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Equinor Exits The Bakken Shale As It Books Record Loss

Equinor is selling all its assets in the Bakken shale play as part of a strategy to boost the profitability of its international upstream business, the Norwegian major said on Wednesday, while the oil major records a net loss for 2020.

Equinor has agreed to sell its assets in the Bakken, including all operated and non-operated acreage and midstream infrastructure, to Grayson Mill Energy, which is backed by EnCap Investments, for only US$900 million. 

It paid $4.7 billion for the assets in 2011.

“Equinor is optimising its oil and gas portfolio to strengthen profitability and make it more robust for the future. By divesting our Bakken position we are realising proceeds that can be deployed towards more competitive assets in our portfolio, enabling us to deliver increased value creation for our shareholders,” Equinor’s president and CEO Anders Opedal said in a statement.  

The Bakken sale is the latest Equinor divestment of onshore U.S. assets following the sale of its assets in the Eagle Ford in Texas in 2019.

Equinor commissioned a report on its U.S. business to PwC last year, and that report showed in October that “Equinor has recorded large financial losses in the US. These were mainly driven by an ambitious growth strategy and investments that were based on overly optimistic price assumptions,” Equinor’s board chair Jon Erik Reinhardsen said at the time. 

Apart from the Bakken sale, Equinor announced on Wednesday its Q4 and full-year 2020 results, reporting a record net loss of US$5.5 billion for 2020, compared to a net income of US$1.85 billion for 2019. The fourth-quarter loss soared to US$2.4 billion from a loss of US$230 million for Q4 2019.

For this year, Equinor expects free cash flow before capital distribution at around US$6 billion, assuming $50 oil, chief financial officer Svein Skeie said in a presentation. The company is cutting its capex plans by around 15 percent compared to previous guidance, with annual capex expected at US$9 billion-US$10 billion this year and next.

Equinor joins other oil majors to report dismal earnings numbers for Q4 and 2020 in what many oil executives described as the most challenging year in their firm’s history.

By Tsvetana Paraskova for Oilprice.com

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