Equinor Cuts $4 Billion in CapEx as Market Uncertainty Rises

Date of Call: Feb 4, 2026

Financials Results

• EPS: $0.81 per share

Guidance:

• 2026 production growth of around 3%.
• 2026 organic CapEx of around $13 billion.
• 2026 cash flow from operations after tax expected to be around $16 billion.
• 2027 cash flow from operations after tax expected to be around $18 billion.
• 2026 quarterly cash dividend of $0.39 per share.
• Share buyback program of up to $1.5 billion for 2026.

Business Commentary:

Strong Performance and Record Production:

• Equinor reported record production of 2,137,000 barrels per day for 2025, up 3.4% from the previous year.
• The increase was attributed to new fields coming online and strong operational performance, including contributions from Johan Castberg and Halten East on the Norwegian Continental Shelf (NCS) and U.S. onshore gas.

Capital Allocation and Cost Discipline:

• The company reduced its CapEx outlook by $4 billion for 2026 and 2027, focusing on maintaining strong cost discipline.
• This adjustment was due to lower commodity prices and increased geopolitical tensions, aiming to strengthen competitiveness and cash flow.

Shareholder Returns and Dividend Growth:

• Equinor delivered $9 billion in capital distribution to shareholders in 2025, maintaining its commitment to growing the quarterly cash dividend by more than 5%.
• The company announced a share buyback program of $1.5 billion for 2026, reflecting a focus on competitive capital distribution amid market volatility.

Strategic Focus on Oil and Gas:

• Equinor prioritized investments in its unique position on the Norwegian Continental Shelf, allocating almost 60% of investments to this area.
• The focus on oil and gas was driven by the need to ensure commerciality and efficiency amidst changing market conditions and geopolitical uncertainties.

U.S. Gas Position and Market Exposure:

• U.S. gas production increased by 45%, capturing higher prices and benefiting from robust power load growth and increased demand in the Northeast.
• Equinor's low unit production cost for U.S. gas around $1 per barrel positions it well to benefit from market upside despite geopolitical risks.

Sentiment Analysis:

Overall Tone: Neutral

• Management acknowledges '2025 was a year of strong deliveries, but it was also a year of increased geopolitical tension and market uncertainty.' They emphasize firm actions to strengthen cash flow and robustness, but also note challenges like reduced CapEx and divestments, showing a balanced, cautious approach.

Q&A:

• Question from Teodor Nilsen (Sparebank 1 Markets AS): First on CapEx. You obviously reduced the guidance for 2027. I just wonder how we should interpret the run rate into 2028. Should we also assume that 2028 CapEx will be well below the $13 billion you previously announced? Or is that too early to say anything about?
  Response: Cannot provide 2028 guidance yet, but expects consistency in oil & gas investment and reduced renewables/low carbon CapEx, with more details at Capital Market Day in June.

• Question from Teodor Nilsen (Sparebank 1 Markets AS): Second question, that is on MMP. Could you just explain what's behind the price review that boosted the results?
  Response: The price review relates to a gas contract arbitration where Equinor won, leading to a one-off payment and higher accrued revenue, with a new mechanism now in place.

• Question from John Olaisen (ABG Sundal Collier Holding ASA): First question is regarding Johan Sverdrup. Anders, you quoted in the media today saying that you expect it to decline by more than 10% this year. I wanted to elaborate a little bit more on that. How much more? And do we expect the same for the next few years?
  Response: Johan Sverdrup expected to decline by more than 10% but well below 20% in 2026; decline rate for future years not specified, but mitigation efforts and new wells will help manage.

• Question from John Olaisen (ABG Sundal Collier Holding ASA): Second question is regarding M&A. You've sold a lot of assets internationally. So I wonder, do you still have assets on the sales list internationally? And also secondly, it's a long time since you bought assets internationally. Do you have -- are you looking at potential acquisitions internationally?
  Response: No specific sales list disclosed, but company remains active in divesting non-core assets and opportunistic acquisitions, like recent U.S. gas investments, are possible.

• Question from Henri Patricot (UBS Investment Bank): First one on the cash flow guidance for '26, '27, you do show this meaningful improvement in '27 to $18 billion. Could you give us a bit more of a breakdown behind this improvement? I think you mentioned Empire Wind starting up, some tax lag effect. What else is contributing to this sharp increase?
  Response: The increase from $16B to $18B for 2027 is based on flat price assumptions, a 3% production increase, and the reversal of the NCS tax lag effect from 2026.

