EQUINOR ASA
EQNR 20-F Report ended Dec. 31, 2024
Equinor
2024
Annual Report on Form 20-F
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
20-F
(Mark one)
1934
OR
For the fiscal year ended
December 31
, 2024
OR
For the transition period from______
to
OR
Date of event requiring this shell company report
Commission file number
1-15200
(Exact Name of Registrant as Specified in Its Charter)
N/A
(Translation of Registra
nt’s Name Into English)
(Jurisdiction of Incorporation or Organization)
(Address of Principal Executive Offices)
Chief Financial Officer
Equinor ASA
Telephone No.: 011-
47
-
5199-0000
Fax No.: 011-
47
-
5199-0050
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
|
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange On Which
Registered
|
|
|
|
|
|
Ordinary shares
, nominal value of
NOK 2.50
each
|
|
|
*Listed, not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the
requirements of the Securities and Exchange Commission
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Equinor
2024
Annual Report on Form 20-F
2
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the
period covered by the annual report.
Ordinary shares
of
NOK 2.50
each
2,944,733,144
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☒
Yes
☐ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒
No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Yes
☐ No
Indicate by check mark whether the registrant has submitted electronically Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files)
☒
Yes
☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act. (Check one):
|
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Emerging growth company
|
|
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards† provided pursuant to Section 13(a) of the Exchange Act.
☐
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 762(b))
by the registered public accounting firm that prepared or issued its audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b).
☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
|
U.S. GAAP
|
☐
|
by the International Accounting Standards Board
|
☒
|
Other
|
☐
|
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow.
Item 17 ☐
Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).
☐ Yes
☒
No
Equinor
2024
Annual Report on Form 20-F
3
TABLE OF CONTENTS
Equinor
2024
Annual Report on Form 20-F
4
CONSOLIDATED FINANCIAL STATEMENTS
7
9
Equinor
2024
Annual Report on Form 20-F
5
INTRODUCTION
Unless otherwise indicated, all references herein to “we”, “our”, the “company”, the “group” or “
Equinor
” are references to
Equinor
ASA
and its consolidated subsidiaries.
This document is our
annual report on
Form 20-F
for th
e year e
nded
31 December 2024
(“
2024
Form 20-F
”)
. Ref
erence is made to
our Norwegian
Annual Report
for
2024
which is attached hereto
as Exhibit 15.4 (the “
2024
Annual Report
”
), o
ur
2024
Oil And Gas
Reserves Report
which is attached
hereto as exhibit 15.5 (the “
2024
Oil And Gas Reserves Report
”), o
ur
2024
Remuneration
Report
wh
ich is attached hereto as exhibit 15.6 (the “
2024
Remuneration Report
”), our Remuneration Policy which is attached
hereto as exhibit 15.7 (the “
2024 Remuneration Policy
”), and our
2024
Board statement on corporate governance
which is attached
hereto as exhibit 15.9 (the “
2024
Corporate Governance Report
”). Only (i)
the information included in this
2024
Form 20-F
, (ii) the
information in the
2024
Annual Report
, the
2024
Oil And Gas Reserves Report
, the
2024
Remuneration Report
, the 2024
Remuneration Policy and the
2024
Corporate Governance Report
that is incorporated by reference in this
2024
Form 20-F
(excluding,
in each case, any page or section references incorporated or referenced in the incorporated material), and (iii) the other exhibits to
this
2024
Form 20-F
shall be d
eemed to be filed with the Securities and Exchange Commission (“
SEC
”) for any purpose, including
incorporation by reference into the Registration Sta
tement on Form F-3 filed on May 4, 2023 (File No. 333-271647), and Registration
Statement on Form S-8 filed on February 9, 2022 (File No. 333-262601) and any other documents filed by us pursuant to the
Securities Act of 1933, as amended, which purport to incorporate by reference
the
2024
Form 20-F
. Unless otherwise indicated,
references to major headings include all information under such major headings, including subheadings, unless such re
ference is a
reference to a subheading, in which case such reference includes only the information contained under such subheading. Any other
information shall not be deemed to be so inc
orporated by reference.
In addition to the information set out below, the information set forth in Section
5.6 Other definitions and abbreviations
of the
2024
Annual Report
is incorporated herein by reference.
The
2024
Annual Report
contains references to our website (https://www.equinor.com). Information on our website or any other
website referenced in the
2024
Annual Report
is not incorporated into this document and should not be considered part of this
document.
The SEC maintains an Internet website that contains reports and other information regarding issuers that file electronically with the
SEC. Our filings with the SEC are available to the public through the SEC’s website at http://www.sec.gov.
The information about
Equinor
’s competitive position in this
2024
Form 20-F
(including the information in the
2024
Annual Report
that
is incorporated by reference herein) is based on several sources such as investment analyst reports, independent market studies,
and internal assessments of market share based on publicly available information about
the financial results and performance of
market
players
.
Sustainability-related statements
Materiality, as used in the context of sustainability, is distinct from, and should not be confused with, such term as defined for SEC
reporting purposes. Any issues or topics identified as material for purposes of sustainability in the
2024
Annual Report
, including the
materiality assessment undertaken by Equinor based on European Sustainability Reporting Standards, are therefore not necessarily
material as defined for SEC reporting purposes.
Equinor
2024
Annual Report on Form 20-F
6
USE
AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures
are defined as numerical measures that either exclude or include amounts that are not excluded or
included in the comparable measures calculated and presented in accordance with generally accepted accounting principles (i.e,
IFRS Accounting Standards in the case of
Equinor
). The following financial measures may be considered non-GAAP financial
measures:
a)
Net debt to capital employed ratio, Net debt to capital employed ratio adjusted, including lease liabilities and Net debt to capital
employed ratio adjusted
b)
Return on average capital employed (ROACE)
c)
Organic capital expenditures
d)
Gross capital expenditures (Gross capex)
e)
Cash flow from operations after taxes paid (CFFO after taxes paid)
f)
Net cash flow before capital distribution and net cash flow
g)
Adjusted operating income and adjusted operating income after tax (previously named Adjusted earnings and Adjusted earnings
after tax)
h)
Adjusted net income
i)
Adjusted earnings per share (Adjusted EPS)
For more information on the calculation and reconciliation of these non-GAAP financial measures, see
“Item 5. Operating and
Financial Review and Prospects—B. Liquidity and capital resources—Use and reconciliation of non-GAAP financial measures
.”
Equinor
2024
Annual Report on Form 20-F
7
FORWARD-LOOKING STATEMENTS
This
2024
Form 20-F
(including information incorporated herein from the
2024
Annual Report
)
contains certain forward-looking
statements that involve risks and uncertainties, in particular in the sections incorporated by reference in Item 4 of this
2024
Form 20-
F
.
In some cases, we use words such as "aim", "ambition", "anticipate", "believe", "continue", "commit", "could", "estimate", "expect",
"intend", "likely", "objective", "outlook", "may", "plan", "schedule", "seek", "should", "strategy", "target", "will", "goal" and similar
expressions to identify forward-looking statements. All statements other than statements of historical fact, including: the commitment
to develop as a broad energy company and diversify our energy mix; the ambition to be a leading company in the energy transition;
ambition to reach net zero by 2050 and expectations regarding progress on our energy transition plan; our ambitions regarding
reduction in operated emissions and net carbon intensity and allocation of investments to renewables and low carbon solutions; our
ambitions and expectations regarding decarbonisation; our ambition to maintain value in oil and gas, focus on high value growth in
renewables and contribute to maturing CCS and hydrogen markets; aims, expectations and plans for renewables production capacity
and power generation, CO2 transport and storage, investments in renewables and low-carbon solutions and the balance
between oil
and gas and renewables production; our expectations and estimates regarding future operational performance, including oil and gas
and renewable power
production, with respect to net carbon intensity, operated emissions, carbon and methane intensity and flaring
reductions; our internal carbon price and other financial metrics for investment decisions; break-even considerations and targets;
robustness of our portfolio; contributions to energy security; aims and expectations regarding
Equinor
’s resilience across different
climate scenarios; future levels of, and expected value creation from, oil and gas production, scale and composition of the oil and gas
portfolio, and development of CCS and hydrogen businesses; plans to develop fields; our intention to optimise and mature our
portfolio; future worldwide economic trends, market outlook and future economic projections and assumptions, including commodity
price assumptions; expectations and plans regarding capital expenditures; future financial performance, including earnings, cash flow,
liquidity, net debt to capital employed* and return on average capital employed (ROACE)*; the ambition to grow cash flow and returns;
expectations regarding cash flow and returns from our oil and gas portfolio, CCS projects and renewables and low carbon solutions
portfolio; organic capital expenditures* for 2025; expectations and plans regarding development and execution of projects and
businesses; expectations and ambitions regarding costs, including the ambition to keep unit of production cost in the top quartile of
our peer group; scheduled maintenance activity and the effects thereof on equity production; business strategy and competitive
position; sales, trading and market strategies; research
and development initiatives and strategy, including ambitions regarding
allocation of
research and development capital towards renewables and low carbon-solutions; expectations related to production
levels, unit production cost, investments, exploration activities, discoveries and development in connection with our ongoing
transactions and projects; our expectations and plans regarding diversity and inclusion and employee training; plans and expectations
regarding completion and results of acquisitions, disposals, joint ventures and other contractual arrangements and delivery
commitments; plans, ambitions and expectations regarding recovery factors and levels, future margins and future levels or
development of capacity, reserves or resources; planned turnarounds and other maintenance activity; estimates related to production
and development, forecasts, reporting levels and dates; operational expectations, estimates, schedules and costs; expectations
relating to licences and leases; oil, gas, alternative fuel and energy prices, volatility, supply and demand; plans and expectations
regarding processes related to human rights laws, corporate structure and organizational policies; expectations and ambitions relating
to digitalisation and technological innovation, including the role and contribution of AI;
expectations regarding role and composition of
the board and our remuneration policies; our goal of safe and efficient operations; effectiveness of our internal policies and plans; our
ability to manage our risk exposure, our liquidity levels and management of liquidity reserves; future credit ratings; estimated or future
liabilities, obligations or expenses; expected impact of currency and interest
rate fluctuations; projected outcome, impact or timing of
HSE regulations; HSE goals and objectives of management for future operations; ambitions and plans relating to our environmental
policy; our ambitions and plans regarding biodiversity (including our aim to develop a net-positive impact approach for projects),
circular economy and value creation for society; expectations and plans regarding pollution control; expectations related to regulatory
trends; impact of PSA effects; projected impact or timing of administrative or governmental rules, standards, decisions, standards or
laws (including taxation laws); projected impact of legal claims against us; ambitions regarding capital distributions and expected
amount and timing of dividend payments and the implementation of our share buy-back programme.
You should not place undue reliance on these forward- looking statements. Our actual results could differ materially from those
anticipated in the forward- looking statements for many reasons,
including the risks factors
incorporated in Item 3.D of this
2024
Form
20-F
.
Forward-looking statements are not guarantees of future performance. They reflect current views about future events, are based on
management’s current expectations and assumptions and are, by their nature, subject to significant risks and uncertainties because
they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual
results and developments to differ materially from those expressed or implied by these forward-looking statements, including levels of
industry product supply, demand and pricing, in particular in light of significant oil price volatility; unfavourable macroeconomic
conditions and inflationary pressures; exchange rate and interest rate fluctuations; levels and calculations of reserves and material
differences from reserves estimates; regulatory stability and access to resources, including attractive low carbon opportunities; the
effects of climate change and changes in stakeholder sentiment and regulatory requirements regarding climate change; changes in
market demand and supply for renewables; inability to meet strategic objectives; the development and use of new technology; social
and/or political instability, including worsening trade relations; failure to prevent or manage digital and cyber disruptions to our
information and operational technology systems and those of third parties on which we rely; operational problems, including cost
inflation in capital
and operational expenditures;
unsuccessful drilling; availability of adequate infrastructure at commercially viable
prices; the actions of field partners and other third-parties; reputational damage; the actions of competitors; the actions of the
Norwegian state as majority shareholder and exercise of ownership by the Norwegian state; changes or uncertainty in or non-
Equinor
2024
Annual Report on Form 20-F
8
compliance with laws and governmental regulations; adverse changes in tax regimes; the political and economic policies of Norway
and other oil-producing countries; regulations on hydraulic fracturing and low-carbon value chains; liquidity, interest rate, equity and
credit risks; risk of losses relating to trading and commercial supply activities; an inability to attract and retain personnel;
ineffectiveness of crisis management systems; inadequate insurance coverage; health, safety and environmental risks; physical
security risks to personnel, assets, infrastructure and operations from hostile or malicious acts; failure to meet our ethical and social
standards; actual or perceived non-compliance with legal or regulatory requirements; and other factors discussed elsewhere in this
2024
Form 20-F
.
The achievement of Equinor’s climate ambitions depends, in part, on broader societal shifts in consumer demands and technological
advancements, each of which are beyond Equinor’s control. Should society’s demands and technological innovation not shift in
parallel with Equinor’s pursuit of its energy
transition plan, Equinor’s ability to meet its climate ambitions will be impaired. The
calculation of Equinor’s net carbon intensity presented in this report includes an estimate of emissions from the use of sold products
(GHG protocol category 11) as a means to more accurately evaluate the emission lifecycle of what we produce to respond to the
energy transition and potential business opportunities arising from shifting consumer demands. Including these emissions in the
calculations should in no way be construed as an acceptance by Equinor of responsibility for the emissions caused by such use.
The reference to any scenario in this report, including any potential net-zero scenarios, does not imply
Equinor
views any particular
scenario as likely to occur. Third- party scenarios discussed in this report reflect the modeling assumptions and outputs of their
respective authors, not
Equinor
, and their use by
Equinor
is not an endorsement by
Equinor
of their underlying assumptions,
likelihood or probability. Investment decisions are made on the basis of
Equinor
’s separate planning process. Any use of the modeling
of a third- party organization within this report does not constitute or imply an endorsement by
Equinor
of any or all of the positions or
activities of such organization.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our
future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of the forward-looking statements. Any forward-looking statement speaks
only as of the date on which such statement is made, and, except as required by applicable law, we undertake no obligation to update
any of these statements after the date of this
2024
Form 20-F
, either to make them conform to actual results or changes in our
expectations.
Equinor
2024
Annual Report on Form 20-F
9
Part I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A.
Directors
and Senior Management
Not applicable.
B.
Advisers
Not applicable.
C.
Auditors
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
A.
Offer Statistics
Not applicable.
B.
Method and Expected Timetable
Not applicable.
ITEM 3. KEY INFORMATION
A.
[Reserved]
B.
Capitalization and Indebtedness
Not applicable.
C.
Reason for the Offer and Use of Proceeds
Not applicable.
D.
Risk Factors
The information in Section
5.2 Risk factors
of Chapter 5 on pages
291 - 297
of the
2024
Annual Report
is incorporated herein by
reference.
ITEM 4. INFORMATION ON THE COMPANY
A.
History and Development of the Company
Equinor ASA
was incorporated on 18 September 1972, is a public limited liability company organised under the laws of Norway
and is subject to the provisions of the Norwegian Public Limited Liability Companies Act.
Equinor
’s head office is located at
Forusbeen
50
,
4035 Stavanger
,
Norway
. The telephone number of its principal place of business is +47-5199-00 00.
The information set forth under the following headings of the
2024
Annual Report
is incorporated herein by
reference
:
•
Key events
in 2024 on page 8;
•
Section
1.1 We are
Equinor
of Chapter 1 on pages 11 - 12
;
•
Section
1.2 Our history: five decades of progress
of Chapter 1 on page 13;
•
The information under the sub-heading “
Project pipeline
” under the heading “
The future of our oil and gas portfolio
”
in Section 2.1 of Chapter 2 on page 44;
•
Strategic progress
in Section 2.1 of Chapter 2 on page 49;
Equinor
2024
Annual Report on Form 20-F
10
•
The information under the sub-heading “
Investments
” under the heading “Strategic Financial Framework” in
Section
2.2 Financial performance
of Chapter 2 on page 55
; and
•
Progress on our Energy transition plan
in Section 2.3 of Chapter 2 on pages 72 - 73.
The information set forth in the
third
and fourth paragraphs of the section entitled “Introduction” of this
2024
Form 20-F
is also
incorporated herein by reference. See also notes
5
Segments
and
6
Acquisitions and disposals
to the Consolidated financial
statements.
B.
Business Overview
The information set forth under the following headings of the
2024
Annual Report
is incorporated
herein by reference
:
•
The information set forth in the first paragraph under the sub-heading "
Adjusting ambitions to realities
" under the
heading "
A message from the Chair and CEO
" on page 7;
•
Section
1.1 We are
Equinor
of Chapter 1 on pages 11 - 12
;
•
Section 1.3 The world in which we operate of Chapter 1 on page 14;
•
Section
1.4 Our strategy and transition ambitions
of Chapter 1 on
pages
15-17
;
•
Section
1.5 Our business
of Chapter 1 on pages 18 - 24
;
•
Section
2.1 Operational performance
of Chapter 2 on pages 37 - 51
;
•
The information under the sub-heading “
Portfolio composition
” under the heading “
Strategic financial framework
”
in Section 2.2 of Chapter 2 on page 55
;
•
Our market perspective
in Section 2.2 of Chapter 2 on pages 56 - 57
;
•
The graphic titled “EP International financial results by country” under the sub-heading “EP International” under
the heading “
Financial performance
” in Section 2.2 of Chapter 2 on page 60
;
•
The graphic titled “REN – Financial information” under the sub-heading “REN” under the heading “Financial
Performance” in Section 2.2 of Chapter 2 on page 63;
•
Progress on our Energy transition plan
in Section 2.3 of Chapter 2 on pages 72 - 73.
;
•
Nature in Section 2.3 of Chapter 2 on page 74;
•
Human rights
in Section 2.3 of Chapter 2 on page 75;
•
Health and safety
in Section 2.3 of Chapter 2 on page 76; and
•
Security
in Section 2.3 of Chapter 2 on page 77.
See also notes
5
Segments
and
7
Total revenues and other income
to the Consolidated financial statements.
The information about
Equinor
’s
competitive position
in the sections of the
2024
Annual Report
that are incorporated by
reference herein is based on several sources such as investment analyst reports, independent market studies, and internal
assessments of market share based on publicly available information about the financial results and performance of market players.
Applicable laws and regulations
Equinor
operates in around 30 countries and is exposed and committed to compliance with numerous laws and regulations
globally. The first graphic in
Section
1.5 Our business
on page 18 in Chapter 1
and the risks set forth under the heading “
Policies and
legislation
” in Section
5.2 Risk factors
on page 300 of Chapter 5 of the
2024
Annual Report
are also incorporated herein by reference.
This section gives a general description on the legal and regulatory framework in the various jurisdictions where
Equinor
operates and
in particular in the countries of
Equinor
’s core activities.
Regulatory framework for upstream oil and gas operations
Currently,
Equinor
is subject to two main regimes applicable to petroleum activities worldwide:
•
Corporate income tax regimes; and
•
Production sharing agreements (PSAs)
Equinor
2024
Annual Report on Form 20-F
11
Equinor
is also subject to a wide variety of laws and regulations concerning its products, operations and activities, including
without limitations laws and regulations relating to health, safety and environment (HSE). Relevant laws and regulations include inter
alia jurisdiction specific laws and regulations, international regulations, conventions or treaties, as well as EU directives and
regulations.
Concession regimes
Under a concession regime, companies are granted licences by the government to extract petroleum. This is similar to the
Norwegian system described below. Typically, the licences are offered to pre-qualified companies following bidding rounds. The
criteria for the evaluation of bidding offers under these regimes can be the level of offered signature bonus (bid amount), minimum
exploration programme, and local content. In exchange for those commitments, the successful bidder(s) receive a right to explore,
develop and produce petroleum within a specified geographical area for a limited period of time. The terms of the licences are usually
not negotiable. The fiscal regime may entitle the relevant jurisdiction to royalties, profit tax or special petroleum tax.
PSA regimes
PSAs are normally awarded to the contractor parties after bidding rounds announced by the government. Main bid parameters
are often minimum exploration programme and signature bonuses, allocation of profit oil and, in some cases, tax.
Under a PSA, the host government typically retains the right to the hydrocarbons in place. The contractor receives a share of the
production for services performed. Normally, the contractor carries the exploration and development costs and risk prior to a
commercial discovery and is then entitled to recover those costs during the production phase. The remaining share of the production -
the profit share, is split between the government and the contractor according to a mechanism set out in the PSA. The contractor is
usually subject to income tax on its own share of the profit oil. Fiscal provisions in a PSA are to a large extent negotiable and are
unique to each PSA.
Norway
Norway is not a member of the European Union (EU) but is a member of the European Free Trade Association (EFTA). The EU
and the EFTA Member States have entered into the Agreement on the European Economic Area, referred to as the EEA Agreement,
which provides for the inclusion of EU legislation in the national law of the EFTA Member States (except Switzerland).
Equinor
’s
business activities are subject to both the EFTA Convention and EU laws and regulations adopted pursuant to the EEA Agreement.
The principal laws governing
Equinor
’s petroleum activities in Norway and on the NCS are the Norwegian Petroleum Act of 29
November 1996 (the Petroleum Act) and the regulations issued thereunder, and the Norwegian Petroleum Taxation Act of 13 June
1975 (the Petroleum Taxation Act).
Under the Petroleum Act, the Norwegian Ministry of Petroleum and Energy (“MPE”) is responsible for resource management and
for administering petroleum activities on the NCS. The main task of the MPE is to ensure that petroleum activities are conducted in
accordance with the applicable legislation, the policies adopted by the Norwegian Parliament and relevant decisions of the Norwegian
State.
The State’s role in relation to major policy issues in the petroleum sector can affect
Equinor
in two ways: first, when the
Norwegian State acts in its capacity as majority owner of
Equinor
shares and, second, when the Norwegian State acts in its capacity
as regulator:
•
The Norwegian State’s shareholding in
Equinor
is managed by the Ministry of Trade, Industry and Fisheries. The Ministry will
normally decide how the Norwegian State will vote on proposals submitted to general meetings of the shareholders. However, in
certain exceptional cases, it may be necessary for the Norwegian State to seek approval from the Storting before voting on a
certain proposal. This will normally be the case if
Equinor
issues additional shares and such issuance would significantly dilute
the Norwegian State’s holding, or if such issuance would require a capital contribution from the Norwegian State in excess of
government mandates. A vote by the Norwegian State against an Equinor proposal to issue additional shares would prevent
Equinor
from raising additional capital in this manner and could adversely affect
Equinor
’s ability to pursue business
opportunities. The information regarding the Norwegian State’s ownership in the information set forth under the heading “
Major
shareholders
” in Section
5.1 Shareholder information
and the risks set forth in “
Ownership and actions by the Norwegian state
” in
Section
5.2 Risk factors
of the
2024
Annual Report
are also incorporated herein by reference.
•
The Norwegian State exercises important regulatory powers over
Equinor
, as well as over other companies and corporations on
the NCS. As part of its business,
Equinor
or the partnerships to which
Equinor
is a party, frequently need to apply for licences
Equinor
2024
Annual Report on Form 20-F
12
and other approvals from the Norwegian State. Although
Equinor
is majority-owned by the Norwegian State, it does not receive
preferential treatment with respect to licences granted by or under any other regulatory rules enforced by the Norwegian State.
The Petroleum Act sets out the principle that the Norwegian State is the owner of all subsea petroleum on the NCS, that the
exclusive right to resource management is vested in the Norwegian State and that the Norwegian State alone is authorised to award
licences for petroleum activities as well as determine their terms. Licensees are required to submit a plan for development and
operation (PDO) to the MPE for approval. For fields of a certain size, the Storting has to accept the PDO before it is formally approved
by the MPE.
Equinor
is dependent on the Norwegian State for approval of its NCS exploration and development projects and its
applications for production rates for individual fields.
Production licences are the most important type of licence awarded under the Petroleum Act. A production licence grants the
holder an exclusive right to explore for and produce petroleum within a specified geographical area. The licensees become the
owners of the petroleum produced from the field covered by the licence. Production licences are normally awarded for an initial
exploration period, which is typically six years, but which can be shorter. The maximum period is ten years. During this exploration
period, the licensees must meet a specified work obligation set out in the licence. If the licensees fulfil the obligations set out in the
initial licence period, they are entitled to require that the licence be extended for a period specified at the time when the licence is
awarded, typically 30 years.
The terms of the production licences are decided by the MPE. Production licences are awarded to groups of companies forming
a joint venture at the MPE’s discretion. The members of the joint venture are jointly and severally liable to the Norwegian State for
obligations arising from petroleum operations carried out under the licence. The MPE decides the form of the joint operating
agreements and accounting agreements. The MPE uses the same standard form of joint operating agreement and accounting
agreement for all licenses.
The governing body of the joint venture is the management committee. In licences awarded since 1996 where the State’s direct
financial interest (SDFI) holds an interest, the Norwegian State, acting through Petoro AS, may veto decisions made by the joint
venture management committee, which, in the opinion of the Norwegian State, would not be in compliance with the obligations set
forth in the licence with respect to the Norwegian State’s exploitation policies or financial interests. This power of veto has never been
used.
Interests in production licences may be transferred directly or indirectly subject to the consent of the MPE and the approval of the
tax treatment by the Ministry of Finance. In most licences, there are no pre-emption rights in favour of the other licensees. However,
the SDFI, or the Norwegian State, as appropriate, still hold pre-emption rights in all licences.
The day-to-day management of a field is the responsibility of an operator appointed by the MPE. The operator is in practice
always a member of the joint venture holding the production licence, although this is not legally required. The terms of engagement of
the operator are set out in the joint operating agreement.
If important public interests are at stake, the Norwegian State may instruct the operators on the NCS to reduce the production of
petroleum. An example of this occurred in May 2020, when the Norwegian State imposed a reduction in oil production for the rest of
the year, due to the Covid-19 pandemic that led to a lower demand for oil and gas. The reduction in production was distributed
between all fields on a pro rata basis.
A licence from the MPE is also required in order to establish facilities for the transportation and utilisation of petroleum.
Ownership of most facilities for the transportation and utilisation of petroleum in Norway and on the NCS is organised in the form of
joint ventures. The participants’ agreements are similar to joint operating agreements for production.
Licensees are required to prepare a decommissioning plan before a production licence or a licence to establish and use facilities
for the transportation and utilisation of petroleum expires or is relinquished, or the use of a facility ceases. On the basis of the
decommissioning plan, the MPE makes a decision as to the disposal of the facilities.
The information regarding Equinor’s activities and shares in Equinor’s production licences on the NCS, set forth under the
headings
“
EPN at a glance
”
in Section 1.5 of Chapter 1 on page 20, “
Liquids and gas production
” in Section 2.1 of Chapter 2 on page
42 and “
The future of our oil and gas portfolio
” in Section 2.1 of Chapter 2 on page 44 “of the
2024
Annual Report
and the tables
entitled “EP Norway Equinor operated fields, average daily entitlement production” and “EP Norway - Partner fields, average daily
entitlement production” under the heading “
Production per field
” in It
em 4.D of this 2024 Form 20-F are incorporated herein by
reference.
On 1 July 2022, the MPE decided that parts of the Norwegian Security Act would apply to
Equinor
. This enabled
Equinor
to
receive and handle classified information from the authorities. In 2023, the MTIF and the MPE notified that the Security Act will apply
in its entirety to
Equinor
as an undertaking engaging in activities which are of vital importance to fundamental national functions. The
Security Act entered into force 1 January 2019 and is designed to protect national security interests. The National Security Authority
supervises undertakings which are subject to the act.
Equinor
2024
Annual Report on Form 20-F
13
Gas sales and transportation from the NCS
Equinor
markets gas from the NCS on its own behalf and on the Norwegian State’s behalf. Dry gas is mainly transported through
the Norwegian gas transport system (Gassled) to customers in the UK and mainland Europe, while liquified natural gas is transported
by vessels to worldwide destinations.
The Norwegian gas transport system, consisting of the pipelines and terminals through which licensees on the NCS transport
their gas, is owned by a joint venture called Gassled. The Norwegian Petroleum Act of 29 November 1996 and the pertaining
Petroleum Regulation establish the basis for non- discriminatory third-party access to the Gassled transport system.
The tariffs for the use of capacity in the transport system are determined by applying a formula set out in separate tariff
regulations stipulated by the MPE. The tariffs are paid for booked capacity rather than the volumes actually transported.
The information regarding MMP’s activities set forth under the head
ings
MMP at a glance
” in Section 1.5 of Chapter 1 on page
22,
“
Midstream, marketing and processing
”
in Section 2.1 of Chapter 2 on page 40 and “
Sold volumes in MMP
” in Sectio
n 2.1 of
Chapter 2 on page 43 of the
2024
Annual Report
is also incorporated herein by reference.
The Norwegian State's participation
In 1985, the Norwegian State established the State’s direct financial interest (SDFI) through which the Norwegian State has
direct participating interests in licences and petroleum facilities on the NCS. As a result, the Norwegian State holds interests in a
number of licences and petroleum facilities in which
Equinor
also holds interests. Petoro AS, a company wholly owned by the
Norwegian State, was formed in 2001 to manage the SDFI assets.
The Norwegian State has a coordinated ownership strategy aimed at maximising the aggregate value of its ownership interests
in Equinor and the Norwegian State’s oil and gas. This is reflected in the Owner’s Instruction described below, which contains a
general requirement that,
Equinor
, in its activities on the NCS, take account of these ownership interests in decisions that may affect
the execution of this marketing arrangement.
SDFI oil and gas marketing and sale
Equinor
markets and sells the Norwegian State’s oil and gas together with
Equinor
’s own production. The arrangement has been
implemented by the Norwegian State through a separate instruction (the Owner’s Instruction) adopted by an extraordinary
shareholder meeting in 2001, with the Norwegian State as sole shareholder at the time. The Owner’s Instruction sets out the specific
terms for the marketing and sale of the Norwegian State’s oil and gas.
Equinor
is obliged under the Owner’s Instruction to jointly market and sell the Norwegian State’s oil and gas as well as
Equinor
’s
own oil and gas. The overall objective of the marketing arrangement is to obtain the highest possible total value for
Equinor
’s oil and
gas and the Norwegian State’s oil and gas, and to ensure an equitable distribution of the total value creation between the Norwegian
State and
Equinor
.
The Norwegian State may at any time utilise its position as majority shareholder of
Equinor
to withdraw or amend the Owner’s
Instruction.
US
Petroleum activities in the US are extensively regulated by multiple agencies in the US federal government, and by tribal, state
and local regulation. The US government directly regulates development of hydrocarbons on federal lands, in the US Gulf of Mexico,
and in other offshore areas. Different federal agencies directly regulate portions of the industry, and other general regulations related
to environmental, safety, and physical controls apply to all aspects of the industry. In addition to regulation by the US federal
government, any activities on US tribal lands (indigenous persons’ semi-sovereign territory) are regulated by governments and
agencies in those areas. Significantly for
Equinor
’s US onshore interests, each individual state has its own regulations of all aspects
of hydrocarbon development within its borders. A recent trend also includes local municipalities adopting their own hydrocarbon
regulations.
In the US, hydrocarbon interests are considered a private property right. In areas owned by the US government, that means that
the government owns the minerals in its capacity as landowner. The federal government, and each tribal and state government,
establishes the terms of its own leases, including the length of time of the lease, the royalty rate, and other terms.
The vast majority of onshore minerals, including hydrocarbons, in every US state in which
Equinor
has onshore interests, belong
to private individuals.
In order to explore for or develop hydrocarbons, a company must enter into a lease agreement with the applicable governmental
agency for federal, state or tribal land, and for private lands, with each owner of the minerals the company wishes to develop. In each
Equinor
2024
Annual Report on Form 20-F
14
lease, the lessor retains a royalty interest in the production (if any) from the leased area. The lessee owns a working interest and has
the right to explore and produce oil and gas. The lessee incurs all the costs and liabilities but will share only the portion of the revenue
that is net of costs and expenses and not reserved to the lessor through its royalty interest.
Leases typically have a primary term for a specified number of years (from one to ten years) and a conditional secondary term
that is tied to the production life of the properties. If oil and gas is being produced in paying quantities at the end of the primary term,
or the operator satisfies other obligations specified in the agreement, the lease typically continues beyond the primary term (Held by
Production). Leases typically involve paying the lessor both a signing bonus based on the number of leased acres and a royalty
payment based on the production.
Each US state has its own agencies that regulate the development, exploration, and production of oil and gas activities. These
state agencies issue drilling permits and control pipeline transportation within state boundaries. The state agencies particularly
relevant to
Equinor
’s US onshore activities include:
(a) Pennsylvania Department of Environmental Protection’s Office of Oil and Gas
Management, and (b) West Virginia Department of Environmental Protection
. In addition, some state utility departments handle
pipeline transportation within state boundaries, and each state also has its own department regulating environmental, health, and
safety issues arising from oil and gas operations.
Brazil
In Brazil, licences are mainly awarded according to a concession regime or a production sharing regime (the latter specifically for
areas within the pre-salt polygon area or strategic areas) by the Federal Government. All state-owned and private oil companies may
participate in the bidding rounds provided they follow the bidding rules and meet the
Brazilian National Agency of Petroleum, Natural
Gas and Biofuels (ANP)’s
qualification criteria. The tender protocol issued for each bidding round contains the draft of the concession
agreement or the production sharing agreement that the winners must adhere to without the possibility of negotiating its terms, i.e., all
the agreements signed under a certain bidding round contain the same general provisions and only differ in the particular items
presented in the offers. There is no restriction on foreign participation, provided that the foreign investor incorporates a company
under the Brazilian law for signing the agreement and complies with the requirements established by the ANP.
Concession Regime
In the concession regime, the concessionary company assumes the risk of investing and finding –
or not finding
– oil or natural
gas. The winning company has ownership of the oil and gas discovery in the conceded area. Through this model of contract, the
company pays the government takes, such as the signature bonus, payment for the occupation or retention of the area (in the case of
onshore blocks), royalties and, in the case of fields that produce large volumes, a special participation. The contracts are signed by
the ANP on behalf of the Federal Union. In past bidding rounds the participants also had to offer a local content percentage as a firm
commitment.
Generally, concessions are granted for a total period of 35 years and typically the exploration phase lasts from two to eight years,
while the production phase may last 27 years from the declaration of commerciality. Concessionaires are entitled to request the
extension of each of these phases, subject to ANP approval.
