![Equinor ASA Logo](https://ik.imagekit.io/kkbzr2uz4cp/stock/nyse/eqnr.png?tr=w-200)
Equinor ASA
NYSE:EQNR
![Equinor ASA Logo](https://ik.imagekit.io/kkbzr2uz4cp/stock/nyse/eqnr.png)
US |
![]() |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
US |
![]() |
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
US |
![]() |
Bank of America Corp
NYSE:BAC
|
Banking
|
US |
![]() |
Mastercard Inc
NYSE:MA
|
Technology
|
US |
![]() |
Abbvie Inc
NYSE:ABBV
|
Biotechnology
|
US |
![]() |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
US |
![]() |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
US |
![]() |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
US |
![]() |
Visa Inc
NYSE:V
|
Technology
|
CN |
![]() |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
US |
![]() |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
US |
![]() |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
US |
![]() |
Coca-Cola Co
NYSE:KO
|
Beverages
|
US |
![]() |
Realty Income Corp
NYSE:O
|
Real Estate
|
US |
![]() |
Walt Disney Co
NYSE:DIS
|
Media
|
US |
![]() |
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
24.62
34.73
|
Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
![]() |
Johnson & Johnson
NYSE:JNJ
|
US |
![]() |
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
![]() |
Bank of America Corp
NYSE:BAC
|
US |
![]() |
Mastercard Inc
NYSE:MA
|
US |
![]() |
Abbvie Inc
NYSE:ABBV
|
US |
![]() |
Pfizer Inc
NYSE:PFE
|
US |
![]() |
Palantir Technologies Inc
NYSE:PLTR
|
US |
![]() |
Nike Inc
NYSE:NKE
|
US |
![]() |
Visa Inc
NYSE:V
|
US |
![]() |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
![]() |
3M Co
NYSE:MMM
|
US |
![]() |
JPMorgan Chase & Co
NYSE:JPM
|
US |
![]() |
Coca-Cola Co
NYSE:KO
|
US |
![]() |
Realty Income Corp
NYSE:O
|
US |
![]() |
Walt Disney Co
NYSE:DIS
|
US |
![]() |
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
![](https://ik.imagekit.io/kkbzr2uz4cp/stock/nyse/eqnr.png)
Earnings Call Analysis
Q2-2024 Analysis
Equinor ASA
In the second quarter, Equinor demonstrated strong operational performance and financial stability. The company reported an adjusted operating income of $7.5 billion before tax and an IFRS net income of $1.9 billion. For the first half of the year, cash flow from operations after tax was $7.7 billion. This is in line with the projected $17.5 billion for the full year, emphasizing the positive impact of strong operations and effective cost management.
Equinor made significant strategic progress by starting production from the Kristin South area and the partner-operated Hanz field. The recent investment decision for the Troll field aims to accelerate production, maintaining high gas export levels with a net present value of over $500 million to Equinor. These investments mark an important step towards sustaining and enhancing production capacity, vital for long-term viability.
The company’s commitment to shareholder returns was reinforced as the Board approved an ordinary cash dividend of $0.35 per share, augmented by an extraordinary dividend of an additional 35%. Furthermore, Equinor’s two-year share buyback program of $10-$12 billion aims to enhance value predictability. Executing the third tranche commencing at $1.6 billion reflects the company's robust financial discipline and shareholder-centric focus.
Equinor's renewables segment saw considerable progress, although it posted a negative adjusted operating income as expected. Assets in Brazil, Poland, and the offshore Dogger Bank A contributed significantly to increased renewable production. Despite some project delays, notably in Dogger Bank, the renewed focus on disciplined investment and strategic partnerships bolsters the company’s commitment to a sustainable future.
Despite the challenges, Equinor remains confident in its financial and operational outlook. The company maintains its guidance of around $17.5 billion in cash flow from operations for the year, and a projected increase to $20 billion next year. Capital expenditures are projected to stay firm at $13 billion, supported by disciplined investment and cost control strategies. This reflects Equinor’s robust approach to navigating market fluctuations while driving long-term value.
Safety continues to be a top priority, with the company's long-term safety performance showing positive trends. The second quarter saw reduced turnaround impacts than expected, maintaining production stability. This operational efficiency not only minimizes disruptions but also showcases Equinor's ability to execute complex maintenance tasks effectively.
Equinor is actively managing its asset portfolio to maximize value. This includes a significant alignment of ownership interests in Norway through a swap with Petoro, which is expected to accelerate production, reduce costs, and unlock full potential in key areas. Additionally, the U.S. gas transaction with EQT aims to enhance longevity, robustness, and reduce breakeven costs for new carbon capture and storage licenses, depicting a forward-thinking strategy adapted to market needs.
