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Norway's Equinor has raised $5 billion in fresh debt to reduce the adverse impact of the oil crisis, the company said. The maturities of the bonds range between 2025 and 2040.
"Equinor is in a strong position to handle market volatility and uncertainty. In combination with our USD 3 billion action plan to reduce cost, this transaction will further strengthen our financial resilience and flexibility going forward, and ensure liquidity to prioritised projects," chief financial officer Lars Christian Bacher said.
The Norwegian heavyweight earlier this year announced a capital and cost cut program of $3 billion. It also announced a postponement of its $5 billion share buyback program, in line with the actions of its peers, which have also been cutting spending plans and suspending share buybacks.
As part of its cost-cut program, Equinor said it would cut organic capital expenditure to $8.5 billion from $10-11 billion. The company said it would also reduce its exploration budget for this year to $1 billion from $1.4 billion. Operating costs for the year, Equinor said, would be cut by $700 million.
"Equinor is in a strong financial position to handle market volatility and uncertainty. Our strategy remains firm, and we are now taking actions to further strengthen our resilience in this situation with the spread of the coronavirus and low commodity prices," chief executive Eldar Saetre said at the time.
Equinor may be in a strong position, but the current market volatility is being called unprecedented by many. The oil price slide has been steep and quick and has occurred in an environment of severely depressed demand, which is indeed unusual and has sparked fears that unless radical measures are taken quickly, prices could fall a lot further.
At the time of writing, Brent crude, the North Sea benchmark, was trading at $26.39 a barrel, with West Texas Intermediate at $21.42, both closing higher on Wednesday following remarks by U.S. President Trump that he expected Russia and Saudi Arabia to close a new production deal over the next few days.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.