27% to $624m.

  • There is still no quarterly visibility of Low Carbon Solutions earnings, capex or progress. This is especially crucial following Equinor’s ESG update where it highlighted that CCS will be a key lever in meeting its -40% NCI target between FY19-35.

  • Equinor’s NCI methodology includes negative emissions associated with carbon capture, utilisation and storage for third parties. We estimate nearly half of Equinor’s FY35 target is dependent on CCS.