• Question from Henri Patricot (UBS Investment Bank): Secondly, I was wondering, there's uncertainty still around Empire Wind 1. What would be the impact to the financial framework you presented today if the project does not complete or implications for the broader CapEx and shareholder returns?
  Response: Threshold for stopping Empire Wind is extremely high given its forward-looking economics; project is on track, and remaining CapEx is covered by ITC and cash flow.

• Question from Biraj Borkhataria (RBC Capital Markets): First one is a follow-up on Johan Sverdrup. You mentioned the decline for 2026. What is in your base case for 2027 and beyond?
  Response: Decline rate for 2027 not specified; team is working to minimize decline with new wells, and Johan Sverdrup Phase 3 will come on stream by end of 2027.

• Question from Biraj Borkhataria (RBC Capital Markets): And then the second question is just on the Empire Wind budget has obviously gone up a little bit. How should we think about how much contingency you have in that new $7.5 billion budget?
  Response: Budget increase due to tariffs and first stop-work order; remaining uncertainty is around potential future tariffs, but project execution is on track.

• Question from Alastair Syme (Citigroup Inc.): Just one question really to Anders. I just wanted to reflect on the journey that Equinor has been on in recent years with respect to the transition because you are signaling today a further scaling back in ambitions with a lower CapEx...
  Response: Market view on low carbon solutions (hydrogen, CCS) has changed due to slower customer progress and delayed emission targets; focus remains on profitable opportunities when market conditions improve.

• Question from Irene Himona (Bernstein Institutional Services LLC): First question is one of clarification really. You referred to your objective to build an integrated power portfolio. Typically, when your peers refer to integrated power, they mean essentially adding gas-fired power generation to renewables. So I wanted to ask what does integrated power mean for you? And how does �rsted fit in that?
  Response: Integrated power includes renewables and flexible assets like gas, batteries, CCGTs; �rsted collaboration fits into this but not a core focus currently.

• Question from Irene Himona (Bernstein Institutional Services LLC): My second question, just going back to the share buyback. Previously, in the past, you had guided to a long-term sustainable through-the-cycle share buyback of around about $2 billion. Today, you lowered that to $1.5 billion. I'm just trying to understand what has changed between then and now essentially.
  Response: $1.5 billion buyback is above the previous $1.2 billion sustainable level, but balance sheet is now normalized; buybacks are regular but dependent on macro environment, while dividends are considered bankable.

• Question from Paul Redman (BNP Paribas): My first question is just how do you think about growth at Equinor? The reason I asked that question is at the Capital Markets Day last year, you highlighted a flat to decline in production 2026 plus.
  Response: Growth will come from international oil & gas (targeting 900k boe/day by 2030), Integrated Power (renewables growth), and exploration on NCS, despite some portfolio divestments.

• Question from Paul Redman (BNP Paribas): And then secondly, when I look at MMP, I guess the long-term -- well, the annual guidance was $1.6 billion, $400 million a quarter. You generated about $1.25 billion to $1.3 billion for the quarter if I take out the long-term gas contract review from this quarter. Is there any reason the guidance isn't updated? And how should we think about MMP going forward?
  Response: Stripping the price review, Q4 MMP was around $400M, in line with guidance; results fluctuate with commodity volatility and trading opportunities, especially in gas.

• Question from Vidar Lyngvær (Danske Bank A/S): First, just another clarification on the renewable spending in 2027. You're reducing CapEx by $4 billion. I get the tax credit part. Could you add some more color on where the remaining cut comes from?
  Response: Remaining cut from reduced offshore wind and onshore renewable projects, as well as cancelled hydrogen and CCS projects like Eemshaven.

• Question from Vidar Lyngvær (Danske Bank A/S): Second, Johan Sverdrup, you mentioned the decline rates there. Are those exit to exit, so exit '25 to exit '26? Or is it average production decline in '26 versus average in '25?
  Response: Decline rate is based on exit production (end of 2025 vs. end of 2026).

• Question from Steffen Evjen (DNB Carnegie): On the ITC, just could you please remind me on the milestones they are required for that payment to come in, in terms of first power and any other things that has to be fulfilled?
  Response: ITC recognized when production starts; assumes full recognition in 2027, with $2B cash flow impact, though timing may vary.