Thank you for standing by. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the Equinor Second Quarter Analyst Conference Call. [Operator Instructions]
I would now like to turn the call over to the presenters. You may begin.
Thank you, operator. My name is BĂĄrd Glad Pedersen, and I'm heading up Investor Relations in Equinor.
Welcome all to the analyst call for our second quarter results. As usual, I'm here together with our CFO, Torgrim Reitan, who will take us through the results before we open the Q&A.
So with that, I hand it to you, Torgrim.
Thank you, BĂĄrd, and good morning, and thank you for joining us, and I hope that you are enjoying your summer.
So let's dive into the results. So the second quarter demonstrates good progress and it confirms what we said at our Capital Markets Day.
Today, we delivered solid financial results, driven by continued strong operational performance. In the quarter, we report adjusted operating income of $7.5 billion before tax and an IFRS net income of $1.9 billion. Year-to-date, we have delivered cash flow from operations after tax of $7.7 billion.
The taxes in the second half of 2024 will be lower. And we expect cash flow from operations to be in line with what we have said around $17.5 billion for the year. I will revert to this.
Adjusted earnings per share were $0.84. Across the portfolio, we are making strategic progress. On the NCS, we started production from the Kristin South area earlier this month and the partner-operated Hanz field came on stream in April.
Together with our partners, we made an investment decision for the Troll field, which will accelerate the production and maintain high gas export levels. This investment is highly valuable with a net present value to Equinor of more than $500 million.
We continue to high grade our oil and gas portfolio. In Norway, we aligned our ownership interests across licenses through a swap with Petoro. Aligning ownerships will be important for accelerating production, reducing costs and driving the full potential in key areas.
In the U.S., we closed the swap transaction in onshore gas with EQT, creating more longevity and robustness and reducing the breakeven for three new CCS licenses with more than 30%, [ 17 ] million tonnes in injection capacity per year. Finally, for Empire Wind, we achieved a new higher strike price of $155 per megawatt hour earlier this year.
We continue to move forward with the project, and our next external milestone will be the financial close. The competitive capital distribution continues in line with what we have said at the Capital Markets Day. For the quarter, the Board approved an ordinary cash dividend of $0.35 per share and in addition, 35% in extraordinary dividend.
At CMU, we introduced a 2-year share buyback program to increase predictability. The program is $10 billion to $12 billion in total with $6 billion allocated this year. In line with this, we announced a third tranche of up to $1.6 billion starting tomorrow.
For 2024, we expect to deliver our total capital distribution of $14 billion. Safety remains our top priority, and our long-term safety trend is positive. Our reported safety performance has never been better. But we do know that this is a race without a finishing line.
In June, we presented the internal investigation report of the helicopter accident in February. We will use the report to further strengthen our work. We delivered around 3% production growth this quarter, in line with our expectations. On the NCS, we had strong operational performance and good regularity.
Total production was up 5% from the same quarter last year and gas production was up 13%, with strong contribution from Troll and Oseberg. The ramp-up of new fields like Breidablikk and Hanz also contributed.
In addition, turnarounds were well executed, impacted -- impacting production less than expected. So we have reduced the overall turnaround impact for the year to 55,000 barrels per day.
For E&P International, production was up 2.5%, and the Buzzard field in the U.K. and U.S. contributed positively, partly offset by turnarounds and lower production in Brazil. For E&P U.S., production was down in the quarter as expected. U.S. offshore was impacted by the planned turnaround on Caesar Tonga. Within our onshore gas production, we indicated there would be curtailments, and we saw some of that in June. For the year, we still expect curtailments based on our operators' commercial decisions to create higher value.
Our renewables production is significantly higher than last year, mainly driven by onshore power plants in Brazil and Poland. In the U.K., offshore wind production increased at Dogger Bank A, 27 turbines have been installed. But full commercial production is now expecting during first half of 2025. And this impacts our production outlook this year.
Now over to our financial results. Liquids prices remain higher than last year. And this quarter, we saw an increase in European gas prices. As expected, storage levels in Europe are healthy, but the market remains fragile. And small changes can give large fluctuations.
Going forward, prices will depend on the weather, European demand and competition for LNG as well as uncertainty related to transit to Ukraine. And as always, supply side disruptions should not happen.
Our E&P Norway results were driven by strong production, delivering adjusted operating income of $6.1 billion and $1.4 billion after tax. Our international E&P segments delivered $963 million in adjusted operating income and close to $700 million after tax.