Production Sharing Regime
In bidding rounds involving the production sharing regime,
applicable to areas located in the pre-salt polygon and
other areas
considered to be strategic
,
the law grants to the Brazilian government-controlled company Petroleo Brasileiro S.A. – Petrobras, a right
of preference to be the sole operator in such areas, with a minimum 30% of participating interest. If this right is exercised, Petrobras
may still participate in the bidding round and present offers for the remaining 70% under the same conditions applicable to other
participants. As in the concession bidding rounds, companies may bid individually or together with other companies. The winners are
required to form a consortium with Pre-Sal Petroleo S.A. (PPSA), a Brazilian state-owned company, which is responsible for
managing the production sharing agreement and selling the production allocated to the Government under the profit oil. PPSA
appoints 50% of the members of the operating committee, including the chairperson, in addition to certain veto rights and casting
vote.
The current criteria for the evaluation of bidding offers under the production sharing regime is the offered percentage of
oil and
natural gas (that is, the largest portion of the exceeding oil)
. The winner will be the company which offers the highest percentage to
the Government in accordance with the technical and economic parameters established for each block in the tender documents under
a certain bidding round.
Production sharing contracts are signed by the Ministry of Mines and Energy on behalf of the Federal Government. Generally,
the contracts are valid for a period of 35 years which, by law, cannot be extended. Of the two phases of the contract – exploration and
production – the exploration phase may be extended provided that the total period of the contract remains as 35 years.
Equinor
2024
Annual Report on Form 20-F
15
In order to perform the exploration and exploitation of oil and gas reserves, companies must obtain an environmental license
granted by the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA), which, together with ANP, is
responsible for the safety and environmental regulations regarding upstream activities.
HSE regulation relevant for the Norwegian upstream oil and gas activities in Norway
Equinor
’s oil and gas operations in Norway must be conducted in compliance with a reasonable standard of care, taking into
consideration the safety of workers, the environment and the economic values of installations and vessels. The Petroleum Act
specifically requires that petroleum operations are carried out in such a manner that a high level of safety is maintained and
developed in step with technological developments.
Equinor
is also required at all times to have a plan to deal with emergency
situations in
Equinor
’s petroleum operations. During an emergency, the Norwegian Ministry of Labour and Social Inclusion/Norwegian
Ministry of Transport/Norwegian Coastal Administration may decide that other parties should provide the necessary resources, or
otherwise adopt measures to obtain the necessary resources, to deal with the emergency for the licensees’ account.
Liability for pollution damage
The Norwegian Petroleum Act imposes strict liability for pollution damage regardless of fault. Accordingly, as a holder of
petroleum licences on the NCS,
Equinor
is subject to statutory strict liability under the Petroleum Act as a result of pollution caused by
spills or discharges of petroleum from petroleum facilities in any of
Equinor
’s licences.
A claim against the license holders for compensation relating to pollution damage shall initially be directed to the operator, which
in accordance with the terms of the joint operating agreement, will distribute the claim to the other licensees in accordance with their
participating interest in the licences.
Discharge permits
Emissions and discharges from Norwegian petroleum activities are regulated through several acts, including the Petroleum Act,
the
CO
2
Tax Act, the Sales Tax Act, the Greenhouse Gas Emission Trading Act and the Pollution Control Act. Discharge of oil and
chemicals in relation to exploration, development and production of oil and natural gas are regulated under the Pollution Control Act.
In accordance with the provisions of this Act, an operator must apply for a discharge permit from relevant authorities on behalf of the
licence group in order to discharge any pollutants into water. Further, the Petroleum Act states that burning of gas in flares beyond
what is necessary for safety reasons to ensure normal operations is not permitted without approval from the MPE. All operators on the
NCS have an obligation to, and are responsible, for establishing sufficient procedures for the monitoring and reporting of any
discharge into the sea. The Norwegian Environment Agency, the Norwegian Petroleum Directorate and the Norwegian Oil Industry
Association have established a joint database for reporting emissions to air and discharges to sea from the petroleum activities, the
Environmental Web (EW). All operators on the NCS report emission and discharge data directly into the database.
Regulations on reduction of carbon emissions and CO
2
storage
Equinor
’s operations in Norway are subject to emissions taxes as well as emissions allowances granted for
Equinor
’s larger
European operations under the emissions trading scheme. The agreed strengthening of the EU’s emission trading scheme is
expected to affect energy and industry installations, which include
Equinor
’s installations at the NCS. The price of emissions
allowances has increased significantly since the reforms to the EU Emission Trading Scheme in 2018 and is expected to increase
further towards 2030.
The Norwegian Climate Act promotes the implementation of Norway's climate targets as part of the transition to a low-emission
society in Norway by 2050. This act may influence our activities through plans and actions implemented by the state to achieve these
targets. Norway has presented a Climate Plan 2021-2030 with an updated target of 55% reduction in GHG emissions in 2030
compared to 1990- levels. The Climate Plan states that the carbon cost for offshore oil and gas production in Norway is expected to
increase to 2000 NOK/t CO
2
towards 2030.
EU directive 2009/31/EC on the geological storage of CO
2
is implemented in the Pollution Control regulations, the regulations
related to the Petroleum Act and in a separate Storage regulation adopted under the 1963 Act relating to scientific research and
exploration for and exploitation of subsea natural resources other than petroleum resources. The CO
2
capture and storage at
Equinor’s Sleipner and Snøhvit fields are governed by the Petroleum Act and the Pollution Control regulations, and the CO
2
storage at
Northern Lights JV DA and Smeaheia projects are governed by the Storage regulations and the Pollution Control regulations.
HSE regulation of upstream oil and gas activities in the US
Equinor
’s upstream activities in the US are heavily regulated at multiple levels, including federal, state, and local municipal
regulation.
Equinor
is subject to those regulations as a part of its activities in the US onshore (including
Equinor
’s assets in
Pennsylvania and West Virginia
), and in the US Gulf of Mexico.
Equinor
2024
Annual Report on Form 20-F
16
The National Environmental Policy Act of 1969 is an umbrella procedural statute that requires federal agencies to consider the
environmental impacts of their actions. Several substantive US federal statutes specifically cover certain potential environmental
effects of hydrocarbon extraction activities. Those include: the Clean Air Act, which regulates air quality and emissions; the Federal
Water Pollution Control Act (commonly known as the Clean Water Act), which regulates water quality and discharges; the Safe
Drinking Water Act, which establishes drinking water standards for tap water and underground injection rules; the Resource
Conservation and Recovery Act of 1976, which regulates hazardous and solid waste management; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, which addresses remediation of legacy disposal sites and release
reporting; and the Oil Pollution Act, which provides for oil spill prevention and response.
Other US federal statutes are resource-specific. The Endangered Species Act of 1973 protects listed endangered and threatened
species and critical habitat. Other statutes protect certain species, including the Migratory Bird Treaty Act, the Bald and Golden Eagle
Protection Act and the Marine Mammal Protection Act of 1972. Other statutes govern natural resource planning and development on
federal lands onshore and on the Outer Continental Shelf (OCS), including: the Mineral Leasing Act; the Outer Continental Shelf
Lands Act; the Federal Land Policy and Management Act of 1976; the Mining Law of 1872; the National Forest Management Act of
1976; the National Park Service Organic Act; the Wild and Scenic Rivers Act; the National Wildlife Refuge System Administration Act
of 1966; the Rivers and Harbors Appropriation Act; and the Coastal Zone Management Act of 1972.
The federal government regulates offshore exploration and production for the OCS, which extends from the edge of state waters
(either 3 or 9 nautical miles from the coast, depending on the state) out to the edge of national jurisdiction, 200 nautical miles from
shore. The Bureau of Ocean Energy Management (BOEM) manages federal OCS leasing programs, conducts resource
assessments, and licences seismic surveys. The Bureau of Safety and Environmental Enforcement (BSEE) regulates all OCS oil and
gas drilling and production. The Office of Natural Resources Revenue (ONRR) collects and disburses rents and royalties from
offshore and onshore federal and Native American lands.
Additional federal statutes cover certain products or wastes, and focus on human health and safety: the Toxic Substances
Control Act regulates new and existing chemicals and products that contain these chemicals; the Hazardous Materials Transportation
Act regulates transportation of hazardous materials; the Occupational Safety and Health Act of 1970 regulates hazards in the
workplace; the Emergency Planning and Community Right-to-Know Act of 1986 provides emergency planning and notification for
hazardous and toxic chemicals.
The federal and state governments share authority to administer some federal environmental programs (e.g., the Clean Air Act
and Clean Water Act). States also have their own, sometimes more stringent, environmental laws. Counties, cities and other local
government entities may have their own requirements as well.
Equinor
continually monitors regulatory and legislative changes at all levels and engages in the stakeholder process through
trade associations and direct comments to suggested regulatory and legislative regimes, to ensure that its operations remain in
compliance with all applicable laws and regulations. In particular, BSEE drilling and production regulations were extensively revised in
response to the 2010 Deepwater Horizon blowout and oil spill. The revised regulatory regime includes requirements for enhanced well
design, improved blowout preventer design, testing and maintenance, and an increased number of trained inspectors.
Equinor
is
engaged with relevant governmental and industry stakeholders to ensure that
Equinor
’s operations remain in compliance.
HSE regulation of upstream oil and gas activities in Brazil
Equinor
’s oil and gas operations in Brazil must be conducted in compliance with a reasonable standard of care, taking into
consideration the safety and health of workers and the environment. The Brazilian Petroleum Law (Law No. 9,478/97) describes the
government’s policy objectives for the rational use of the country’s energy resources, including the protection of the environment. In
addition to the Brazilian Petroleum Law,
Equinor
is also subject to many other laws and regulations issued by different authorities,
including ANP, IBAMA, Federal Environmental Council (CONAMA) and Brazilian Navy. All those authorities have the power to impose
fines in case of non-compliance with the respective rules. The concession and production sharing contracts also impose obligations
on operators and consortium members, who are jointly and severally liable. They must, at their own account and risk, assume and
fully respond to all losses and damages caused directly or indirectly by the applicable consortium’s operations and their performance,
irrespective of fault, to the ANP, the Federal Government, third parties and the environment, without prejudice to any recourse rights
which may have been agreed separately among the consortium members (such as in a joint operating agreement).
The exploration, drilling and production of oil and gas depend on environmental licences which define the conditions for the
implementation of the project and compliance measures to mitigate and control environmental impact.
Equinor
is subject to fines and
even licence suspension and/or cancellation in case of non-compliance with such conditions.
In Brazil,
Equinor
is also required to have an emergency response system as per ANP Resolution No. 882/2022 to deal with
emergency situations in its petroleum operations, as well as an oil spill response plan in accordance to CONAMA Resolution No.
398/2008, for each asset to minimise the environmental impact of any environmental unexpected situation that may generate spill of
oil or chemical to sea.
Equinor
2024
Annual Report on Form 20-F
17
Discharge permits
Discharges from Brazilian petroleum activities are regulated through several acts, including the CONAMA Resolution No.
393/2007 for produced water, CONAMA Resolution No. 357/2005 and CONAMA Resolution No. 430/2011 for effluents (sewage, etc)
and IBAMA technical instructions for drilling waste. According to Environmental Ministry Ordinance No. 422/2011, the discharge of
chemicals in connection with exploration, development and production of oil and natural gas is assessed as part of the environmental
permitting process and the operator must apply for any discharge permit from relevant authorities on behalf of the license group in
order to discharge any pollutants into the water.
Regulations on reduction of carbon emissions
Although
Equinor
’s operations in Brazil are not subject to emissions taxes (CO
2
limit) yet, a Bill of Law has recently been
approved by the Brazilian congress for the establishment of a carbon market.
The mechanisms of the carbon market will be
implemented within a transition period of six years and Equinor’s activities in Brazil will be subject to a cap-and-trade system but the
extent of restrictions and obligations will only be known after further regulation of the law.
The CONAMA Regulation No. 382/06 regulates air emissions limits for pollutant gases (e.g. NOx) from all fixed sources that
have total power consumption higher than 100MW.
Gas flares must be authorised by the ANP under ANP Resolution No. 806/2020, which also sets out cases in which ANP
authorisation is not necessary.
The Brazilian government signed the Paris Agreement in 2015. During COP26, Brazil updated its ambition to reduce its
greenhouse gas emissions by 37% until 2025 and 50% until 2030, compared to 2005 levels. Because of the desire to boost the
economy and an expected growing energy demand, the focus on emissions reduction is on improved control of forests and land use
and for that Brazil continue to adhere to the Forest for Deal agreement, committing to take actions to reduce illegal deforestation until
2030. The country also adheres to the Global Methane Pledge.
Regulatory framework for renewable energy operations
Equinor
’s renewables positions currently mainly consist of offshore wind farms in operation and development in the UK, the state
of New York and Poland. In these jurisdictions the legislation is structured around a lease where permission to develop is granted
following a series of approvals relating largely to environmental and social impact assessments. The government separately auctions
a subsidized power purchase price either through renewable offtake certificates or contracts for difference. In both cases,
Equinor
and
its partners take the risk for developing, constructing and operating the wind farms within a fixed timeframe.
Equinor’s onshore renewables positions currently mainly consist of solar, battery and wind farms in operation and development in
US, UK, Brazil, Poland and Denmark. The projects are mainly developed by the following wholly owned subsidiaries: (i) Rio Energy in
Brazil; (ii) East Point in US; (iii) Wento in Poland; and (iv) BeGreen in Denmark. Additionally, Equinor holds material equity share in a
company named Noriker in UK.
Other
Equinor
entered into agreements with the National Iranian Oil Company (NIOC), namely, a Development Service Contract for
South Pars Gas Phases 6, 7 8 (offshore part), an Exploration Service Contract for the Anaran Block and an Exploration Service
Contract for the Khorramabad Block, which are located in Iran.
Equinor
’s operational obligations under these agreements have
terminated and the licences have been abandoned. The cost recovery programme for these contracts was completed in 2012, except
for the recovery of tax and obligations to the Social Security Organization (SSO). From 2013 to November 2018, after closing
Equinor
’s office in Iran,
Equinor
’s activity was focused on a final settlement with the Iranian tax and SSO authorities relating to the
above-mentioned agreements.
In a letter from the US State Department of 1 November 2010,
Equinor
was informed that it was not considered to be a company
of concern based on its previous Iran-related activities.
Equinor
has an intention to settle historic obligations in Iran while remaining compliant with applicable sanctions and trade
restrictions against Iran. Since November 2018
Equinor
has not conducted any activity in Iran, nor has it been able to resolve tax
claims from the Iranian authorities.
No payments were made to Iranian authorities during 2024.
Equinor
2024
Annual Report on Form 20-F
18
Taxation of Equinor
Norway
Equinor
’s profits, both from offshore oil and natural gas activities and from onshore activities, are subject to Norwegian corporate
income tax. In addition, a special petroleum tax is levied on profits from petroleum production and pipeline transportation on the NCS.
In June 2022 the parliament enacted a cash-flow based tax system for the special petroleum tax with effect from 1 January 2022.
After the reform, the Norwegian petroleum income is taxable at a tax rate of 71.8% after deducting a calculated 22% corporate tax.
The corporate tax is deductible in the basis for the special petroleum tax, resulting in a 78% marginal tax rate. For further information,
see note
11
Income taxes
to the Consolidated financial statements.
Investment costs in the
ordinary
tax base (22%) will continue to be depreciated over six years. In the special tax base,
investments are written off immediately in line with the cash-flow based tax system. Projects covered by the temporary rules
introduced in 2020 have had a tax uplift of 12.4% in 2024. The temporary rules apply to investments covered by field or infrastructure
plans (PDOs and PIOs) submitted to the MPE after 12 May 2020 and before 1 January 2023 and approved before 1 January 2024.
The temporary rules will continue to apply until (and including) the year of planned production or project start-up according to the
approved plans.
Equinor
’s international petroleum activities are subject to tax pursuant to local legislation.
US
Equinor
’s operations in the US are subject generally to corporate income, severance and production, ad valorem and transaction
taxes levied by the federal, state and local tax authorities, and to royalties payable to federal, state and local authorities and, in some
cases, private landowners. The federal corporate income tax rate in the US is 21%, and there is an alternative 15% minimum tax on
corporate book income for corporations with profits over USD 1 billion. US companies are also subject to the Base Anti-abuse Tax
(“BEAT”) which imposes tax at 10% until 2026 and 12.5% thereafter on payments to foreign affiliates of US companies if those
payments exceed a given threshold of total tax-deductible expenditures.
Brazil
Corporate income tax and social contribution are levied on taxable net income at a combined rate of 34%. A simplified tax regime
with a lower effective tax rate is available for legal entities with gross revenues below a threshold of 78 million Brazilian reais per year.
In addition, there are several indirect taxes, but indirect tax rate on exports is currently set to zero.
The concessionary tax regime in Brazil usually includes government takes such as a 10% royalty, and special participation tax
that varies based on time, location and production between 10% and 40%, using a reference price that is established by the Brazilian
petroleum regulator (ANP). The Production Sharing Regime in Brazil usually includes a 15% royalty, an annual 80% cost recovery
ceiling, and a biddable government profit share.
In December 2023, the Brazilian Congress approved an amendment to the Federal Constitution which aims to simplify the
indirect tax system through the introduction of a multi-tiered value added tax (VAT) system, whereby VAT would be levied with a
federal rate and a state and/or municipality rate. The states or municipalities would individually set their respective rates and
administer the tax for the local element of the VAT, but the standard maximum aggregated rate is 26.5%. The implementation of the
new VAT will be phased into effect over the next years. During the transition period existing taxes and new VAT will coexist. The
amendment also includes an excise tax on the extraction, sale or commercialization of goods and services with a “harmful effect on
health or environment” of up to 1% of the market value of extracted production. This excise tax is being called “selective tax”. A
complementary law regulating the new VAT was enacted and established the specific rate of the excise tax at 0.25% for oil gas.
The new tax law in Brazil also
preserves
suspensions or exemptions from certain indirect taxes for importation of capital goods
into Brazil, such as Repetro-Sped.
Regarding income tax reform, the Federal Government has already submitted some measures that are still pending approval by
Congress, such as the institution of the Global Minimum Tax of 15%; the deduction of financial losses; and the increase corporate
income taxes on interest on net equity (juros sobre capital próprio). Other specific proposals that are also part of the income tax
reform may still be submitted this year, including the revision of the rules for taxation of financial transactions, Taxation on a Universal
Basis, and the taxation of large technology companies, which had already been indicated by the Government. In addition, there are
many changes relating to income taxation that are already in force, such as transfer pricing rules; restrictions on deduction of interest
on net equity; taxation of offshore funds; and review/control of tax benefits. The Federal Government has announced additional
proposals to change the direct income tax to be discussed by Congress during 2025 and to be effective in 2026. While introducing a
withholding tax on dividends paid by Brazilian incorporated entities was not among the measures announced, changes already
announced were in relation to taxation of individuals, prohibition to establish or increase tax incentives depending on the economic
results in 2025 and limitations to subventions and subsidies.
Equinor
2024
Annual Report on Form 20-F
19
Finally, the ratification of the new Brazil-Norway Convention to Avoid Double Taxation (DTT) signed in 2022 is ongoing. The
Decree that internalises the DTT has recently been approved at the House of Representatives and will be sent to the Senate. The
new DTT has a text more aligned with the current OECD model tax convention. In the new DTT, Brazil expressly kept its rights to
charge withholding income tax on fees from technical services, with a reduced tax rate of 10% (instead of the domestic 15%). This will
impact services acquired from the Brazilian entities from Norwegian entities.
UK
The UK government introduced a 25% Energy Profits Levy (EPL) in May 2022, which was increased to 35% from January 2023.
The levy is charged on profits from oil and gas operations in the UK or on the UK Continental Shelf and is in addition to existing profit-
based taxes on the sector. The EPL increased the rate of tax on oil and gas company profits to 75% from January 2023
, and was due
to expire on 31 March 2028. However, following the UK General Election, the new Labour Government announced in their Budget on
30 October 2024 that the rate of EPL would increase to 38% from 1 November 2024, and will be extended until 31 March 2030. In
addition, certain investment incentives (the Investment Allowance of 29%) are removed from 1 November 2024. The Government
announced a commitment to consult with business during 2025 on what a replacement regime might look like to address future “price
shocks” once the EPL regime expires in 2030.
In addition, the UK government also introduced the Electricity Generator Levy (EGL) which took effect from 1 January 2023. The
EGL imposes a tax of 45% on exceptional receipts generated from the production of wholesale electricity which is sold at an average
price in excess of £75 per MWh.
The EGL is scheduled to expire on 31 March 2028.
Disclosures regarding oil and gas operations
The
2024
Oil And Gas Reserves Report
is incorporated herein by reference. See also notes
5
Segments
and
7
Total revenues
and other income
to the Consolidated financial
statements
. The information set forth under the headings “Operational data”, “Sales
prices” and “Sales volumes” in Section 2.1 Operational performance of the 2024 Annual Report is also incorporated herein by
reference.
Supplementary oil and gas information pursuant to FASB Topic 932
The following information is reported pursuant to FASB Topic 932.
|
Capitalised cost related to oil and gas producing activities
|
|||
|
Consolidated companies
|
|||
|
At 31 December
|
|||
|
(in USD million)
|
2024
|
2023
|
2022
|
|
Unproved properties
|
5,229
|
5,022
|
5,917
|
|
Proved properties, wells, plants and other equipment
|
171,332
|
183,316
|
181,189
|
|
Total capitalised cost
|
176,561
|
188,338
|
187,106
|
|
Accumulated depreciation, impairment and amortisation
|
(124,739)
|
(132,902)
|
(133,584)
|
|
Net capitalised cost
|
51,823
|
55,436
|
53,523
|
Net capitalised cost related to equity accounted investments a
s of
31 December 2024
w
as
USD 0 million
, USD 0 million in
2023
and
USD 463 million in
2022
. T
he reported figures are based on capitalised costs within the upstream segments i
n
Equinor
, in line with the
description below for result of operations for oil and gas producing activities.
Equinor
2024
Annual Report on Form 20-F
20
|
Expenditures incurred in oil and gas property acquisition, exploration and development activities
|
||||||
|
These expenditures include both amounts capitalised and expensed.
|
||||||
|
Consolidated companies
|
||||||
|
(in USD million)
|
Norway
|
Eurasia
excluding
Norway
|
Africa
|
USA
|
Americas
excluding
USA
|
Total
|
|
Full year 2024
|
||||||
|
Exploration expenditures
|
715
|
13
|
48
|
150
|
475
|
1,401
|
|
Development costs
|
5,099
|
692
|
490
|
1,232
|
1,721
|
9,234
|
|
Acquired proved properties
|
104
|
5
|
0
|
2,064
|
0
|
2,173
|
|
Acquired unproved properties
|
101
|
0
|
18
|
504
|
32
|
655
|
|
Total
|
6,019
|
710
|
556
|
3,950
|
2,228
|
13,463
|
|
Full year 2023
|
||||||
|
Exploration expenditures
|
662
|
16
|
35
|
310
|
253
|
1,276
|
|
Development costs
|
4,864
|
470
|
509
|
1,084
|
1,279
|
8,206
|
|
Acquired proved properties
|
0
|
1,271
|
0
|
0
|
0
|
1,271
|
|
Acquired unproved properties
|
352
|
5
|
0
|
6
|
18
|
381
|
|
Total
|
5,878
|
1,762
|
544
|
1,400
|
1,550
|
11,134
|
|
Full year 2022
|
||||||
|
Exploration expenditures
|
494
|
27
|
57
|
150
|
360
|
1,088
|
|
Development costs
|
4,483
|
320
|
379
|
712
|
965
|
6,859
|
|
Acquired proved properties
|
110
|
226
|
38
|
0
|
0
|
374
|
|
Acquired unproved properties
|
6
|
0
|
0
|
0
|
0
|
6
|
|
Total
|
5,093
|
573
|
474
|
862
|
1,325
|
8,327
|
Expenditures incurred in exploration and development activities related to equity accounted investments was
USD 0 million i
n
2024
,
USD 0 million in
2023
and USD 155 million in
2022
.
Results of operation for oil and gas producing activities
As required by Topic 932, the revenues and expenses included in the following table reflect only those relating to the oil and gas
producing operations of
Equinor
.
The results of operations for oil and gas producing activities are included in the three upstream reporting segments
Exploration
Production Norway
(
EP Norway
),
Exploration Production International
(
EP International
) and
Exploration Production USA
(
EP
USA
) as presented in n
ote
5
Segments
to the Consolidated financial statements. Production cost is based on operating expenses
related to production of oil and gas. From the operating expenses certain expenses such as; transportation costs, accruals for over/
underlift position and royalty payments costs are excluded. These expenses and mainly upstream business administration are
included as other expenses in the tables below. Other revenues mainly consist of gains and losses from sales of oil and gas interests
and gains and losses from commodity-based derivatives within the upstream segments.
Income tax expense is calculated on the basis of statutory tax rates adjusted for uplift and tax credits. No deductions are made for
interest or other elements not included in the table below.
Equinor
2024
Annual Report on Form 20-F
21
|
Consolidated companies
|
||||||
|
(in USD million)
|
Norway
|
Eurasia
excluding
Norway
|
Africa
|
USA
|
Americas
excluding
USA
|
Total
|
|
Full year 2024
|
||||||
|
Sales
|
80
|
14
|
495
|
114
|
73
|
776
|
|
Transfers
|
33,271
|
1,113
|
2,277
|
3,610
|
2,502
|
42,773
|
|
Other revenues
|
291
|
6
|
820
|
233
|
32
|
1,382
|
|
Total revenues
|
33,642
|
1,133
|
3,592
|
3,957
|
2,607
|
44,931
|
|
Exploration expenses
|
(513)
|
(15)
|
(33)
|
(219)
|
(443)
|
(1,223)
|
|
Production costs
|
(2,867)
|
(306)
|
(455)
|
(495)
|
(759)
|
(4,882)
|
|
Depreciation, amortisation and net impairment losses
|
(4,954)
|
(529)
|
(553)
|
(1,607)
|
(983)
|
(8,626)
|
|
Other expenses
|
(745)
|
(185)
|
12
|
(649)
|
(303)
|
(1,870)
|
|
Total costs
|
(9,079)
|
(1,035)
|
(1,029)
|
(2,970)
|
(2,488)
|
(16,601)
|
|
Results of operations before tax
|
24,563
|
98
|
2,563
|
987
|
119
|
28,330
|
|
Tax expense
|
(19,013)
|
469
|
(800)
|
(206)
|
(1,099)
|
(20,650)
|
|
Results of operations
|
5,550
|
567
|
1,763
|
781
|
(980)
|
7,680
|
|
Net income/(loss) from equity accounted investments
|
0
|
13
|
0
|
0
|
0
|
13
|
Equinor
2024
Annual Report on Form 20-F
22
|
Consolidated companies
|
||||||
|
(in USD million)
|
Norway
|
Eurasia
excluding
Norway
|
Africa
|
USA
|
Americas
excluding
USA
|
Total
|
|
Full year 2023
|
||||||
|
Sales
|
62
|
107
|
533
|
127
|
92
|
921
|
|
Transfers
|
37,892
|
1,121
|
2,242
|
3,954
|
2,646
|
47,855
|
|
Other revenues
|
387
|
129
|
57
|
238
|
76
|
887
|
|
Total revenues
|
38,341
|
1,357
|
2,832
|
4,319
|
2,814
|
49,663
|
|
Exploration expenses
|
(476)
|
(20)
|
(37)
|
(322)
|
30
|
(825)
|
|
Production costs
|
(2,898)
|
(250)
|
(482)
|
(494)
|
(593)
|
(4,717)
|
|
Depreciation, amortisation and net impairment losses
|
(5,017)
|
(840)
|
(567)
|
(1,489)
|
(1,026)
|
(8,939)
|
|
Other expenses
|
(862)
|
(456)
|
19
|
(691)
|
(446)
|
(2,436)
|
|
Total costs
|
(9,253)
|
(1,566)
|
(1,067)
|
(2,996)
|
(2,035)
|
(16,917)
|
|
Results of operations before tax
|
29,088
|
(209)
|
1,765
|
1,323
|
779
|
32,746
|
|
Tax expense
|
(22,543)
|
34
|
(961)
|
(358)
|
(106)
|
(23,934)
|
|
Results of operations
|
6,545
|
(175)
|
804
|
965
|
673
|
8,812
|
|
Net income/(loss) from equity accounted investments
|
0
|
(13)
|
0
|
0
|
41
|
28
|
Equinor
2024
Annual Report on Form 20-F
23
|
Consolidated companies
|
||||||
|
(in USD million)
|
Norway
|
Eurasia
excluding
Norway
|
Africa
|
USA
|
Americas
excluding
USA
|
Total
|
|
Full year 2022
|
||||||
|
Sales
|
155
|
554
|
615
|
166
|
88
|
1,578
|
|
Transfers
|
74,468
|
1,252
|
3,019
|
5,168
|
1,853
|
85,760
|
|
Other revenues
|
1,308
|
(203)
|
(1)
|
213
|
57
|
1,374
|
|
Total revenues
|
75,931
|
1,603
|
3,633
|
5,547
|
1,998
|
88,712
|
|
Exploration expenses
|
(366)
|
(249)
|
(69)
|
(220)
|
(320)
|
(1,224)
|
|
Production costs
|
(2,916)
|
(202)
|
(470)
|
(399)
|
(518)
|
(4,505)
|
|
Depreciation, amortisation and net impairment losses
|
(4,167)
|
(623)
|
(530)
|
(361)
|
(579)
|
(6,260)
|
|
Other expenses
|
(866)
|
(201)
|
3
|
(533)
|
(413)
|
(2,010)
|
|
Total costs
|
(8,315)
|
(1,275)
|
(1,066)
|
(1,513)
|
(1,830)
|
(13,999)
|
|
Results of operations before tax
|
67,616
|
328
|
2,567
|
4,034
|
168
|
74,713
|
|
Tax expense
|
(52,070)
|
(152)
|
(1,043)
|
2,458
|
361
|
(50,446)
|
|
Results of operations
|
15,546
|
176
|
1,524
|
6,492
|
529
|
24,267
|
|
Net income/(loss) from equity accounted investments
|
0
|
52
|
0
|
0
|
120
|
172
|
|
Average production cost in USD per boe based on
entitlement volumes (consolidated)
|
Norway
|
Eurasia
excluding
Norway
|
Africa
|
USA
|
Americas
excluding
USA
|
Total
|
|
2024
|
6
|
26
|
13
|
5
|
19
|
7
|
|
2023
|
6
|
16
|
12
|
4
|
15
|
7
|
|
2022
|
6
|
13
|
12
|
4
|
21
|
7
|
Production cost per boe is calculated as the production costs in the result of operations table, divided by the produced entitlement
volumes (mboe) for the corresponding period.
Equinor
2024
Annual Report on Form 20-F
24
C.
Organizational Structure
Exhibit 8 to this
2024
Form 20-F
is incorporated herein by reference. The table within Exhibit 8 shows significant subsidiaries and
significant equity accounted companies within the
Equinor group
as of
31 December 2024
.
D.
Property, Plant and Equipment
Equinor
has interests in real estate in many countries throughout the world, including as part of certain developments and
projects of
Equinor
or in which
Equinor
participates.
Equinor
’s three largest office buildings are (i) its head office located at
Forusbeen 50
,
Stavanger
,
Norway
which comprises
approximately 135,000 square meters of office space, (ii) its office building in
Sandslivegen 90
,
Bergen
, Norway
which comprises
approximately 99,488 square meters of office space, and (iii) its office building located at Fornebu on the outskirts of Oslo which
comprises approximately 65,500 square meters. All three office buildings are leased by
Equinor
. Under a new lease agreement
entered into in 2022 for the office building at Fornebu,
Equinor
has reduced its area to 51,563 square meters with effect from around
the start of year 2024. The office building in Bergen is owned by Sandsliveien 90 AS, a subsidiary of Equinor Pensjon.
The information set forth under the following headings of the
2024
Annual Report
is incorporated herein by reference:
•
Section
1.5 Our business
of Chapter 1 on pages 18 - 24
;
•
Section
2.1 Operational performance
of Chapter 2 on pages 37 - 51
;
•
The information under the sub-heading “
Investments
” under the heading “Strategic Financial Framework” in
Section
2.2 Financial performance
of Chapter 2 on page 55
;
•
The information under the sub-heading “
Portfolio composition
” under the heading “
Strategic financial framework
”
in Section 2.2 of Chapter 2 on page 55
; and
•
Progress on our Energy transition plan
in Section 2.3 of Chapter 2 on pages 72 - 73.
See also notes
12
Property, plant and equipment
and
25
Leases
to the Consolidated financial statements.
Production per field
The following tables show the regional production by field.
