Equinor's Q3 2025: Contradictions Emerge on Offshore Wind Strategy, U.S. Investment Risks, and Capital Flexibility

Date of Call: October 29, 2025

Financials Results

• EPS: $0.37 adjusted earnings per share; impacted by negative results from financial items and a one-off decommissioning charge related to Titan

Guidance:

• Maintain CMU (February) guidance for production, organic CapEx and capital distribution.
• MMP guidance updated to ~ $400M adjusted operating income per quarter (prudent baseline given current market dynamics).
• Expect net debt ratio to finish the year at the lower end of the 15%–30% guided range at current forward prices.
• Capital distribution: ordinary dividend $0.37/share and a final 2025 buyback tranche up to $1.266B; total 2025 distributions ~ $9B.
• Limit new significant offshore-wind capital commitments; Empire Wind equity cash need ~ $2B in 2026 (largely offset by investment tax credit in 2027).

Business Commentary:

• Production and Cash Flow:
• Equinor's production was up 7% from the previous year's third quarter, reaching 2,130,000 barrels per day.

• The positive production growth was driven by strong operational performance, with Johan Sverdrup delivering close to 100% regularity and Johan Castberg producing at a premium of around $5 to Brent.

• Impairments and Financial Impact:

• Equinor booked net impairments of $754 million, mainly due to lower long-term oil price assumptions and a transfer of assets to the Adura IJV.

• These impairments reflect the company's response to market conditions, particularly in its E&P International business.

• Capital Distribution and Shareholder Returns:

• Equinor approved an ordinary cash dividend of $0.37 per share and a fourth and final tranche of the share buyback program for 2025, totaling up to $1.266 billion.

• The company distributed $5.6 billion to shareholders, demonstrating its commitment to returning capital to shareholders while maintaining a solid financial position.

• Offshore Wind Strategy and Investment:

• Equinor's involvement in offshore wind was discussed, with a focus on a more capital-efficient approach, including participating in Ørsted's rights issue to nominate a board candidate.
• This strategic decision aims to improve financial performance and enhance collaboration in the offshore wind sector.

Sentiment Analysis:

Overall Tone: Neutral

• Management highlighted 'strong operational performance' and production up 7% YOY with $6.2B adjusted operating income, robust cash flow (YTD CFO after tax $14.7B) and cost discipline, while acknowledging volatility, a net loss of $0.2B due to impairments and a fatality — indicating balanced optimism but realistic caution.

Q&A:

• Question from Irene Himona (Sanford C. Bernstein & Co., LLC., Research Division): So my first question is on the unit depreciation charge in Norway. It's up about 13% from Q2. Can we assume that is the new normal level going forward? And then my second question is on Ørsted. You obviously decided to participate in the rights issue and to turn from a passive to an active shareholder with a Board seat. Can you elaborate a little bit on what it is that you think Ørsted is perhaps not doing very well where your active participation may help them improve. And then what type of industrial cooperation do you envisage that would benefit both sides?
  Response: On Ørsted: Equinor will take a more active board role to pursue industrial/strategic collaboration to create shareholder value while maintaining a high threshold for any new offshore-wind capital commitments.

• Question from Biraj Borkhataria (RBC Capital Markets, Research Division): Just the first one on the MMP guidance. I wonder if you could just dive into a bit more detail around the change in factors there. And also, you've gone from a range of $400 million to $800 million to a single figure. And I was wondering if there's a sort of signal factor in there that either you see fewer opportunistic -- opportunities to trade or if you are just taking less risk given the environment is changing? And then just a follow up on the question before Ørsted, just trying to understand why you didn't consider a Board seat in the first place? Because I recall it just wasn't really part of the discussion at the time around the CMU. So just trying to get the understanding of -- obviously, the environment has changed, policy has changed, but has your investment thesis on that business investment changed?
  Response: MMP guidance set to ~ $400M per quarter as a prudent baseline due to reduced market volatility, structural market changes and the prior divestment of gas-transport assets (removing ~ $40M/q).