The Argerich well in Argentina was drive and expensed in the quarter. The overlift in the second quarter contributes to around $250 million in adjusted operating income for E&P Norway and around $170 million for E&P International.
Our MMP results were driven by European piped gas and strong LNG trading and supported by successful power trading. These results were also impacted by turnarounds at Mongstad and high activity in low-carbon solutions.
Our renewables assets in operation contributed with $41 million this quarter. As we continue to build our renewable business, the adjusted operating income was negative as expected. We will continue to be disciplined and not overpay for access. And this is key to building a profitable business.
Since second quarter last year, adjusted OpEx and SG&A is up by 11%, driven by higher productions, overlift effects, general inflation, and increased activity in renewables and low-carbon solutions. We also see an underlying upstream cost increase of around 4%, quite in line with that production growth. We continue to maintain a strong focus on capital discipline and cost control.
Then to our cash flow. This quarter, our cash flow from operations was $1.9 billion after tax. We paid the final two NCS tax installments based on 2023 results, totaling $7 billion in the quarter. For the second half of this year, we will pay three NCS tax installments, one in the third quarter and the remaining two in the fourth quarter. Each installments will be NOK 31.3 billion, which is lower than in the first half of the year.
We expect cash flow from operations for this year of around $17.5 billion after tax, as we said at the CMU. While gas prices currently are below our CMU price assumptions, oil prices remain somewhat higher, and the impact from the lower gas prices is softened by the Norwegian tax system.
Next year, we expect to be back at around $20 billion in cash flow from operations after tax. In the quarter, we paid total capital distribution of $2.5 billion. Organic OpEx was $2.9 billion and $5.7 billion year-to-date. After taxes, capital distribution and investments, our net cash flow came in negative as expected at $4.2 billion for the quarter.
We have a solid financial position with $32 billion in cash and cash equivalents, and our net debt to capital employed ratio increased to negative 3.4% this quarter.
It is important to note that following our AGM in May, the state's share of buybacks from last year was treated as a financial debt, impacting the net debt ratio for the second quarter. However, the payment of $4 billion was done in July, which will impact the cash flow in the third quarter. We are planning for a negative net cash flow for the year, in line with what we indicated at the CMU. And we expect a positive net debt ratio by the end of the year.
Finally, our guidance for CapEx and oil and gas production remains firm. We have updated our renewables production guidance. We now expect it to grow by around 70% this year, mainly reflecting the progress on Dogger Bank A. Now I hand it back to you BĂĄrd, and I do look forward to your questions. So thank you.
Thank you, Torgrim. We are then ready to start the Q&A, and I see that we have a good list of questions already. So that is good. [Operator Instructions] We will try to keep it within the hour since we started.
So the first question is Martijn Rats from Morgan Stanley. So Martijn, please go ahead.
I was wondering whether the overlift in this quarter will be mirrored in an underlift maybe next quarter or the quarter thereafter. And also, if then, it's just a volume effect or if there's also a sort of a price less revenue sort of element to it. Can you sort of talk a little bit about that?
And then secondly, last quarter, you mentioned that European industrial gas demand were starting to show a bit of a sign of life. I think you mentioned something like up 5% on a weather-adjusted basis. But sort of listening to your comments now and also other comments that you made this morning, maybe that has reversed. I was wondering if you could give us an update on that.
All right. Thank you very much, Martijn. So yes, so this quarter, we had an overlift situation both within the NCS assets and also internationally assets. So I just want to remind you that on the NCS, we had a similar underlift in the last quarter as we have an overlift in the current quarter. So there's no sort of carryforward or any effect of that, it sort of will fluctuate from quarter-to-quarter. And the same goes for international E&P, that's sort of -- that fluctuates from overlift to underlift across quarters. So there is no sort of things that is carried forward related to this overlift, more than sort of a natural rhythm of production.
In Norway, there the overlift came across a large set of assets. And internationally, the overlift was related to Angola and Azerbaijan mainly.
On your question on industrial gas demand in Europe. Yes, we see that continue. It is -- we see approximately a 10% growth or increase in sort of industrial gas demand in Europe. And of course, it is very glad to see that. And the total industrial gas demand in that market, we see that to be around 100 bcm on an annual basis. So it's sort of clearly an addition to the demand.
When that is said, there are other drivers that are, I would say, argue more important in sort of the price setting in Europe, and that is particularly the demand from Asia. So clearly, that is something to watch very, very closely. And China, we see this year has an 8% growth in demand. So that is really important to follow on. And then sort of that brings me into the concept of weather, because weather clearly, it means a lot for both storage levels and demand and what have you.