Equinor
2024
Annual Report on Form 20-F
25
|
EP Norway - Equinor operated fields, average daily entitlement production
|
||||||
|
Field
|
Geographical area
|
Equinor's equity
interest in %
|
On stream
|
Licence expiry date
|
Average
production in 2024
mboe/day
|
|
|
Johan Sverdrup
|
The North Sea
|
42.63
|
2019
|
2036-2037
|
320
|
|
|
Troll Phase 1 (Gas)
|
The North Sea
|
30.55
|
1)
|
1996
|
2030
|
230
|
|
Oseberg
|
The North Sea
|
49.30
|
1988
|
2031
|
109
|
|
|
Aasta Hansteen
|
The Norwegian Sea
|
51.00
|
2018
|
2041
|
71
|
|
|
Gullfaks
|
The North Sea
|
51.00
|
1986
|
2036
|
71
|
|
|
Visund
|
The North Sea
|
53.20
|
1999
|
2034
|
50
|
|
|
Snøhvit
|
The Barents Sea
|
36.79
|
2007
|
2035-2047
|
48
|
|
|
Åsgard
|
The Norwegian Sea
|
35.01
|
1999
|
2027
|
41
|
|
|
Tyrihans
|
The Norwegian Sea
|
58.84
|
2009
|
2029
|
38
|
|
|
Gina Krog
|
The North Sea
|
58.70
|
2017
|
2032
|
37
|
|
|
Snorre
|
The North Sea
|
33.28
|
1992
|
2040
|
29
|
|
|
Martin Linge
|
The North Sea
|
51.00
|
2021
|
2027
|
25
|
|
|
Kvitebjørn
|
The North Sea
|
39.55
|
2004
|
2031
|
23
|
|
|
Breidablikk
|
The North Sea
|
39.00
|
2023
|
2030
|
23
|
|
|
Fram
|
The North Sea
|
45.00
|
2003
|
2040
|
18
|
|
|
Sleipner West
|
The North Sea
|
58.35
|
1996
|
2028
|
15
|
|
|
Statfjord Unit
|
The North Sea
|
40.17
|
1979
|
2040
|
12
|
|
|
Grane
|
The North Sea
|
36.61
|
2003
|
2030
|
12
|
|
|
Troll Phase 2 (Oil)
|
The North Sea
|
30.55
|
1)
|
1995
|
2030
|
10
|
|
Gudrun
|
The North Sea
|
36.00
|
2014
|
2032
|
10
|
|
|
Heidrun
|
The Norwegian Sea
|
13.04
|
1995
|
2045
|
9
|
|
|
Kristin
|
The Norwegian Sea
|
54.82
|
2005
|
2027-2033
|
8
|
|
|
Mikkel
|
The Norwegian Sea
|
43.97
|
2003
|
2028
|
7
|
|
|
Trestakk
|
The Norwegian Sea
|
59.10
|
2019
|
2029
|
6
|
|
|
Valemon
|
The North Sea
|
66.78
|
2015
|
2031
|
6
|
|
|
Alve
|
The Norwegian Sea
|
53.00
|
2009
|
2029
|
6
|
|
|
Tordis
|
The North Sea
|
41.50
|
1994
|
2040
|
5
|
|
|
Vigdis
|
The North Sea
|
41.50
|
1997
|
2040
|
5
|
|
|
Hyme
|
The Norwegian Sea
|
42.50
|
2013
|
2029
|
4
|
|
|
Njord
|
The Norwegian Sea
|
27.50
|
1997
|
2034
|
4
|
|
|
Statfjord East
|
The North Sea
|
29.25
|
1994
|
2040
|
4
|
|
|
Norne
|
The Norwegian Sea
|
39.10
|
1997
|
2026
|
3
|
|
|
Svalin
|
The North Sea
|
57.00
|
2014
|
2030
|
3
|
|
|
Sleipner East
|
The North Sea
|
59.60
|
1993
|
2028
|
3
|
|
|
Morvin
|
The Norwegian Sea
|
64.00
|
2010
|
2027
|
2
|
|
|
Urd
|
The Norwegian Sea
|
63.95
|
2005
|
2026
|
2
|
|
|
Utgard
|
The North Sea
|
38.44
|
2019
|
2028
|
2
|
|
|
Tune
|
The North Sea
|
50.00
|
2002
|
2031-2032
|
2
|
|
|
Gungne
|
The North Sea
|
62.00
|
1996
|
2028
|
2
|
|
|
Statfjord North
|
The North Sea
|
17.00
|
1995
|
2040
|
1
|
|
|
Sigyn
|
The North Sea
|
60.00
|
2002
|
2035
|
1
|
|
|
Sygna
|
The North Sea
|
28.03
|
2000
|
2040
|
0
|
|
|
Sindre
|
The North Sea
|
74.66
|
2)
|
2017
|
2026-2034
|
0
|
|
Gimle
|
The North Sea
|
74.66
|
2)
|
2006
|
2026-2034
|
0
|
|
Fram H Nord
|
The North Sea
|
49.20
|
2014
|
2035
|
0
|
|
|
Byrding
|
The North Sea
|
70.00
|
2017
|
2025-2035
|
0
|
|
|
Total Equinor operated fields
|
1,278
|
|||||
1)
Adjusted equity interest from 1 September due to re-determination.
2)
Unitization to Brime Unit
Equinor
2024
Annual Report on Form 20-F
26
|
EP Norway - Partner operated fields, average daily entitlement production
|
||||||
|
Field
|
Geographical area
|
Equinor's
equity
interest in %
|
Operator
|
On stream
|
Licence
expiry date
|
Average
production in
2024 mboe/day
|
|
Skarv
|
The Norwegian Sea
|
36.17
|
Aker BP ASA
|
2013
|
2029-2036
|
48
|
|
Ormen Lange
|
The Norwegian Sea
|
25.35
|
A/S Norske Shell
|
2007
|
2040-2041
|
34
|
|
Ivar Aasen
|
The North Sea
|
41.47
|
Aker BP ASA
|
2016
|
2029-2036
|
10
|
|
Goliat
|
The Barents Sea
|
35.00
|
Vår Energi ASA
|
2016
|
2042
|
8
|
|
Hanz
|
The North Sea
|
50.00
|
Aker BP ASA
|
2024
|
2036
|
4
|
|
Ærfugl Nord
|
The Norwegian Sea
|
30.00
|
Aker BP ASA
|
2021
|
2033
|
2
|
|
Marulk
|
The Norwegian Sea
|
33.00
|
DNO Norge AS
|
2012
|
2030
|
2
|
|
Enoch
|
The North Sea
|
11.78
|
Repsol Sinopec North Sea Ltd.
|
2007
|
2030
|
0
|
|
Total partner operated fields
|
108
|
|||||
|
Total EP Norway
|
1,386
|
|||||
Equinor
2024
Annual Report on Form 20-F
27
|
EP International - Average daily equity production
|
||||||
|
Field
|
Country
|
Equinor's
equity
interest in %
|
Operator
|
On steam
|
Licence expiry
date
|
Average daily equity
production in 2024
mboe/day
|
|
Americas (excluding US)
|
110
|
|||||
|
Peregrino
|
Brazil
|
60.00
|
Equinor Brasil Energia Ltda.
|
2011
|
2040
|
50
|
|
Roncador
|
Brazil
|
25.00
|
Petróleo Brasileiro S.A.
|
1999
|
2052
|
27
|
|
Bandurria Sur
|
Argentina
|
30.00
|
Yacimientos Petrolíferos
Fiscales S.A.
|
2015
|
2050
|
17
|
|
Hebron
|
Canada
|
9.01
|
ExxonMobil Canada Properties
|
2017
|
HBP
1)
|
10
|
|
Hibernia/Hibernia
Southern Extension
2)
|
Canada
|
Varies
|
Hibernia Management and
Development Company Ltd.
|
1997
|
HBP
1)
|
4
|
|
Bajo del Toro
|
Argentina
|
50.00
|
Yacimientos Petrolíferos
Fiscales S.A.
|
2022
|
2055
|
2
|
|
Africa
|
173
|
|||||
|
Block 17
|
Angola
|
22.16
|
TotalEnergies EP Angola S.A.
|
2001
|
2045
|
77
|
|
In Salah
|
Algeria
|
31.85
|
Sonatrach
3)
|
2004
|
2027
|
27
|
|
Eni In Salah Limited
|
||||||
|
Equinor In Salah AS
|
||||||
|
Block 15
|
Angola
|
12.00
|
Esso Exploration Angola Block
15 Limited
|
2004
|
2032
|
24
|
|
Agbami
7)
|
Nigeria
|
0.00
|
Star Deep Water Petroleum
Limited (an affiliate of Chevron
in Nigeria)
|
2008
|
2042
|
17
|
|
In Amenas
|
Algeria
|
45.90
|
Sonatrach
3)
|
2006
|
2027
|
14
|
|
Eni In Amenas Limited
|
||||||
|
Equinor In Amenas AS
|
||||||
|
Block 31
|
Angola
|
13.33
|
Azule Energy Exploration
(Angola) Limited
|
2012
|
2031
|
8
|
|
Murzuq
|
Libya
|
10.00
|
Akakus Oil Operations
|
2003
|
2037
|
7
|
|
Eurasia
|
57
|
|||||
|
ACG
8)
|
Azerbaijan
|
0.00
|
BP Exploration (Caspian Sea)
Limited
|
1997
|
2049
|
23
|
|
Mariner
6)
|
UK
|
65.11
|
Equinor UK Limited
|
2019
|
HBP
1)
|
16
|
|
Buzzard
6)
|
UK
|
29.89
|
CNOOC Petroleum Europe
Limited
|
2007
|
2046
|
11
|
|
Statfjord Unit
4)
|
UK
|
14.53
|
Equinor Energy AS
|
1979
|
HBP
1)
|
4
|
|
Utgard
4)
|
UK
|
38.00
|
Equinor Energy AS
|
2019
|
HBP
1)
|
2
|
|
Barnacle
5)
|
UK
|
100.00
|
Equinor UK Limited
|
2019
|
HBP
1)
|
0
|
|
Total EP International
|
340
|
|||||
1)
Held by Production (HBP): A leasehold interest that is perpetuated beyond its primary term as long as there is production in paying quantities from well(s) on
the lease or lease(s) pooled therewith.
2)
Equinor's equity interests are 5.0% in Hibernia and 9.49% in Hibernia Southern Extension.
3)
The complete name for Sonatrach is Société nationale de transport et de commercialisation d’hydrocarbures.
4)
T
he Utgard and Statfjord Unit fields span the boundary between the Norwegian and UK continental shelves. In this table we report only volumes pertaining to
the Equinor share in UKCS.
5)
Actual production for Barnacle was 0.2 mboe/day.
6)
I
n December 2024, Equi
nor announced its decision with Shell to create an incorporated joint venture (IJV) combining their UK upstream businesses, which will
become the biggest independent oil and gas company on the UK continental shelf. The transaction has economic effect on 1 January 2025. Completion of the
transaction remains subject to approvals and is expected by the end of 2025.
For more information, see note
6
Acquisitions and disposals
to the Consolidated
financial statements.
7)
On 6 December 2024, Equinor closed the transaction to sell its Nigerian business to Chappal Energies. Upon completion, Equinor divested its 20.21% stake in
Agbami, with Equinor effectively exiting the country.
8)
On 29 November 2024, Equinor closed the transaction to sell its business in Azerbaijan. Upon completion, Equinor divested its 7.27% stake in Azeri Chirag
Gunashli (ACG) and its 8.71% stake in Baku-Tbilisi-Ceyhan (BTC).
Equinor
2024
Annual Report on Form 20-F
28
|
EP USA - Average daily equity production
|
||||||
|
Field
|
Country
|
Equinor's
equity
interest in %
|
Operator
|
On stream
|
Licence
expiry date
|
Average daily
equity production
in 2024 mboe/day
|
|
Appalachian (APB)
1)
|
US
|
Varies
2)
|
Equinor/others
3)
|
2008
|
HBP
5)
|
213
|
|
Caesar Tonga
|
US
|
46.00
|
Anadarko U.S. Offshore LLC
|
2012
|
HBP
5)
|
26
|
|
Vito
|
US
|
36.89
|
Shell Offshore Inc.
|
2023
|
HBP
5)
|
26
|
|
Tahiti
|
US
|
25.00
|
Chevron USA Inc.
|
2009
|
HBP
5)
|
21
|
|
St. Malo
|
US
|
21.50
|
Chevron USA Inc.
|
2014
|
HBP
5)
|
14
|
|
Julia
|
US
|
50.00
|
ExxonMobil Corporation
|
2016
|
HBP
5)
|
13
|
|
Jack
|
US
|
25.00
|
Chevron USA Inc.
|
2014
|
HBP
5)
|
11
|
|
Big Foot
|
US
|
27.50
|
Chevron USA Inc.
|
2018
|
HBP
5)
|
9
|
|
Stampede
|
US
|
25.00
|
Hess Corporation
|
2018
|
HBP
5)
|
7
|
|
Titan
|
US
|
100.00
|
Equinor USA EP Inc.
|
2018
|
HBP
5)
|
1
|
|
Heidelberg
4)
|
US
|
12.00
|
Anadarko U.S. Offshore LLC
|
2016
|
HBP
5)
|
0
|
|
Total EP USA
|
341
|
|||||
1)
Appalachian basin contains Marcellus and Utica formations.
2)
Equinor’s actual equity interest varies depending on wells and area.
3)
Operators are Equinor USA Onshore Properties Inc, Chesapeake Operating LLC, Southwestern Production Company, Chief Oil Gas LLC, and several other
operators
.
4)
Actual production for Heidelberg was 0.3 mboe/day.
5)
Held by Production (HBP): A leasehold interest that is perpetuated beyond its primary term as long as there is production in paying quantities from well(s) on
the lease(s) pooled therewith.
ITEM
4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The discussion does not address certain items in respect of 2022. A discussion of such items may be found in the
Annual Report
o
n
Form 20-F
for the year ended
31 December 2023
, filed with the
SEC on
21 March 2024.
A.
Operating
Results
The information set forth under the following headings of the
2024
Annual Report
is incorporated herein by reference:
•
Section
1.4 Our strategy and transition ambitions
of Chapter 1 on pages 15-17
;
•
Section
1.5 Our business
of Chapter 1 on pages 18 - 24
;
•
Section
2.1 Operational performance
of Chapter 2 on pages 37 - 51
;
•
Strategic financial framework
in Section 2.2 of Chapter 2 on pages 54 - 55;
•
The information under the sub-heading “Group” under the heading “Financial Performance” in Section 2.2 of
Chapter 2 on page 58;
•
Capital distribution in Section 2.2 of Chapter 2 on page 65;
•
Review of cash flows
in Section 2.2 of Chapter 2 on page 66
;
•
Debt and liquidity management
in Section 2.2 of Chapter 2 on page 67
;
•
Balance sheet and financial indicators
in Section 2.2 of Chapter 2 on pages 68 - 70
;
•
Group outlook in Section 2.2 of Chapter 2 on page 70; and
•
Progress on our Energy transition plan
in Section 2.3 of Chapter 2 on pages 72 - 73.
Equinor
2024
Annual Report on Form 20-F
29
See also the information set forth under the heading “Applicable Laws and Regulations” in “Item 4―Information on the
Company―B. Business Overview” of this
2024
Form 20-F
, and note
3
Climate change and energy transition
to the Consolidated
financial statements.
Financial Review
The following tables show the financial perform
ance by
reporting segment
.
|
EP Norway - Financial information
|
|||
|
For the year ended 31 December
|
|||
|
(in USD million)
|
2024
|
2023
|
Change
|
|
Total revenues and other income
|
33,643
|
38,340
|
(12%)
|
|
Operating, selling, general and administrative expenses
|
(3,612)
|
(3,759)
|
(4%)
|
|
Depreciation, amortisation and net impairment losses
|
(4,954)
|
(5,017)
|
(1%)
|
|
Exploration expenses
|
(513)
|
(476)
|
8%
|
|
Net operating income/(loss)
|
24,564
|
29,088
|
(16%)
|
|
Additions to PPE, intangibles and equity accounted investments
|
6,285
|
5,939
|
6%
|
|
For the year ended 31 December
|
|||
|
Operational information
|
2024
|
2023
|
Change
|
|
EP Norway entitlement liquid and gas production (mboe/day)
|
1,386
|
1,374
|
1%
|
|
EP Norway entitlement liquids production (mboe/day)
|
628
|
645
|
(3%)
|
|
EP Norway entitlement gas production (mboe/day)
|
758
|
729
|
4%
|
|
Average liquids price (USD/bbl)
|
77.1
|
78.6
|
(2%)
|
|
Average internal gas price (USD/MMBtu)
|
9.47
|
12.20
|
(22%)
|
Financial Performance
EP Norway revenues continued to remain strong for 2024 with slightly higher production than in 2023, even though lower gas prices
during the year led to a decrease in net operating income and revenues compared to 2023. Other income in 2023 was positively
impacted by gain from sale of ownership shares in the Statfjord area with USD 222 million.
The Statfjord area divestment, reduction in CO
2
quota prices and some one-off effects decreased operating, selling, general and
administrative expenses from 2023 to 2024. Initiatives to reduce overall cost have shown positive results in 2024 and are key to
maintaining a lower cost level over time in addition to continued portfolio optimisation. However, during 2024 higher operation and
maintenance activities on several fields partially offset the decrease.
Ramp-up of new fields and field-specific investments increased depreciation, amortisation and net impairment losses in 2024.
However, there was a negative impact in 2023 from an impairment of USD 588 million of a North Sea asset, compared to a less
significant impairment of another asset in 2024. This, together with the reducing effect on the depreciation from previous year’s
impairment, more than offset the increase from 2023 to 2024.
The exploration drilling activity level was higher in 2024 than in 2023 (30 wells this year compared to 28 wells last year), and higher
average well cost and lower capitalisation rate led to an increase in exploration expenses in 2024. The increase was partially offset by
lower seismic activities.
During 2024,
additions to PPE, intangibles and equity accounted investments
increased from 2023 mainly due to increased activity in
the sanctioned projects portfolio both for Equinor- and partner operated projects.
Equinor
2024
Annual Report on Form 20-F
30
|
EP International - Financial information
|
|||
|
For the year ended 31 December
|
|||
|
(in USD million)
|
2024
|
2023
|
Change
|
|
Total revenues and other income
|
7,343
|
7,032
|
4%
|
|
Purchases [net of inventory]
|
85
|
(70)
|
N/A
|
|
Operating, selling, general and administrative expenses
|
(2,123)
|
(2,176)
|
(2%)
|
|
Depreciation, amortisation and net impairment losses
|
(2,064)
|
(2,433)
|
(15%)
|
|
Exploration expenses
|
(496)
|
(20)
|
100%
|
|
Net operating income/(loss)
|
2,746
|
2,332
|
18%
|
|
Additions to PPE, intangibles and equity accounted investments
|
3,191
|
4,376
|
(27%)
|
|
For the year ended 31 December
|
|||
|
Operational information
|
2024
|
2023
|
Change
|
|
EP International equity liquid and gas production (mboe/day)
|
340
|
345
|
(2%)
|
|
EP International entitlement liquid and gas production (mboe/day)
|
261
|
266
|
(2%)
|
|
Production sharing agreements (PSA) effects (mboe/d)
|
79
|
79
|
0%
|
|
Average liquids price (USD/bbl)
|
72.0
|
72.6
|
(1%)
|
Financial Performance
Total revenues and other income, as well as net operating income, remained strong and increased in 2024 compared to 2023. This
increase is mainly due to the gain from the sale of the Nigerian business. This gain is offset by lower entitlement and lifted production,
in addition to a decline in liquid commodity prices.
Losses on the sale of Corrib were included within operating, selling, general and administrative expenses in 2023, thereby showing an
overall decrease in costs year-on-year. This decrease was partially offset by higher operating and maintenance activity levels in Brazil
and the UK, as well as increased transportation costs and tariffs in Brazil.
The cessation of depreciation on the Azeri Chirag Gunashli (ACG) asset, following its classification as ‘held for sale’ at the end of
2023, is the main reason for the decrease in depreciation in 2024 compared to 2023. This decrease was partially offset by increased
depreciation on the Buzzard field, which was depreciated for six months in 2023 after it was acquired 1 July 2023, as opposed to 11
months in 2024. Both Buzzard and Mariner were depreciated for 11 months in 2024 until they were classified as ‘held for sale’ in
December 2024, at which point further deprecation ceased.
Net impairment losses related to property, plant, and equipment decreased from USD 310 million in 2023 to
USD
0 million
in
2024
. In
2023, the impairment was mainly related to the exit from Azerbaijan.
The increase in exploration expenses includes the effects of unsuccessful exploration campaigns in Canada, Brazil, and offshore
Argentina in 2024. This is in contrast to the capitalisation of previously expensed exploration wells in Brazil in 2023, which were
deemed commercial.
The acquisition of Suncor Energy UK Limited in 2023 is the main reason for the reduction in additions to PPE, intangibles and equity
accounted investments in 2024 compared to 2023.
Equinor
2024
Annual Report on Form 20-F
31
|
EP USA - Financial information
|
|||
|
For the year ended 31 December
|
|||
|
(in USD million)
|
2024
|
2023
|
Change
|
|
Total revenues and other income
|
3,957
|
4,319
|
(8%)
|
|
Operating, selling, general and administrative expenses
|
(1,142)
|
(1,178)
|
(3%)
|
|
Depreciation, amortisation and net impairment losses
|
(1,607)
|
(1,489)
|
8%
|
|
Exploration expenses
|
(176)
|
(299)
|
(41%)
|
|
Net operating income/(loss)
|
1,031
|
1,353
|
(24%)
|
|
Additions to PPE, intangibles and equity accounted investments
|
3,862
|
1,206
|
100%
|
|
For the year ended 31 December
|
|||
|
Operational information
|
2024
|
2023
|
Change
|
|
EP USA equity liquids and gas production (mboe/day)
|
341
|
363
|
(6%)
|
|
EP USA entitlement liquid and gas production (mboe/day)
|
295
|
314
|
(6%)
|
|
Royalties (mboe/d)
|
46
|
49
|
(7%)
|
|
Average liquids price (USD/bbl)
|
64.5
|
64.4
|
0%
|
|
Average internal gas price (USD/mmbtu)
|
1.70
|
1.77
|
(4%)
|
Financial Performance
Entitlement production decreased due to lower production efficiency and hurricane impacts in US offshore. Additionally, curtailment of
production and lower activity affecting the Appalachia onshore assets were the main drivers for the decrease in revenues in 2024
compared to 2023.
Operating, selling, general and administrative expenses decreased due to a legal settlement in the prior year for a previously owned
asset. EP USA experienced a decrease in operating expenses due to lower production from US offshore, which was partially offset
by additional workover costs for certain US offshore assets.
Furthermore, the decrease can also be attributed to lower cost asset
base resulting from the transaction with EQT in the second quarter of 2024.
Depreciation and amortisation decreased in 2024 when compared to 2023, due to lower production in US offshore assets and
previous year reserve additions. This was partially offset by an increase due to a change in the abandonment estimate for a late life
asset impacting the full year of 2024.
Impairment reversals related to property, plant, and equipment amounted to
USD
0 million
in
2024
. In
2023
, impairment reversa
ls
amounted to
USD
266 million
primarily related to the assets in US offshore.
Decreased exploration expenses were driven by fewer exploration prospects in US offshore. In 2024, there was one exploration
prospect while in 2023 there were four. The prospects in both 2023 and 2024 were non-commercial and were expensed accordingly.
Investments in 2024 are driven by the continued development of the Sparta project and additional wells on several US offshore
assets.
Additionally, the two transactions with EQT in the Appalachian Basin partner operated assets resulted in an increase in
additions to PPE, intangibles and equity accounted investments from 2023. This increase was partially offset by a decrease from the
Appalachia operated assets impacting PPE disposals.
Equinor
2024
Annual Report on Form 20-F
32
|
MMP - Financial information
|
|||
|
For the year ended 31 December
|
|||
|
(in USD million)
|
2024
|
2023
|
Change
|
|
Total revenues and other income
|
101,792
|
105,908
|
(4%)
|
|
Purchases [net of inventory]
|
(92,789)
|
(95,769)
|
(3%)
|
|
Operating, selling, general and administrative expenses
|
(4,919)
|
(4,916)
|
—%
|
|
Depreciation, amortisation and net impairment losses
|
(757)
|
(1,239)
|
(39%)
|
|
Net operating income/(loss)
|
3,326
|
3,984
|
(17%)
|
|
Additions to PPE, intangibles and equity accounted investments
|
953
|
844
|
13%
|
|
For the year ended 31 December
|
|||
|
Operational information MMP
|
2024
|
2023
|
Change
|
|
Liquid sales volume (mmbbl)
|
1,008.8
|
956.3
|
5%
|
|
Natural gas sales Equinor (bcm)
|
63.6
|
58.9
|
8%
|
|
Natural gas entitlement sales Equinor (bcm)
|
53.2
|
53.2
|
—%
|
|
Power generation (GWh) Equinor share
|
1,982
|
2,298
|
(14%)
|
|
Realised piped gas price Europe (USD/MMBtu)
|
11.03
|
13.86
|
(20%)
|
|
Realised piped gas price US (USD/MMBtu)
|
2.00
|
2.09
|
(4%)
|
Financial performance
Total revenues and other income slightly decreased from 2023 to 2024 due to lower gas and oil sales prices in both Europe and North
America partially offset by higher gas and oil sales volumes.
Purchases [net of inventory] decreased from 2023 to 2024 due to lower prices for both gas and liquids, partially offset by an increase
in liquid and gas sales volumes.
The decrease in Operating expenses and selling, general and administrative expenses from 2023 to
2024 was mainly due to lower transportation costs and costs related to operating onshore plants, which was partially offset by higher
costs related to developing low carbon projects.
Net operating income includes the net effect of gain on sale of assets, fair value change in commodity derivatives and storages,
impairment reversals, changes in onerous provisions and operational storage value. D
uring
2024
, net operating income included
impairment reversals of
USD
158 million
, in contrast to
USD
343 million
o
f net impairments in the prior year. Current year result is
mostly explained by a strong contribution of piped gas and LNG trading along with a positive result from Crude and LPG
.
The main driver for the increase in additions to PPE from 2023 to 2024 are higher investments in projects related to onshore plants.
Depreciation, amortisation and impairment decreased from 2023 to 2024 driven by the impairment of refinery assets in previous year.
Equinor
2024
Annual Report on Form 20-F
33
|
REN - Financial information
|
|||
|
For the year ended 31 December
|
|||
|
(in USD million)
|
2024
|
2023
|
Change
|
|
Revenues third party, other revenue and other income
|
216
|
50
|
100%
|
|
Net income/(loss) from equity accounted investments
|
100
|
(33)
|
N/A
|
|
Total revenues and other income
|
317
|
17
|
100%
|
|
Operating, selling, general and administrative expenses
|
(687)
|
(462)
|
49%
|
|
Depreciation, amortisation and net impairment losses
|
(306)
|
(312)
|
(2%)
|
|
Net operating income/(loss)
|
(676)
|
(757)
|
11%
|
|
Additions to PPE, intangibles and equity accounted investments
|
2,153
|
2,007
|
7%
|
|
For the year ended 31 December
|
|||
|
Operational information
|
2024
|
2023
|
Change
|
|
Renewables power generation (TWh) Equinor share
|
2,802
|
1,859
|
51%
|
Financial Performance
The increase in total revenues and other income for the full year of 2024 was driven by contributions from the addition of onshore
wind farms in operation in Brazil and Poland, a positive gain in fair value adjustment related to contingent consideration and
a positive
movement in net income/(loss) from equity-accounted investments.
Lower project development costs in 2024 as a consequence of divestment of the Beacon Wind project and acquisition of full
ownership of Empire Wind in the first quarter of 2024 drove an increase in net income/(loss) from equity accounted investments.
Further, capitalisation of expenditures for Bałtyk, the offshore wind project in Poland, from the third quarter of 2023 also supported the
increase for the full year of 2024.
The total operating expenses for the full year of 2024 increased compared to the previous year, reflecting higher activity levels from
ongoing development projects and increased business development expenditures during the first nine months of 2024.
In the fourth quarter of 2024, a reduction in the level of business development due to the closure of activities in some emerging
markets resulted in a decrease in administrative and operating expenses.
The improvement of net operating income for 2024 compared to the prior year was partially attributable
to an increase in total revenue
and other income, which offset some of the higher operating and administrative expenses for the year. The net operating loss for the
full year of 2024 included the effect of a USD 211 million impairment mainly related to acquired early phase project rights within
onshore markets, a USD 147 million net loss resulting from the asset swap transaction between Equinor and bp in the first quarter,
under which Equinor took full ownership of the Empire Wind lease and projects and bp took full ownership of the Beacon Wind lease
and projects and USD 50 million impairment of an offshore wind lease project in California in the third quarter of 2024.
Net operating income/(loss) for the full year of 2023 included the effects of a USD 300 million impairment on Equinor’s offshore wind
projects on the US Northeast coast.
The acquisition of full ownership of Empire Wind projects in the US in the first quarter of 2024 drove the increase in additions to
PPE, intangibles and equity accounted investments compared to 2023.
Equinor
2024
Annual Report on Form 20-F
34
B.
Liquidity and Capital Resources
The information set forth under the following headings of the
2024
Annual Report
is incorporated herein by reference:
•
The information under the sub-heading “
Investments
” under the heading “Strategic Financial Framework” in
Section
2.2 Financial performance
of Chapter 2 on page 55
;
•
Capital distribution
in Section
2.2 Financial performance
of Chapter 2 on page
65
;
•
Review of cash flows
in Section
2.2 Financial performance
of Chapter 2 on page 66
;
•
Debt and liquidity management
in Section
2.2 Financial performance
of Chapter 2 on page 67, excluding the
information in the second and sixth paragraphs under the sub-heading “Debt and Credit Rating”; and
•
Balance sheet and financial indicators
in Section 2.2 of Chapter 2 on pages 68 - 70
.
Any credit rating referred to in this
2024
Form 20-F
is not a recommendation to buy, hold or sell any of our or our subsidiaries’
securities. Credit ratings may be changed, suspended or withdrawn at any time, and each rating should be evaluated independently
of any other rating.
See also notes
16
Financial investments and financial receivables
,
18
Trade and other receivables
,
19
Cash and cash
equivalents
,
21
Finance debt
,
23
Provisions and other liabilities
,
24
Trade and other payables
,
25
Leases
, and
26
Other
commitments, contingent liabilities and contingent assets
to the Consolidated financial statements.
Principal contractual obligations
The foll
owing table summarises principal contractual obligations, excluding derivatives and other hedging instruments, as well as
asset retirement obligations which for the most part are expected to lead to cash disbursements more than five years into the future.
See note
23
Provisions and other liabilities
to the Consolidated financial statements for a maturity profile on asset retirement
obligations and other provisions.
Non-current finance debt in the following table represents principal payment obligations, including interest obligations. Obligations
payable by
Equinor
to entities accounted for in the
Equinor group
using the equity method are included in the table below with
Equinor
’s full proportionate share. For assets that are included in the
Equinor
accounts through joint operations or similar
arrangements, the amounts in the table include the net commitment payable by
Equinor
(i.e.,
Equinor
’s proportionate share of the
commitment less
Equinor
's ownership share in the applicable entity).
|
Principal contractual obligations
|
|||||
|
As at 31 December 2024
|
|||||
|
Payment due by period
1)
|
|||||
|
(in USD million)
|
Less than 1
year
|
1-3 years
|
3-5 years
|
More than 5
years
|
Total
|
|
Undiscounted non-current finance debt- principal and interest
2)
|
2,685
|
5,723
|
3,415
|
16,529
|
28,352
|
|
Undiscounted leases
3)
|
1,363
|
1,299
|
494
|
803
|
3,959
|
|
Nominal minimum other long-term commitments
4)
|
3,112
|
4,469
|
2,652
|
4,655
|
14,888
|
|
Total contractual obligations
|
7,160
|
11,491
|
6,561
|
21,987
|
47,198
|
|
1)
''Less than 1 year'' represents
2025
; ''1-3 years'' represents
2026
and
2027
, ''3-5 years'' represents
2028
and
2029
, while ''More than 5 years'' includes
amounts for later periods.
2)
See note
21
Finance debt
to the Consolidated financial statements. The main differences between the table and the note relate to interest.
3)
See note
4
Financial risk and capital management
to the Consolidated financial statements.
4)
See note
26
Other commitments, contingent liabilities and contingent assets
to the Consolidated financial statements.
|
|||||
Equinor
had contractual commitments of USD
11,841
million
a
t
31 December 2024
. The
contractual commitments reflect
Equinor
's
share and mainly comprise construction and acquisition of property, plant and equipment as well as committed investments/funding or
resources in equity accounted entities.
Equinor
’s projected pension benefit obligation was USD
7,286
million
, and th
e fair value of plan assets amounted to USD
5,664
million as
of
31 December 2024
. Th
e company’s payments regarding these benefit plans are mainly related to employees in
Norway.
See note
22
Pensions
to the Con
solidated financial statements for more information.
Equinor
2024
Annual Report on Form 20-F
35
Off balance sheet arrangements
Equinor
is party to various agreements such as transportation and processing capacity contracts, that are not recognised in the
balance sheet. Furthermore,
Equinor
is lessee in a range of lease contracts, whereas all leases shall be recognised in the balance
sheet. Commitments regarding the non-lease components of lease contracts as well as leases that have not yet commenced are not
recognised in the balance sheet and represent off balance sheet commitments.
Equinor
is also party to certain guarantees,
commitments and contingencies that, pursuant to IFRS Accounting Standards, are not necessarily recognised in the balance sheet as
liabilities. See n
ote
26
Other commitments, contingent liabilities and contingent assets
to
the Consolidated financial statements for
more information.
Summarised financial information
related
to guaranteed debt securities
The
following
summarised financial information provides financial information of
Equinor Energy AS
as co-obligor and guarantor as
required by SEC Rule 3-10 and 13-01 of Regulation S-X.
Equinor Energy AS
is a 100% owned subsidiary of
Equinor ASA
.
Equinor Energy AS
is the co-obligor of certain existing debt
securities of
Equinor ASA
and has guaranteed certain existing debt securities of
Equinor ASA
, including in each case debt securities
that are registered under the US Securities Act of 1933 ("US registered debt securities").
As co-obligor,
Equinor Energy AS
fully, unconditionally and irrevocably assumes and agrees to perform, jointly and severally with
Equinor ASA, the payment and covenant obligations for certain debt held by
Equinor ASA
. As a guarantor,
Equinor Energy AS
fully
and unconditionally guarantees the payment obligations for certain debt held by
Equinor ASA
. Total debt at
31 December 2024
is
USD 21,399 million,
all of which is either guaranteed by
Equinor Energy AS
(
USD 19,581 million)
, or for which
Equinor Energy AS
is
co-obligor
(USD 1,818 million
). In the future,
Equinor ASA
may from time to time issue debt for which
Equinor Energy AS
will be the
co-obligor or guarantor.
The applicable US registered debt securities and related guarantees of
Equinor Energy AS
are unsecured and rank equally with all
other unsecured and unsubordinated indebtedness of
Equinor ASA
and
Equinor Energy AS
. The guarantees of
Equinor Energy AS
are subject to release in limited circumstances upon the occurrence of certain customary conditions. With respect to US registered
debt securities (and certain other debt securities) issued on or after 18 November 2019,
Equinor Energy AS
will automatically and
unconditionally be released from all obligations under its guarantee and the guarantee shall thereupon terminate and be discharged
of no further force or effect, in the event that at substantially the same time as its guarantee of such debt securities is terminated, the
aggregate amount of indebtedness for borrowed money for which
Equinor Energy AS
is an co-obligor (as a guarantor, co-issuer or
borrower) does not exceed 10% of the aggregate principal amount of indebtedness for borrowed money of
Equinor ASA
and its
subsidiaries, on a consolidated basis, as of such time.
Internal dividends, group contributions and repayment of capital from
Equinor Energy AS
to
Equinor ASA
are regulated in the
Norwegian Public Limited Liabilities Act §§ 3-1 - 3-5.
The following summarised financial information for the year ended
31 December 2024
provides financial information about
Equinor
ASA
, as issuer, and
Equinor Energy AS
, as co-obligor and guarantor on a combined basis after elimination of transactions between
Equinor ASA
and
Equinor Energy AS
. Investments in non-guarantor subsidiaries are eliminated.
Currency gain on transactions
between
Equinor ASA
and
Equinor Energy AS
of
USD 1,344 million
is included in financial items in accordance with the IFRS
Accounting Standards group principles and are included in external items in the Condensed profit and loss statement.