• Question from Teodor Nilsen (Sparebank 1 Markets AS, Research Division): First one, just want to follow up on the Ørsted question recently asked here. I just want to know what has actually changed in what you can offer from the first time you acquired shares until now the recent share issue. So that is the first question. And second question that is on Bacalhau, congrats on first oil there. How should we think around the ramp-up pace to plateau?
  Response: Bacalhau ramp-up will be gradual — Phase 1 involves continuous drilling/completions (19 wells: 11 producers plus injectors) through 2025 and into 2026, so no precise plateau date yet.

• Question from Jason Gabelman (TD Cowen, Research Division): I am going to start also on Ørsted. And it's, I guess, a bit tangentially related to what's going on. But as we think about potential outcomes one of the thoughts in the market is a formation of a joint venture between the 2 parties. And with that, there's a lot of speculation on cash, that would need to be contributed into the joint venture from Equinor standpoint. So the question is really, as you look at your 3 offshore wind projects. How much equity capital have you spent in those projects thus far? And how much is left to be spent on those 3 projects? And then my follow-up is on the global gas market. There's been maybe a surprising amount of LNG projects sanctioned year-to-date. You've seen China demand slowing down, some thoughts on Power of Siberia 2 coming online at some point next decade. Can you just talk about your outlook for the global gas market? And if it's shifted at all just given the developments that we've seen year-to-date in that market.
  Response: Remaining equity needs are limited: Dogger largely underway, Empire Wind requires ~ $2B equity in 2026 (offset by ~ $2B investment tax credit in 2027), Baltic 2/3 need modest equity — overall limited near-term cash draw.

• Question from Christopher Kuplent (BofA Securities, Research Division): Just some I guess, rather boring questions, Torgrim about detail. I wonder whether you can help us review what's happened in the 9 months on your net working capital, great results, I guess. And whether you can combine that review with an outlook where you think we're heading? And if I could ask you to do the same, particularly for your Norwegian business, I understand there's a lot of moving parts in terms of assets for sale outside of Norway, but Norway has seen a significant decline in the discount to Brent that you've been able to achieve in Q3. Again, I would love to have your review of that and outlook, if possible.
  Response: Working capital fell by ~$1B this quarter to $3.7B (down ~$3B YTD), driven by lower commodity prices and reduced MMP-related exposures; the Johan Castberg premium (~$5 over Brent) helped narrow NCS discounts.

• Question from Henri Patricot (UBS Investment Bank, Research Division): Two, please. The first one, I was wondering if you can give us an update on latest thinking on timing of the Peregrino disposal? And then secondly, on Johan Sverdrup, you mentioned here the field continues to produce at a very high level? Or are you thinking about the evolution of that going into 2026? And to what extent do we start to see a decline next year?
  Response: Peregrino sale to Prio: expect to close on 40% of the 60% stake in Q4 and the remaining 20% in Q1, with proceeds a little below $3B split ~2/3 in Q4 and 1/3 in Q1; Johan Sverdrup will start to decline in 2026 after having fast-forwarded production.

• Question from Michele Della Vigna (Goldman Sachs Group, Inc., Research Division): I wanted to come back to your comment about effectively restricting or being very capital efficient on Offshore Wind, given the acceleration in power demand we're seeing globally. I was just wondering, are there some other areas in the power markets where instead you see opportunities and you could look at redeploying some of the capital you're taking away from Offshore Wind at this time of low returns for those developments.
  Response: Equinor sees selective opportunities in Power (new 'Power' business area) leveraging gas positions and customer base, but will remain capital-disciplined and only pursue projects with strong returns — not planning a major step-up in spend.

• Question from Peter Low (Rothschild & Co Redburn, Research Division): Perhaps a question on the cash tax paid in the quarter, which I think was maybe a bit lower than expected. So it looks like you paid 2 NCS installments of $3.9 billion, but the total cash tax paid in the cash flow statement was $3.8 billion. Were you getting refunds in other regions? Or can you perhaps explain that number a little bit?
  Response: Primarily timing effects: taxes are still being paid based on earlier higher price assumptions and there are international offsets (UK EPL/Rosebank and U.S. items) that reduce paid cash tax in the quarter.

• Question from Naisheng Cui (Barclays Bank PLC, Research Division): Just one follow-up on MMP guidance, please. I think you mentioned in your report that part of the reason you cut MMP guidance is because divestment of gas infrastructure assets. I wonder if you could isolate the impact on that place rather than the market condition change.
  Response: The divestment of gas infrastructure reduced MMP by about $40 million per quarter.