And this summer, we see that it is a warm summer in Asia and China, that actually increases demand for gas to power and air conditioning, actually impacting demand of LNG. So weather is actually playing a role also in December.
Then I would like to draw your attention also towards Ukraine and the transit of Russian gas through Ukraine currently around 13 bcm is coming in that direction. And sort of Ukrainian government has said that they want to end that transit by year-end. So we'll see, but also an area to watch when we sort of try to get our hands around sort of demand-supply balances in the European gas markets.
The next question is Teodor Sveen-Nilsen in Sparebank 1 Markets.
First of all, on your production guidance for oil and gas, Torgrim, to the first quarter presentation, I think you made some comments around that we should expect lower production and definitely seen that during second quarter. So how should we think around the total production guidance for the year still being flat year-over-year? Do you still see some downside risk to that? So that's the first question.
Second question that is on renewables. I don't know that you have recently made some reorganization in your renewable business and that you may be looking to reduce the project portfolio somewhat. I just wonder how that will impact your long-term target. So 35 to 60 terawatt hours production by 2030. It looks a little bit ambitious now. So any thoughts on that and the reorganization would be useful.
So first on production guidance. What we have seen this quarter is a strong operational performance in where we produce and also that maintenance has gone very effectively and smoothly. So that is one element into it. The other one is that we have finalized closed the EQT transaction, which actually adds a little bit of volume into the mix. And then, the reason why we said about a little bit of downside the last quarter that was linked to curtailment of U.S. gas production, which we expected. We still expect some of that, but we do see a robustness in our production. So we say we actually stand firm on the guidance that we have.
I think when we talk about production, I just want to make you aware of sort of the turnaround program this summer because in the second quarter, we have had a production turnaround of around 55 barrels per day. In the third quarter, it will be significantly higher. It will be 125,000 barrels per day as such. So this is a little bit contrary to the way it was last year, where sort of it was the second quarter that had the highest turnaround.
So just for your modeling, so you're aware of that, there is a significant turnaround program happening in this quarter. But taking all of that into account, production guidance remains firm.
Then on renewables and the targets and ambitions and all of that. We are -- we will build a renewables and low-carbon business on top of our oil and gas business, which we'll continue to invest $10 billion a year, as you are very well aware of. It is very important for us that the investments we are doing are creating values, that they are robust and that they are profitable. So capital discipline needs to be the headline on sort of the way we conduct and build our business.
So -- and Anders has said this for a long time, that sort of, if he has to choose or we have to choose between delivering between value-creating projects or volume targets, it will be value creating projects. So that is very sure.
More specifically, the projects we have ongoing are moving forward. And they will contribute clearly to growing the renewables production, and we are moving in line with sort of towards the ambitions that we have said. But clearly, we will focus very much on reducing costs where we can and focus our efforts and investments into where we see that the value creation is happening. So yes, so thanks.
Next question is from Biraj Borkhataria from RBC.
I've got two. The first one's on the Rosebank sale. You've talked about selling down the interest in the past, but then suspended the sale due to the change in government. I was wondering if you had so far any clarity on fiscal changes, particularly around whether there could be any retroactive changes in the U.K. oil and gas taxes, because I suppose that would have quite a significant impact on the economics, both for you and also for the potential buyers. So any color around your confidence in the fiscal regime there would be helpful.
And then the second question is just on Empire Wind. Has there been any update on the project financing progress there? Are you still expecting that by year-end?
On Rosebank, yes, we acquired 40% of Rosebank together with other assets in the U.K. from Suncor last year. So currently, we hold 80% in that asset. So that is higher than we sort of like to be in assets like this. And we said earlier this year that we plan to farm down a part of that. So that's clearly dialogues that we have with other companies related to that asset.
On your specific question on sort of change of government in the U.K. and tax uncertainty. We are a very significant energy investor in the U.S. and have a close dialogue on all levels with the government, and they are very much aware of the needs and for our industry.
In the manifesto they put forward after the election, they have some statements that sort of be clearly recognized. One is that they want to create an attractive investment climate for the industry. And also, they really would like to focus on growth and the GE transition. And that means that, and our expectation is that any changes to the tax system needs to be balanced and business-friendly. And in particular, that means capital allowances towards tax as such.
And sort of what we read out of the manifesto is that sort of they will work on changes that safeguard a business-friendly environment as such. This is very important, and they are very much aware of that.
So but, Rosebank is great assets, low breakeven. We plan to start it up in 2027, and it's going to be an important part of our cash flow in -- towards the end of this decade.
Let's see, that was the first one, Biraj. That was first answer on that one.
