Will report the commitment of the United States every quarter – E24

Updating case …

STAVANGER / OSLO (E24 / STAVANGER EVENBLAD): The world is not as it used to be, and the Equinor general meeting was not as usual this year.

Not only is the oil industry in crisis, but its implementation has also been affected. The company has also shed light on major losses that have accumulated to around $ 200 billion so far in the United States.

Dagens Næringsliv has mentioned the losses, a bad corporate culture and the lack of cost control that took place from 2008 onwards until the company raised the alarm internally in 2014.

One of Equinor’s main objections has been the way the company reports its results. The main US operations are reported quarterly along with the rest of the international operations.

Although depreciations in the United States have often been discussed on a quarterly basis, more comprehensive information on the results for each country, including the United States, has been provided only in the annual report.

Equinor did not want to separate the USA. USA In their own previous reports, but now they are changing:

“There has been no secret, but now we will make changes to make performance in the United States visible, including in our quarterly presentations,” CEO Eldar Sætre said from the podium, citing the losses that have been discussed.

Both the Financial Supervisory Authority, analysts and managers have asked Equinor to provide more detailed and regular details of the United States initiative in its financial reports. Many have felt that the lack of reports every quarter has made it difficult to keep up with developments on an ongoing basis.

So far, Equinor has not wanted to change its reports, which consist of the Norwegian shelf, international operations, and MMP (sales, midstream, and refineries).

However, based on the second quarter financial report, to be released in late July, This has changed. Then the US business. USA It will be reported as a separate segment within the Group’s international operations.

– This means that we will provide accounting results, adjusted earnings before and after taxes, investments, amortizations and developments in fixed assets of the US business. We will also consider making the United States a completely independent reporting segment, Eldar Stære said.

Last year, the company stated that total impairment charges in the US USA They had increased to NOK 84 billion. New amortizations came in the first quarter. What many did not know is that losses are much greater than this, even through losses in operations.

– This is how we just shouldn’t have it

In the company headquarters hall in Forus, fewer than 20 participants had filled the seats, including Equinor employees. Everyone was asked to stay two meters away.

– We are experiencing a situation in which the demand for our products has been significantly reduced. At the same time, we have had an extraordinary offer page. Altogether, this has contributed to a collapse in the oil market and a weak gas market, initiated by President Jon Erik Reinhardsen.

He was alongside CEO Eldar Sætre, the keynote speakers, and the podium on stage was split between each post.

The president also came to losses in the United States, but he started with certainty:

“The company has failed to maintain the positive trend in the frequency of serious incidents,” Reinhardsen said, adding that the number of injuries increased somewhat from 2018 to 2019.

“The board’s clear expectation is that the security work will continue with unwavering force,” he continued.

And then, the Chairman of the Board presented a description of the initiative of the United States:

– A cost culture has been described that is not entirely acceptable. As described, we simply shouldn’t have it at Equinor, the president said.

– An expensive purchase that we certainly should have been without

Directors noted that the lack of cost control, loss and other notifications that emerged from the internal audit has been on the board’s agenda “ever since the cases were revealed.”

“Although there will always be areas where we can improve now, I can say that today we have a very different situation than the one described,” Reinhardsen said.

– But it is not the lack of internal control that has led to amortizations. This is mainly related to the expectations of a high oil price, as well as the costs of an exploration campaign in the Gulf of Mexico. Here, we and others feel that expectations were not met. Exploration is risky and sometimes you find and sometimes you don’t. On land we pay too high prices, he continued.

The President made no secret of the fact that the United States’ initiative has been costly:

“This is expensive animal learning that we certainly should have been, but they are also reserves that we still possess, with values ​​that we hope to recover,” Reinhardsen said.

At the same time, the chairman of the board noted that the company believes that the international effort in all different countries has been generally profitable:

– The company has invested just over $ 100 billion net in Norway. Net cash flow (current income minus expenses, journal entry) so far is up to $ 70 billion. In addition, the book value is $ 45 billion internationally, after redemptions from the United States, Reinhardsen said.

“International investment is already positive at $ 10 billion, without us having any added value beyond book value,” Reinhardsen said, adding that since 2001 the company has paid $ 1.6 billion in taxes and dividends to the Norwegian state. .