• Question from Paul Redman (BNP Paribas Exane, Research Division): And I might be a little bit early, but I just wanted to ask about how you're thinking about the distribution program for next year. We're going into 2026 with quite volatile view on oil prices. difficult view into gas prices, your debt came down this quarter, and I think you're guiding to a reversion of some of that into 4Q. So I just wanted to ask about how we should maybe think about a distribution program for 2026. And then just a confirmation on whether you're going to guide to that the 4Q results or at the Capital Markets Day later in the year?
  Response: Dividend is considered bankable and buybacks remain a regular tool; 2026 distribution decisions will be taken with a two‑year view (accounting for ~ $2B Empire Wind equity in 2026) and will be announced with Q4 results in February.

• Question from Martijn Rats (Morgan Stanley, Research Division): Well, only one for me. I wanted to ask about the impairment charge, because it's more of a question of just sort of trying to make sure I interpret this correctly. So the long-term oil price assumption has come down, but it's still $75 a barrel. But that has triggered $750 million of impairments, which sort of suggests that there were projects in your portfolio that had breakevens well above $75 a barrel. And I was wondering if that is the correct interpretation. If your projects have breakevens below $75, but you lower the long-term assumption, it wouldn't trigger an impairment, right? Am I interpreting this correctly?
  Response: Impairments (~$754M) were driven by lower long‑term price assumptions and accounting factors — notably assets held for sale (no prior depreciation) and acquisition carrying values — rather than indicating widespread portfolio breakeven issues.

• Question from Matthew Lofting (JPMorgan): I just wanted to come back Empire Wind, Torgrim, I think you mentioned in your opening remarks that there was an availability issue that's emerged on in the installation vessel with Maersk. Could you just expand on what's happening there and sort of any risk that, that poses to the future development progress of Empire Wind into next year?
  Response: A Maersk/Seatrium dispute led to cancellation of the contracted installation vessel, but Empire Wind is 55% complete with all monopiles installed; management views the issue as manageable given alternative vessel availability, though not risk‑free.

• Question from James Carmichael (Joh. Berenberg, Gossler & Co. KG, Research Division): Just quickly on the U.K. and Rosebank. I was just wondering what the latest is on that approval process. And then I guess maybe just sort of general thoughts on the U.K. as we maybe get a bit closer to some clarity on the fiscal outlook here.
  Response: Rosebank: Equinor submitted regulator responses and the public consultation opened; consultation runs until Nov 20 and there's no set decision date yet; management calls for a stable U.K. fiscal framework.

• Question from Kim Fustier (HSBC Global Investment Research): I noticed that one of your Norwegian competitors has recently expressed some concerns that there may not be enough projects on the NCS within a year or 2 to sustain a healthy domestic supply chain. Obviously, you're also moving away from big greenfield projects to smaller brownfields. So it's kind of an industry-wide issue. Just interested in hearing your views on sort of the outlook for the NCS supply chain and cost inflation.
  Response: Equinor's NCS 2035 plan aims to sustain activity via more but smaller and faster developments (target ~30 exploration wells/year and 6–8 subsea developments/year) to keep the domestic supply chain active and reduce costs.

• Question from Steffen Evjen (DNB Carnegie, Research Division): So a quick one. Just remind me on the tax credit in the U.S. What's the milestone you have to get that credit paid? Is that first power or COD on the project?
  Response: The investment tax credit is triggered by first power/production start — management plans for first power in 2027.

Contradiction Point 1

Equinor's Strategy and Offshore Wind Position

It involves a change in Equinor's strategic approach to offshore wind investments, particularly concerning its relationship with Ørsted and the decision to seek a Board seat.