But then we had the second one, and that was Empire Wind, yes. So Empire Wind, so we said at the Capital Markets Day that this year is the year of derisking the Empire Wind project. So renegotiating the price contract with the state of New York, getting in place sort of project financing and levering and then thirdly, farming it down. So a little bit of an update on these topics for you.
One is that we got sort of the contract, the price increase from $118 to $155 per megawatt hour. The project finance is underway. So the bank group is coming together. And we plan to -- for a sort of a financial close towards the end of this year, and that will be sort of the next sort of official milestone for this project.
And then thirdly, farming down the asset will be important for us. And currently, we hold it 100%. It is 100% consolidated in our accounts. And that is also reflected in sort of the CapEx guidance that we have put forward. And if I remember right, we said it had in isolation and in CapEx impact of $1.2 billion this year and $1.5 billion next year. So if we successfully are able to farm down that assets and have it off balance sheet, reported CapEx will naturally be lower as such. So it is progressing according to plan.
The next question is Lydia Rainforth from Barclays.
I actually have three questions. Actually, just picking up on the low carbon spend and evolution obviously, if you're talking about the idea that you need to be disciplined and which costs need to be value creating, I mean, at some point, you have to go actually this carbon -- the low carbon spend actually is probably too much that we put in there that we just can't spend all that money?
And then secondly, on the cash return side, can I just ask how you're thinking about this, because you've got $14 billion this year that goes out and shares are quite a big part of your market cap. It's a little bit less next year, and then it's lower in kind of 2026. I mean, when we think about '26, the guidance, you've already given, and I know this a little bit way out, but am I thinking about that as a minimum level? Or I'm just trying to get a sense of actually what's the underlying cash return to shareholders at this point.
Okay. it was a little bit hard to hear you on your first question. I know it was related to low carbon solutions and capital discipline. Maybe -- you can maybe -- you can repeat that.
Sorry, I'll be little bit slower as well. I was just thinking -- I mean, at some point, you've talked about it needs to be value creating earlier in the call. At what point sort of do you go actually, we just can't spend all the money that would be allocated to low carbon, because the projects are becoming more expensive or they just aren't those probably nice opportunities. So actually, do you struggle to spend the low carbon budget that you've got?
Okay. So yes, I mean, currently, the project that has -- is matured the most is the Northern Light project. That is well supported by government and sort of has a return that is absolutely or is appropriate. Currently, we are working on -- in the U.K. on carbon capture and storage projects, which are mature. It is the Net Zero Teesside and the NEP, the Endurance storage project as well.
So those are moving forward, and they are providing our returns that is sort of appropriate as such. On sort of beyond that, clearly, quite a bit of work ongoing on CCS, storage side and also CO2 gathering and transportation. And we are in discussion, building a CO2 pipeline from the continent to the Norwegian Continental Shelf.
We see that, it will still take some government to support to lift all of this, but we do believe that is going to build a meaningful and constructive return business in a way. I would say, within the low carbon solutions, the hydrogen type of universe is not moving forward as quickly and sort of there are still work to be done before we see a clear road map to returns in the longer term there.
On cash returns or capital distribution, $14 billion this year, that's right. That should translate into 18% or 19% directly yield. We have said that next year, we have sort of the cash return, $0.35 per share is growing by $0.02 per year and then $1.2 in sort of a standard share buyback.
And then on top of that, additional share buyback. So in total, between $4 billion and $6 billion next year. And then your question was, so what about 2026. And this is not a time and place to give you specifics on that, Lydia. But what I can say that we have the cash -- the ordinary cash dividend -- we have $1.2 billion in sort of standard share buyback. And then we have said that we intend to use capital distribution to bring our gearing and balance sheet back to sort of in better balance as such. So -- but we will come back on this on the Capital Markets Day in February. And clearly, capital distribution to have that competitive is a key priority for us as leaders.
The next question is Yoann Charenton from Bernstein.
Yes, I would like to ask about an update on M&A activities overall. I have three questions related to this. First, can you please tell us how many assets are classified as held for sale as of June?
The second question is in relation to Rosebank. Are you able to say what is the impact of Rosebank on the group CapEx this year? If I remember correctly, this year's planned farm-down was reflected in the full year CapEx guidance earlier this year.
And then the third question is about basically any color you could provide on the timing for closing deals that have been announced but that have yet to complete. And what is the overall impact on cash flow, please?
The last one, one was closing on Azerbaijan inventory.
Yes. So first, it was a very specific question on held for sale and M&A. So currently, it is the Azerbaijan asset that is classified as held for sale. In addition to that, we did a swap, a value-neutral swap with Petoro this quarter in various licenses. And the one leg of that swap, which we are divesting is classified as held for sale for the time being.
