Equinor Plunges 4% Amid Share Buy-Back and Project Cost Hikes – What’s Next for the Energy Giant?

Summary
• Equinor (EQNR) tumbles 3.96% intraday, trading at $23.185 after opening at $24.07
• Share buy-back program accumulates 12.5 million shares at NOK 237.52 average price
• Johan Castberg project cost estimate rises NOK 13 billion, signaling operational headwinds
• Oil & Gas sector sees mixed momentum as OPEC+ tightens output and U.S. offshore wind projects face regulatory delays

Equinor’s sharp intraday decline reflects a confluence of bearish catalysts: escalating project costs, aggressive buy-backs, and sector-wide uncertainty. With the stock trading near its 52-week low of $21.405, investors are recalibrating expectations amid a volatile energy landscape. The move underscores the fragility of energy stocks in a market balancing geopolitical risks and decarbonization pressures.

Cost Overruns and Buy-Backs Spark Investor Anxiety
Equinor’s 4% drop is driven by two critical developments. First, the Johan Castberg project’s cost estimate surged by NOK 13 billion, raising concerns about capital efficiency and profitability. Second, the company’s aggressive fourth-tranche buy-back—purchasing 888,448 shares at NOK 237.52—has triggered mixed signals. While buy-backs typically signal confidence, the timing coincides with reduced FY2024 EPS estimates from Zacks Research and a 54% price hike demand for U.S. offshore wind projects. These factors have eroded short-term optimism, particularly as the stock trades below its 200-day moving average of $24.34.

Oil & Gas Sector Volatility as XOM Trails Equinor’s Slide
The Oil & Gas Exploration and Production sector is under pressure, with sector leader Exxon Mobil (XOM) down 2.8%. Equinor’s decline mirrors broader sector jitters, as OPEC+’s output freeze through Q1 2026 and geopolitical risks (e.g., drone attacks on Iraqi gas fields) weigh on sentiment. However, Equinor’s drop is amplified by project-specific risks, such as the Johan Castberg overruns and its $1 billion Azerbaijan asset sale exploration. While peers like BP and TotalEnergies are navigating offshore wind price hikes, Equinor’s mixed signals—buy-backs vs. cost escalations—make it a standout in the sector’s bearish narrative.

Bearish Setup: Puts and ETFs for a Volatile Energy Sector
• 200-day average: $24.34 (below current price)
• RSI: 62.39 (neutral to bearish)
• MACD: 0.159 (bullish divergence) vs. signal line -0.037
• Bollinger Bands: Price at $23.185 (near lower band at $22.10)
• Support/Resistance: 30D support at $22.97, 200D resistance at $23.13

Equinor’s technicals suggest a bearish near-term bias, with RSI hovering near overbought territory and price testing lower Bollinger Band support. The 200-day average remains a critical level to watch for a potential rebound. For leveraged exposure, the VanEck Natural Resources ETF (HAP) (-0.19% change) and Goldman Sachs Innovate Equity ETF (GINN) (+0.74% change) offer sector alignment. However, the most compelling options are deep-in-the-money puts:

• EQNR20260116P23.84 (Put, Strike: $23.84, Expiry: 2026-01-16)
- IV: 15.61% (moderate)
- Leverage Ratio: 31.30%
- Delta: -0.858 (high sensitivity)
- Theta: -0.060 (rapid time decay)
- Gamma: 0.353 (strong price sensitivity)
- Turnover: 6,000 (high liquidity)
- Payoff (5% downside): $0.66 per share (max(0, 23.84 - 21.97))
This put offers high leverage and liquidity, ideal for capitalizing on a potential breakdown below $23.13 support.

• EQNR20260116P22.84 (Put, Strike: $22.84, Expiry: 2026-01-16)
- IV: 24.05% (moderate)
- Leverage Ratio: 92.66%
- Delta: -0.367 (moderate sensitivity)
- Theta: -0.0398 (moderate time decay)
- Gamma: 0.3889 (strong price sensitivity)
- Turnover: 441 (reasonable liquidity)
- Payoff (5% downside): $1.87 per share (max(0, 22.84 - 21.97))
This put balances leverage and liquidity, offering asymmetric upside if the stock gaps down.

Action Alert: Aggressive bears should prioritize EQNR20260116P23.84 into a breakdown below $23.13. For a more conservative approach, EQNR20260116P22.84 provides a safer entry if the stock consolidates near $22.10.

Backtest Equinor Stock Performance
The backtest of EQNR's performance after a -4% intraday plunge from 2022 to now shows mixed results. The 3-day win rate is 49.08%, the 10-day win rate is 48.28%, and the 30-day win rate is 45.65%. While the stock has had some positive returns in the short term, the overall performance has been lackluster, with a maximum return of only 0.41% over 30 days.

Equinor at Crossroads: Watch $22.10 Support and Sector Catalysts
Equinor’s 4% drop reflects a fragile balance between aggressive buy-backs and project overruns. While the stock’s technicals suggest a bearish near-term outlook, the key to its trajectory lies in two factors: 1) whether the $22.10 Bollinger Band support holds, and 2) sector-wide developments like OPEC+ policy shifts or offshore wind regulatory clarity. With sector leader Exxon Mobil (XOM) down 2.8%, energy investors must remain vigilant. For now, EQNR20260116P23.84 offers a high-leverage play on a potential breakdown, while the VanEck Natural Resources ETF (HAP) provides broader sector exposure. Watch for $22.10 support or a surge in offshore wind project approvals.