Intercompany balances and transactions between the co-obligor group and the non-guarantor subsidiaries are presented on separate
lines. Transactions with related parties are also presented on a separate line item and include transactions with the Norwegian State's
and the Norwegian State’s share of dividend declared but not paid.
The combined summarized financial information is prepared in accordance with
Equinor
's IFRS Accounting Standards policies as
described in no
te
2
Accounting policies
to the
Consolidated financial
statements
.
Equinor
2024
Annual Report on Form 20-F
36
|
COMBINED PROFIT AND LOSS STATEMENT FOR EQUINOR ASA AND EQUINOR ENERGY AS
|
|
|
(unaudited, in USD millions)
|
Full year 2024
|
|
Revenues and other income
|
84,765
|
|
External
|
79,092
|
|
Non-guarantor subsidiaries
|
5,380
|
|
Related parties
|
293
|
|
Operating expenses
|
(54,695)
|
|
External (incl depreciation)
|
(32,020)
|
|
Non-guarantor subsidiaries
|
(11,552)
|
|
Related parties
|
(11,122)
|
|
Net operating income
|
30,070
|
|
Net financial items
|
(983)
|
|
External
|
(1,074)
|
|
Non-guarantor subsidiaries
|
91
|
|
Related parties
|
0
|
|
Income before tax
|
29,087
|
|
Income tax
|
(20,281)
|
|
Net income
|
8,806
|
|
COMBINED BALANCE SHEET FOR EQUINOR ASA AND EQUINOR ENERGY AS
|
|
|
At 31 December
|
|
|
(unaudited, in USD millions)
|
2024
|
|
Non-current assets
|
42,376
|
|
External
|
34,526
|
|
Non-guarantor subsidiaries
|
7,796
|
|
Related parties
|
55
|
|
Current assets
|
38,301
|
|
External
|
32,700
|
|
Non-guarantor subsidiaries
|
5,387
|
|
Related parties
|
214
|
|
Non-current liabilities
|
46,976
|
|
External
|
46,403
|
|
Non-guarantor subsidiaries
|
123
|
|
Related parties
|
450
|
|
Current liabilities
|
39,128
|
|
External
|
25,774
|
|
Non-guarantor subsidiaries
|
11,868
|
|
Related parties
|
1,487
|
Equinor
2024
Annual Report on Form 20-F
37
Use and reconciliation of non-GAAP financial measures
Non-GAAP financial measures
are defined as numerical measures that either exclude or include amounts that are not excluded or
included in the comparable measures calculated and presented in accordance with generally accepted accounting principles (i.e,
IFRS Accounting Standards in the case of
Equinor
). The following financial measures may be considered non-GAAP financial
measures:
a)
Net debt to capital employed ratio, Net debt to capital employed ratio adjusted, including lease liabilities and Net debt to capital
employed ratio adjusted
b)
Return on average capital employed (ROACE)
c)
Organic capital expenditures
d)
Gross capital expenditures (Gross capex)
e)
Cash flow from operations after taxes paid (CFFO after taxes paid)
f)
Net cash flow before capital distribution and net cash flow
g)
Adjusted operating income and adjusted operating income after tax (previously named Adjusted earnings and Adjusted earnings
after tax)
h)
Adjusted net income
i)
Adjusted earnings per share (Adjusted EPS)
a) Net debt to capital employed ratio
In
Equinor
’s view, net debt ratios provide a more informative picture of
Equinor
’s financial strength than gross interest-bearing
financial debt.
Three different net debt to capital ratios are provided below: 1) net debt to capital employed, 2) net debt to capital employed ratio
adjusted, including lease liabilities, and 3) net debt to capital employed ratio adjusted.
These calculations are based on 1)
Equinor
’s gross interest-bearing financial liabilities as recorded in the Consolidated balance sheet
2) Net interest-bearing debt before adjustments, which excludes cash, cash equivalents and current financial investments from gross
interest-bearing debt, and 3) net interest-bearing debt adjusted, including lease liabilities which adjusts the above measure for other
interest-bearing elements.
The following adjustments are made in calculating the net debt to capital employed ratio adjusted, including lease liabilities ratio and
the net debt to capital employed adjusted ratio: collateral deposits (classified as Cash and cash equivalents in the Consolidated
balance sheet), and financial investments held in
Equinor
Insurance AS (classified as Current financial investments
are treated as
non-cash and excluded from the calculation of these non-GAAP measures. Collateral deposits are excluded since they relate to
certain requirements of exchanges where
Equinor
’s securities are trading and therefore are presented as restricted cash and cash
equivalents. Financial investments in
Equinor
Insurance are excluded as these investments are not readily available for the group to
meet short term commitments. These adjustments result in a higher net debt figure and in
Equinor
’s view provides a more prudent
measure of the net debt to capital employed ratio than would be the case without such exclusions. Additionally, lease liabilities are
further excluded in calculating the net debt to capital employed ratio adjusted.
Forward-looking net debt to capital employed ratio adjusted, including lease liabilities and net debt to capital employed ratio adjusted
included in this report are not reconcilable to their most directly comparable IFRS Accounting Standards measures without
unreasonable efforts, because the amounts included or excluded from IFRS Accounting Standards measures used to determine net
debt to capital employed ratio adjusted, including lease liabilities and net debt to capital employed ratio adjusted cannot be predicted
with reasonable certainty.
The accompanying table details the calculations for these non-GAAP measures and reconciles them with the most directly
comparable IFRS Accounting Standards financial measure or measures.
Equinor
2024
Annual Report on Form 20-F
38
|
Calculation of capital employed and net debt to capital employed ratio
|
For the year ended
31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
|
Shareholders' equity
|
42,342
|
48,490
|
|
|
Non-controlling interests
|
38
|
10
|
|
|
Total equity
|
A
|
42,380
|
48,500
|
|
Current finance debt and lease liabilities
|
8,472
|
7,275
|
|
|
Non-current finance debt and lease liabilities
|
21,622
|
24,521
|
|
|
Gross interest-bearing debt
|
B
|
30,094
|
31,796
|
|
Cash and cash equivalents
|
8,120
|
9,641
|
|
|
Current financial investments
|
15,335
|
29,224
|
|
|
Cash and cash equivalents and current financial investment
|
C
|
23,455
|
38,865
|
|
Net interest-bearing debt before adjustments
|
B1 = B-C
|
6,639
|
(7,069)
|
|
Other interest-bearing elements
1)
|
2,583
|
2,030
|
|
|
Net interest-bearing debt adjusted, including lease liabilities
|
B2
|
9,221
|
(5,040)
|
|
Lease liabilities
|
3,510
|
3,570
|
|
|
Net interest-bearing debt adjusted
|
B3
|
5,711
|
(8,610)
|
|
Calculation of capital employed:
|
|||
|
Capital employed
|
A+B1
|
49,018
|
41,431
|
|
Capital employed adjusted, including lease liabilities
|
A+B2
|
51,601
|
43,460
|
|
Capital employed adjusted
|
A+B3
|
48,091
|
39,890
|
|
Calculated net debt to capital employed
|
|||
|
Net debt to capital employed
|
(B1)/(A+B1)
|
13.5%
|
(17.1%)
|
|
Net debt to capital employed ratio adjusted, including lease liabilities
|
(B2)/(A+B2)
|
17.9%
|
(11.6%)
|
|
Net debt to capital employed ratio adjusted
|
(B3)/(A+B3)
|
11.9%
|
(21.6%)
|
|
1)
Other interest-bearing elements are cash and cash equivalents adjustments regarding collateral deposits classified as
cash and cash equivalents in the Consolidated balance sheet but considered as non-cash in the non-GAAP calculations
as well as financial investments in Equinor Insurance AS classified as current financial investments.
|
|||
Equinor
2024
Annual Report on Form 20-F
39
b) Return on average capital employed (ROACE)
Return on average capital employed (ROACE) is the ratio of adjusted operating income after tax to the average capital employed
adjusted. The reconciliation for adjusted operating income after tax is presented in section g). Average capital employed adjusted
refers to the average of the capital employed adjusted values as of
31 December
for both the current and the preceding year, as
presented under the heading Calculation of capital employed in section a).
Equinor
uses ROACE to evaluate performance by measuring how effectively the company employs its capital, whether financed
through equity or debt.
An IFRS Accounting Standards measure most directly comparable to ROACE would be calculated as the ratio of net income/(loss) to
average capital employed that is based on
Equinor
’s gross interest-bearing financial
liabilities as recorded in the Consolidated
balance sheet, excluding cash, cash equivalents and current financial investments.
ROACE is used as a supplementary measure and should not be viewed in isolation or as an alternative to measures calculated in
accordance with IFRS Accounting Standards, including income before financial items, income taxes and minority interest, or net
income, or ratios based on these figures.
Forward-looking ROACE included in this report is not reconcilable to its most directly comparable IFRS Accounting Standards
measure without unreasonable efforts, because the amounts included or excluded from IFRS Accounting Standards measures used
to determine ROACE cannot be predicted with reasonable certainty.
|
Calculated ROACE based on IFRS Accounting Standards
|
31 December
|
||
|
(in USD millions, except percentages)
|
2024
|
2023
|
|
|
Net income/(loss)
|
A
|
8,829
|
11,904
|
|
Average total equity
|
1
|
45,440
|
51,244
|
|
Average current finance debt and lease liabilities
|
7,874
|
6,446
|
|
|
Average non-current finance debt and lease liabilities
|
23,071
|
25,536
|
|
|
- Average cash and cash equivalents
|
(8,881)
|
(12,610)
|
|
|
- Average current financial investments
|
(22,279)
|
(29,550)
|
|
|
Average net-interest bearing debt
|
2
|
(215)
|
(10,178)
|
|
Average capital employed
|
B = 1+2
|
45,225
|
41,066
|
|
Calculated ROACE based on Net income/loss and capital employed
|
A/B
|
19.5%
|
29.0%
|
|
Calculated ROACE based on Adjusted operating income after tax and capital employed adjusted
|
31 December
|
||
|
(in USD millions, except percentages)
|
2024
|
2023
|
|
|
Adjusted operating income/(loss) after tax
1)
|
A
|
9,062
|
10,348
|
|
Average capital employed adjusted
|
B
|
43,991
|
41,731
|
|
Calculated ROACE based on Adjusted operating income after tax and capital employed adjusted
|
A/B
|
20.6%
|
24.8%
|
|
1) Restated. For more information, see Amended principles for Adjusted operating income in the section ‘Use
and reconciliation of non-GAAP financial measures.’
|
|||
c) Organic capital expenditures
Organic capital expenditures represent capital expenditures, defined as Additions to PPE, intangibles and equity accounted
investments as presented in note 5 Segments to the annual report, excluding expenditures related to acquisitions, leased assets, and
other investments with significantly different cash flow patterns.
Equinor
believes this measure gives stakeholders relevant information
to understand the company’s investments in maintaining and developing its assets.
Equinor
2024
Annual Report on Form 20-F
40
Forward-looking organic capital expenditures included in this report are not reconcilable to its most directly comparable IFRS
Accounting Standards measure without unreasonable efforts, because the amounts excluded from such IFRS Accounting Standards
measure to determine organic capital expenditures cannot be predicted with reasonable certainty.
|
Calculation of organic capital expenditures
|
Total Group
|
||
|
(in USD billions)
|
2024
|
2023
|
|
|
Additions to PPE, intangibles and equity accounted investments
|
16.7
|
14.5
|
|
|
Acquisition-related additions
|
3.4
|
3.2
|
|
|
Right of use asset additions
|
1.2
|
1.1
|
|
|
Other additions (with unique cash flow patterns)
|
0.0
|
0.0
|
|
|
Organic capital expenditures
|
12.1
|
10.2
|
|
d) Gross capital expenditures (Gross capex)
Gross capital expenditures represent capital expenditures, defined as Additions to PPE, intangibles and equity accounted
investments as presented in the financial statements, excluding additions to right of use assets related to leases and capital
expenditures financed through government grants.
Equinor
adds the proportionate share of capital expenditures in equity accounted
investments not included in Additions to PPE, intangibles and equity accounted investments.
Equinor
believes that by excluding
additions to right of use assets related
to leases, this measure better
reflects the company's investments in the business to drive
growth.
Forward-looking gross capital expenditures included in this report are not reconcilable to its most directly comparable IFRS
Accounting Standards measure without unreasonable efforts, because the amounts included or excluded from such IFRS Accounting
Standards measure to determine gross capital expenditures cannot be predicted with reasonable certainty.
|
Calculation of gross capital expenditures
|
For the year ended
31 December
|
||
|
(in USD billions)
|
2024
|
2023
|
|
|
Additions to PPE, Intangibles and equity accounted companies
|
16.7
|
14.5
|
|
|
Less adjustments
|
0.6
|
0.4
|
|
|
Gross capital expenditures
|
16.1
|
14.1
|
|
e) Cash flows from operations after taxes paid (CFFO after taxes paid)
Cash flows from operations after taxes paid represents, and is used by management to evaluate, cash generated from operating
activities after taxes paid, which is available for investing activities, debt servicing and distribution to shareholders. Cash flows from
operations after taxes paid is not a measure of our liquidity under IFRS Accounting Standards and should not be considered in
isolation or as a substitute for an analysis of our results as
reported in this report. Our definition of Cash flows from operations after
taxes paid is limited and does not represent residual cash flows available for discretionary expenditures.
The table below provides a reconciliation of Cash flows from operations after taxes paid to its most directly comparable IFRS
Accounting Standards measure, Cash flows provided by operating activities before taxes paid and working capital items, as of the
specified dates:
|
Cash flow from operations after taxes paid (CFFO after taxes paid)
|
||
|
(in USD million)
|
2024
|
2023
|
|
Cash flows provided by operating activities before taxes paid and working capital items
|
38,483
|
48,016
|
|
Taxes paid
|
(20,592)
|
(28,276)
|
|
Cash flow from operations after taxes paid (CFFO after taxes paid)
|
17,892
|
19,741
|
Forward-looking cash flows from operations after taxes paid included in this report are not reconcilable to its most directly comparable
IFRS Accounting Standards measure without unreasonable efforts, because the amounts included or excluded from such IFRS
Accounting Standards measure to determine cash flows from operations after taxes paid cannot be predicted with reasonable
certainty.
Equinor
2024
Annual Report on Form 20-F
41
f) Net cash flow before capital distribution and net cash flow
Net cash flow before capital distribution represents, and is used by management to evaluate, cash generated from operational and
investing activities available for debt servicing and distribution to shareholders. Net cash flow before capital distribution is not a
measure of our liquidity under IFRS Accounting Standards and should not be considered in isolation or as a substitute for an analysis
of our results as reported in this report. Our definition of Net cash flow before capital distribution is limited and does not represent
residual cash flows available for discretionary expenditures. The table below provides a reconciliation of Net cash flow before capital
distribution to its most directly comparable IFRS Accounting Standards
measure, Cash flows provided by operating activities before
taxes paid and working capital items, as of the specified dates
Net cash flow represents, and is used by management to evaluate, cash generated from operational and investing activities available
for debt servicing. Net cash flow is not a measure of our liquidity under IFRS Accounting Standards and should not be considered in
isolation or as a substitute for an analysis of our results as reported in this report. Our definition of Net cash flow is limited and does
not
represent residual cash flows available for discretionary expenditures
.
The table below reconciles Net cash flow with its most directly comparable IFRS Accounting Standards measure, Cash flows provided
by operating activities before taxes paid and working capital items, as of the specified dates:
|
Net cash flow before capital distribution and net cash flow
|
||
|
(in USD million)
|
2024
|
2023
|
|
Cash flows provided by operating activities before taxes paid and working capital items
|
38,483
|
48,016
|
|
Taxes paid
|
(20,592)
|
(28,276)
|
|
Cash used/received in business combinations
|
(1,710)
|
(1,195)
|
|
Capital expenditures and investments
|
(12,177)
|
(10,575)
|
|
(Increase)/decrease in other interest-bearing items
|
(623)
|
(87)
|
|
Proceeds from sale of assets and businesses
|
1,470
|
272
|
|
Net cash flow before capital distribution
|
2,385
|
8,154
|
|
Dividends paid
|
(8,578)
|
(10,906)
|
|
Share buy-back
|
(6,013)
|
(5,589)
|
|
Net cash flow
|
(12,206)
|
(8,340)
|
g)
Adjusted operating income and Adjusted operating income after tax (previously named adjusted
earnings and adjusted earnings after tax)
Adjusted operating income is based on net operating income/(loss) and adjusts for certain items affecting the income for the period to
separate out effects that management considers may not be well correlated to
Equinor
’s underlying operational performance in the
individual reporting period. Management believes adjusted operating income provides an indication of
Equinor
’s underlying
operational performance and facilitates comparison of operational trends between periods. The name of this measure was changed in
2024 to eliminate confusion regarding the basis of the calculation; additionally, one adjusting item was removed from the calculation of
the measure, as detailed below in the Amended principles section.
Adjusted operating income after tax equals adjusted operating income/(loss) less tax on adjusted operating income. Tax on adjusted
operating income is computed by adjusting the income tax for tax effects of adjustments made in calculating adjusted operating
income. The tax rate applied is the tax rate applicable to each adjusting item and tax regime, adjusted for certain foreign currency
effects as well as effects of specific changes to deferred tax assets.
Management believes adjusted operating income after tax
provides an indication of
Equinor
’s underlying operational performance after tax and facilitates comparisons of operational trends after
tax between periods as it reflects the tax charge associated with operational performance excluding the impact of financing. The
name of this measure was changed in 2024 in line with the change of the name of the pre-tax measure above.
Amended principles for Adjusted operating income with effect from 2024:
Equinor
has made the following changes to the items adjusted for within Adjusted operating income:
With effect from 2024, Equinor no longer adjusts for over-/underlift to arrive at adjusted operating income. Over-/underlift is presented
using the sales method. The sales revenues and associated costs are reflected in adjusted operating income when the physical
volumes are lifted and sold rather than when they are produced, in line with IFRS Accounting Standards. Removing this adjustment is
the result of a comprehensive materiality assessment and an effort to streamline our reporting. This change is a part of our ongoing
commitment to improve the non-GAAP financial measures we present, ensuring that the adjustments are meaningful to users of the
financial statements and supplementary information.
Equinor
2024
Annual Report on Form 20-F
42
These changes were applied retrospectively to the comparative figures. This change only affects the EP Norway and EP
International reporting segments and does not impact the comparative figures of other segments.
|
Impact of change
|
Full year of 2023
|
||
|
EP Norway
|
As reported
|
Impact
|
Restated
|
|
Adjusted total revenues and other income
|
38,213
|
35
|
38,248
|
|
Over-/underlift
|
(35)
|
35
|
—
|
|
Adjusted operating and administrative expenses
|
(3,730)
|
(29)
|
(3,759)
|
|
Over-/underlift
|
29
|
(29)
|
—
|
|
Adjusted operating income/(loss)
|
29,577
|
6
|
29,583
|
|
Adjusted operating income/(loss) after tax
|
6,494
|
1
|
6,495
|
|
Impact of change
|
Full year of 2023
|
||
|
EP International
|
As reported
|
Impact
|
Restated
|
|
Adjusted total revenues and other income
|
6,956
|
(45)
|
6,910
|
|
Over-/underlift
|
45
|
(45)
|
—
|
|
Adjusted operating and administrative expenses
|
(1,915)
|
22
|
(1,893)
|
|
Over-/underlift
|
(22)
|
22
|
—
|
|
Adjusted operating income/(loss)
|
2,863
|
(23)
|
2,840
|
|
Adjusted operating income/(loss) after tax
|
1,650
|
(24)
|
1,626
|
|
Impact of change
|
Full year of 2023
|
||
|
Equinor group
|
As reported
|
Impact
|
Restated
|
|
Adjusted total revenues and other income
|
105,871
|
(10)
|
105,861
|
|
Over-/underlift
|
10
|
(10)
|
—
|
|
Adjusted operating and administrative expenses
|
(11,540)
|
(7)
|
(11,547)
|
|
Over-/underlift
|
7
|
(7)
|
—
|
|
Adjusted operating income/(loss)
|
36,220
|
(17)
|
36,203
|
|
Adjusted operating income/(loss) after tax
|
10,371
|
(23)
|
10,348
|
|
Effective tax rates on adjusted operating income
|
71.4
%
|
0.0
%
|
71.4
%
|
Adjusted operating income adjust for the following items:
•
Changes in fair value of derivatives:
In the ordinary course of business,
Equinor
enters into commodity derivative contracts to
manage the price risk exposure relating to future sale and purchase contracts. These commodity derivatives are measured at fair
value at each reporting date, with the movements in fair value recognised in the income statement. By contrast, the related sale
and purchase contracts are not recognised until the transaction occurs resulting in timing differences. Therefore the unrealised
movements in the fair value of these commodity derivative contracts are excluded from adjusted operating income and deferred
until the time of the physical delivery to minimise the effect of these timing differences. Further, embedded derivatives within
certain gas contracts and contingent consideration related to historical divestments are carried at fair value. Any accounting
impacts resulting from such changes in fair value are also excluded from adjusted operating income, as these fluctuations are
not indicative of the underlying performance of the business.
•
Periodisation of inventory hedging effect:
Equinor
enters into derivative contracts to manage price risk exposure relating to its
commercial storage. These derivative contracts are carried at fair value while the inventories are accounted for at the lower of
cost or market price. An adjustment is made to align the valuation principles of inventories with related derivative contracts. The
adjusted valuation of inventories is based on the forward price at the expected realisation date. This is so that the valuation
principles between commercial storages and derivative contracts are better aligned.
Equinor
2024
Annual Report on Form 20-F
43
•
The operational storage
is not hedged and is not part of the trading portfolio. Cost of goods sold is measured based on the
FIFO (first-in, first-out) method, and includes realised gains or losses that arise due to changes in market prices. These gains or
losses will fluctuate from one period to another and are not considered part of the underlying operations for the period.
•
Impairment and reversal of impairment
are excluded from adjusted operating income since they affect the economics of an
asset for the lifetime of that asset, not only the period in which it is impaired or the impairment is reversed. Impairment and
reversal of impairment can impact both the exploration expenses and the depreciation, amortisation and net impairments line
items.
•
Gain or loss from sales of assets
is eliminated from the measure since the gain or loss does not give an indication of future
performance or periodic performance; such a gain or loss is related to the cumulative value creation from the time the asset is
acquired until it is sold.
•
Eliminations (internal unrealised profit on inventories)
:
Volumes derived from equity oil inventory vary depending on several
factors and inventory strategies, i.e. level of crude oil in inventory, equity oil used in the refining process and level of in-transit
cargoes. Internal profit related to volumes sold between entities within the group and still in inventory at period end is eliminated
according to IFRS Accounting Standards (write down to production cost). The proportion of realised versus unrealised gain
fluctuates from one period to another due to inventory strategies and consequently impacts net operating income/(loss). Write
down to production cost is not assessed to be a part of the underlying operational performance, and elimination of internal profit
related to equity volumes is excluded in adjusted operating income.
•
Other items of income and expense
are adjusted when the impacts on income in the period are not reflective of
Equinor
’s
underlying operational performance in the reporting period. Such items may be unusual or infrequent transactions, but they may
also include transactions that are significant which would not necessarily qualify as either unusual or infrequent. However, other
items adjusted do not constitute normal, recurring income and operating expenses for the company. Other items are carefully
assessed and can include transactions such as provisions related to reorganisation, early retirement, etc.
•
Change in accounting policy
is adjusted when the impacts on income in the period are unusual or infrequent, and not reflective
of
Equinor
’s underlying operational performance in the reporting period.
Equinor
2024
Annual Report on Form 20-F
44
|
Items impacting net operating income/(loss) in
the full year of 2024 (in USD million)
|
Equinor
group
|
EP
Norway
|
EP
International
|
EP USA
|
MMP
|
REN
|
Other
|
|
Net operating income/(loss)
|
30,927
|
24,564
|
2,746
|
1,031
|
3,326
|
(676)
|
(64)
|
|
Total revenues and other income
|
103,774
|
33,643
|
7,343
|
3,957
|
101,792
|
317
|
(43,277)
|
|
Adjusting items
|
(1,512)
|
—
|
(805)
|
—
|
(583)
|
(124)
|
—
|
|
Changes in fair value of derivatives
|
(421)
|
—
|
—
|
—
|
(421)
|
—
|
—
|
|
Gain/loss on sale of assets
|
(941)
|
—
|
(805)
|
—
|
(135)
|
—
|
—
|
|
Periodisation of inventory hedging effect
|
(26)
|
—
|
—
|
—
|
(26)
|
—
|
—
|
|
Provisions
|
(124)
|
—
|
—
|
—
|
—
|
(124)
|
—
|
|
Adjusted total revenues and other income
|
102,262
|
33,643
|
6,538
|
3,957
|
101,209
|
193
|
(43,277)
|
|
Purchases [net of inventory variation]
|
(50,040)
|
—
|
85
|
—
|
(92,789)
|
—
|
42,664
|
|
Adjusting items
|
16
|
—
|
—
|
—
|
12
|
—
|
4
|
|
Eliminations
|
4
|
—
|
—
|
—
|
—
|
—
|
4
|
|
Operational storage effects
|
17
|
—
|
—
|
—
|
17
|
—
|
—
|
|
Provisions
|
(5)
|
—
|
—
|
—
|
(5)
|
—
|
—
|
|
Adjusted purchases [net of inventory variation]
|
(50,024)
|
—
|
85
|
—
|
(92,777)
|
—
|
42,668
|
|
Operating and administrative expenses
|
(11,786)
|
(3,612)
|
(2,123)
|
(1,142)
|
(4,919)
|
(687)
|
697
|
|
Adjusting items
|
296
|
—
|
84
|
—
|
48
|
163
|
—
|
|
Gain/loss on sale of assets
|
232
|
—
|
84
|
—
|
—
|
147
|
—
|
|
Other adjustments
|
16
|
—
|
—
|
—
|
—
|
16
|
—
|
|
Provisions
|
48
|
—
|
—
|
—
|
48
|
—
|
—
|
|
Adjusted operating and administrative
expenses
|
(11,491)
|
(3,612)
|
(2,038)
|
(1,142)
|
(4,871)
|
(524)
|
697
|
|
Depreciation, amortisation and net
impairments
|
(9,835)
|
(4,954)
|
(2,064)
|
(1,607)
|
(757)
|
(306)
|
(148)
|
|
Adjusting items
|
70
|
—
|
—
|
—
|
(191)
|
261
|
—
|
|
Impairment
|
261
|
—
|
—
|
—
|
—
|
261
|
—
|
|
Reversal of impairment
|
(191)
|
—
|
—
|
—
|
(191)
|
—
|
—
|
|
Adjusted depreciation, amortisation and net
impairments
|
(9,765)
|
(4,954)
|
(2,064)
|
(1,607)
|
(949)
|
(44)
|
(148)
|
|
Exploration expenses
|
(1,185)
|
(513)
|
(496)
|
(176)
|
—
|
—
|
—
|
|
Adjusting items
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Adjusted exploration expenses
|
(1,185)
|
(513)
|
(496)
|
(176)
|
—
|
—
|
—
|
|
Sum of adjusting items
|
(1,130)
|
—
|
(721)
|
—
|
(714)
|
301
|
4
|
|
Adjusted operating income/(loss)
|
29,798
|
24,564
|
2,025
|
1,031
|
2,612
|
(375)
|
(60)
|
|
Tax on adjusted operating income
|
(20,736)
|
(19,013)
|
(425)
|
(224)
|
(1,174)
|
50
|
50
|
|
Adjusted operating income/(loss) after tax
|
9,062
|
5,551
|
1,600
|
807
|
1,438
|
(325)
|
(10)
|
Equinor
2024
Annual Report on Form 20-F
45
|
Items impacting net operating income/(loss) in
the full year of 2023 (in USD million)
|
Equinor
group
|
EP
Norway
|
EP
International
|
EP USA
|
MMP
|
REN
|
Other
|
|
Net operating income/(loss)
|
35,770
|
29,087
|
2,332
|
1,353
|
3,984
|
(757)
|
(229)
|
|
Total revenues and other income
|
107,174
|
38,340
|
7,032
|
4,319
|
105,908
|
17
|
(48,442)
|
|
Adjusting items
|
(1,313)
|
(92)
|
(121)
|
(32)
|
(1,049)
|
(17)
|
(1)
|
|
Changes in fair value of derivatives
|
(711)
|
128
|
(96)
|
—
|
(743)
|
—
|
—
|
|
Gain/loss on sale of assets
|
(319)
|
(221)
|
(25)
|
(32)
|
(23)
|
(17)
|
(1)
|
|
Impairment
|
1
|
—
|
—
|
—
|
—
|
1
|
—
|
|
Other adjustments
|
(100)
|
—
|
—
|
—
|
(100)
|
—
|
—
|
|
Periodisation of inventory hedging effect
|
(183)
|
—
|
—
|
—
|
(183)
|
—
|
—
|
|
Adjusted total revenues and other income
1)
|
105,861
|
38,248
|
6,910
|
4,286
|
104,860
|
—
|
(48,443)
|
|
Purchases [net of inventory variation]
|
(48,175)
|
—
|
(70)
|
—
|
(95,769)
|
—
|
47,664
|
|
Adjusting items
|
173
|
—
|
—
|
—
|
36
|
—
|
137
|
|
Eliminations
|
137
|
—
|
—
|
—
|
—
|
—
|
137
|
|
Operational storage effects
|
41
|
—
|
—
|
—
|
41
|
—
|
—
|
|
Provisions
|
(5)
|
—
|
—
|
—
|
(5)
|
—
|
—
|
|
Adjusted purchases [net of inventory variation]
|
(48,003)
|
—
|
(70)
|
—
|
(95,733)
|
—
|
47,801
|
|
Operating and administrative expenses
|
(11,800)
|
(3,759)
|
(2,176)
|
(1,178)
|
(4,916)
|
(462)
|
692
|
|
Adjusting items
|
253
|
—
|
283
|
22
|
(72)
|
20
|
—
|
|
Gain/loss on sale of assets
|
289
|
—
|
283
|
—
|
—
|
6
|
—
|
|
Other adjustments
|
36
|
—
|
—
|
22
|
—
|
14
|
—
|
|
Provisions
|
(72)
|
—
|
—
|
—
|
(72)
|
—
|
—
|
|
Adjusted operating and administrative
expenses
1)
|
(11,547)
|
(3,759)
|
(1,893)
|
(1,156)
|
(4,988)
|
(442)
|
692
|
|
Operating and administrative expenses
|
(11,800)
|
(3,759)
|
(2,176)
|
(1,178)
|
(4,916)
|
(462)
|
692
|
|
Adjusting items
|
253
|
—
|
283
|
22
|
(72)
|
20
|
—
|
|
Gain/loss on sale of assets
|
289
|
—
|
283
|
—
|
—
|
6
|
—
|
|
Other adjustments
|
36
|
—
|
—
|
22
|
—
|
14
|
—
|
|
Provisions
|
(72)
|
—
|
—
|
—
|
(72)
|
—
|
—
|
|
Adjusted operating and administrative
expenses1)
|
(11,547)
|
(3,759)
|
(1,893)
|
(1,156)
|
(4,988)
|
(442)
|
692
|
|
Depreciation, amortisation and net
impairments
|
(10,634)
|
(5,017)
|
(2,433)
|
(1,489)
|
(1,239)
|
(312)
|
(143)
|
|
Adjusting items
|
1,259
|
588
|
310
|
(290)
|
343
|
300
|
9
|
|
Impairment
|
1,550
|
588
|
310
|
—
|
343
|
300
|
9
|
|
Reversal of impairment
|
(290)
|
—
|
—
|
(290)
|
—
|
—
|
—
|
|
Adjusted depreciation, amortisation and net
impairments
|
(9,374)
|
(4,429)
|
(2,123)
|
(1,779)
|
(897)
|
(12)
|
(134)
|
|
Exploration expenses
|
(795)
|
(476)
|
(20)
|
(299)
|
—
|
—
|
—
|
|
Adjusting items
|
61
|
—
|
36
|
25
|
—
|
—
|
—
|
|
Impairment
|
61
|
—
|
36
|
25
|
—
|
—
|
—
|
Equinor
2024
Annual Report on Form 20-F
46
|
Adjusted exploration expenses
|
(734)
|
(476)
|
16
|
(274)
|
—
|
—
|
—
|
|
Sum of adjusting items
1)
|
433
|
496
|
508
|
(277)
|
(742)
|
303
|
145
|
|
Adjusted operating income/(loss)
1)
|
36,203
|
29,583
|
2,840
|
1,076
|
3,242
|
(454)
|
(84)
|
|
Tax on adjusted operating income
1)
|
(25,855)
|
(23,088)
|
(1,214)
|
(304)
|
(1,364)
|
63
|
51
|
|
Adjusted operating income/(loss) after tax
1)
|
10,348
|
6,495
|
1,626
|
773
|
1,877
|
(391)
|
(33)
|
1)
Restated for Equinor group, EP Norway and EP International due to amended principles for 'over-/underlift'. For further information see section Amended
principles for Adjusted operating income
h)
Adjusted net income
Adjusted net income is based on net income/(loss) and provides additional transparency to Equinor’s
underlying financial
performance by also including
underlying financial performance by also including
net financial items and the associated tax effects
.
This measure includes adjustments made to arrive at adjusted operating income after tax, in addition to specific adjustments related
to net financial items and related tax effects, as well as certain adjustments to income tax, as described below. Management believes
this measure provides an indication of Equinor’s underlying financial performance including the impact from financing and facilitates
comparison of trends between periods.
Adjusted net income incorporates the adjustments from Adjusted operating income, as well as the following items
impacting net financial items and income tax/tax rate:
•
Changes in fair value of financial derivatives used to hedge interest-bearing instruments.
Equinor enters into financial
derivative contracts to manage interest rate risk on long term interest-bearing liabilities including bonds and financial loans. The
financial derivative contracts (hedging instruments) are measured at fair value at each reporting date, with movements in fair
value recognised in the income statement. The long term interest-bearing liabilities are measured at amortised cost and not
remeasured at fair value at each reporting date.
This creates measurement differences and
therefore the movements in the fair
value of these financial derivative contracts and associated tax effects are excluded from the calculation of adjusted net income
and deferred until the time the underlying instrument is matured, exercised, or settled. Management believes that this
appropriately reflects the economic effect of these risk management activities in each period and provides an indication of
Equinor’s underlying financial performance
.
•
Foreign currency gains/losses on positions used to manage currency risk exposure related to future payments in NOK
and foreign currency gains/losses on certain intercompany bank balances.