On the Rosebank. So yes, we said that in the early of the year that sort of we were planning to divest Rosebank and part of Sparta. And -- but we also said this quarter that our CapEx, $13 billion remains firm. And I just want to say that that's sort of that guiding. We see that as a robust for progress in -- of planned divestments as such. So we are comfortable delivering on what we have promised.
And then the last question was closing of Azerbaijan, right? Yes. So we have both Nigeria and Azerbaijan as assets we have actually signed an agreement on and moving towards closing. I won't promise anything. They are progressing. And as we have, there are still some outstanding topics in sort of discussions with government, but it is progressing and is getting closer to closing of those transactions.
The next one is Peter Low from Redburn. So Peter, please go ahead.
The first one was just on Dogger Bank. Can you talk a bit about what the issues have been there that have led to the delays that have resulted in you kind of reducing the power output guidance this year? And then the second was just could we get an update on some of your upcoming major project start-ups in oil and gas, for example, Castberg. Is that still on track for first oil this year, anything on Bacalhau, I mean, it start up next year?
Okay. So on Dogger Bank, the operator of that development is SSE. So they should be the one that actually provides sort of an in-depth explanation to this. Currently, there are 27 turbines fully or partly installed, and there are seven have turbines in production for the time being. It is somewhat slower than planned.
And the reason -- one of the reasons behind it is actually it has been a very windy summer. So I mean, so it's -- if it's a good location, as such, but it's -- that is part of the reason as such. It is progressing, and we expect it to be sort of fully in production in the second half of this year.
On major projects, so Johan Castberg first, which currently sits in a Fjord. It is sort of left the yard on the West Coast of Norway and sits in sort of the Fjord and doing commissioning work, planning to sail away to the Barents Sea in August and on track to sort of come into production by the end of this year or in fourth quarter as such. There is still significant work, but it is progressing well. It is the expected production in 2025 is around 80,000 barrels per day. So it's a significant contributor to our production. You also mentioned Bacalhau, also progressing well. The vessel currently sits in Singapore in the yard and sort of subsea work in Brazil is ongoing. We expect first oil in 2025 as such. So it is also progressing.
And then we have spoken about Rosebank as another sort of large development. And then there are two more, a little bit longer out in time Rio in Brazil. And are planning coming on stream in '28 and also Sparta in Gulf of Mexico in '28. So actually five very large greenfield developments moving forward. And they are moving forward according to plan.
The next one is Kim Fustier from HSBC.
I've got two, please. First one is, I was wondering if there has been any progress on Wisting and on Bay du Nord. both of these were previously put on hold that there seems to have been some movements on engineering procurement lately. And maybe just some general comments you can offer on the cost and contracting environment in the offshore?
And secondly, I see that you've acquired a small lithium project in the U.S. It's a very small amount, but I just wondered how serious you are about this year. One of your U.S. peers seems to be quite serious about it. So any comments you can offer there would be helpful.
Okay. So on Wisting and Bay du Nord, those are two projects, is sort of, where we have said they need to do some more work before they are ready. And sort of we have had good success with that in over the years to say push things back to improve them further. So both of them are progressing. Wisting, we are maturing that towards a final investment decision in 2026, and that work is progressing, and Bay du Nord, also progressing well.
And we do hope and expect to bring that forward to sort of a concept select not too far into the future. We have an ongoing drilling program in those waters and that hopefully can prove up even more volumes there.
In the contracting environment, it is generally a rather tight market, and we see clearly inflation, but in sort of the projects which are sanctioned we have good control. I mean, the non-sanctioned projects, I mean, we are not immune. So we see more exposure there.
As a large sort of investors and operator, clearly, we were able to steer this on a portfolio level and limit the exposure to inflation as such. So we have what we need, but clearly, we are not immune to inflation. On lithium, yes, we made an acquisition into Standard Lithium early this year. We see synergies between what we already do and this, particularly with the subsurface and sort of activities. And we do see lithium as a sort of an interesting commodity for the future as such and taking an early and small position into that line of business.
Next one on the list John A. Olaisen from ABG.
Two very quick questions. First, could you please elaborate on the dry well you had in Argentina in Q2? But your results say -- it's all disappointing that you will give up exploration in the area? Or do you plan further exploration well within the area, please? That's one first, please.
Okay. Yes. So the Argerich well was dry. It was frontier exploration well with naturally lower expectation for Discovery as such. So that's the way it is. The license that Argerich sits in is called CAN 100, which is a very significant and large acreage. But clearly, we have not made up of mind on the way forward, and we will clearly analyze and consider what we will do here. We have covered the area with seismic, and we have a good overview on the area.