• Question from Steffen Evjen (DNB Carnegie): My second question is just a clarification on Adura. I think you said $1 billion in dividends. Is that your share? Or is that the total share to both shareholders?
  Response: $1B in dividends refers to Equinor's share from Adura, not total JV dividends.

• Question from Martijn Rats (Morgan Stanley): I've got 2, if I may. I wanted to ask you again about the CapEx reductions... And I was wondering how we should interpret this reduction in CapEx on this occasion. If power and low carbon CapEx goes down, is that -- should we interpret that as well, the company is just going to do less of that stuff?
  Response: Reduction reflects both organic project cancellations (e.g., Eemshaven) and no significant inorganic opportunities; future investments will await better market conditions for profitable projects.

• Question from Martijn Rats (Morgan Stanley): And then the other question I wanted to ask is about the 10% OpEx and SG&A reduction target... Could you talk a little bit about the key levers, where that spending can be reduced?
  Response: Reduction driven by divestments, lower activity, early-phase cost cuts, and efficiencies; further levers include NCS 2035 cost initiatives and AI implementation.

• Question from Naisheng Cui (Barclays Bank PLC): Two questions, please. The first one is on your upstream reserve life. I wonder how do you think about a reasonable level of upstream reserve life in the medium to long run...
  Response: Reserve life (ROP) around 7 is comfortable; AI and new technology aiding exploration to maintain discovery rates despite smaller fields.

• Question from Naisheng Cui (Barclays Bank PLC): Then my second question is on �rsted. I think earlier, you mentioned that you could collaborate more with �rsted in kind of different types of potential structures. And I wonder if you could elaborate what you mean by the potential structures?
  Response: Collaboration could involve various structures beneficial to both shareholders, like the Shell joint venture, but no current discussions to elaborate.

• Question from Jason Gabelman (TD Cowen): I wanted to first go back to the Empire Wind guidance. And I'm wondering if the $600 million of cash flow, is that what Equinor expects to receive? Or are there going to be some repayments on the project financing that are going to minimize that in the earlier years?
  Response: $600M cash flow is from Equinor's equity; no repayments to lenders; includes portfolio effect reducing U.S. minimum tax.

• Question from Jason Gabelman (TD Cowen): And then my follow-up is just on kind of broader exploration opportunities beyond what you've discussed... I wonder if you look at those regions as potential opportunities for the company...
  Response: Focus is on core areas (Angola, Brazil, U.S.); open to other opportunities but bar is high; exploration mainly in known basins.

• Question from Kim Fustier (HSBC Global Investment Research): I had a couple on the NCS, please. Firstly, I believe that back in November, you announced a reorganization of your NCS business along centralized functional lines... Could you give a bit more color on this?
  Response: Reorganization streamlines work processes and decision-making for faster subsea tie-in project execution, aiming for 2-3 year time from discovery to production.

• Question from Kim Fustier (HSBC Global Investment Research): And then secondly, could you give an update on a couple of pre-FID projects, Wisting and then Bay du Nord in Canada...
  Response: Wisting concept selection in 2026, potential FID in 2027; Bay du Nord approaching DG2, with good government engagement.

• Question from Christopher Kuplent (BofA Securities): I'll keep it to one question for Torgrim, and please forgive me for some quick mental math. But when you set your $1.5 billion buyback, are you effectively arguing over the course of '26 and '27... you're targeting to be free cash flow neutral after dividends and buybacks.
  Response: Share buyback set considering two-year free cash flow outlook, leaning on balance sheet in 2026 and expecting stronger flow in 2027.

• Question from Matthew Lofting (JPMorgan Chase & Co): Just one on Empire Wind and read-throughs from it... Are there learnings that are emerging from Empire Wind for optimal sizing, taking into account perhaps above as well as belowground factors?
  Response: Key learning is increased political risk; future projects will require stronger bipartisan support to manage above-ground risks effectively.

• Question from James Carmichael (Joh. Berenberg, Gossler & Co. KG): Just again on Empire Wind. I was just wondering if you could clarify your sort of best case estimate on the timing of the underlying court case...
  Response: Court timing uncertain, but preliminary injunctions for all operators indicate a strong case; merits hearing may occur within a couple of months.

Contradiction Point 1

Financial Impact and Timing of ITC for Empire Wind

Contradiction on the project's cash flow neutrality timeline and the size of the 2027 cash flow impact.