Foreign currency gains/losses on positions
used to manage currency risk exposure (cash equivalents/financial investments and related currency derivatives where
applicable), as well as currency gains/losses on certain intercompany bank balances are eliminated from adjusted net income.
The currency effects on intercompany bank balances are mainly due to a large part of Equinor’s operations having NOK as
functional currency, and the effects are offset within equity as other comprehensive income arising on translation from functional
currency to presentation currency USD. These currency effects increase volatility in financial performance, which does not reflect
Equinor’s underlying financial performance. Management believes that these adjustments remove periodic fluctuations in
Equinor’s adjusted net income.
•
Derecognition of deferred tax assets or recognition of previously unrecognised deferred tax assets.
These changes are
related to taxable income in future reporting periods and are not reflective of performance in the current reporting period.
•
Income tax effects arising only when calculating income tax in the functional currency (USD).
Certain group companies
have USD as functional currency, which is different from the currency in which the taxable income is measured (tax currency).
Income tax effects arising only when calculating income tax in the functional currency (USD), that are not part of the tax
calculation in the tax currency are adjusted for. Management believes this better aligns the effective tax rate in functional
currency with the statutory tax rate in the period.
Equinor
2024
Annual Report on Form 20-F
47
i)
Adjusted earnings per share
Adjusted earnings per share is computed by dividing
Adjusted net income by the weighted average number of shares outstanding
during the period. Earnings per share is a metric that is frequently used by investors, analysts and other parties to assess a
company's profitability per share. Management believes this measure provides an indication of Equinor’s underlying financial
performance including the impact from financing and facilitates comparison of trends between periods.
The non-GAAP financial measures presented in sections g) to i) above are supplementary measures and should not be viewed in
isolation or as substitutes for net operating income/(loss), net income/(loss) and earnings per share, which are the most directly
comparable IFRS Accounting Standards measures. The reconciliation tables later in this report reconcile the above non-GAAP
measures to the most directly comparable IFRS Accounting Standards measure or measures. There are material limitations
associated with the above measures compared with the IFRS Accounting Standards measures, as these non-GAAP measures do not
include all the items of revenues/gains or expenses/losses of Equinor that are required to evaluate its profitability on an overall basis.
The non-GAAP measures are only intended to be indicative of the underlying developments in trends of our on-going operations.
Reconciliation of adjusted operating income after tax to net income
|
For the year ended
31 December
|
|||
|
(in USD million)
|
2024
|
2023
|
|
|
Net operating income/(loss)
|
A
|
30,927
|
35,770
|
|
Income tax
|
B1
|
22,157
|
25,980
|
|
Tax on net financial items
|
B2
|
(107)
|
256
|
|
Income tax less tax on net financial items
|
B = B1 - B2
|
22,264
|
25,724
|
|
Net operating income after tax
|
C = A - B
|
8,663
|
10,046
|
|
Items impacting net operating income/(loss)
1)
|
D
|
(1,130)
|
433
|
|
Tax on items impacting net operating income/(loss)
1)
|
E
|
1,529
|
(131)
|
|
Adjusted operating income after tax
1)
|
F = C+D+E
|
9,062
|
10,348
|
|
Net financial items
|
G
|
58
|
2,114
|
|
Tax on net financial items
|
H
|
107
|
(256)
|
|
Net income/(loss)
|
I = C+G+H
|
8,829
|
11,904
|
1) Restated due to amended principles for 'over-/underlift'. For more information, see Amended principles for Adjusted operating income in the section ‘Use and
reconciliation of non-GAAP financial measures.’
Equinor
2024
Annual Report on Form 20-F
48
Reconciliation of adjusted net income to net income, including calculation of adjusted earnings per share
|
For the year ended
31 December
|
|||
|
in USD millions
|
2024
|
2023
|
|
|
Net operating income/(loss)
|
30,927
|
35,770
|
|
|
Items impacting net operating income/(loss)
1)
|
A
|
(1,130)
|
433
|
|
Adjusted operating income
1)
|
B
|
29,798
|
36,203
|
|
Net financial items
|
58
|
2,114
|
|
|
Adjusting items
|
C
|
134
|
(965)
|
|
Changes in fair value of financial derivatives used to hedge interest bearing
instruments
|
(46)
|
(351)
|
|
|
Foreign currency (gains)/losses on certain intercompany bank and cash
balances
|
179
|
(614)
|
|
|
Adjusted net financial items
|
D
|
192
|
1,149
|
|
Income tax
|
E
|
(22,157)
|
(25,980)
|
|
Tax effect on adjusting items
|
F
|
1,344
|
(54)
|
|
Adjusted net income
|
G = B + D + E + F
|
9,177
|
11,318
|
|
Less:
|
|||
|
Adjusting items
|
H = A + C
|
(996)
|
(531)
|
|
Tax effect on adjusting items
|
1,344
|
(54)
|
|
|
Net income/(loss)
|
8,829
|
11,904
|
|
|
Attributable to shareholders of the company
|
I
|
8,806
|
11,885
|
|
Attributable to non-controlling interests
|
23
|
19
|
|
|
Attributable to shareholders in %
|
J
|
99.7
%
|
99.8
%
|
|
Adjusted net income attributable to shareholders of the company
|
K = G x J
|
9,154
|
11,300
|
|
Weighted average number of ordinary shares outstanding (in millions)
|
L
|
2,821
|
3,021
|
|
Basic earnings per share (in USD)
|
M = I/L
|
3.12
|
3.93
|
|
Adjusted earnings per share (in USD)
|
N = K/L
|
3.24
|
3.74
|
1) Restated due to amended principles for 'over-/underlift'. For more information, see Amended principles for Adjusted operating income in the section ‘Use and
reconciliation of non-GAAP financial measures.’
C.
Research and Development, Patents and Licences, etc.
The information set forth under the following headings of the
2024
Annual Report
is incorporated herein by reference:
•
TDI at a glance
in Section 1.5 of Chapter 1 on page
24
;
and
•
Section
2.4. Fuelling innovation
of Chapter 2 on pages 78 - 80.
See also notes
9
Auditor’s remuneration and Research and development expenditures
and
12
Property, plant and equipment
to
the Consolidated financial statements.
D.
Trend Information
The information set forth in Section 1.3 The world in which we operate of Chapter 1 and under the heading “
Our market
perspective
” in Section
2.2 Financial performance
of Chapter 2 on pages
56 - 57
of the
2024
Annual Report
is incorporated herein by
reference. See also “Item 5. Operating and Financial Review―A. Operating Results” of this
2024
Form 20-F
.
E.
Critical Accounting Estimates
Not Applicable.
Equinor
2024
Annual Report on Form 20-F
49
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors and Senior Management
Members of
Equinor
’s board of directors as of
31 December 2024
:
Jon Erik Reinhardsen
Position
: Chair of the Board and chair of the Compensation and Executive Development Committee
Term of office
: Chair of the Board of
Equinor ASA
since 1 September 2017. Up for election in 2025.
Year of birth:
1956
Independent
: Yes
Other directorships
:
Listed companies: Member of the Board of Oceaneering International, Inc.
Non-listed companies: Chair of the Board of Fire Security AS, Smart Ocean AS and Baring Group AS.
Number of shares in
Equinor ASA
: 4,584 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Reinhardsen is a part-time senior advisor with BearingPoint Capital. Reinhardsen was the Chief Executive Officer of
Petroleum Geo-Services (PGS) from 2008 - August 2017. PGS
delivered
global geophysical- and reservoir services. In the
period 2005 - 2008 Reinhardsen was President Growth, Primary Products in the international aluminium company Alcoa Inc. with
headquarters in the US, and he was in this period based in New York. From 1983 to 2005, Reinhardsen held various positions in
the Aker Kværner group, including Group Executive Vice President of Aker Kværner ASA, Deputy Chief Executive Officer and
Executive Vice President of Aker Kværner Oil Gas AS in Houston and Executive Vice President in Aker Maritime ASA.
Education
: Master’s degree in Applied Mathematics and Geophysics from the University of Bergen. He has also attended the
International Executive Program at the Institute for Management Development (IMD) in Lausanne, Switzerland.
Family relations
: No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters
: Reinhardsen is a Norwegian citizen, and resident in Norway.
Anne Drinkwater
Position
: Deputy chair of the Board, chair of the board’s Audit Committee and member of the Board’s safety, Sustainability an
d
Ethics Committee
.
Term of office
: Deputy chair of the Board of
Equinor ASA
since 1 July 2022 and board member since 1 July 2018. Up for
election in 2025.
Year of birth
: 1956.
Independent
: Yes.
Other directorships
:
Listed company: Non-executive member of the board of Balfour Beatty plc.
Number of shares in
Equinor ASA
: 1,100 (as of 31 December 2024)
Loans from
Equinor ASA
: None.
Experience
: Drinkwater was employed with bp in the period 1978-2012, holding a number of different leadership positions in the
company. In the period 2009-2012 she was chief executive officer of bp Canada. She has extensive international experience,
including being responsible for operations in the US, Norway, Indonesia, the Middle East and Africa. Through her career
Drinkwater has acquired a deep understanding of the oil and gas sector, holding both operational roles, and more distinct
business responsibilities.
Education
: Bachelor of Science in Applied Mathematics and Statistics, Brunel University London.
Family relations
: No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters
: Drinkwater is a British citizen, and resident in the United States.
Jonathan Lewis
Position
: Member of the Board, chair of the Board's Safety, Sustainability and Ethics Committee and member of the Board's
Audit Committee.
Term of office
: Member of the Board of
Equinor ASA
since 1 July 2018. Up for election in 2025.
Year of birth
: 1961
Independent
: Yes
Other directorships
:
Non-listed company:Chair of the Board of Associated British Ports
Number of shares in
Equinor ASA
: None (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Lewis was the Chief Executive Officer of Capita plc from December 2017 until January 2024, having previously
spent 30 years working for large multi-national companies in technology-enabled industries. Lewis came to Capita plc from Amec
Foster Wheeler plc, a global consulting, engineering and construction company, where he was CEO from 2016-2017. Prior to
Equinor
2024
Annual Report on Form 20-F
50
this, he held a number of senior leadership positions at Halliburton, where he was employed in the period 1996-2016. Lewis has
previously held several directorships within technology and the oil and gas industry.
Education
: Lewis has a PhD in Reservoir Characterisation, from University of Reading and a Bachelor of Science degree in
Geology from Kingston University.
Family relations
: No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters
: Lewis is a British and US citizen, and resident in the UK.
Finn Bjørn Ruyter
Position
: Member of the Board, the Board's Audit Committee and the Board’s Compensation and Executive Development
Committee.
Term of office
: Member of the Board of
Equinor ASA
since 1 July 2019. Up for election in 2025.
Year of birth
: 1964
Independent
: Yes
Other directorships
:
Non-listed companies: Board member of Cegal in addition to several companies fully or partly owned by Hafslund.
Number of shares in
Equinor ASA
: 620 (as of
31 December 2024
)
Loans from
Equinor ASA
: None
Experience
: Ruyter has since July 2012 been CEO of Hafslund AS. He was CFO in the company 2010-2011. In 2009-2010 he
worked in the Philippine hydro power company SN Aboitiz Power. In the period 1996-2009 he led the power trading entity and
from 1999 also the energy division in Elkem. From 1991-1996 Ruyter worked with energy trading in Norsk Hydro.
Education
: Master’s degree in mechanical engineering from the Norwegian University of Technology (NTNU) and an MBA from
BI Norwegian School of Management.
Family relations:
No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Ruyter is a Norwegian citizen, and resident in Norway.
Haakon Bruun-Hansen
Position
: Member of the Board, the Board's Audit Committee and the Board's Safety, Sustainability and Ethics Committee.
Term of office
: Member of the Board of
Equinor ASA
since 12 December 2022. Up for election in 2025.
Year of birth
: 1960
Independent
: Yes
Other directorships:
Non-listed companies: Member of the Advisory board at Kongsberg Defence Aerospace (KDA)
Number of shares in
Equinor ASA
: None (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Bruun-Hanssen held the position as Chief of Norwegian Defence Forces from 2013-2020, previously having held
the position as Chief
Norw
egian Joint Operational Headquarters from 2011-2013 and Chief Royal Norwegian Navy from 2009-
2011, Chief of staff Royal Norwegian Navy from 2007-2009 and Chief Naval Operations centre from 2003-2007. Prior to this he
has had an extensive career in the Norwegian Military.
Education
: Bruun-Hanssen has a broad education through the Norwegian Military; Petty Officer training school, Norwegian
naval Academy, Submarine Commanding officer course and Higher command course, Forsvarets Høyskole. He is also educated
at Military Command and Staff college, Instituut Defensie Leergangen in The Netherlands and has participated in work sessions
relating to board roles and tasks at Insead In-Board Nordic Academy.
Family relations
: No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters
: Bruun-Hanssen is a Norwegian citizen, and resident in Norway.
Mikael Karlsson
Position:
Member of the Board of Equinor ASA , the Board's Compensation and Executive Development Committee and the
Board's Safety, Sustainability and Ethics Committee.
Term of office:
Member of the Board of Equinor ASA since 1 April 2024. Up for election in 2025.
Year of birth:
1961
Independent:
Yes
Other directorships:
Non-listed companies: Chair of the board of Actis Capital
Number of shares in Equinor ASA:
None (as of 31 December 2024)
Loans from Equinor ASA:
None
Experience:
Karlsson is partner and Vice Chairman of Actis Capital, a leading global investor in sustainable infrastructure. In the
period 2021-2023 he was Chief Investment Officer in Actis, in 2012 he became partner in Actis and had the role as Head of
Energy and Infrastructure from 2015-2021. From 2009-2015 he was CEO in Globeleq, an Actis portfolio company. Karlsson held
several roles in ABB Energy Ventures before he came to Actis.
Equinor
2024
Annual Report on Form 20-F
51
Education:
Master’s in business administration from the University of Massachusetts in USA and a Master of Science in
Industrial Engineering and Management from Linköping Institute of Technology in Sweden.
Family relations:
No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Karlsson is a Swedish citizen, and resident in Switzerland.
Tone Hegland Bachke
Position:
Member of the Board of Equinor ASA and the Board's Compensation and Executive Development Committee.
Term of office:
Member of the Board of Equinor ASA since 1 July 2024. Up for election in 2025.
Year of birth:
1972
Independent:
Yes
Other directorships:
None
Number of shares in Equinor ASA:
5,400 (as of 31 December 2024)
Loans from Equinor ASA:
None
Experience:
Tone Hegland Bachke is a Managing Director and part of the Executive Board of Directors of SHV Holdings in the
Netherlands. She was previously in Telenor ASA where she was Executive Vice President and Group CFO from 2020-2024 and
Senior Vice President and Head of Group Treasury from 2018-2020. She was CEO and CFO in Implenia Norge AS from
2017-2018 and CFO in Kistefos AS from 2015-2017. She has had several managing positions in Akastor ASA, Aker Solutions
ASA, Aker Kværner ASA and Kværner ASA from 2002-2015 and positions as analyst and key account manager in DNB from
1999-2002, as well as analyst in Norske Conoco from 1997-1999.
Education:
MSc in Economics and Business Administration (“Siviløkonom”) from the Norwegian School of Economics (NHH).
Family relations:
No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Bachke is a Norwegian citizen and resident in Norway.
Fernanda Lopes Larsen
Position:
Member of the Board of Equinor ASA and the Board's Safety, Sustainability and Ethics Committee.
Term of office:
Member of the Board of Equinor ASA since 1 July 2024. Up for election in 2025.
Year of birth:
1974
Independent:
Yes
Other directorships:
None
Number of shares in Equinor ASA:
None (as of 31 December 2024)
Loans from Equinor ASA:
None
Experience:
Fernanda Lopes Larsen has served as Executive Vice President of Yara Africa Asia Pacific in Yara International
since October 2020. She has held senior positions roles in Yara, including Senior Vice President of Indirect Procurement
between December 2016 and October 2020. She has been with Yara since 2012 and held roles as Head of Logistics
Procurement Europe in Supply Chain and Central Category Manager roles in Production. Prior to joining Yara Ms. Lopes Larsen
held manufacturing and supply chain positions in the fast-moving consumer goods (FMCG) industry with Procter Gamble
(PG) and within pharmaceutical multinational GSK (GlaxoSmithKline). She has extensive international experience in the
chemical manufacturing industry and broad international experience.
Education:
Master of Science in Civil Engineering from the Graz University of Technology, Austria, Master of Business
Administration from IESE Business School, Spain and Professional Certificate in Corporate Innovation from Stanford University,
United States.
Family relations:
No family relations to other members of the Board, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters:
Lopes Larsen is a Brazilian and British citizen and resident in Singapore.
Stig Lægreid
Position
: Employee representative member of the Board and member of the Safety, Sustainability and Ethics Committee.
Term of office
: Member of the Board of
Equinor ASA
since 1 July 2013. Up for election in 2025.
Year of birth
: 1963
Independent
: No
Other board directorships
: None
Number of shares in
Equinor ASA
: 340 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Lægreid is now a full-time employee representative as the leader of NITO,
Equinor
. He has been occupied as
weight estimator for platform design from 2005 and prior to this as project engineer and constructor for production of primary
metals. Employed in ÅSV and Norsk Hydro since 1985.
Education
: Bachelor's degree, Mechanical Construction from OIH.
Family relations
: No family relationships to other board members, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters
: Lægreid is a Norwegian citizen and resident in Norway.
Equinor
2024
Annual Report on Form 20-F
52
Per Martin Labråten
Position
: Employee representative member of the Board, member of the Safety, Sustainability and Ethics Committee and
member of the Board's Compensation and Executive Development Committee.
Term of office
: Member of the Board of
Equinor ASA
since 8 June 2017. Up for election in 2025.
Year of birth
: 1961
Independent
: No
Other directorships
: Labråthen is a member of the Executive Committee of Styrke trade union and holds a number of offices as
a result of this.
Number of shares in
Equinor ASA
: 1,171 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Labråthen is now a full-time employee representative as the leader of Styrke
Equinor
branch. He has previously
worked as a process technician at the petrochemical plant on Oseberg field in the North Sea.
Education
: Labråthen has a craft certificate as a process/chemistry worker.
Family relations
: No family relations to other members of the Board, members of the Corporate Executive Committee or
members of the Corporate Assembly.
Other matters
: Labråthen is a Norwegian citizen, and resident in Norway.
Hilde Møllerstad
Position
: Employee representative member of the Board and member of the Board's Audit Committee.
Term of office
: Member of the Board of Directors of
Equinor ASA
since 1 July 2019. Up for election in 2025.
Year of birth
: 1966
Independent
: No
Other board directorships
: None
Number of shares in
Equinor ASA
: 4,413 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Møllerstad has been employed by
Equinor
since 1991 and works within petroleum technology discipline in
Exploration Production International
. Møllerstad has been a member of the Corporate Assembly in
Equinor
from 2013 - 2019
and was a board member of Tekna Private from 2012 - 2017 and she has had several trust offices in Tekna
Equinor
since 1993.
Education
: Chartered engineer from NTNU (Norwegian University of Science and Technology) and Project Management
Essential (PME) from BI/NTNU (Norwegian Business School BI/ Norwegian University of Science and Technology).
Family relations
: No family relationships to other board members, members of the Corporate Executive Committee or the
Corporate Assembly.
Other matters
: Møllerstad is a Norwegian citizen and resident in Norway
Members of
Equinor
's corporate executive committee as of
31 December 2024
:
Anders Opedal
Position
: President and Chief Executive Officer (CEO) since 2 November 2020
Year of birth:
1968
External offices
: None
Number of shares in
Equinor ASA
: 65,259 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Opedal joined
Equinor
in 1997. From 2018-2020 he held the position as Executive Vice President Technology,
Projects and Drilling. From August to October 2018, he was Executive Vice President for Development, Production Brazil and
prior to this Senior Vice President for Development, Production International Brazil. He also held the position as
Equinor
’s Chief
Operating Officer. In 2011 he took on the role as Senior Vice President in Technology, Projects and Drilling; where he was
responsible for
Equinor
’s NOK 300 billion project portfolio. From 2007-2010 he served as Chief Procurement Officer. He has held
a range of technical, operational and leadership positions in the company and started as a petroleum engineer in the Statfjord
operations. Prior to
Equinor
, Opedal worked for Schlumberger and Baker Hughes.
Education
: MBA from Heriot-Watt University and master's degree in Engineering (sivilingeniør) from the Norwegian Institute of
Technology (NTH) in Trondheim.
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Opedal is a Norwegian citizen and resident in Norway.
Equinor
2024
Annual Report on Form 20-F
53
Torgrim Reitan
Position
: Executive Vice President and Chief Financial Officer since 6 October 2022
Year of birth
: 1969
External offices
: None
Number of shares in
Equinor ASA
: 19,691 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Reitan joined
Equinor
in 1995. He comes from the position of Senior Vice President for Finance and Control in
Equinor
’s
Renewables
business area, which he held since 2020. From 2018 - 2020 he was Executive Vice President for
Development and production international, and from 2015 - 2018 Reitan held the position as Executive Vice President of
Development and Production USA. Prior to this he held the position as Executive Vice President and Chief Financial Officer from
2010 - 2015. He has held several management positions in
Equinor
prior to this, including Senior Vice President in trading and
operations in the Natural gas business area in 2009 - 2010, Senior Vice President in Performance management and analysis
from 2007 - 2009, and from 2005 - 2007 he was Senior Vice President in Performance Management, Tax and MA. From 1995 -
2004 Reitan held various positions in the Natural Gas business area and corporate functions.
Education
: Master of science degree from the Norwegian School of Economics and Business administration (NHH).
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Torgrim Reitan is a Norwegian citizen and resident in Norway.
Jannicke Nilsson
Position
: Executive Vice President,
Safety, Security Sustainability
(
SSU
) since 1 June 2021.
Year of birth
: 1965
External offices
: Member of the Board of Odfjell SE and Jotun A/S.
Number of shares in
Equinor ASA
: 69,889 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Since joining
Equinor
in 1999, Nilsson has held a number of central leadership position within operation, projects
and technology. From June 2021, Jannicke Nilsson has led the corporate function which shapes and safeguards
Equinor
’s efforts
on the areas of safety, security, and sustainability, including
Equinor
Energy Transition Plan. Prior to this role she was Executive
Vice President and Chief Operating Officer (COO) for five years. As COO she drove
Equinor
’s digital transformation and
delivered tangible results delivering on the company’s strategy. Nilsson has also been a program leader for a company-wide
efficiency programme running from 2014 – 2016.
Education
: MSc in Cybernetics and Process Automation and a BSc in Automation from the Rogaland Regional College/
University of Stavanger.
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other
: Nilsson is a Norwegian citizen and resident in Norway.
Kjetil Hove
Position
: Executive Vice President,
Exploration Production Norway
(
EPN
) since 1 January 2021
Year of birth
: 1965
External offices
: Member of the Board of Offshore Norge
Number of shares in
Equinor ASA
: 27,962 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Hove joined
Equinor
in 1991. He has held several central management positions in
Equinor
. He comes from the
position of Senior Vice President Field Life Extension, which he held since January 2020. Prior to this, Hove was Senior Vice
President for Operations Technology in Development Production Norway. From 2000 - 2012 he worked internationally,
including as Country Manager for
Equinor
in Brazil for 3.5 years. Hove started his career in 1991 in Norsk Hydro within petroleum
technology holding various positions within exploration, field development and operations in Norway.
Education
: Master’s degree in petroleum engineering from Norwegian University of Science and Technology (NTNU).
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Hove is a Norwegian citizen and resident in Norway.
Philippe François Mathieu
Position
: Executive Vice President,
Exploration Production International
(
EPI
) since 1 January 2023
Year of birth
: 1966
External offices
: None
Number of shares in
Equinor ASA
: 11,073 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Mathieu joined
Equinor
in 1995. He comes from the position of Senior Vice President Corporate Strategy, which he
had since October 2019. Mathieu has also held the Senior Vice President position for Joint Operations Support in
Exploration
Production Norway
from 2016 – 2019, Corporate Finance from 2014 – 2016, and Business Development Midstream
Equinor
2024
Annual Report on Form 20-F
54
Infrastructure from 2011 – 2014. Prior to the roles as Senior Vice President, Mathieu held several senior positions within
marketing and supply in commercializing gas contracts in both North Africa and Europe.
Education
: Civil Engineer degree from Ecole Nationale des Travaux Publics de l’Etat and a Master’s degree in Economics from
Université Lumière Lyon and from University of California, Berkeley.
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Philippe Mathieu is a French citizen and resident in Norway.
Geir Tungesvik
Position
: Executive Vice President,
Projects, Drilling Procurement
(
PDP
) since 1 May 2022
Year of birth
: 1961
External offices
: None
Number of shares in
Equinor Energy AS
: 24,024 (as of 31 December 2024)
Loans from
Equinor Energy AS
:
None
Experience
: Geir Tungesvik joined
Equinor
in 1985. He comes from the position as Senior Vice President Project Development.
Previously he has held central management positions in the company including the position as Senior Vice President for Drilling
and Well, Vice President for exploration drilling, Vice President for Grane production field and Vice President for health, safety
and environment in Exploration.
Education
: Master of Science degree in petroleum from the University of Stavanger (UIS) and Master module in strategic
management from the Norwegian Business School (BI).
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Tungesvik is a Norwegian citizen and resident in Norway.
Irene Rummelhoff
Position
: Executive Vice President, Marketing, Midstream Processing (MMP) since 17 August 2018
Year of birth
: 1967
External offices
: Member of the board of Airbus SE
Number of shares in
Equinor Energy AS
: 35,815 (as of 31 December 2024)
Loans from
Equinor Energy AS
: None
Experience
: Rummelhoff joined
Equinor
in 1991. She has held a number of management positions within international business
development, exploration, and the downstream business in
Equinor
. Her most recent position, which she held from June 2015,
was as Executive Vice President New Energy Solutions (NES).
Education
: Master’s degree in Petroleum geosciences from the Norwegian Institute of Technology (NTH)
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Rummelhoff is a Norwegian citizen and resident in Norway.
Jens Økland
Position:
Acting Executive Vice President, Renewables (REN)
since 6 December 2024
Year of birth:
1969
External offices:
None
Number of shares in Equinor ASA:
18,958 (as of 31 December 2024)
Loans from Equinor ASA:
None
Experience:
Økland joined Equinor in 1994. He comes from the position as Senior Vice President of Strategy and Business
Development in the Renewables business area, which he held from 2018. From 2015 -2018 he was Executive Vice President for
Marketing, Midstream and Processing. He has held several management positions in Equinor prior to this, including Vice
President of operations for the Åsgard area in Development and Production Norway in 2013-15, Senior Vice President in the
Natural gas business area from 2010-13, Senior Vice President in Gas Supply and Infrastructure from 2008-2010 and from 2007
– 2008 he was Vice President in Business Development Natural gas Europe.
From 1994 – 2007 has held various positions in the Natural Gas business area and in the retail business.
Education:
Master in Science in business from BI Norwegian Business School in Oslo.
Family relations:
No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters:
Økland is a Norwegian citizen and resident in Norway.
Hege Skryseth
Position
:
Executive Vice President Technology, Digital Innovation
since 1 September 2022
Year of birth
: 1967
External offices
: Member of the Board of Tomra and AutoStore
Number of shares in
Equinor ASA
: 8,021 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Equinor
2024
Annual Report on Form 20-F
55
Experience
: Skryseth joined
Equinor
on 1 September 2022. She comes from the position as Executive Vice President of
Kongsberg, and President of Kongsberg Digital, a position which she held since 2013. Prior to Kongsberg, Skryseth held various
leadership positions in international tech companies such as Microsoft and Geodata (ESRI).
Education
: Executive MBA from NHH and Bachelor from BI, college graduate from NITH.
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Skryseth is a Norwegian citizen and resident in Norway.
Siv Helen Rygh Torstensen
Position
: Executive Vice President and General Counsel, Legal Compliance (LEG) since 1 June 2021.
Year of birth
: 1970
External offices
: Deputy chair of the Council of Ethics of the Government Pension Fund Global
Number of shares in
Equinor ASA
: 18,552 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Rygh Torstensen joined
Equinor
in 1998. She comes from the position of Senior Vice President and General
Counsel, which she held since 1 August 2019. Prior to that she held the position as Head of CEO office from July 2016. From
2011 - 2016 she was Vice President Corporate in LEG. From 1998 - 2011 Rygh Torstensen held various positions within LEG,
including as Corporate Compliance Office and Acting General Counsel. Before joining
Equinor
she worked with the law firm
Cappelen Krefting DA and as a lawyer for Stavanger municipal council.
Education
: Master of Law from the University of Bergen, Norway, and licensed as an Attorney at Law.
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Rygh Torstensen is a Norwegian citizen and resident in Norway.
Jannik Lindbæk
Position
: Executive Vice President Communication since 1 March 2022
Year of birth
: 1965
External offices
: None
Number of shares in
Equinor ASA
: 14,339 (as of 31 December 2024)
Loans from
Equinor ASA
: None
Experience
: Lindbæk joined
Equinor
in 2010. He was appointed Senior Vice President Communication 1 January 2021. He was
Vice President Corporate Communications Political Public Affairs Norway from 2019-2021. Prior to this he was
Equinor
’s Vice
President for communication in Brussels, before that in the CFO Global Business Services, and as Vice President Media
Relations from 2010-2015. Before joining
Equinor
, Lindbæk was SVP Corporate Communication in Aker Solutions, PR manager
in Microsoft and PR consultant in BWPR and GCI Monsen.
Education
: Master’s degree in Comparative Politics from the University of Bergen and London School of Economics.
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Lindbæk is a Norwegian citizen and resident in Norway.
Aksel Stenerud
Position
: Executive Vice President, People Organisation (PO) since 1 March 2022
Year of birth:
1963
External offices
: None
Number of shares in Equinor ASA
: 14,192 (as of 31 December 2024)
Loans from Equinor ASA
: None
Experience
: Stenerud joined
Equinor
in 2008 and has held various leadership roles across the company. His most recent
position, which he held from November 2021, was Vice President Employee Relations in Corporate PO. From August 2018, he
was Vice President for PO in
Exploration Production International
. He has also served as Vice President for
Exploration
Production Norway
from 2014-2018. Stenerud has had a long international career within HR and prior to this he served as an
officer in the Norwegian Airforce.
Education
: Graduate from the Air Defense academy. Minor and Intermediate in phsycology with the Norwegian university of
science and technology in Trondheim.
Family relations
: No family relations to other members of the Corporate Executive Committee, members of the Board or the
Corporate Assembly.
Other matters
: Stenerud is a Norwegian citizen and resident in Norway.
The
information set forth in th
e
2024
Corporate Governance Report
, Chapter
8
, under the headi
n
g “
Corporate assembly
” is also
incorporated herein by reference.
Equinor
2024
Annual Report on Form 20-F
56
B.
Compensation
The information set forth under the following headings of the 2024 Remuneration Policy is incorporated herein by reference:
•
Remuneration of the corporate assembly and board of directors
; and
•
Remuneration of the corporate executive committee.
The information set forth under the following headings of the
2024
Remuneration Report
is
incorporated herein by reference:
•
Notes on roles and remuneration of CEC members in 2024;
•
Execution of policy on executive remuneration in 2025;
•
Derogations and deviations from remuneration policy;
•
Right to reclaim (‘malus and clawback’);
•
Remuneration and share ownership of the board of directors and corporate assembly;
•
Remuneration of the CEC;
•
Shares awarded or due to the CEC in the reported financial year;
•
Total number and value of shares held by the CEC; and
•
Performance and AVP awarded to the CEC members in the reported financial year.
See also note
22
Pensions
to the Consolidated financial statements.
C.
Board Practices
The information set forth under the following headings of the of the
2024
Annual Report
is incorporated herein by reference:
•
Governing bodies
in Section
1.7 Governance and risk management
on pages 26 - 28; and
•
Corporate executive committee
in Section
1.7 Governance and risk management
on pages 29 - 30.
The information set forth under the following headings of the
2024
Corporate Governance Report
is also incorporated herein by
reference:
•
Corporate assembly, board of directors and corporate executive committee
in Chapter
8
; and
•
The information set forth under the heading ‘
The board of directors’ committees
’ in Chapter
9
.
See also “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management” of this
2024
Form 20-F
for more information regarding the expiration date of the current term of office of the members of our board of directors and the period
during which our directors have served in such capacity, and the composition of the board of directors’ committees.
D.
Employees
Our engagement with unions
We respect our employees’ rights to organise and to voice their opinions, and we have the same clear expectations for our suppliers
and partners. We engage with employee representatives on labour matters through a variety of channels, including meetings with
labour unions on all levels of the organisation, works councils, and health and working environment committees. Union
representatives are invited to collaborate in connection with change initiatives and as part of committees that are established to
further develop the company in line with corporate strategy.
In 2024, several collective agreements were negotiated with relevant unions. Some of these were
main settlements that covered both
the annual wage increase and other compensation elements.
These were put into effect at different locations and for various types of
personnel across the organisation. One example is the main settlement carried out for the Brazil organisation in 2024 that led to a
collective agreement for offshore and onshore employees being signed in November. Another example is the signing of a Project
Labour Agreement (PLA) in March 2024 for the construction of the South Brooklyn Marine Terminal in the U.S. This PLA ensures that
the construction of the terminal will provide union jobs for suppliers with fair wages, industry leading safety standards, with robust and
equitable training programmes.
Through 2024, we have had continuous dialogue and collaboration with union representatives and safety delegates on a number of
topics. This includes discussions on changes to the legislative framework, change processes, working time, rotations and shift work
and career development.
Employee Relations oversees union negotiations, and Vice President Employee Relations is accountable for this engagement.
Equinor
2024
Annual Report on Form 20-F
57
Number of Employees
|
Total workforce by region and employment type in the Equinor group in 2024
|
||||
|
as of 31 December 2024
|
||||
|
Geographic location
|
Permanent employees
|
Consultants
|
Total workforce
1
|
Consultants (%)
|
|
Norway
|
21,053
|
828
|
21,881
|
4
|
|
Rest of Europe
|
1,668
|
63
|
1,731
|
4
|
|
Africa
|
63
|
4
|
67
|
6
|
|
Asia
|
120
|
14
|
134
|
10
|
|
North America
|
731
|
87
|
818
|
11
|
|
South America
|
1,004
|
57
|
1,061
|
5
|
|
Australia
|
2
|
2
|
4
|
50
|
|
Total
|
24,641
|
1,055
|
25,696
|
4
|
|
Non - OECD
|
1,154
|
74
|
1,228
|
6
|
|
1
Contractor personnel, defined as third-party service provides who work at our onshore and offshore operations, are not included.
|
||||
|
Number of employees by employment type
|
Total
|
|
Number of employees (Headcount)
|
25,155
|
|
Number of permanent employees (Headcount)
|
24,641
|
|
Number of temporary employees (Headcount)
|
514
|
|
Number of non-guaranteed hours employees (Headcount)
|
0
|
|
Number of full-time employees (Headcount)
1
|
24,126
|
|
Number of part-time employees (Headcount)
1
|
515
|
|
1
Including only permanent employees
|
|
E.