Okay. So no conclusion as of now, whether you're going to drill more or abandoned.
No, we haven't made a decision. I mean, clearly, still analyzing, but the well was dry.
And my second question, this is related to the renewable business. Given the equity accounting practice, only a small portion of the underlying net debt from that part of the business is reflected in your balance sheet. But is it possible to give an indication of the size of your balance sheet that it relates to the renewable business, please?
Yes, that is $3.54 billion. $3.54 billion at the end of the quarter.
That was very accurate. Is that number given over in the report?
No, it is not sort of written in the report, but we are happy to provide it in calls and discussions on an ongoing basis on the size of it.
John, thank you. But I think, John, sorry, but thank you, you have had your two questions, and I have a lot on the list.
The next one is Henri Patricot from UBS.
Two questions, please, from my side. The first one in MMP and the other subsection in MMP, which was a more negative number this quarter, you mentioned developing low-carbon projects. I was wondering if that's something that we should expect to be an increasingly negative for the drag on earnings in MMP? Or was that quarter particularly weak, just a percent of performance to expect next 2 quarters in that particular subsection.
And then secondly, a follow-up on Dogger Bank. So you mentioned you had some delays to Phase A. I was wondering what the implications you see for Phase B and C for the projects and whether we should expect there to be some delays here as well and effectively full capacity of the project a bit later than expected?
So the MMP result came in at $521 million, which is sort of within the guided range. And I'm happy to see that MMP have been able to deliver within or above the guided range or since we introduced sort of the increased guiding. So I would argue that they continue to deliver strong results across the business. This quarter, LNG trading and gas trading, in particular, is worth mentioning. However, sort of the other areas within MMP delivered fairly around sort of what you should expect this quarter. The asset that has sort of been under maintenance is Mongstad and refinery. So that is sort of very limited results from sort of that part of the business. But when that is in operations, they provide typically a meaningful part into the earnings from MMP. So I would say that MMP is sort of fair.
On your question on low-carbon spending, clearly, we are in a growth phase. And clearly, there are business development and early phase costs. We have taken that well into account into our guiding when we put forward. The costs that we do spend here is specific project-related cost is not administration or general costs. They are linked to projects, but projects which are in an early phase, so you don't book it as investments. You have to book it as operational cost as well. Right. The second question was Dogger Bank B and C. So the sort of -- they are planned to come sort of following each other. We're sort of 1 year between them. So it's sort of long-term operational sort of -- we do it one after the other two and all of that. So they are planned to come with 1 year between them. So I'm not in a position to say whether what we see now is, is impacting them. But what we do see is that Dogger Bank B, we expect first power in first half of '25 and full power in first half of '26.
And Dogger Bank C, first power, first half '26 and then full power first half in '27, which is 1 year after what we expect from Dogger Bank A. So that's sort of the latest update I have on this. SSE as operator is the one that we really need to provide with more details here.
Next one is Michele Della Vigna from Goldman Sachs.
And congratulations on the good delivery. I will be quick. Two questions. First, I was wondering on Johan Sverdrup, if you could provide us a little bit of an update, one more quarter of good production. When do you expect the field to start declining if this has been pushed back into next year?
And secondly, we've heard of some disruptions in the offshore wind supply chain, especially in the U.K. I was just wondering if you are finding it difficult to get especially the vessels or if effectively, this is just normal course of business.
Okay. On Johan Sverdrup, progressing according to plan. As you remember, we sort of increased the production of Plato level earlier this year to 755,000 barrels per day, and we expect it to come off that sort of increased to pro level towards the end of this year or next year. So the key here is to drill wells to manage or and manage water, water handling. So all of that is progressing according to plan.
Two new wells this quarter. We planned 10 new wells during the year, then it will be around 41 wells drilled on Johan Sverdrup. Next year, we will launch a drilling campaign focusing on multilaterals as well. And then we have Johan Sverdrup Phase 3, where we plan for a concept select in the fourth quarter and start by end '27 on the Phase 3 here.
I just want to say this is what we do. I mean, this is absolutely the core competence of the company. And here, we apply all the competence and technology and sort of deep knowledge that we have and managing reservoirs is sort of Equinor at it's best, and we apply that at Johan Sverdrup, and is progressing well, and it continues to deliver as we expect.
You had one more offshore wind supply chain. Yes. I think it takes too much to give a full answer on that. We are sort of well on the projects that are ongoing, but clearly, there are supply chain issues within offshore wind. We do recognize that. But for our own projects, we are good.
Paul Redman from BNP Paribas.