What factors drive the $2B increase in cash flow guidance from 2026 to 2027, and what financial impact would arise if the Empire Wind project does not complete? - Henri Patricot (UBS Investment Bank)

2025Q4: The project is on track... The company believes the political risk has been overstated... The $7.5B budget increase is primarily due to tariffs and the impact of the first stop-work order. - Anders Opedal(CEO)

1) How much has Equinor spent and remains for its offshore wind projects (Dogger Bank, Empire Wind, Baltic)? 2) What is the outlook for the global gas market given recent LNG project sanctioning and demand trends? - Jason Gabelman (TD Cowen)

2025Q3: Expected to be cash flow neutral over the next two years... A $2B cash flow impact is expected in 2027 (some cash may take time to settle). There is potential for some recognition in 2026. - Torgrim Reitan(CFO)

Contradiction Point 2

Johan Sverdrup Field Decline Rate and Mitigation

Contradiction on the expected decline rate for 2026 and the company's ability to mitigate it.

What is the expected decline rate for the Johan Sverdrup field in 2026 and beyond, and do you still have assets for sale internationally, looking at potential acquisitions? - John Olaisen (ABG Sundal Collier Holding ASA)

2025Q4: The decline for 2026 is expected to be more than 10% but well below 20%. The team is working to minimize the decline through new drilling and efficiency measures. - Anders Opedal(CEO)

What is the timeline for the Peregrino disposal? What is the production outlook for Johan Sverdrup through 2026, and when will the decline begin? - Henri Patricot (UBS Investment Bank)

2025Q3: Production is expected to start declining in 2026, but efforts are ongoing to maintain high production through optimization (e.g., multilateral wells, water management). - Torgrim Reitan(CFO)

Contradiction Point 3

Share Buyback Guidance and Rationale

Contradiction on the basis for setting the 2026 share buyback guidance.

1) What is Equinor's "integrated power" strategy and its relation to Ørsted? 2) Why was the share buyback guidance reduced to $1.5B from ~$2B? - Irene Himona (Bernstein Institutional Services LLC)

2025Q4: The new $1.5B for 2026 reflects a normalized balance sheet; the company aims to manage within its means after returning $54B over the last 3 years. - Torgrim Reitan(CFO)

How should the 2026 capital distribution program be viewed considering volatile prices and Q4 debt reversion? Will guidance be provided with Q4 results or at the Capital Markets Day? - Paul Redman (BNP Paribas Exane)

2025Q3: The 2026 distribution will be announced with Q4 results in February. It will take a two-year perspective: Empire Wind equity (~$2B) in 2026 is offset by expected tax credits in 2027. - Torgrim Reitan(CFO)

Contradiction Point 4

Capital Expenditure (CapEx) Guidance and Strategy

Contradiction on whether CapEx reductions are due to inorganic moves or changed project viability.

1) Is the CapEx reduction shifting focus from organic to inorganic investments? 2) What are the primary drivers behind the 10% OpEx/SG&A reduction target? - Martijn Rats (Morgan Stanley)

2025Q4: The reductions in renewables/low-carbon CapEx are not primarily due to inorganic moves... They reflect a higher bar for successful bids and the deliberate choice to not proceed with some projects... - Torgrim Reitan(CFO)

Is the primary goal of the Peregrino divestment to strengthen the balance sheet or to fund new acquisitions that replace its production volumes? - Hendrik Patricot (UBS)

2025Q2: The primary goal is value creation and portfolio high-grading. The company has been active in M&A... A strong balance sheet is always a priority. - Torgrim Reitan(CFO)

Contradiction Point 5

Strategic Approach to U.S. Market and Political Risk

Shift from viewing the U.S. as a core, stable jurisdiction to acknowledging high political risk.

What lessons were learned from the Empire Wind project (100% equity stake, political risk) regarding risk management and capital allocation strategies? - Matthew Lofting (JPMorgan Chase & Co)

2025Q4: The experience highlights the increasing politicalization and polarization of energy projects in several countries... The company will adapt its decision processes to account for this new risk factor. - Anders Opedal(CEO)

Does the Empire Wind situation prompt a reconsideration of your geographically concentrated (e.g., US) strategy compared to peers? What are the expectations for the Bucha Lau FPSO's startup and ramp-up timeline in Brazil? - Biraj Borkhataria (RBC)

2025Q1: The US is an important contributor... The company operates in countries with high political stability (OECD). - Anders Opedal(CEO)