Share Ownership
The information set forth under the following headings of the
2024
Remuneration Report
is incorporated herein by reference:
•
Total number and value of shares held by the members of the board of directors
;
•
Shares held by the members of the corporate assembly; and
•
Total number and value of shares held by the CEC.
The information set forth under the heading “
Equinor
's share incentive plans
” in Section 5.1 of Chapter 5 on page
289
of the 2024
Annual Report is also incorporated herein by reference.
F.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major S
hareholders
The information set forth under the heading “
Major shareholders
” in Section
5.1 Shareholder information
of the
2024
Annual
Report
is incorporated herein by reference.
B.
Related Party Transactions
As part of its general loan arrangement for
Equinor
employees,
Equinor
has granted loans to
Equinor
-employed spouses of
certain members of the corporate executive committee. Permanent employees in specified employee categories may take out a car
loan from
Equinor
in accordance with standardised provisions set by the company. The standard maximum car loan is limited to the
cost of the car, including registration fees, but not exceeding NOK 400,000. Employees remunerated outside the collective labour
Equinor
2024
Annual Report on Form 20-F
58
area are entitled to a car loan up to NOK 600,000 (for employees remunerated as senior managers) or NOK 700,000 (for employees
remunerated as vice presidents and senior vice presidents). The car loan is interest- free, but the tax value, "interest advantage",
must be reported as salary. Permanent employees of
Equinor ASA
may also apply for a consumer loan up to NOK 350,000. The
interest rate on consumer loans corresponds to the standard rate in effect at any time for “reasonable loans” from employer as
decided by the Norwegian Ministry of Finance, i.e., the lowest rate an employer may offer without triggering taxation of the benefit for
the employee.
The information set forth under the heading “Equal treatment of shareholders and transactions with close associates” in Chapter
4
on
page 8 of the
2024
Corporate Governance Report
is also incorporated herein by reference. See also note
27
Related parties
to the
Consolidated financial statements.
C.
Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A.
Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements” of this
2024
Form 20-F
.
Dividend policy and dividends
The information set forth under the heading “
Capital distribution
” in Section
2.2 Financial performance
of the
2024
Annual Report
is
incorporated herein by reference. The information set forth under the heading “
Equity and dividends
” in Chapter
3
on page 7 of the
2024
Corporate Governance Report
is also incorporated herein by reference.
See also note
20
Shareholders' equity, capital distribution and earnings per share
to the Consolidated financial statements.
Legal or arbitration proceedings
Equinor
is involved in a number of proceedings globally concerning matters arising in connection with the conduct of its business.
Equinor
does not believe such proceedings will, individually or in the aggregate, have a significant effect on
Equinor
’s financial
position, profitability, results of operations or liquidity. See also note
11
Income taxes
and note
26
Other commitments, contingent
liabilities and contingent assets
to the Consolidated Financial Statements for a description of certain proceedings, including updated
descriptions of litigation previously reported.
B.
Significant Changes
None.
ITEM 9. THE OFFER AND LISTING
A.
Offer and Listing Details
Equinor
's shares have been listed on the Oslo Børs (ticker: EQNR) and the New York Stock Exchange in the form of American
Depositary Shares (ADS) (ticker: EQNR) since our initial public offering on 18 June 2001. The ADSs traded on the New York Stock
Exchange are evidenced by American Depositary Receipts (ADR), and each ADS represents one ordinary share.
B.
Plan of Distribution
Not applicable.
C.
Markets
See “Item 9.A―The Offer and Listing―Offer and Listing Details” of this
2024
Form 20-F
.
D.
Selling Shareholders
Not applicable.
E.
Dilution
Not applicable.
Equinor
2024
Annual Report on Form 20-F
59
F.
Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A.
Share Capital
Not applicable.
B.
Memorandum and Articles of Association
Equinor
's current articles of association were adopted at the annual general meeting of shareholders o
n 14 May 2024.
The
articles of association are included as exhibit 1 to this
2024
Form 20-F
.
Summary of Equinor’s articles of association:
Name of the company
The registered name is
Equinor ASA
.
Equinor
is a Norwegian public limited company.
Registered office
Equinor
’s registered office is in Stavanger, Norway, registered with the Norwegian Register of Business Enterprises under
number
923 609 016
.
Objective of the company
The objective of
Equinor ASA
is to develop, produce and market various forms of energy and derived products and services, as
well as other business. The activities may also be carried out through participation in or cooperation with other companies.
Share capital
Equinor
’s share capital is
NOK
6,981,953,075.00
divided into
2,792,781,230.00
s
hares.
Nominal value of shares
The nominal value of each ordinary share is
NOK 2.50
.
Board of directors
Equinor
’s articles of association provide that the board of directors shall consist of 9 - 11 directors. The board, including the chair
and the deputy chair, shall be elected by the corporate assembly for a period of up to two years.
Corporate assembly
Equinor
has a corporate assembly comprising 18 members who are normally elected for a term of two years. The general
meeting elects 12 members with four deputy members, and six members with deputy members are elected by and among the
employees.
General meetings of shareholders
Equinor
’s annual general meeting is held no later than 30 June each year. The annual general meeting shall address and decide
adoption of the annual report and accounts, including the distribution of any dividend and any other matters required by law or the
articles of association.
Documents related to the general meetings do not need to be sent to all shareholders if they are accessible on
Equinor
’s
website. A shareholder may request that such documents be sent to him/her.
Equinor
2024
Annual Report on Form 20-F
60
Shareholders may vote in writing, including through electronic communication, during a specified period before the general
meeting.
Equinor
's board of directors adopted guidelines for advance voting in March 2012, and these guidelines are described in the
notices of the annual general meetings.
Marketing of petroleum on behalf of the Norwegian State
Equinor
’s articles of association provide that
Equinor
is responsible for marketing and selling petroleum produced under the
State’s direct financial interest’s (SDFI) shares in production licences on the Norwegian continental shelf as well as petroleum
received by the Norwegian State paid as royalty together with its own production.
Equinor
’s general meeting adopted an instruction in
respect of such marketing on 25 May 2001, as most recently amended by authorisation of the annual general meeting on 15 May
2018.
Nomination committee
The tasks of the nomination committee are to present a recommendation to:
•
The general meeting regarding the election of shareholder-elected members and deputy members of the corporate assembly.
•
The general meeting regarding the election of members of the nomination committee.
•
The general meeting for the remuneration of members of the corporate assembly and the nomination committee.
•
The corporate assembly regarding the election of shareholder-elected members to the board of directors.
•
The corporate assembly for the remuneration for members of the board of directors.
•
The corporate assembly for election of the chair and the deputy chair of the corporate assembly.
The general meeting may adopt instructions for the nomination committee.
Exhibit 2.1 to this
2024
Form 20-F
is also incorporated herein by reference.
C.
Material Contracts
Equinor
is the technical service provider (TSP) for the Kårstø and Kollsnes gas processing plants in accordance with the
technical service agreement between Equinor and Gassco AS.
Equinor
holds an ownership interest in Vestprosess (
34%
), which
transports and processes NGL and condensate. Vestprosess is also operated by Gassco, with
Equinor
as TSP. The technical services
agreement between Gassco AS and
Equinor
is included as Exhibit 4(a)(i), along with the amendments thereto in Exhibit 4(a)(ii), to this
2024
Form 20-F
.
See also note
27
Related parties
to the Consolidated financial statements.
D.
Exchange C
ontrols
Under Norwegian foreign exchange controls currently in effect, transfers of capital to and from Norway are not subject to prior
government approval. An exception applies to the physical transfer of payments in currency exceeding certain thresholds, which must
be declared to the Norwegian custom authorities. This means that non-Norwegian resident shareholders may receive dividend
payments without Norwegian exchange control consent as long as the payment is made through a licensed bank or other licensed
payment institution.
There are no restrictions affecting the rights of non-Norwegian residents or foreign owners who hold our shares to receive
dividends, interest or other similar payments.
E.
Taxation
Norwegian tax consequences
This section describes material Norwegian tax consequences for shareholders in connection with the acquisition, ownership and
disposal of shares and American Depositary Shares (“ADS”) in
Equinor
. The term “shareholders” refers to both holders of shares and
holders of ADSs, unless otherwise explicitly stated.
The outline does not provide a complete description of all Norwegian tax regulations that might be relevant to individual
shareholders. The outline is based on current laws and practices, but these laws and practices are subject to change, possibly also
on a retroactive basis. Thus, the actual tax consequences for a shareholder may differ from the description set out below.
Shareholders should consult their own professional tax adviser about the specific tax consequences of owning and disposing of
shares or ADSs in
Equinor
in their particular situation.
Equinor
2024
Annual Report on Form 20-F
61
Taxation of dividends received by Norwegian shareholders
Corporate shareholders (i.e., limited liability companies and similar entities) that are tax residents in Norway are generally subject
to tax in Norway on dividends received from
Equinor
in the year the dividend is declared. However, under the participation exemption
method, only 3% of the dividends are subject to tax at the ordinary income tax rate of 22% (the tax rate is 25% for entities subject to
the finance tax). The effective tax rate for dividends received by corporate shareholders is thus 0.66% (3% x 22%) for ordinary
corporations and 0.75% (3% x 25%) for entities subject to the finance tax.
Individual shareholders tax resident in Norway are subject to tax in Norway on dividends received from
Equinor
exceeding a tax-
free allowance (the tax-free allowance is described below). Dividends exceeding the tax-free allowance are included in the individual’s
ordinary taxable income in the year the dividend is declared. Dividend income exceeding the tax-free allowance is grossed up with a
factor of 1.72 before being included in the ordinary taxable income, resulting in an effective tax rate of 37.84% (22% x 1.72).
The tax-free allowance is computed for each individual share or ADS. The annual tax-free allowance equals the allowance basis
multiplied by a risk-free interest rate set annually by the tax authorities. The allowance basis is equal to the acquisition cost for such
share or ADS, as adjusted with, inter alia, any repayment of capital and any unused allowance. If the calculated allowance for one
year exceeds the dividends distributed on the share or ADS, the excess (the “unused allowance”) may be carried forward and set off
against future dividends received on the same share or ADS (or gains upon the realisation of the same share or ADS, see below). Any
unused allowance will also be added to the allowance basis for such share or ADS and thus increasing the tax-free allowance in the
following years.
Individual shareholders that are tax residents in Norway may hold the shares (but not the ADS) in
Equinor
through a share
savings account. Dividends on shares owned through the share savings account are only taxable when the dividends are withdrawn
from the account.
Taxation of dividends received by foreign shareholders
Non-resident shareholders are, as a starting point, subject to Norwegian withholding tax on dividends from Equinor at a rate of
25%. Equinor is responsible for deducting the withholding tax upon distribution of dividends to non-resident shareholders.
Corporate shareholders that carry on business activities in Norway, and whose shares or ADSs are effectively connected with
such activities, are not subject to withholding tax. For such shareholders, 3% of the received dividends are subject to the standard
income tax rate of 22% (25% for companies subject to the finance tax).
The effective tax rate for the dividend is thus 0.66% (3% x
22%) if such shareholders are ordinary corporations and 0.75% (3% x 25%) if such shareholders are entities subject to the finance
tax.
The dividend withholding tax does not apply to corporate shareholders in the EEA that are comparable to Norwegian limited
liability companies or certain other types of Norwegian entities, provided they are able to demonstrate that they are genuinely
established and carry on genuine economic business activity within the EEA.
The withholding tax rate of 25% is often reduced in tax treaties between Norway and other countries. The reduced withholding
tax rate will generally only apply to dividends paid on shares held by shareholders who are able to demonstrate that they are the
beneficial owner and entitled to the benefits of the relevant tax treaty.
Individual shareholders that are tax residents within the EEA may apply to the Norwegian tax authorities for a refund if the tax
withheld exceeds the applicable tax treaty rate or the tax that would have been levied based on the standard withholding tax rate
(25%) if the dividends had been reduced with the tax-free allowance (as explained above).
Individual shareholders that are tax residents within the EEA may hold the listed shares (but not the ADSs) in
Equinor
through a
Norwegian share savings account. Dividend on shares owned through the share savings account will only be subject to withholding
tax when withdrawn from the account.
Procedure for claiming a reduced withholding tax rate on dividends
A foreign shareholder that is entitled to an exemption from or reduction of withholding tax on dividends, may request that the
exemption or reduction is applied at source by the distributor. Such request must be accompanied by satisfactory documentation
which supports that the foreign shareholder is entitled to a reduced withholding tax rate. Specific documentation requirements apply.
For holders of shares and ADSs deposited with JPMorgan Chase Bank N.A. (JPMorgan), documentation establishing that the
holder is eligible for the benefits under a tax treaty with Norway, may be provided to JPMorgan. JPMorgan has been granted
permission by the Norwegian tax authorities to receive dividends from us for redistribution to a beneficial owner of shares and ADSs
at the applicable treaty withholding rate.
The statutory 25% withholding tax rate will be levied on dividends paid to shareholders (either directly or through a depositary)
who have not provided the relevant documentation to the relevant party that they are eligible for a reduced rate. Shareholders that
Equinor
2024
Annual Report on Form 20-F
62
believe they are eligible for a reduced rate will in this case have to apply to Skatteetaten (The Norwegian Tax Administration) for a
refund of the excess amount of tax withheld. Please refer to the tax authorities’ web page for more information and the requirements
of such application: skatteetaten.no (Reduced withholding tax on share dividends for foreign shareholders – The Norwegian Tax
Administration).
Taxation on realisation of shares and ADSs
Corporate shareholders that are tax residents in Norway are not subject to tax in Norway on gains derived from the sale,
redemption or other disposal of shares or ADSs in
Equinor
. On the other hand, corporate shareholders that are tax residents in
Norway are not allowed any deduction for losses on shares or ADS in
Equinor
.
Individual shareholders that are tax residents in Norway are subject to tax in Norway on the sale, redemption, or other disposal of
shares or ADSs. Taxable gains or losses in connection with such realisation are included in the individual's ordinary taxable income in
the year of disposal. The taxable gain or loss on the realised shares or ADSs is grossed up with a factor of 1.72 before it is included in
the ordinary taxable income, resulting in an effective tax rate of 37.84% (22% x 1.72).
The taxable gain or deductible loss (before grossing up) is calculated as the sales price adjusted for transaction expenses minus
the taxable basis. A shareholder's tax basis is normally equal to the acquisition cost of the shares or the ADSs (as adjusted with, inter
alia, any repayment of capital). Any unused allowance pertaining to a share or an ADS may be deducted from a taxable gain on the
same share or ADS but may not lead to or increase a deductible loss. Furthermore, any unused allowance may not be set off against
gains from the realisation of other shares or ADSs held by the shareholder.
If a shareholder disposes of shares or ADSs acquired at different times, the shares or ADSs that were first acquired will be
deemed to be first sold (the “FIFO” principle) when calculating the gain or loss for tax purposes.
Individual shareholders that are tax residents in Norway may hold the shares (but not the ADSs) in
Equinor
through a stock
savings account. Gain on shares owned through the stock savings account will only be taxable when withdrawn from the account
whereas loss on shares will be deductible when the account is terminated.
A corporate shareholder or an individual shareholder who ceases to be tax resident in Norway due to Norwegian law or relevant
tax treaty provisions may, in certain circumstances, become subject to Norwegian exit taxation on unrealised capital gains related to
the shares or the ADSs in Equinor.
Shareholders who are not tax residents in Norway are generally not subject to tax in Norway on capital gains. On the other hand,
losses are not deductible on the sale, redemption, or other disposal of shares or ADSs in Equinor, unless the shareholder carries on
business activities in Norway and such shares or ADSs are or have been effectively connected with those activities.
Wealth tax
The shares and the ADSs in Equinor are included in the basis for the computation of wealth tax imposed on individuals who are
tax residents in Norway. Norwegian limited liability companies and certain similar entities are not subject to wealth tax.
For the tax year 2024, the net wealth tax is 1.0% for net worth above a threshold of NOK 1,700,000, and 1.1% for net worth
above a threshold of NOK 20,000,000. The assessment value of listed shares (including ADSs) is 80% of the listed value of such
shares or ADSs on 1 January 2025 (the tax assessment year).
For the tax year 2025, the thresholds for the net wealth tax are
adjusted to NOK 1,760,000 and NOK 20,700,000 respectively.
Non-resident shareholders are not subject to wealth tax in Norway for shares and ADSs in Equinor unless the shareholder is an
individual and the shareholding is effectively connected with their business activities in Norway.
United States tax matters
This section describes the material United States federal income tax consequences for US holders (as defined below) of the
ownership and disposition of shares or ADSs. It only applies to you if you hold your shares or ADSs as capital assets for United
States federal income tax purposes. This discussion addresses only United States federal income taxation and does not discuss all of
the tax consequences that may be relevant to you in light of your individual circumstances, including foreign, state or local tax
consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net
investment income or the alternative minimum tax. This section does not apply to you if you are a member of a special class of
holders subject to special rules, including dealers in securities, traders in securities that elect to use a mark-to-market method of
accounting for securities holdings, tax-exempt organisations, insurance companies, partnerships or entities or arrangements that are
treated as partnerships for United States federal income tax purposes, persons that actually or constructively own 10% of the
combined voting power of voting stock of
Equinor
or of the total value of stock of
Equinor
, persons that hold shares or ADSs as part of
a straddle or a hedging or conversion transaction, persons that purchase or sell shares or ADSs as part of a wash sale for tax
purposes, or persons whose functional currency is not USD.
Equinor
2024
Annual Report on Form 20-F
63
This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed
regulations, published rulings and court decisions, all as currently in effect, and the Convention between the United States of America
and the Kingdom of Norway for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
Income and Property (the “Treaty”). These laws are subject to change, possibly on a retroactive basis. In addition, this section is
based in part upon the representations of the depositary and the assumption that each obligation in the deposit agreement and any
related agreement will be performed in accordance with its terms. For United States federal income tax purposes, if you hold ADRs
evidencing ADSs, you will generally be treated as the owner of the shares represented by those ADRs. Exchanges of shares for
ADRs and ADRs for shares will not generally be subject to United States federal income tax.
A “US holder” is a beneficial owner of shares or ADSs that is, for United States federal income tax purposes: (i) a citizen or
resident of the United States; (ii) a United States domestic corporation; (iii) an estate whose income is subject to United States federal
income tax regardless of its source; or (iv) a trust if a United States court can exercise primary supervision over the trust's
administration and one or more United States persons are authorised to control all substantial decisions of the trust.
You should consult your own tax adviser regarding the United States federal, state and local and Norwegian and other tax
consequences of owning and disposing of shares and ADSs in your particular circumstances.
The tax treatment of the shares or ADSs will depend in part on whether or not we are classified as a passive foreign investment
company, or PFIC, for United States federal income tax purposes. Except as discussed below, under “—PFIC rules”, this discussion
assumes that we are not classified as a PFIC for United States federal income tax purposes.
Taxation of distributions
Under the United States federal income tax laws, the gross amount of any distribution (including any Norwegian tax withheld
from the distribution payment) paid by
Equinor
out of its current or accumulated earnings and profits (as determined for United States
federal income tax purposes), other than certain pro-rata distributions of its shares, will be treated as a dividend that is taxable for you
when you, in the case of shares, or the depositary, in the case of ADSs, receive the dividend, actually or constructively. If you are a
non-corporate US holder, dividends that constitute qualified dividend income will be eligible to be taxed at the preferential rates
applicable to longterm capital gains as long as, in the year that you receive the dividend, the shares or ADSs are readily tradable on
an established securities market in the United States or
Equinor
is eligible for benefits under the Treaty. We believe that
Equinor
is
currently eligible for the benefits of the Treaty and we therefore expect that dividends on the ordinary shares or ADSs will be qualified
dividend income. To qualify for the preferential rates, you must hold the shares or ADSs for more than 60 days during the 121-day
period beginning 60 days before the ex-dividend date and meet certain other requirements. The dividend will not be eligible for the
dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United
States corporations.
The amount of the dividend distribution that you must include in your income will be the value in USD of the payments made in
NOK determined at the spot NOK/USD rate on the date the dividend is distributed, regardless of whether or not the payment is in fact
converted into USD. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal
income tax purposes, will be treated as a non-taxable return of capital to the extent of your tax basis in the shares or ADSs and, to the
extent in excess of your tax basis, will be treated as capital gain. However, Equinor does not expect to calculate earnings and profits
in accordance with United States federal income tax principles. Accordingly, you should expect to generally treat distributions we
make as dividends.
Subject to certain limitations, the 15% Norwegian tax withheld in accordance with the Treaty and paid to Norway will be
creditable or deductible against your United States federal income tax liability, unless a reduction or refund of the tax withheld is
available to you under Norwegian law. Special rules apply in determining the foreign tax credit limitation with respect to dividends that
are subject to the preferential tax rates.
Dividends will generally be income from sources outside the United States and will generally be “passive” income for purposes of
computing the foreign tax credit allowable to you. Any gain or loss resulting from currency exchange rate fluctuations during the
period from the date you include the dividend payment in income until the date you convert the payment into USD will generally be
treated as US-source ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income.
Taxation of capital gains
If you sell or otherwise dispose of your shares or ADSs, you will generally recognise a capital gain or loss for United States
federal income tax purposes equal to the difference between the value in USD of the amount that you realise and your tax basis,
determined in USD, in your shares or ADSs. Capital gain of a non-corporate US holder is generally taxed at preferential rates if the
property is held for more than one year. The gain or loss will generally be income or loss from sources within the United States for
foreign tax credit limitation purposes. If you receive any foreign currency on the sale of shares or ADSs, you may recognise ordinary
income or loss from sources within the United States as a result of currency fluctuations between the date of the sale of the shares or
ADSs and the date the sales proceeds are converted into USD. You should consult your own tax adviser regarding how to account for
payments made or received in a currency other than USD.
Equinor
2024
Annual Report on Form 20-F
64
PFIC rules
We believe that the shares and ADSs should not currently be treated as stock of a PFIC for United States federal income tax
purposes and we do not expect to become a PFIC in the foreseeable future. However, this conclusion is a factual determination that
is made annually and thus may be subject to change. It is therefore possible that we could become a PFIC in a future taxable year.
In general, we will be a PFIC in a taxable year if:
•
at least 75% of our gross income for the taxable year is passive income or
•
at least 50% of the value, determined on the basis of a quarterly average, of our assets in such taxable year is attributable to
assets that produce or are held for the production of passive income.
“Passive income” generally includes dividends, interest, gains from the sale or exchange of investment property rents and
royalties (other than certain rents and royalties derived in the active conduct of a trade or business) and certain other specified
categories of income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation
is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving
directly its proportionate share of the other corporation's income.
If we were to be treated as a PFIC, you will generally be subject to special rules with respect to:
•
any gain you realise on the sale or other disposition of your shares or ADSs and
•
any excess distribution that we make to you (generally, any distributions to you during a single taxable year, other than the
taxable year in which your holding period in the shares or ADSs begins, that are greater than 125% of the average annual
distributions received by you in respect of the shares or ADSs during the three preceding taxable years or, if shorter, your holding
period for the shares or ADSs that preceded the taxable year in which you receive the distribution).
Under these rules:
•
the gain or excess distribution will be allocated ratably over your holding period for the shares or ADSs,
•
the amount allocated to the taxable year in which you realized the gain or excess distribution or to prior years before the first year
in which we were a PFIC with respect to you will be taxed as ordinary income,
•
the amount allocated to each other prior year will be taxed at the highest tax rate in effect for that year, and
•
the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such
year.
Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.
Unless you make certain elections, your shares or ADSs will generally be treated as stock in a PFIC if we were a PFIC at any
time during your holding period in your shares or ADSs, even if we are not currently a PFIC.
In addition, notwithstanding any election you make with regard to the shares or ADSs, dividends that you receive from us will not
constitute qualified dividend income to you if we are a PFIC (or are treated as a PFIC with respect to you) either in the taxable year of
the distribution or the preceding taxable year. Dividends that you receive that do not constitute qualified dividend income are not
eligible for taxation at the preferential rates applicable to qualified dividend income. Instead, you must include the gross amount of any
such dividend paid by us out of our accumulated earnings and profits (as determined for United States federal income tax purposes)
in your gross income, and it will be subject to tax at rates applicable to ordinary income.
If you own shares or ADSs during any year that we are a PFIC with respect to you, you may be required to file Internal Revenue
Service (“IRS”) Form 8621.
Foreign Account Tax Compliance Withholding
A 30% withholding tax will be imposed on certain payments to certain non-US financial institutions that fail to comply with
information reporting requirements or certification requirements in respect of their direct and indirect United States shareholders and/
or United States accountholders. To avoid becoming subject to the 30% withholding tax on payments to them, we and other non-US
financial institutions may be required to report information to the IRS regarding the holders of shares or ADSs and to withhold on a
portion of payments under the shares or ADSs to certain holders that fail to comply with the relevant information reporting
requirements (or hold shares or ADSs directly or indirectly through certain non-compliant intermediaries). However, under proposed
Treasury regulations, such withholding will not apply to payments made before the date that is two years after the date on which final
Equinor
2024
Annual Report on Form 20-F
65
regulations defining the term “foreign passthru payment” are enacted. The rules for the implementation of these requirements have
not yet been fully finalised, so it is impossible to determine at this time what impact, if any, these requirements will have on holders of
the shares and ADSs.
F.
Dividends and Paying Agents
Not applicable.
G.
Statement by Experts
Not applicable.
H.
Documents on Display
Our filings with the SEC are available to the public through the SEC’s website at http://www.sec.gov. We also make available on
our website, free of charge, our annual reports on
Form 20-F
, as well as certain other SEC filings, as soon as reasonably practicable
after they are electronically filed with or furnished to the SEC. The information on our website is not incorporated by reference in this
document.
Documents related to us that are available to the public (this
2024
Form 20-F
, the
2024
Annual Report
, our Articles of
Association, our Code of Conduct, financial statements and our historical financial information for each of the three financial years
preceding the publication of this
2024
Form 20-F
) can be consulted on our website and at:
Equinor ASA
,
Forusbeen 50
,
4035
Stavanger
,
Norway
. Unless stated otherwise, none of these documents form a part of this
2024
Form 20-F
.
I.
Subsidiary Information
Not applicable.
J.
Annual Report to Security Holders
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See notes
4
Financial risk and capital management
and
28
Financial instruments and fair value measurement
to the
Consolidated financial statements.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A.
Debt Securities
Not applicable.
B.
Warrants and Rights
Not applicable.
C.
Other Securities
Not applicable.
D.
American Depositary Shares
Exhibit 2.1 to this
2024
Form 20-F
is incorporated herein by reference.
Name of depositary and address of its principal executive office.
JPMorgan Chase Bank N.A. (JPMorgan), serves as the depositary for
Equinor
’s ADR programme having replaced the Deutsche
Bank Trust Company Americas (Deutsche Bank) pursuant to the Further Amended and Restated Deposit Agreement dated 4
February 2019.
Equinor
2024
Annual Report on Form 20-F
66
Fees and charges payable by a holder of ADSs
JPMorgan collects its fees for the delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs
for the purpose of withdrawal, or from intermediaries acting for them. The depositary collects other fees from investors by billing ADR
holders, by deducting such fees and charges from the amounts distributed or by deducting such fees from cash dividends or other
cash distributions. The depositary may refuse to provide fee-attracting services until its fees for those services are paid.
The charges of the depositary payable by investors are as follows:
|
ADR holders, persons depositing or withdrawing shares, and/or persons
whom ADSs are issued, must pay:
|
For:
|
|
USD 5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
|
Issuance of ADSs, including issuances resulting from a deposit of
shares, a distribution of shares or rights or other property, and
issuances pursuant to stock dividends, stock splits, mergers,
exchanges of securities or any other transactions or events affecting
the ADSs or the deposited securities.
Cancellation of ADSs for the purpose of withdrawal of deposited
securities, including if the deposit agreement terminates, or a
cancellation or reduction of ADSs for any other reason
|
|
USD 0.05 (or less) per ADS
|
Any cash distribution made or elective cash/stock dividend offered
pursuant to the Deposit Agreement
|
|
USD 0.05 (or less) per ADS, per calendar year (or portion thereof)
|
For the operation and maintenance costs in administering the ADR
programme
|
|
A fee equivalent to the fee that would be payable if securities distributed to you had been
shares and the shares had been deposited for issuance of ADSs
|
Distribution to registered ADR holders of (i) securities distributed by
the company to holders of deposited securities or (ii) cash proceeds
from the sale of such securities
|
|
Registration or transfer fees
|
Transfer and registration of shares on our share register to or from
the name of the Depositary or its agent when you deposit or
withdraw shares
|
|
Expenses of the Depositary
|
SWIFT, cable, telex, facsimile transmission and delivery charges (as
provided in the deposit agreement).
Fees, expenses and other charges of JPMorgan or its agent (which
may be a division, branch or affiliate) for converting foreign currency
to USD, which shall be deducted out of such foreign currency.
|
|
Taxes and other governmental charges the Depositary or the custodian have to pay, for
example, stock transfer taxes, stamp duty or withholding taxes
|
As necessary
|
|
Any fees, charges and expenses incurred by the Depositary or its agents for the servicing
of the deposited securities, the sale of securities, the delivery of deposited securities or in
connection with the depositary's or its custodian's compliance with applicable law, rule or
regulation, including without limitation expenses incurred on behalf of ADR holders in
connection with compliance with foreign exchange control regulations or any law or
regulation relating to foreign investment
|
As necessary
|
Direct and indirect payments by the depositary
For the year ended
31 December 2024, J
.P. Morgan reimbursed USD 3,735,450 to the company. Other reasonable costs
associated with the administration of the ADR programme are borne by the company. For the year ended 31 December 2024, such
costs, associated with the administration of the ADR programme, paid by the company, added up to USD 260,258. Under certain
circumstances, including the removal of J.P. Morgan as depositary, the company is required to repay to J.P. Morgan certain amounts
paid to the company in prior periods.
Equinor
2024
Annual Report on Form 20-F
67
Part II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15
. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The management of
Equinor
, with the participation of our chief executive officer and chief financial officer, has evaluated the
effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of
31 December 2024
. Based on that evaluation, the chief executive officer and chief financial officer have concluded that these
disclosure controls and procedures are effective at a reasonable level of assurance.
In designing and evaluating our disclosure controls and procedures, our management, with the participation of the chief
executive officer and chief financial officer, recognised that any controls and procedures, no matter how well designed and operated,
can only provide reasonable assurance that the desired control objectives will be achieved, and that the management must
necessarily exercise judgment when evaluating possible controls and procedures. Because of the limitations inherent in all control
systems, no evaluation of controls can provide absolute assurance that all control issues and any instances of fraud in the company
have been detected.
Management’s Annual Report on Internal Control Over Financial Reporting
The management of
Equinor
is responsible for establishing and maintaining adequate internal control over financial reporting.
Our internal control over financial reporting is a process designed, under the supervision of the chief executive officer and chief
financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
Equinor
’s
financial statements for external reporting purposes in accordance with IFRS Accounting Standards as adopted by the European
Union (EU). The accounting policies applied by the group also comply with IFRS Accounting Standards as issued by the International
Accounting Standards Board (IASB).
The management of
Equinor
has assessed the effectiveness of internal control over financial reporting based on the Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on this assessment, management has concluded that
Equinor
’s internal control over financial reporting as of
31 December
2024
was effective.
Equinor
’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets, provide reasonable assurance that
transactions are recorded in the manner necessary to permit the preparation of financial statements in accordance with IFRS
Accounting Standards, and that receipts and expenditures are only carried out in accordance with the authorisation of the
management and directors of
Equinor
; and provide reasonable assurance regarding the prevention or timely detection of any
unauthorised acquisition, use or disposition of
Equinor
’s assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Moreover,
projections of any evaluation of the effectiveness of internal control to future periods are subject to a risk that controls may become
inadequate because of changes in conditions and that the degree of compliance with policies or procedures may deteriorate.
Attestation Report of the Registered Public Accounting Firm
The effectiveness of internal control over financial reporting as of
31 December 2024
has been audited by Ernst Young AS, an
independent registered accounting firm that also audits Equinor’s Consolidated financial statements. Their audit report on the internal
control over financial reporting is included in the Consolidated financial statements.
Equinor
2024
Annual Report on Form 20-F
68
Changes in Internal Control Over Financial Reporting
There were no significant changes in our internal control over financial reporting during the year ended
31 December 2024
that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Anne Drinkwater qualifies as an “audit committee financial expert” as defined in Item
16A of
Form 20-F
under the Exchange Act and each of them is an independent director under Rule 10A-3 under the Exchange Act.
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Conduct, which is approved by our board of directors, and applies to our board members, all of our
employees (including our principal executive, principal financial and principal accounting officers) and hired personnel. Our Code of
Conduct is filed as Exhibit 11 to this
2024
Form 20-F
.
In 2024, our board of directors approved certain amendments to our Code of Conduct
to reflect Equinor’s continuous focus on
ethical behavior. The update included clarifications to the conflict of interest provisions including the routines related to registration of
directorships, secondary employment and ownership interests.
In 2024, we did not grant any waiver, including any implicit waiver, from any provision of the Code of Conduct to our principal
executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
information set forth under the heading “
External auditor
” in Chapter
15
of the
2024
Corporate Governance Report
is
incorporated herein by reference. See also note
9
Auditor’s remuneration and Research and development expenditures
to the
Consolidated financial statements
.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
See “Item 16G. Corporate Governance―Board committees” of this
2024
Form 20-F
.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The information set forth under the headings
“
Equinor
’
s share incentive plans
”, “
Share buy-backs
” and “
Summary of share buy-
backs
” in Section
5.1 Shareholder information
of the
2024
Annual Report
is also incorporated herein by reference.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Equinor
’s primary listing is on Oslo Børs. The American Depositary Receipts (ADRs) are listed on the New York Stock Exchange
(NYSE). In addition,
Equinor
is a foreign private issuer subject to the reporting requirements of the SEC. ADRs representing the
company’s ordinary shares are listed on the NYSE. While
Equinor
’s corporate governance practices follow the requirements of
Norwegian law,
Equinor
is also subject to the NYSE’s listing rules. As a foreign private issuer,
Equinor
is exempt from most of the
NYSE corporate governance standards that domestic US companies must comply with. However,
Equinor
is required to disclose any
Equinor
2024
Annual Report on Form 20-F
69
significant ways in which its corporate governance practices differ from those applicable to domestic US companies under the NYSE
rules. A statement of differences is set out below:
Corporate governance guidelines
The NYSE rules require domestic US companies to adopt and disclose corporate governance guidelines.