What changes have occurred regarding your Board seat since acquiring Ørsted shares? How should we view the growth rate to plateau for Bacalhau? - Teodor Nilsen (Sparebank 1 Markets AS, Research Division)

2025Q3: Regarding Ørsted, the current situation necessitates signaling support with a Board seat. For Bacalhau, it started production on October 15, with a complex drilling plan involving 19 wells. The ramp-up is gradual, with continuous drilling and completion until 2026. - [Torgrim Reitan](CFO)

With global power demand growth, are there other power market segments with capital deployment opportunities related to offshore wind? - Michele Della Vigna (Goldman Sachs Group, Inc., Research Division)

2025Q2: We are focused on the Power segment, building on our gas position and customer base. There are opportunities, but we remain capital disciplined, aiming for significant profitability before deploying capital. - [Torgrim Reitan](CFO)

Contradiction Point 2

U.S. Geopolitical Risks and Investment Strategy

It highlights potential changes in the company's strategy regarding investments in the U.S., which could impact the company's global presence and risk profile.

Is the unit depreciation charge in Norway the new normal going forward? What prompted the strategic shift to an active shareholder role with a Board seat regarding Ørsted? - Irene Himona (Sanford C. Bernstein & Co., LLC., Research Division)

2025Q3: We remain cautious about significant future capital commitments in offshore wind. - [Torgrim Reitan](CFO)

What does the Empire Wind situation reveal about your geographic diversification strategy, particularly regarding Norway's role? Are you pivoting toward a more diversified approach? - Teodor Sveen Nilsen (SpareBank 1 Markets)

2025Q1: The Empire Wind situation is viewed as an unlawful act by the US government. While US is an important contributor to Equinor, their concentration strategy is not changing. They prioritize critical size and scale effects in their core countries. - [Anders Opedal](CEO)

Contradiction Point 3

Capital Investment and Flexibility

It involves the company's approach to capital investment and flexibility, which are crucial for operational and financial decision-making.

Explain the change in MMP guidance factors? Why didn't you pursue a board seat with Ørsted earlier? - Biraj Borkhataria (RBC Capital Markets, Research Division)

2025Q3: Capital investments aggregated for the first 9 months were $8.5 billion, down 14% year-on-year. Last year, we also had an April development start-up, and 2025 has maintained this level of flexibility. - [Torgrim Reitan](CFO)

How will the Empire Wind stop order impact the capital expenditure budget? Where is flexibility in spending plans under lower price conditions? - Peter Low (Rothschild & Co Redburn, Research Division)

2025Q1: The capital investment plan has flexibility in 2025, with more flexibility opening up in 2026 and 2027. They aim to adapt spending plans based on market conditions. - [Torgrim Reitan](CFO)

Contradiction Point 4

Impairment Assumptions and Methodology

It involves differing explanations for the impairment testing methodology and assumptions, which are crucial for understanding the company's financial health and risk management.

Can you explain the impairment charge based on long-term oil price assumptions? - Martijn Rats (Morgan Stanley, Research Division)

2025Q3: The impairment is mainly due to lower long-term oil price assumptions, but also to assets held for sale. The majority of the portfolio is robust for impairments despite the significant reduction in long-term price assumptions. - [Torgrim Reitan](CFO)

Why the 3% discount rate for Empire Wind impairment? How to interpret working capital movements? - Biraj Borkhataria (RBC)

2025Q2: The 3% discount rate is an unlevered, real discount rate after tax. The lower rate is justified by the fixed revenue profile for Empire Wind over 25 years. - [Torgrim Reitan](CFO)

Contradiction Point 5

Dividend Sustainability and Capital Distribution

It involves the company's commitment to dividend and capital distribution, which are crucial for investor expectations and financial planning.

How will volatile oil and gas prices affect next year's distribution program? - Paul Redman (BNP Paribas Exane, Research Division)

2025Q3: We will maintain capital discipline and prioritize cash dividend and share buybacks. Capital distribution decisions will consider long-term factors like equity investments in offshore wind projects and tax credits. The net debt to capital ratio is expected to be at the lower end of the guided range. - [Torgrim Reitan](CFO)

How sustainable is the dividend and capital distribution given current oil and gas prices? What would be the impact of a drop in oil prices on distributions? - Biraj Borkhataria (RBC)

2025Q1: Equinor is committed to a $9 billion capital distribution for 2025. They are prepared for lower oil prices due to their strong balance sheet, cash position, and cost discipline. The Norwegian tax system dampens the impact of lower prices by offsetting taxes. - [Torgrim Reitan](CFO)