Perfect. On turnarounds quickly, you guided to 125 MBoe per day for 3Q '24. If I look at 3Q '23, what was the planned maintenance? Do you also have a number for unplanned maintenance impacted you last quarter. I'm trying to just see whether 125 MBoe per day is more or less year-on-year. And then second, when we talk about value over volume in the renewable division, I just building a little bit on Lydia's question, if there's areas where you think that you could slow down capital, do I see that as CapEx out of the plan? Or would you see a reallocation into other parts of the business?
Okay. So good -- so turnarounds, we expect 125,000 barrels per day in the third quarter this year. And then last year, it was 38,000 barrels per day in the same quarter. And I'm not sure I really got your question, and that was related to unplanned maintenance. We had some prolonged maintenance related to Troll last year, but I think that impacted the fourth quarter more than the third quarter. But I think maybe you should call Investor Relations afterwards to get the more specifics on that.
But my point is it is sort of a significant program we have in the next quarter, but production guiding remains firm. On value over volume, well, we are planning to invest $10 billion into our oil and gas activities. And that sort of remains firm. It has a high priority in the capital allocation project and capital allocation process. And sort of if we should make any changes, I mean, we have a guiding out there and sort of there's no sort of -- well, let me put this differently.
I mean, we are not in a position where we want to change anything related to our CapEx guiding for the time being, things are progressing according to our plan and sort of in sort of the value over volume, value over volume considerations that is typically impacting more the early phase sort of activities than ongoing investment program.
So I mean, you have seen that we haven't sort of won in sort of lease rounds recently. That is because we will just find them to be, be too expensive. That is not impacting sort of short-term investments, it's more sort of the longer-term investment that will have an impact on. So I have not an update to give you on this for the time being, Paul. But clearly, we are not starting new projects unless we see that they are value accretive.
Next one is Chris Kuplent from Bank of America.
I'll try and keep it short. One remaining. Torgrim, would you mind updating us what kind of macro deck was prevalent when these new tax installments were set for the second half? That's it.
Yes. No, great, Chris. So that will typically be close to forward prices that we -- that we are sort of in earlier this spring. So I don't have the number, Chris, particularly, but I think it would be around -- I think, if you have a look at sort of the forward prices early June, I think that is a good estimate for sort of the assumptions we do for those calculations. And I can't comment on what it is. But have a look at that, and you'll find the answer.
Thank you. Let's move on to Jason Gabelman from TD Cowen.
Just one quick one for me. Next year, you have a $2 billion range for shareholder distributions. Can you just talk about what the factors are, what you consider the low end or the high end of the range? Is it commodity prices? Is it things like Empire Wind farm down? Is there kind of one or two items that could tilt the balance to the low end or the high end for next year?
All right. Okay. Thanks, Jason. Yes, so between $4 billion and $6 billion in share buyback next year. So it is not linked to any farm-down or Empire Wind or anything like that. We haven't made up our mind yet and we will communicate that on the Capital Markets Day. But typically, parameters to consider is the strength of the balance sheet and sort of the macro outlook at that point in time as such. Those are the two major parameters that will sort of go into that consideration.
Thank you. We are fast approaching the hour, but let's take one final one, and that is Matt Lofting from JPMorgan. Matt, please.
Just one question left, please. I just wanted to ask you about full year operating cash flow generation. It struck me that the run rate in the first half looked somewhat light at sub-$8 billion preworking cap relative to $17.5 billion or so, I think, that you'd referenced in February for the full year. So obviously, cash tax is expected to be lower in the second half, but equally, you're signaling a heavier turnaround effect certainly in 3Q. So how do you sort of see the run rate gap second half versus first half? And then absent of higher gas prices, where does that additional cash generation come from?
Okay. No. Thanks, Matt. So you're right, $7.7 billion in the first half and then $17.5 billion for the full year. So it's sort of higher towards the end. We see actually a relatively flat cash flow from operations before tax through the four quarters this year. And the tax -- there's a shift in tax payment is actually the major explanation to this. And I would say that sort of should explain absolutely most of it.
So the production is -- the -- yes, the -- we are getting back quite a bit of U.S. production in the second half of the year, and that has a very low tax associated with it. So that clearly helps on sort of the after-tax cash flow. If you sort of compare that to sort of the after-tax cash flow of maintenance on NCS, which has a large tax coverage, if you like. So -- but it is majority -- the major explanation here is actually tax payments.
Thank you, and thank you, everybody, for calling in and for your questions. We are just above 1 hour. As usual, let me remind you that the IR team remain available if there are any follow-up questions. So thank you, and have a good rest of the day.