Equinor
’s corporate
governance principles are developed by the management and the board of directors, in accordance with the Norwegian Code of
Practice for Corporate Governance and applicable law. Oversight of the board of directors and management is exercised by the
corporate assembly.
Director independence
The NYSE rules require domestic US companies to have a majority of “independent directors”. The NYSE definition of an
“independent director” sets out five specific tests of independence and requires an affirmative determination by the board of directors
that the director has no material relationship with the company.
Pursuant to Norwegian company law,
Equinor
’s board of directors consists of members elected by the corporate assembly both
for shareholder and employee representatives.
Equinor
’s board of directors has determined that, in its judgment, all shareholder
representatives are independent. In making its determinations of independence, the board focuses, among other things, on there not
being any conflicts of interest between shareholders, the board of directors and the company’s management. It does not strictly make
its determination based on the NYSE’s five specific tests but takes into consideration all relevant circumstances which may in the
board’s view affect the directors’ independence. The directors elected from among
Equinor
’s employees would not be considered
independent under the NYSE rules as they are employees of Equinor. None of these employee representatives are executive officers
of the company. For further information about the board of directors, see “Item 6. Directors, Senior Management and Employees—A.
Directors and Senior Management” of this
2024
Form 20-F
.
Board committees
Pursuant to Norwegian company law, managing the company is the responsibility of the board of directors.
Equinor
has an audit
committee, a safety, sustainability and ethics committee and a compensation and executive development committee. The audit
committee and the compensation and executive development committee operate pursuant to instructions that are broadly comparable
to the applicable committee charters required by the NYSE rules. They report on a regular basis to, and are subject to, oversight by
the board of directors.
Equinor
complies with the NYSE rule regarding the obligation to have an audit committee that meets the requirements of Rule
10A-3 of the US Securities Exchange Act of 1934. The members of Equinor’s audit committee include an employee representative
director.
Equinor
relies on the exemption provided in Rule 10A-3(b)(1)(iv)(C) from the independence requirements of the US
Securities Exchange Act of 1934 with respect to the employee representative director. Equinor does not believe that its reliance on
this exemption will materially adversely affect the ability of the audit committee to act independently or to satisfy the other
requirements of Rule 10A-3 relating to audit committees. The other members of the audit committee meet the independence
requirements under Rule 10A-3.
Among other things, the audit committee evaluates the qualifications and independence of the company’s external auditor.
However, in accordance with Norwegian law, the auditor is elected by the annual general meeting of the company’s shareholders.
Equinor
does not have a nominating/corporate governance committee formed from its board of directors. Instead, the roles prescribed
under the NYSE rules for such committee are principally carried out by the corporate assembly and the nomination committee. The
nomination committee is elected by the general meeting of shareholders, while the corporate assembly is elected partly by the
general meeting of shareholders and partly by and among the employees.
NYSE rules require the compensation committee of US companies to comprise independent directors, recommend senior
management remuneration and determine the independence of advisors when engaging them.
Equinor
, as a foreign private issuer, is
exempted from complying with these rules and is permitted to follow its home country regulations. The compensation committee
consists of four shareholder representatives and one employee representative.
Equinor
’s compensation committee makes
recommendations to the board regarding management remuneration, including that of the CEO. Further, the compensation committee
assesses its own performance and has the authority to hire external advisors. The nomination committee, which is elected by the
general meeting of shareholders, recommends to the corporate assembly the candidates and remuneration of the board of directors.
The nomination committee also recommends to the general meeting of shareholders the candidates and remuneration for the
nomination committee and the shareholder representative candidates and remuneration for the corporate assembly.
Shareholder approval of equity compensation plans
NYSE rules require that, with limited exemptions, all equity compensation plans must be subject to a shareholder vote. Under
Norwegian company law, although the issuance of shares and authority to buy-back company shares must be approved by
Equinor
’s
annual general meeting of shareholders, the approval of equity compensation plans is normally reserved for the board of directors.
Equinor
2024
Annual Report on Form 20-F
70
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
We have
adopted
insider trading policies and procedures governing the purchase, sale, and other dispositions of our securities
by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading
laws, rules and regulations, and listing standards applicable to us. A copy of our insider trading policies and procedures is filed as
Exhibit 16 to this report.
ITEM 16K. CYBERSECURITY DISCLOSURE
Cyber security Risk Management and Strategy
from cyber security threats are interconnected and company-wide, so we seek to ensure shared situational awareness and common
prioritization across different business areas. As described further below under “Cyber security Governance”, we have a cross-
departmental approach to addressing cyber security risk, which includes our employees, management and board of directors.
We use a variety of tools and processes to identify, assess and manage material cyber security risks. We identify cyber security
risks based on an evaluation of various cyber security threat scenarios that may cause disruption to our business or operations.
These scenarios are developed to represent incremental levels of severity of the estimated monetary, reputational, safety, security or
sustainability impact of cyber security threats such as social engineering (phishing), malicious software targeting end-users/network,
unauthorized access by insiders, employee/consultant error and/or unintended errors.
We conduct annual company-wide cyber security assessments to assess the threats posed by external actors to our information
technology and operational technology systems and promote awareness internally of the cyber security threats faced by the company.
We also conduct assessments of cyber security incidents experienced by the company and third parties relevant to the company.
These assessments are conducted in collaboration between the technology, digital and innovation business area, the global
operations technology excellence unit and the corporate security and crisis management unit. The business area risk owners,
regional security managers, country office representatives, political analysis teams, shipping security teams, enterprise data and
cyber security professionals and the emergency response-and-support centre are all involved in and contribute to these assessments.
The results of these assessments are shared regularly with the board of directors, including the safety, sustainability and ethics
committee.
We engage external assessors to conduct maturity testing to evaluate our processes and procedures within specific areas to
ensure continuous development of barriers against cyber security threats. We also seek information from national security authorities
and work closely with IT vendors, external cyber security advisory services and other companies in the industry with the aim of
continuously improving our capabilities to identify, protect, detect, respond to and recover from cyber security threats. We also use
input provided by external auditors as part of independent reviews to improve our cyber security barriers.
Actual and/or potential vulnerabilities in our information systems are continuously monitored by our Cyber Defence Center. We
follow the ISO27001, IEC62443 and National Institute for Standard and Technology (NIST) cyber security frameworks to build
resilience, focusing on capabilities for reducing both the probability and consequences of cyber security incidents. We utilize multiple
tools and practices to monitor external developments related to cyber security which may be relevant to the company, such as alerts/
publications from national cyber security centres, advice from security risk consulting firms and reports from information technology
and cyber security companies, and assess their implications for Equinor with a focus on external factors, such as the threat actors’
presence, capability, intent, past targeting and anticipated future targeting, as well as internal factors such as evidence of attacks on
our information systems. All relevant updates and developments are disseminated across the company through the company’s
intranet and e-mails to interested internal stakeholders.
Equinor
2024
Annual Report on Form 20-F
71
We provide cyber security awareness training to all our employees on an annual basis which is designed to provide guidance for
identifying and avoiding cyber security risks, and require employees in certain roles to complete additional role based, specialized
cyber security trainings.
We have company-wide management systems detailing protocols and response governance for emergency response and
business continuity management. Our management systems reflect industry good practices, internal requirements, national laws and
regulations and ISO/IEC standards to identify, protect, detect, respond and recover from cyber security threats. The corporate security
and crisis management unit is responsible for setting strategic direction and maintaining the company’s corporate framework on crisis
and business continuity management. We have adopted business continuity plans and disaster recovery plans which are designed
with the goal of minimizing the consequences of cyber security incidents, and are reviewed on a regular basis. We also have a
dedicated global cyber security incident response team, comprised of specially trained personnel, that provides assistance and
support in dealing with any actual and/or potential cyber security incidents.
cyber security risks are identified and assessed in the early stages of negotiating contracts and addressed accordingly based on the
nature of services provided. Cyber security risks associated with third parties are monitored through the life cycle of the relationships.
In
2024
, as in previous years, we experienced several cyber security incidents and other disruptions to our information systems.
risks.
Cyber security Governance
audit committee
, reviews and monitors the effectiveness of the ERM framework, which has identified cyber security as one of the top
enterprise risks. The board and audit committee discuss the company’s ERM framework, and three-lines of control model and
learnings from risk-adjusting actions and assurance activities on a bi-annual basis.
least annually the developments, implementation, effectiveness and practice of the company’s cyber security policies, programmes
and strategies, and the effectiveness of internal controls for cyber security matters, including applicable management systems,
policies, practices, processes, leadership, and culture, and summarizes its assessments in an annual report to the board of directors.
The SSEC also receives regular briefings and updates from the Executive Vice President for Safety, Security Sustainability (EVP
SSU) relating to material risks from cyber security threats and management of cyber security-related risks.
together to contribute to the creation and protection of value. As the first line-of-control, cyber security risk is managed in the business
areas as an integral part of employee and manager tasks. Technical experts in each business area are responsible for monitoring the
relevant business area’s cyber security risks and performance, conducting assessments and ensuring a suitable and effective
management system that reflects the relevant business area’s business scope and context, risks and external regulatory
requirements.
The first line shares its experiences and findings in a systematic way with the second line. The responsibility for
reporting material risks from cyber security threats, regularly and systematically, follows the accountability of the business areas up to
their respective executive vice presidents. The executive vice presidents of the business areas meet with the EVP SSU bi-annually to
review top enterprise risk from cyber security threats.
and support to the first line in identifying and executing assurance activities and monitors, supports and challenges the first line in
relation to performance and management of cyber security risks. The
EVP SSU
leads the second line-of-control for cyber security-
related matters and oversees cyber security risks across the company and reports to the Corporate Executive Committee (CEC) and
the SSEC.
The Chief Security Officer (CSO) and Chief Information Security Officer (CISO) assist the EVP SSU
in the day-to-day
monitoring of cyber security risks, which are reported to the CEC. The CEC is responsible for reviewing and approving the strategy
and resourcing of cyber security risk management.
Our current EVP SSU holds a Master’s degree in Cybernetics and Process
Automation and a Bachelor’s degree in Automation from the Rogaland Regional College/University of Stavanger. She has held a
number of central leadership positions within operations, projects and technology since she joined Equinor in 1999, including Chief
Operating Officer, where she drove the company’s digital transformation.
Our third line-of-control is the corporate audit unit which performs independent audits across business areas and management
roles, including cyber security audits, and reports to the board of directors on a periodic basis.
Equinor
2024
Annual Report on Form 20-F
72
Part III
ITEM 17. FINANCIAL STATEMENTS
The
Company has responded to Item 18 in lieu of this item.
ITEM 18. FINANCIAL STATEMENTS
The audited consolidated financial statements as required under Item 18 are attached hereto starting on page 79 of this
2024
Form 20-F
. The audit report of Ernst Young AS, an independent registered accounting firm, is included herein preceding the audited
Consolidated Financial Statements.
Equinor
2024
Annual Report on Form 20-F
73
ITEM 19. EXHIBITS
|
Exhibit no
|
Description
|
|
Exhibit 1
|
|
|
Exhibit 2.1
|
|
|
Exhibit 2.2
|
|
|
Exhibit 2.3
|
|
|
Exhibit 2.4
|
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|
Exhibit 2.5
|
|
|
Exhibit 2.6
|
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|
Exhibit 2.7
|
|
|
Exhibit 4(a)(i)
|
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|
Exhibit 4(a)(ii)
|
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|
Exhibit 4(c)
|
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Exhibit 8
|
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Exhibit 11
|
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Exhibit 12.1
|
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Exhibit 12.2
|
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Exhibit 13.1
|
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Exhibit 13.2
|
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Exhibit 15.1
|
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Exhibit 15.2
|
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Exhibit 15.3
|
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Exhibit 15.4
|
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Exhibit 15.5
|
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Exhibit 15.6
|
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|
Exhibit 15.7
|
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Exhibit 15.8
|
|
|
Exhibit 15.9
|
|
|
Exhibit 16
|
|
|
Exhibit 17
|
|
|
Exhibit 101
|
Interactive Data Files (formatted in Inline XBRL (Extensible Business Reporting Language)). Submitted electronically
with the
2024
Form 20-F
.
|
|
Exhibit 104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
1)
Furnished only.
|
|
The
total amount of long term debt securities of Equinor ASA and its subsidiaries authorised under instruments other than those
listed above does not exceed 10% of the total assets of Equinor ASA and its subsidiaries on a consolidated basis. The company
agrees to furnish copies of any such instruments to the Commission upon request.
Equinor
2024
Annual Report on Form 20-F
74
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F
and that it has duly caused and
authorised the undersigned to sign this annual report on its behalf.
EQUINOR ASA
(Registrant)
By:
/s/ TORGRIM REITAN
Name:
Torgrim Reitan
Title:
Executive Vice President and Chief Financial Officer
Dated: 20 March 2025
Equinor
2024
Annual Report on Form 20-F
75
The reports set out below are provided in accordance with standards of the Public Company Accounting Oversight Board (United
States). Ernst Young AS (PCAOB ID:
1572
) has also issued a report in accordance with law, regulations, and auditing standards
and practices generally accepted in Norway, including International Standards on Auditing (ISAs), which includes opinions on the
Consolidated financial statements and the parent company financial statements of
Equinor ASA
, and on other required matters. That
report is not included
in this
2024
Form 20-F
, but only in the
2024
Annual Report
.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Equinor ASA
.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Equinor ASA and its subsidiaries (Equinor or the Company) as of
31 December 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity and cash
flows for each of the three years in the period ended 31 December 2024, and the related notes (collectively referred to as the
“Consolidated Financial Statements”). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the
financial position of the Company as of 31 December 2024 and 2023, and the results of its operations and its cash flows for each of
the three years in the period ended 31 December 2024, in conformity with IFRS Accounting Standards as issued by the International
Accounting Standards Board (IASB) and in conformity with IFRS Accounting Standards as adopted by the European Union.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of 31 December 2024, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),
and our report dated 4 March 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the Consolidated Financial Statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
Consolidated Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the Consolidated Financial
Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the Consolidated Financial Statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the Consolidated Financial
Statements that were communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
Consolidated Financial Statements and (2) involved our especially challenging, subjective or complex judgments. The communication
of critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are
not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
Equinor
2024
Annual Report on Form 20-F
76
|
Recoverable amounts of production plants and oil and gas assets including assets under development
|
|
|
Description of
the Matter
|
As of 31 December 2024, the Company has recognised production plants and oil and gas assets, including
assets under development, of USD 33,255 million and USD 17,278 million, respectively, within Property, plant and
equipment, and assets classified as held for sale of USD 7,227 million. Refer to Note 14 to the Consolidated
Financial Statements for the related disclosures. As described in Note 14, determining the recoverable amount of
an asset involves an estimate of future cash flows, which is dependent upon management’s best estimate of the
economic conditions that will exist over the asset’s useful life. The asset’s operational performance and external
factors have a significant impact on the estimated future cash flows and therefore, the recoverable amount of the
asset.
|
|
Auditing management’s estimate of the recoverable amount of production plants and oil and gas assets is
complex and involves a high degree of judgement. Significant assumptions used in forecasting future cash flows
are future commodity prices, currency exchange rates, expected reserves, capital expenditures, and the discount
rate.
|
|
|
These significant assumptions are forward-looking and can be affected by future economic and market conditions,
including matters related to climate change and energy transition. As described in Note 3 to the Consolidated Financial
Statements, the effects of the initiatives to limit climate change and the potential impact of the energy transition are
relevant to some of the economic assumptions in the Company’s estimation of future cash flows. Climate considerations
are included directly in the impairment assessments by estimating the carbon costs in the cash flows, and indirectly as
the expected effects of the climate change are included in the estimated commodity prices. As also described in Note 3,
commodity price assumptions applied in value-in-use impairment testing are based on management’s best estimate,
which differs from the price-set required to achieve the goals of the Paris Agreement as described in the International
Energy Agency (IEA) World Energy Outlook’s Announced Pledges Scenario, or the Net Zero Emissions by 2050
Scenario. The impact of the energy transition and potential restrictions by regulators, market and strategic considerations
may also have an effect on the estimated production profiles and the economic lifetime of the Company’s assets and
projects.
|
|
|
Additionally, the treatment of tax in the estimation of the recoverable amount is challenging, as the Company is
subject to different tax structures that are inherently complex, particularly in Norway.
|
|
|
How We
Addressed the
Matter in Our
Audit
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the
Company’s process for evaluating the recoverability of production plants and oil and gas assets including assets
under development, and assets classified as held for sale. This included testing controls over management’s
review of assumptions and inputs to the assessments of impairment and impairment reversals.
|
|
Our audit procedures performed over the significant assumptions and inputs included, among others, evaluation
of the methods and models used in the calculation of the recoverable amount. We also evaluated the relevant tax
effects based on the local legislation of the relevant jurisdictions, particularly in Norway, and tested the clerical
accuracy of the models through independently recalculating the value in use. We involved valuation specialists to
assist us with these procedures. In addition, we compared projected capital expenditures to approved operator
budgets or management forecasts. For those assets previously impaired, we compared actual results to the
forecasts used in historical impairment analyses. We also compared expected reserve volumes with internal
production forecasts and external evaluations of expected reserves and we compared the historical production
with management’s previous production forecasts, with the involvement of our reserves specialists.
|
|
|
To test price assumptions, we evaluated management’s methodology to determine future commodity prices and
compared such assumptions to external benchmarks, among other procedures. We involved valuation specialists
to assist in evaluating the reasonableness of the Company’s assessment of currency exchange rates and the
discount rate, by assessing the Company’s methodologies and key assumptions used to calculate the rates and
by comparing those rates with external information. We also evaluated management’s methodology to factor
climate-related matters into their determination of future commodity price assumptions.
|
|
|
To test carbon cost assumptions, with the involvement of climate change and sustainability specialists, we
evaluated management’s methodology to determine future carbon costs, including assessing the impact from
climate-related matters, and compared management’s assumptions with the current legislation in place in the
relevant jurisdictions and the jurisdictions’ announced pledges regarding escalation of carbon costs.
|
|
|
We evaluated management’s sensitivity analyses over its future commodity prices and carbon cost assumptions
by taking into consideration, among other sources, the Net Zero Emissions by 2050 Scenario and Announced
Pledges Scenario estimated by the International Energy Agency (IEA). We have also evaluated management’s
disclosures related to the consequences of initiatives to limit climate change, including the effects of the
Company’s climate change strategy on the Consolidated Financial Statements and the energy transition’s effects
on estimation uncertainty, discussed in more detail in Notes 3 and 14.
|
|
|
Estimation of the asset retirement obligations
|
|
Equinor
2024
Annual Report on Form 20-F
77
|
Description of
the Matter
|
As of 31 December 2024, the Company has recognised a provision for decommissioning and removal activities of
USD 10,928 million classified within Provisions and other liabilities. Refer to Note 23 to the Consolidated Financial
Statements for the related disclosures. As described in Note 23, the appropriate estimates for such obligations
are based on historical knowledge combined with knowledge of ongoing technological developments,
expectations about future regulatory and technological development and involve the application of judgement and
an inherent risk of significant adjustments. The estimated costs of decommissioning and removal activities require
revisions due to changes in current regulations and technology while considering relevant risks and uncertainties.
|
|
Auditing management’s estimate of the decommissioning and removal of offshore installations at the end of the
production period is complex and involves a high degree of judgement. Determining the provision for such
obligations involves application of considerable judgement related to the assumptions used in the estimate, the
inherent complexity and uncertainty in estimating future costs, and the limited historical experience against which
to benchmark estimates of future costs. Significant assumptions used in the estimate are the discount rates and
the expected future costs, which include the underlying assumptions norms and rates, and time required to
decommission and can vary considerably depending on the expected removal complexity.
|
|
|
These significant assumptions are forward-looking and can be affected by future economic and market conditions,
including matters related to climate change and energy transition. As described in Note 3 to the Consolidated
Financial Statements, the effects of the initiatives to limit climate change and the potential impact of the energy
transition are relevant to some of the economic assumptions in the Company’s estimation of future cash flows.
The impact of the energy transition and potential restrictions by regulators, market and strategic considerations
may also have an effect on the estimated economic lifetime of the Company’s assets and projects. If the
Company’s business cases for the oil and gas producing assets in the future should change materially due to
governmental initiatives to limit climate change, it could affect the timing of cessation of the assets and the asset
retirement obligations (ARO).
|
|
|
How We
Addressed the
Matter in Our
Audit
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the
Company’s process to calculate the present value of the estimated future decommissioning and removal
expenditures determined in accordance with local conditions and requirements. This included testing controls
over management’s review of assumptions described above, used in the calculation of the ARO.
|
|
To test management’s estimation of the provision for decommissioning and removal activities, our audit
procedures included, among others, evaluating the completeness of the provision by comparing significant
additions to property, plant and equipment to management’s assessment of new ARO obligations recognized in
the period.
|
|
|
To assess the expected future costs, among other procedures, we compared day rates for rigs, marine operations
and heavy lift vessels to external market data or existing contracts. For time required to decommission, we
compared the assumptions against historical data. We compared discount rates to external market data. With the
support of our valuation specialists, we evaluated the methodology and models used by management to estimate
the ARO and performed a sensitivity analysis on the significant assumptions. In addition, we recalculated the
formulas in the models.
|
|
|
We evaluated management’s sensitivity analyses over the effect of performing removal five years earlier than
currently scheduled due to potential governmental initiatives to limit climate change. We have also evaluated
management’s disclosures related to the consequences of initiatives to limit climate change, including the effects
of the Company’s climate change strategy on the Consolidated Financial Statements and the energy transition’s
effects on estimation uncertainty, discussed in more detail in Notes 3 and 23.
|
/s/
Ernst Young AS
We have served as the Company’s auditor since 2019.
4 March 2025
Equinor
2024
Annual Report on Form 20-F
78
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Equinor ASA
Opinion on Internal Control over Financial Reporting
We have audited Equinor ASA and subsidiaries’ (the Company) internal control over financial reporting as at 31 December 2024,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as at 31 December 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the 2024 Consolidated Financial Statements of the Company, and our report dated 4 March 2025 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control
over Financial Reporting as set out in Item 15. Controls and Procedures. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst Young AS
Stavanger, Norway
4 March 2025
Equinor
2024
Annual Report on Form 20-F 79
|
79
|
ABOUT US
|
|
Consolidated financial statements
|
|
Equinor
2024
Annual Report on Form 20-F 80
|
80
|
ABOUT US
|
|
Consolidated statement of income
|
|
|
Full year
|
||||
|
(in USD million)
|
Note
|
2024
|
2023
|
2022
|
|
Revenues
|
|
|
|
|
|
Net income/(loss) from equity accounted investments
|
|
(
|
|
|
|
Other income
|
|
|
|
|
|
Total revenues and other income
|
|
|
|
|
|
Purchases [net of inventory variation]
|
(
|
(
|
(
|
|
|
Operating expenses
|
(
|
(
|
(
|
|
|
Selling, general and administrative expenses
|
(
|
(
|
(
|
|
|
Depreciation, amortisation and net impairment
|
(
|
(
|
(
|
|
|
Exploration expenses
|
(
|
(
|
(
|
|
|
Total operating expenses
|
(
|
(
|
(
|
|
|
Net operating income/(loss)
|
|
|
|
|
|
Full year
|
||||
|
(in USD million)
|
Note
|
2024
|
2023
|
2022
|
|
Interest income and other financial income
|
|
|
|
|
|
Interest expenses and other financial expenses
|
(
|
(
|
(
|
|
|
Other financial items
|
(
|
|
(
|
|
|
Net financial items
|
|
|
(
|
|
|
Income/(loss) before tax
|
|
|
|
|
|
Income tax
|
(
|
(
|
(
|
|
|
Net income/(loss)
|
|
|
|
|
|
Attributable to shareholders of the company
|
|
|
|
|
|
Attributable to non-controlling interests
|
|
|
(
|
|
|
Basic earnings per share (in USD)
|
|
|
|
|
|
Diluted earnings per share (in USD)
|
|
|
|
|
Equinor
2024
Annual Report on Form 20-F 81
|
81
|
ABOUT US
|
|
Consolidated statement of comprehensive income
|
|
|
Full year
|
||||
|
(in USD million)
|
Note
|
2024
|
2023
|
2022
|
|
Net income/(loss)
|
|
|
|
|
|
Actuarial gains/(losses) on defined benefit pension plans
|
|
(
|
|
|
|
Income tax effect on income and expenses recognised in OCI
1)
|
(
|
|
(
|
|
|
Items that will not be reclassified to the Consolidated statement of income
|
|
(
|
|
|
|
Foreign currency translation effects
|
(
|
(
|
(
|
|
|
Share of OCI from equity accounted investments
|
(
|
(
|
|
|
|
Items that may subsequently be reclassified to the Consolidated statement of income
|
(
|
(
|
(
|
|
|
Other comprehensive income/(loss)
|
(
|
(
|
(
|
|
|
Total comprehensive income/(loss)
|
|
|
|
|
|
Attributable to the shareholders of the company
|
|
|
|
|
|
Attributable to non-controlling interests
|
|
|
(
|
|
|
1) Other Comprehensive Income (OCI).
|
||||
Equinor
2024
Annual Report on Form 20-F 82
|
82
|
ABOUT US
|
|
Consolidated balance sheet
|
|
|
At 31 December
|
||||
|
(in USD million)
|
Note
|
2024
|
2023
|
|
|
ASSETS
|
||||
|
Property, plant and equipment
|
|
|
||
|
Intangible assets
|
|
|
||
|
Equity accounted investments
|
|
|
||
|
Deferred tax assets
|
|
|
||
|
Pension assets
|
|
|
||
|
Derivative financial instruments
|
|
|
||
|
Financial investments
|
|
|
||
|
Non-current prepayments and financial receivables
|
|
|
||
|
Total non-current assets
|
|
|
||
|
Inventories
|
|
|
||
|
Trade and other receivables
1)
|
|
|
||
|
Current prepayment and financial receivables
1)
|
|
|
||
|
Derivative financial instruments
|
|
|
||
|
Financial investments
|
|
|
||
|
Cash and cash equivalents
|
|
|
||
|
Total current assets
|
|
|
||
|
Assets classified as held for sale
|
|
|
||
|
Total assets
|
|
|
||
|
1)
|
Disaggregated from the previously reported line-item Trade and other receivables.
|
|||
|
2)
|
Disaggregated from the previously reported line-item Trade, other payables and provisions.
|
|||
|
At 31 December
|
|||
|
(in USD million)
|
Note
|
2024
|
2023
|
|
EQUITY AND LIABILITIES
|
|||
|
Shareholders’ equity
|
|
|
|
|
Non-controlling interests
|
|
|
|
|
Total equity
|
|
|
|
|
Finance debt
|
|
|
|
|
Lease liabilities
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
Pension liabilities
|
|
|
|
|
Non-current provisions and other liabilities
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
Total non-current liabilities
|
|
|
|
|
Trade and other payables
2)
|
|
|
|
|
Current provisions and other liabilities
2)
|
|
|
|
|
Current tax payable
|
|
|
|
|
Finance debt
|
|
|
|
|
Lease liabilities
|
|
|
|
|
Dividends payable
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
Total current liabilities
|
|
|
|
|
Liabilities directly associated with the assets classified as held for sale
|
|
|
|
|
Total liabilities
|
|
|
|
|
Total equity and liabilities
|
|
|
|
Equinor
2024
Annual Report on Form 20-F 83
|
83
|
ABOUT US
|
|
Consolidated statement of changes in equity
|
|
|
(in USD million)
|
Share capital
|
Additional
paid-in capital
|
Retained
earnings
|
Foreign currency
translation reserve
|
OCI from equity
accounted
investments
1)
|
Shareholders'
equity
|
Non-controlling
interests
|
Total equity
|
|
At 1 January 2022
|
|
|
|
(
|
|
|
|
|
|
Net income/(loss)
|
|
|
(
|
|
||||
|
Other comprehensive income/(loss)
|
|
(
|
|
(
|
(
|
|||
|
Total comprehensive income/(loss)
|
|
|||||||
|
Dividends
|
(
|
(
|
(
|
|||||
|
Share buy-back
|
(
|
(
|
—
|
(
|
(
|
|||
|
Other equity transactions
|
(
|
—
|
(
|
(
|
(
|
|||
|
At 31 December 2022
|
|
|
|
(
|
|
|
|
|
|
Net income/(loss)
|
|
|
|
|
||||
|
Other comprehensive income/(loss)
|
(
|
(
|
(
|
(
|
(
|
|||
|
Total comprehensive income/(loss)
|
|
|||||||
|
Dividends
|
(
|
(
|
(
|
|||||
|
Share buy-back
|
(
|
(
|
(
|
(
|
(
|
|||
|
Other equity transactions
|
(
|
—
|
(
|
(
|
(
|
|||
|
At 31 December 2023
|
|
|
|
(
|
|
|
|
|
|
Net income/(loss)
|
|
|
|
|
||||
|
Other comprehensive income/(loss)
|
|
(
|
(
|
(
|
(
|
|||
|
Total comprehensive income/(loss)
|
|
|||||||
|
Dividends
|
(
|
(
|
(
|
|||||
|
Share buy-back
|
(
|
—
|
(
|
(
|
(
|
|||
|
Other equity transactions
|
—
|
(
|
(
|
|
(
|
|||
|
At 31 December 2024
|
|
|
|
(
|
|
|
|
|
|
1) OCI items from equity accounted investments that may subsequently be reclassified to the Consolidated statement of income, are presented as part of OCI from equity accounted investments. OCI items that will not be reclassified to the Consolidated
statements of income will be included in retained earnings.
|
||||||||
|
Please refer to
note 20
Shareholders’ equity, capital distribution and earnings per share for more details
|
||||||||
Equinor
2024
Annual Report on Form 20-F 84
|
84
|
ABOUT US
|
|
Consolidated statement of cash flows
|
|
|
Full year
|
||||
|
(in USD million)
|
Note
|
2024
|
2023
|
2022
|
|
Income/(loss) before tax
|
|
|
|
|
|
Depreciation, amortisation and net impairments, including exploration write-offs
|
|
|
|
|
|
(Gains)/losses on foreign currency transactions and balances
|
(
|
(
|
(
|
|
|
(Gains)/losses on sale of assets and businesses
|
(
|
|
(
|
|
|
(Increase)/decrease in other items related to operating activities
1)
|
(
|
(
|
|
|
|
(Increase)/decrease in net derivative financial instruments
|
(
|
|
|
|
|
Interest received
|
|
|
|
|
|
Interest paid
|
(
|
(
|
(
|
|
|
Cash flows provided by operating activities before taxes paid and working
capital items
|
|
|
|
|
|
Taxes paid
|
(
|
(
|
(
|
|
|
(Increase)/decrease in working capital
|
|
|
(
|
|
|
Cash flows provided by operating activities
|
|
|
|
|
|
Cash used in business combinations
|
(
|
(
|
|
|
|
Capital expenditures and investments
|
(
|
(
|
(
|
|
|
(Increase)/decrease in financial investments
2)
|
|
|
(
|
|
|
(Increase)/decrease in derivative financial instruments
|
|
(
|
|
|
|
(Increase)/decrease in other interest-bearing items
|
(
|
(
|
(
|
|
|
Proceeds from sale of assets and businesses
3)
|
|
|
|
|
|
Cash flows provided by/(used in) investing activities
|
(
|
(
|
(
|
|
|
Full year
|
||||
|
(in USD million)
|
Note
|
2024
|
2023
|
2022
|
|
Repayment of finance debt
|
(
|
(
|
(
|
|
|
Repayment of lease liabilities
|
(
|
(
|
(
|
|
|
Dividends paid
|
(
|
(
|
(
|
|
|
Share buy-back
|
(
|
(
|
(
|
|
|
Net current finance debt and other financing activities
|
|
|
(
|
|
|
Cash flows provided by/(used in) financing activities
|
(
|
(
|
(
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
(
|
(
|
|
|
|
Foreign currency translation effects
|
(
|
(
|
(
|
|
|
Cash and cash equivalents at the beginning of the period
(net of overdraft)
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
(net of overdraft)
4)
|
|
|
|
|
|
1) This line item includes a net fair value gain of USD
were a net fair value gain of USD
adjustments relate to inventory, shares and financial investments.
|
||||
|
2) This line item includes the acquisition of
|
||||
|
3) For 2024, this line item includes cash consideration related to the disposals of the businesses in Nigeria and Azerbaijan,
as well as cash consideration related to the sale of gas infrastructure assets in Norway. See note 6 Acquisitions and
disposals for more information.
|
||||
|
4) At
31 December
2024
,
2023
and
2022
, cash and cash equivalents net of overdraft were
|
||||
|
Interest paid in cash flows provided by operating activities excludes capitalised interest of
USD
and
USD
in Capital expenditures and investments in cash flows used in investing activities. Total interest paid amounts to
USD
|
||||
Equinor
2024
Annual Report on Form 20-F 85
|
85
|
ABOUT US
|
|
Notes to the consolidated financial statements
Note
1.
Organisation
The
Equinor group
(
Equinor
) con
sists of
Equinor ASA
and its subsidiarie
s.
Equinor
ASA
is incorporated and
domiciled in
Norway
and listed on the Oslo Børs
(
Norway
) a
nd the New York Stock Exchange (USA).
The address of its registered office
is
Forusbeen 50
,
NO-4035 Stavanger
,
Norway
.
Equinor
’s objective is to develop, produce and market
various forms of energy and derived products and
services, as well as other businesses.
The activities
may also be carried out through participation in or
cooperation with other companies
.
Equinor Energy
AS
, a
100
%
owned operating subsidiary of
Equinor
ASA
and owner of all of
Equinor
's oil and gas activities
and net assets on the Norwegian continental shelf, is
co-obligor or guarantor for certain debt obligations
of
Equinor ASA
.
The Consolidated financial statements of
Equinor
for
the full year
2024
were approved for issuance by the
board of directors on 4 March
2025
and is subject to
approval by the annual general
meeting
on
14
May
2025
.
Note
2.
