Equinor raises dividend, capital expenditure as Q4 profit lags

OSLO: Norwegian oil and gas firm Equinor  raised its quarterly dividend and plans to boost capital spending in 2019 as it develops new fields in Brazil, the company said on Wednesday.

Equinor's adjusted operating earnings before interest and tax rose to $4.39 billion in the fourth quarter from $3.96 billion during the same period of 2018, lagging a forecast of $4.8 billion in a Reuters poll of analysts.

For the full year 2018, adjusted earnings rose 42 percent year-on-year to $18 billion.

"We delivered record high production in 2018, and we are well positioned for profitable growth in the coming years. Internationally we are increasingly taking the role as operator, and we are strengthening Brazil as a core area for Equinor," Chief Executive Eldar Saetre said in a statement.

Equinor reported lower-than-expected results as higher operational and exploration costs dragged down its operating profit in Norway, Biraj Borkhataria at RBC Capital Markets said.

"We suspect the market may react negatively initially to the earnings miss, with performance thereafter relying on Equinor's ability to provide the market with confidence in its financial framework over the medium term, with implications for higher shareholder returns over time," he added.

Equinor said it planned to pay a dividend of $0.26 per share for the fourth quarter, an increase from the $0.23 paid in recent quarters. Analysts had expected an unchanged dividend.

The company also said it expected to generate a total of $14 billion free cash flow over 2019-2021 at $70 a barrel, indicating a potential to raise dividends going forward.

The company, formerly known as Statoil, also said it planned to raise its capital expenditure to $11 billion this year from $9.9 billion in 2018, and will boost its spending on exploration to $1.7 billion from $1.4 billion, it added.

Equinor's quarterly output stood at a record high of 2.2 million barrels of oil equivalent (mboe) per day, up from 2.1 mboe in the same quarter a year ago.

The quarterly production growth was mainly on account of portfolio changes and new wells, especially in the U.S. onshore, the company said.

The company expects to deliver an average annual production growth of around 3 percent from 2019 to 2025 as it prepares to bring Norway's 2.2-3.2 billion barrels Johan Sverdrup oilfield onstream towards the end of 2019.

The production in 2019, however, is expected to remain broadly steady, it added.