Equinor: launches cost action plan to counter crisis
(CercleFinance.com) - Norwegian oil group Equinor on Wednesday presented an action plan to preserve its financial strength in markets hit by both the COVID-19 pandemic and low commodity prices.
The energy group said it plans to cut organic capex for 2020 from 10 billion-11 billion dollars to around 8.5 billion dollars, meaning a reduction of around 20%.
The company will also lower its exploration activity for 2020, from around 1.4 billion dollars to around 1 billion dollars, it said in a statement this morning.
Finally, Equinor plans to reduce its operating costs for 2020 by around 700 million dollars from original estimates.
These cost reductions of about 3 billion dollars come alongside the already announced suspension of its share buybacks.
With these measures, Equinor believes it can be organic cash flow neutral before capital distribution in 2020, with an average oil price around 25 dollars per barrel for the remainder of the year.
The US West Texas Intermediate crude oil (WTI) is currently trading at 24.7 dollar per barrel.
Equinor shares were up 5.5% in Oslo after these announcements.
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