Accounting policies
|
|
The Consolidated financial statements of
Equinor
ASA
and its subsidiaries (
Equinor
) have been
prepared in accordance with
IFRS Accounting
Standards
as adopted by the European Union (EU)
and with IFRS Accounting Standards as issued by the
International Accounting Standards Board (IASB),
IFRIC® Interpretations issued by IASB and the
additional requirements of the Norwegian Accounting
The Consolidated financial statements are prepared
on the historical cost basis with some exceptions
where fair value measurement is applied. These
exceptions are specifically disclosed in the accounting
policies sections in relevant notes. The material
accounting policies described in these Consolidated
financial statements have been applied consistently
to all periods presented.
Certain amounts in the comparable years have been
reclassified or re-presented to conform to current
year presentation. Unless otherwise noted, all
amounts in the Consolidated financial statements are
denominated in
USD
millions. Due to rounding the
subtotals and totals in some of the tables in the notes
may not equal the sum of the amounts shown in the
primary financial statements.
The line items included in Total operating expenses in
the Consolidated statement of income are presented
as a combination of function and nature in conformity
with industry practice. Purchases [net of inventory
variation] and Depreciation, amortisation and net
impairments are presented on separate lines based
on their nature, while Operating expenses and Selling,
general and administrative expenses as well as
Exploration expenses are presented on a functional
basis. Significant expenses such as salaries, pensions,
etc. are presented by their nature in the notes to the
Consolidated financial statements.
The Consolidated financial statements include the
accounts of
Equinor ASA
and its subsidiaries as well
as
Equinor
’s interests in joint operations and equity
accounted investments. All intercompany balances
and transactions, including unrealised profits and
losses arising from
Equinor
's internal transactions,
Foreign exchange differences arising on translation
of transactions, assets and liabilities to the functional
currency of individual entities in
Equinor
are
recognised as foreign exchange gains or losses in the
Consolidated statement of income within Net financial
items. Foreign exchange differences arising from the
translation of estimate-based provisions are
generally accounted for as part of the change in the
underlying estimate.
When preparing the Consolidated financial
statements, the financial statements of entities with
functional currencies other than the Group’s
presentation currency (
USD
)are translated into
USD
,
w
ith the foreign exchange differences recognised
separately in Other comprehensive income (OCI).
The cumulative translation differences relating to an
entity are reclassified to the Consolidated statement
of income and reflected as a part of the gain or loss
upon disposal of that entity.
Loans from
Equinor ASA
to subsidiaries and equity
accounted investments with other functional
currencies than the parent company, and where
settlement is neither planned nor likely in the
foreseeable future, are considered part of the parent
company’s net investment in these entities. Foreign
exchange differences arising from these loans are
recognised in OCI in the Consolidated financial
In the statement of cash flows, operating activities are
presented using the indirect method. Income/(loss)
before tax is adjusted for changes in inventories and
operating receivables and payables, the effects of
non cash items such as depreciations, amortisations
and impairments, provisions, unrealised gains and
losses and undistributed profits from associates, and
items of income or expense for which the cash effects
are investing or financing cash flows. Increase/
decrease in financial investments, derivative financial
instruments, and other interest-bearing items are all
presented net as part of Investing activities. This
presentation is normally due to the nature of the
transactions which often involve large amounts,quick
turnover,
and short maturities, or consideration of
amendments to IFRS Accounting Standards and
IFRIC Interpretations
New IFRS Accounting Standards, amendments to IFRS
Accounting Standards and IFRIC Interpretations that
became effective and were adopted by
Equinor
as of
1 January 2024
do not have significant impact on
Equinor
’s Consolidated financial statements upon
adoption. This includes:
Equinor
2024
Annual Report on Form 20-F 86
|
86
|
ABOUT US
|
|
•
N
on-current Liabilities with Covenants and
|
|
|
|
Classification of Liabilities as Current or Non-
current - Amendments to IAS 1
•
Lease liability in a Sale and Leaseback -
Amendments to IFRS 16
•
Supplier Finance Arrangements - Amendments to
IAS 7 and IFRS 7
IFRS Accounting Standards, amendments to IFRS
Accounting Standards, and IFRIC Interpretations
issued, but not yet effective:
Equinor
has not early adopted any IFRS Accounting
Standard, amendments to IFRS Accounting
Standards, or IFRIC Interpretations issued, but not yet
effective.
I
FRS 18 Presentation and Disclosure in Financial
Statements
In April 2024, the IASB issued IFRS 18, which will
replace IAS 1 effective from 1 January 2027. The new
standard introduces several key new requirements:
•
Entities are required to classify all income and
expenses into five categories in the Consolidated
statement of income: operating, investing,
financing, income taxes, and discontinued
operations.
•
Additionally, entities are required to present a
newly-defined operating profit subtotal.
•
Management-defined performance measures
(MPMs) shall be disclosed in a single note to the
financial statements.
•
Enhanced guidance for aggregating and
disaggregating information in financial
statements.
In addition, entities are required to use the operating
profit subtotal as the starting point for the
Consolidated statement of cash flows when
presenting cash flows provided by operating
activities under the indirect method.
IFRS 18 applies retrospectively and allows for earlier
application if disclosed.
Equinor is currently assessing the impact of IFRS 18 on
our financial statements. While recognition and
measurement of items will remain unchanged, the
presentation in the Consolidated statement of income
will be affected. Among other impacts, net income/
(loss) from equity accounted companies, as well
gains/(losses) on disposal of interests in such
companies, will be excluded from the new operating
profit subtotal and classified in the investing category.
Foreign currency exchange gains/(losses) not related
to the financing category will be reclassified into the
operating and investing categories. Interest income
and other financial income, and gains/(losses) on
financial investments will be classified in the investing
category.
The cash flow statement will also be affected. The
new operating profit subtotal will be the starting point
for the Consolidated statement of cash flows. Interest
paid will be reclassified from cash flows provided by
operating activities to cash flows provided by/(used
in) financing activities. Interest received and dividends
received will be included in cash flows provided by/
(used in) investing activities.
Equinor will ensure full compliance by the effective
date, including restating comparative information and
preparing for new disclosures.
Other accounting standards:
The following new and amended accounting
standards are not expected to have a significant
impact on Equinor’s Consolidated financial
statements:
•
Lack of Exchangeability - Amendments to IAS 21
•
Classification and Measurement of Financial
Instruments - Amendments to IFRS 9 and IFRS 7
estimation uncertainty
The preparation of the Consolidated financial
statements requires management to make
accounting judgements, estimates and
assumptions.
Information about judgements made in applying
the accounting policies that have the most
significant effects on t
he amounts recognised in
the Consolidated financial statements is described
in the following notes:
Note 6
– Acquisitions and disposals
Note 7
– Total revenues and other income
Note 25
– Leases
Estimates used in the preparati
on of these
Consolidated financial statements are prepared
based on customised models. The assumptions
applied in these estimates are derived from
historical experience, external sources of
information and various other factors that
management assesses to be reasonable under the
current conditions and circumstances. These
estimates and assumptions form the basis of
making the judgements about carrying values of
assets and liabilities when these are not readily
apparent from other sources. Actual results may
differ from these estimates. The estimates and
underlying assumptions are continuously reviewed,
taking into account the current and expected
future set of conditions.
Equinor
is exposed to several underlying economic
factors affecting the overall results, such as
commodity prices, foreign currency exchange
rates, market risk premiums and interest rates as
well as financial instruments with fair values
derived from changes in these factors. The effects
of the initiatives to limit climate changes and the
transition to a lower carbon economy are relevant
to several of these economic assumptions. In
addition,
Equinor
's results are influenced by the
level of production, which in the short term may be
impacted by, for instance, maintenance
programmes, among other factors.
In the long-
term, the results are impacted by the success of
exploration, field developments, operating
activities, and progress within renewables and low
carbon solutions.
The most important matters in understanding the
key sources of estimation uncertainty are
described in each
of the following notes:
Note 3
– Climate change and energy transition
Note 11
– Income taxes
Note 12
– Property, plant and equipment
Note 13
– Intangible assets
Note 23
– Provisions and other liabilities
Note 26
– Other commitments, contingent liabilities
and contingent assets
Equinor
2024
Annual Report on Form 20-F 87
|
87
|
ABOUT US
|
|
Note
3.
Climate change and energy transition
|
|
Risks arising from climate change and the
transition to a lower carbon economy
Policy, legal, regulatory, market and technology
developments related to climate change, can affect
Equinor
’s business plans and financial performance.
Shifts in stakeholder focus between energy security,
affordability and sustainability add uncertainty to
delivery and outcomes associated with
Equinor
’s
strategy. In its long-term planning,
Equinor
analyses
how the global energy markets may develop, such as
future changes in demand for
Equinor
’s products (oil,
gas and power in key markets). Commodity price
sensitivities are presented in a table below, including
the
World Energy Outlook
2024
(WEO)
scenarios
presented by the International Energy Agency (IEA),
Equinor
assesses
risks in short-, medium- and long-
term perspectives, including strategic and emerging
risks that can impact achievement of our corporate
objectives.
C
limate-related risks are assessed from
two perspectives: transition risk, which relates to the
financial robustness of the company’s business model
and portfolio in various decarbonisation scenarios;
and physical climate risk, which relates to the
exposure and potential vulnerability of
Equinor
’s
assets to climate-related perils in different climate
change scenarios.
Equinor
’s
Energy transition plan
and climate related ambitions are responses to the
challenges and opportunities presented by the
energy transition.
On the right is a summary of
relevant risks and risk adjusting actions:
|
Risks – upsides and downsides
|
Risk adjusting actions
|
|
|
Transition risks
|
▪
S
tricter climate laws, regulations, and policies as well as adverse litigation
outcomes could adversely impact
Equinor
's financial results and outlook,
including the value of its assets. These might be direct impacts, or indirect
impacts through changes in consumer behaviour or technology developments.
▪
Multiple factors in the energy transition contribute to uncertainty in future energy
price assumptions and changes in investor and societal sentiment can affect
Equinor
’s access to capital markets and financing costs.
▪
Changing demand and more cost-competitive solutions for renewable energy and
low-carbon solutions represent both threats and opportunities for
Equinor
future
value creation and the value of
Equinor
’s assets.
▪
Strong competition for assets, changing levels of policy support, and different
commercial/contractual models may lead to diminishing returns within the renewable
and low carbon industries and hinder
Equinor
ambitions. These investments may be
exposed to interest rate risk and inflation risk.
▪
Equinor
sees opportunities for value creation in the energy transition through
optimisation of
Equinor
’s oil and gas business and by utilising its competitive
capabilities across new areas of the energy system. In a decarbonising world with a
broad energy mix, policymakers and stakeholders may set a premium on oil and gas
produced in a responsible and increasingly carbon efficient way.
|
▪
Equinor
monitors trends in relevant policies and regulations and
addresses regulatory and policy risk in capital investment processes and
through enterprise risk management in the business line.
▪
Equinor
includes actual or default minimum carbon pricing across
investments, applies price robustness criteria and routinely stress tests
the portfolio for different future price scenarios towards net zero. Hurdle
rates and other financial sensitivity testing are included in decision making.
▪
Equinor
has developed its corporate strategy and Energy transition plan
(ETP) to demonstrate commitment to a low carbon business
transformation that balances investor and societal expectations. This
includes an ambitious abatement plan to reduce absolute emissions and
emissions intensity from Equinor activities.
▪
Equinor
assesses climate-related risks related to external technology
development trends and invests in research, innovation and technology
ventures that support positive value creation for its portfolio. Examples of
relevant technologies within
Equinor
’s portfolio include carbon capture
and storage (CCS), battery technology, solar and wind renewable energy,
low CO₂ intensity solutions, improvements in methane emissions and
application of renewables in oil and gas production.
|
|
Physical climate risks
|
▪
Changes in physical climate parameters could impact
Equinor
's operations, resulting
in disruption to operations, increased costs, or incidents. This could be through
extreme weather events or chronic physical impacts such as rising sea level
accompanied by increased wave heights. As
Equinor
’s renewable portfolio grows,
unexpected changes in meteorological parameters, such as average wind speed or
changes in wind patterns and cloud cover can affect energy production as well as
factors such as maintenance and equipment lifetimes.
|
▪
Physical climate risks are taken into account through technical and engineering
functions in design, operations, and maintenance, with consideration of how the
external physical environment may be changing.
▪
With assistance from leading expert consultants and climate scenario models,
Equinor
continues to assess potential vulnerability of its assets to modelled climate-
related changes in the physical environment. However, there is uncertainty
regarding the magnitude of impact and time horizon for the occurrence of physical
impacts of climate change, which leads to uncertainty regarding the potential
impact for
Equinor
.
|
Equinor
2024
Annual Report on Form 20-F 88
|
88
|
ABOUT US
|
|
Impact on
Equinor
’s financial statements
|
|
Equinor's double materiality assessment identified
transition risks as a
material sustainability matter.
The
quantified impact on the financial statements for
2024
is not significant.
CO₂-cost and EU ETS carbon credits
Equinor
’s oil gas operations in Europe are part of
Accounting policies
Purchased CO₂ quotas under the EU Emissions
Trading System (EU ETS) are reflected at cost in
Operating expenses as incurred in line with emissions.
Accruals for CO₂ quotas required to cover emissions
to date are valued at market price and reflected as
current liabilities within Trade and other payables.
Quotas owned, but exceeding the
emissions incurred
|
Number of EU ETS
quotas in thousands
|
(in USD million)
|
|||
|
2024
|
2023
|
2024
|
2023
|
|
|
Opening balance at 1 January
|
|
|
|
|
|
Allocated free quotas
|
|
|
||
|
Purchased quotas on the ETS market
|
|
|
|
|
|
Sold quotas on the ETS market
|
|
|
||
|
Returned excess free quotas
|
(
|
(
|
||
|
Settled quotas (offset against emissions)
|
(
|
(
|
(
|
(
|
|
Closing balance at 31 December
|
|
|
|
|
|
All numbers in the table are presented gross (100%) for Equinor operated licenses and include both EU ETS and UK ETS
quotas, as received or settled during the calendar year.
|
||||
the EU Emission Trading System (EU ETS).
Equinor
buys EU ETS allowances (quotas or carbon credits)
for the emissions related to its oil gas production
and processing. Currently
Equinor
receives a share of
free quotas according to the EU ETS regulation. The
share of free quotas is expected to be significantly
reduced in the future, partially due to the phasing out
of free quotas for gas production by
2030
.
classified as Other current receivables, as long as
such purchased quotas are acquired in order to
cover own emissions and may be kept to cover
subsequent years’ emissions.
Obligations resulting from current year emissions and
the corresponding amounts for quotas that have
been bought, paid, and expensed, but which have not
yet been surrendered to the relevant authorities, are
reflected net in the balance sheet.
Total
expensed
CO₂ cost related to emissions and
purchase of CO₂ quotas in
Equinor
related to
activities resulting in GHG emissions (
Equinor
’s share
of the operating licences in addition to land-based
facilities) amounted to
USD
465
million
in
2024
,
USD
486
million
in
2023
and
USD
510
million
in
2022
.
A large portion of the cost of CO₂ is related to the
purchase of EU ETS quotas
.
The table below shows,
on a 100% operated basis, an analysis of number of
quotas utilised and the related monetary amounts
recognised in financial statements by
Equinor
’s
operated licences and land- based facilities subject
Allocated free quotas consist of actual free quotas
received in ETS during the
calendar
year. In
2024
,
Equinor received the allocated share of free quotas
for the years
2024
and
2023
, due to a delay in the
allocation schedule. The closing balance for the
number of quotas consists mainly of purchased
quotas for current year and remaining quotas after
the settlement of current and previous year(s),
including free quotas. The closing balance in
USD
consists mainly of the value of the remaining quotas
after the preliminary allocation of the current year
quotas.
|
(in USD million)
|
2024
|
2023
|
|
Offshore, REN
|
|
|
|
Onshore, REN
|
|
|
|
Total Additions to PPE, intangibles and equity accounted investments - REN
|
|
|
|
Low carbon solutions (within MMP)
|
|
|
|
Total Additions to PPE, intangibles and equity accounted investments - REN and LCS
|
|
|
Investments in renewables and low-carbon solutions
Equinor
’s ambition is to build a focused, carbon
efficient oil and gas portfolio complemented with
renewable and low-carbon solutions to create long-
term value while supplying reliable energy with
progressively lower emissions. Equinor continues to
mature its renewables portfolio under development.
During
2024
Equinor closed an asset swap
transaction with bp,
under which Equinor took full
ownership of the Empire Wind lease and projects and
bp took full ownership of the Beacon Wind lease and
projects.
Additions to PPE, intangibles and equity accounted
the additional investments in the South Brooklyn
Marine Terminal (SBMT) and Empire Wind projects in
the US and investments related to projects in the UK
and Europe contributed to the significant increase in
Acquisitions and disposals for more details.
Equinor
2024
Annual Report on Form 20-F 89
|
89
|
ABOUT US
|
|
Equinor
is taking steady steps to industrialise CCS.
During
2024
,
the Northern Lights project was
completed and is now ready to receive CO
2
, and
already fully booked by customers
.
Equinor
is
pursuing the Net Zero Teesside and Northern
Endurance Partnership
projects
in order to provide
thermal power and CCS to local industries in the UK.
In the US, Equinor is participating in one of the largest
US carbon capture and storage projects, Bayou
Bend, which is located along the Gulf Coast in
Southeast Texas. Investments in these projects
amounted to
USD
76
million
in
2024
(
USD
179
million
in
2023
).
|
|
Investments in electrification of oil and gas assets
During
2024
,
Equinor
invested around
USD
180
million
in electrification (around
USD
200
million
in
2023
).
Equinor
’s abatement projects primarily include full
and
partial
electrification of offshore assets in
Norway at key fields and plants, including the Troll,
Oseberg, Njord and the Hammerfest LNG plant,
mainly by power from shore. Emissions abatement
milestones in
2024
included partial electrification of
the Troll B and Troll C fields. Further, Sleipner field
centre, along with the Gudrun platform and other
associated fields, were connected to power from
shore.
Research and development activities (RD)
Equinor
is involved in several RD projects aimed at
optimizing oil and gas activities, reducing emissions,
and developing new business opportunities in
renewables and low carbon solutions.
Equinor
’s total
remuneration and Research and development
Property, Plant Equipment (capitalised RD).
P
ower Purchase Agreements (PPAs)
Equinor holds various long-term power purchase
agreements (PPAs) for power sourced from wind and
solar parks with an expiry date up until 2040. The
agreements imply balancing services provided to the
asset owners, whereby Equinor takes over the long-
term balancing risk related to production. The
majority of these agreements are settled at the
appropriate market price less a balancing fee and
expire by the end of 2026. The agreements include
pay-as-produced elements, but since the majority of
the power purchase agreements are linked to the
applicable market prices, and the power purchased is
mainly sold on power exchanges at market price,
Equinor only holds a limited long-term price risk
related to these agreements. For accounting policies
related to power sales and related purchases, please
Effects on estimation uncertainty
The effects of the initiatives to limit climate changes
and the potential impact of the energy transition are
relevant to some of
Equinor
’s economic assumptions
and future cash flow estimations. The resulting effects
and
Equinor
's exposure to them are sources of
uncertainty. Estimating global energy demand and
commodity prices towards 2050 is challenging due to
various complex factors, including technology change,
taxation and production limits, which may change
over time. This could lead to significant changes in
accounting estimates, such as useful life (depreciation
period and timing of asset retirement obligations),
value-in-use (impairment assessments), and deferred
utilisation period of tax losses carried forward and
recognised as deferred tax assets).
Commodity prices
Significant changes in oil and gas prices outside
planning assumptions could impact our financial
performance.
Equinor
’s commodity price assumptions
applied in value-in-use impairment testing are based
on management’s best estimate of future market
trends.
This price-set is currently not equal to the
price-set
mapped out
to achieve net zero emissions
by 2050 and limit global warming to
1.5
°C
as outlined
in IEA’s WEO Net Zero Emissions
scenario
. Changes in
how the world acts with regards to achieving the
goals in the Paris agreement could have a negative
impact on the valuation of
Equinor
’s assets. A
calculation of possible impairments of Equinor’s
upstream production assets and certain intangible
assets using price assumptions from two IEA WEO
scenarios are provided in the sensitivity table below.
In these estimates
we use management’s price
assumptions until
2030
,
and from
2030
onwards we
apply linear interpolation between IEA’s prices
. In
previous years, a linear bridging was applied between
the current commodity prices and the first price point
provided in the WEO scenarios. To be comparable to
Equinor management’s price assumptions, we adjust
the crude oil prices in the WEO scenarios for
transportation cost and all prices for real inflation in
2024
.
These
illustrative impairment sensitivity
calculations are based on a simplified model with
Cost of CO
2
Climate-related considerations are included directly
in the impairment calculations by estimating the CO₂
taxes in the cash flows, and indirectly through
estimated commodity prices related to supply and
demand. The CO₂ prices also have effect on the
estimated pro
duction profiles and economic cut-off
of the projects.
We apply carbon price assumptions for all
Equinor
’s
assets, also for assets in countries outside EU where
CO
2
is not already subject to taxation
or where
Equinor
has not established specific estimates
. Our
default assumption, in real
2024
terms,
is
a price of
USD
92
per tonne starting in 2026 that increases to
USD
118
per tonne by
2030
and stays flat thereafter.
The EU ETS price has increased significantly from
25
EUR/tonne
in
2020
to an average cost of EU ETS
allowances of
66
EUR/tonne
in
2024
(
86
EUR/tonne
in
2023
). Equinor’s commodity price assumptions
include an EU
ETS
price of near
70
EUR/tonne
for the
next two years. By 2040 the price is assumed to
increase to around
136
EUR/tonne
(
130
EUR/tonne
projected in
2024
)
, and thereafter to around
165
EUR/tonne in 2050 (
150
EUR/tonne
projected in
2024
) in real
2024
terms.
Thus,
Equinor
expects greenhouse gas emission costs
to increase from current levels and to have a wider
geographical range than today. During
2024
,
Equinor
paid CO₂-related fees in Norway, the UK and
Germany for its own operated assets an
d
Nigeria
and Canada for partner-operated assets
.
The CO₂-tax assumptions used for impairment
calculations of Norwegian upstream assets are based
on
Norway’s Climate Action Plan for the period
2021-2030 (Meld. St 13 (2020-2021)), assuming a
gradually increased CO₂ tax (the total of EU ETS +
Norwegian CO₂ tax) in Norw
ay to
2,000
NOK/tonne
(real 2020) in
2030
.
Equinor
2024
Annual Report on Form 20-F 90
|
90
|
ABOUT US
|
|
Sensitivity table
|
|
variables from two scenarios in IEA’s WEO
2024
compared to management’s price assumptions, and
an estimated po
tential impairment effect given these
scenarios.
The IEA prices are adjusted f
or inflation
E1 Climate change in the Annual Report 2024 for
more details about the scenarios.
|
Management's price
assumptions
1)
|
Net Zero Emissions (NZE) by
2050 Scenario
4)
|
Announced Pledges
Scenario (APS)
5)
|
|||||
|
Brent blend, 2030
|
|
USD/bbl
|
|
USD/bbl
|
|
USD/bbl
|
|
|
Brent blend, 2040
|
|
USD/bbl
|
|
USD/bbl
|
|
USD/bbl
|
|
|
Brent blend, 2050
|
|
USD/bbl
|
|
USD/bbl
|
|
USD/bbl
|
|
|
TTF, 2030
|
|
USD/MMBtu
|
|
USD/MMBtu
|
|
USD/MMBtu
|
|
|
TTF, 2040
|
|
USD/MMBtu
|
|
USD/MMBtu
|
|
USD/MMBtu
|
|
|
TTF, 2050
|
|
USD/MMBtu
|
|
USD/MMBtu
|
|
USD/MMBtu
|
|
|
EU ETS
2), 3)
, 2030
|
|
USD/tCO
2
|
|
USD/tCO
2
|
|
USD/tCO
2
|
|
|
EU ETS
2), 3)
, 2040
|
|
USD/tCO
2
|
|
USD/tCO
2
|
|
USD/tCO
2
|
|
|
EU ETS
2), 3)
, 2050
|
|
USD/tCO
2
|
|
USD/tCO
2
|
|
USD/tCO
2
|
|
|
Illustrative potential impairment (USD)
|
~
|
billion
|
|
billion
|
|||
|
1)
|
Management’s future commodity price assumptions applied when estimating value in use, see
note 14
Impairments.
|
||||||
|
2)
|
Scenarios: Price of CO₂ quotas in advanced economies with net zero pledges, not including any other CO₂ taxes.
|
||||||
|
3)
|
EU ETS price assumptions have been translated from EUR to USD using Equinor’s assumptions for currency rates,
EUR/
USD
=
|
||||||
|
4)
|
A scenario where the world moves on a potential path towards limiting global warming to 1.5 °C relative to pre-
industrial levels.
|
||||||
|
5)
|
A scenario where all national energy and climate targets made by governments are met on time and in full. Using this
scenario, the world is expected to reach a 1.7ºC increase in the year 2100.
|
||||||
An increase in systematic climate risk may result in a
higher discount rate applied for impairment testing
further information on discount rate sensitivity.
The IEA scenarios primarily stress oil and gas prices,
not reflecting the potential impact on trading and
refinery margins in MMP, or
Equinor
’s
renewable
assets and low carbon projects. For most MMP assets,
margin movements are not directly correlated to oil
and gas price fluctuations. Further, many of Equinor’s
renewable assets have fixed price offtake contracts,
and therefore are not directly sensitive to power
prices.
MMP and REN segments represent
only
around
14
%
of
Equinor
’s total book value of non-
current segment assets and equity accounted
Including these assets in the calculation of illustrative
potential impairments would therefore not be
expected to have a material impact
Robustness of
Equinor
’s portfolio, and risk of stranded
assets
The
transition to renewable energy, technological
development, and the expected reduction in global
demand for carbon-based energy, may impact the
future profitability of certain upstream oil and gas
assets.
Equinor
uses scenario analysis to outline
different possible energy futures, some of which imply
lower oil and natural gas prices and higher CO₂ tax. If
this materialises, it can lead to a decrease in the cash
flow from oil and gas, and potentially reduce the
economic lifetime of some assets.
Equinor
seeks to
mitigate this risk by improving the resilience of the
existing upstream portfolio, maximising the efficiency
of the infrastructure on the NCS and optimising the
high- quality international portfolio. The project
portfolio is robust to low oil and gas prices and
actions are in place to maintain cost discipline across
the company.
Equinor
continues to pursue high-value
barrels to enhance the portfolio, through exploration,
increased recovery in addition to acquisitions and
divestments, with the expectation of strong oil and
gas cash flow from operations. We further aim to
maintain significant capex flexibility in the current
port
folio, with non-sanctioned projects representing a
substantial part of the expected capex for the period
2026-2027
and beyond. This is expected to allow
Equinor
to optimise and re-prioritise non-sanctioned
projects to ensure continued generation of high value
t
hrough cycles.
Based on the current production profiles,
approximately
57
%
of
Equinor
’s
proved
oil and gas
reserves, as defined by the SEC, are planned to be
produced in the period
2025-2030
and more than
indicates
a lower risk of early cessation of production
and can provide flexibility in adapting to the changing
market conditions or a shift in global energy demand.
for the definition of proved and expected oil and gas
reserves.
Equinor
will continue to selectively explore for new
resources with a focus on mature areas with existing
infrastructure to minimise emissions and maximise
value. During the transition,
Equinor
will continue to
supply oil and gas beyond
2035
but we anticipate
that it will form an increasingly smaller proportion of
our portfolio over time due to both declining demand
and the expected production decline
on
the
Norwegian Continental Shelf. Reaching
Equinor
’s net
emissions will require a company-wide, coordinated
effort to execute and mature the abatement projects,
improve energy efficiency, develop new technologies,
and strengthen the resilience of the portfolio.
Equinor
aims to achieve a
15
-
20
%
reduction in net carbon
intensity by
2030
and a
30
-
40
%
r
eduction
by
2035
,
including scope 3 emissions. The combination of
increased renewables and decarbonised energy, the
scale up of low carbon solutions such as CCS and
optimisation of the oil and gas portfolio provides
confidence that
Equinor
can meet its medium-term
ambitions. As such,
Equinor
’s ambitions in the Energy
transition plan have currently not resulted in the
identification of additional assets being triggered for
impairment or earlier cessation.
Any future exploration may be restricted by policies,
regulations, market, and strategic considerations.
Provided that the economic assumptions would
deteriorate to
such an extent that undeveloped
assets controlled by
Equinor
should not materialise,
Equinor
2024
Annual Report on Form 20-F 91
|
91
|
ABOUT US
|
|
assets at risk are mainly comprised of the intangible
assets Oil and Gas prospects, signature bonuses and
the capitalised exploration costs, with a total carrying
value of
USD
3.6
billion
in
2024
,
1.1
being in EPN and
13
Intangible assets for more information regarding
Equinor
’s intangible assets.
|
|
Equinor
has not currently identified material physical
risk related to potential exposure of its asset portfolio
in modelled climate change scenarios, and will
continue to develop its approach for detailed
assessment going forward.
Timing of Asset Retirement Obligations (ARO)
As mentioned above, there are currently no assets
triggered for earlier cessation as a result of
Equinor
’s
ambitions in the Energy transition plan
However, if the
business cases of
Equinor
’s producing oil and gas
assets should change materially, this could affect the
timing of cessation of the assets. A shorter production
period will increase the carrying value of the liability.
To
illustrate, performing removal five years earlier
than currently scheduled would increase the liability
by aro
und
USD
1.1
billion
before tax and excluding
h
eld for sale assets (around
USD
1.2
billion
in
2023
),
Provisions and other liabilities for more information
regarding
Equinor
’s ARO, including expected timing of
cash outflows of recognised asset retirement
obligations. The most significant cash outflows are
expected between 2035-2039.
Note
4.
Financial risk and capital
management
General information and financial risks
Equinor
's business activities naturally expose
Equinor
to financial risks such as market risk (including
commodity price risk, currency risk, interest rate risk
and equity price risk), liquidity risk and credit risk.
Equinor
’s approach to risk management includes
assessing and managing risk in activities using a
holistic risk approach, by considering relevant
correlations at portfolio level between the most
important market risks and the natural hedges
inherent in
Equinor
’s portfolio. This approach allows
Equinor
to reduce the number of risk management
transactions and avoid sub-optimisation.
The corporate risk committee, which is an advisory
body in Enterprise Risk Management, is responsible
for
Equinor
’s Enterprise Risk Management and for
proposing appropriate measures to adjust risk at the
corporate level. This includes assessing
Equinor
’s
financial risk policies.
Market risk
Equinor
operates in the worldwide crude oil, refined
products, natural gas, and electricity markets and is
exposed to market risks including fluctuations in
hydrocarbon prices, foreign currency rates, interest
rates, and electricity prices that can affect the
revenues and costs of operating, investing, and
financing. These risks are managed primarily on a
short-term basis with a focus on achieving the highest
risk-adjusted returns for
Equinor
within the given
mandate. Long term exposures are managed at the
corporate level, while short-term exposures are
managed according to trading strategies and
mandates. Mandates in the trading organisations
within crude oil, refined products, natural gas, and
electricity are relatively restricted compared to the
total market risk of
Equinor
.
Commodity price risk
Equinor
’s most important long-term commodity risk
(crude oil and natural gas) is related to future market
prices as
Equinor
´s risk policy is to be exposed to both
upside and downside price movements. In the longer
term, also power price risk is to a large extent
expected to contribute to
Equinor
’s commodity price
risk portfolio. To manage short-term commodity risk,
Equinor
enters into commodity-based derivative
contracts, including futures, options, over-the-counter
(OTC) forward contracts, market swaps and
contracts for differences related to crude oil,
petroleum products, natural gas, power and
emissions.
Equinor
’s bilateral gas sales portfolio is
exposed to various price indices with a combination
of gas price markers. The term of crude oil and
refined oil products derivatives are usually less than
one year, and they are traded mainly on the Inter-
|
Commodity price sensitivity
|
At 31 December
|
|||
|
2024
|
2023
|
|||
|
(in USD million)
|
-
|
+
|
-
|
+
|
|
Crude oil and refined products net gains/(losses)
|
|
(
|
|
(
|
|
Natural gas, electricity and CO₂ net gains/(losses)
|
(
|
|
|
(
|
Continental Exchange (ICE), the CME group, the OTC
Brent market, and crude and refined products swap
markets. The term of natural gas, power, and emission
derivatives is usually three years or less, and they are
mainly OTC physical forwards and options, NASDAQ
OMX Oslo forwards, and futures traded on the
European Energy Exchange (EEX), NYMEX and ICE.
sensitivities of
Equinor
's commodity-based derivative
contracts.
Equinor
's assets and liabilities resulting
from commodity-based derivative contracts consist
of both exchange traded and non-exchange traded
instruments, including embedded derivatives that
have been bifurcated and recognised at fair value in
the Consolidated balance sheet.
Pri
ce risk sensitivities at the end of
2024
and
2023
at
change based on the duration of the derivatives.
Since none of the derivative financial instruments
included in the table below are part of hedging
relationships, any changes in the fair value would be
Equinor
2024
Annual Report on Form 20-F 92
|
92
|
ABOUT US
|
|
Currency risk
|
|
Equinor
’s cash flows from operating activities deriving
predominantly from oil and gas sales, operating
expenses and capital expenditures are mainly in
USD
,
but taxes, dividends to shareholders on the Oslo Børs
and a share of our operating expenses and capital
expenditures are in NOK. Accordingly,
Equinor
’s
currency management is primarily linked to mitigate
currency risk related to payments in NOK. This means
that
Equinor
regularly purchases NOK, primarily spot,
but also on a forward basis using conventional
derivative instruments.
instruments has been calculated, by assuming a
10
%
reasonable possible change in the most relevant
foreign currency exchange rates that impact
Equinor
’s financial accounts, based on balances at
31 December 2024
. As of
31 December 2023
, a
change of
11
%
in the most relevant foreign currency
exchange rates was viewed as a reasonable possible
change. With reference to the table below, a negative
figure represents a negative equity impact/loss, while
a positive figure represents a positive equity impact/
gain.
Interest rate risk
Bonds are normally issued at fixed rates in a variety
of currencies (among others
USD
, EUR and GBP) and
some of these bonds are converted to floating
USD
bonds by using interest rate and currency swaps.
Equinor
manages its interest rates exposure on its
bond portfolio based on risk and reward
considerations from an enterprise risk management
perspective. This means that the fixed/floating mix on
interest rate exposure may vary from time to time.
For more detailed information about
Equinor
’s long-
calculated by assuming a change o
f
100
basis
points
as a reasonable possible change in interest rates at
the end of
2024
. In
2023
, a change of
130
b
asis points
was viewed as a reasonable possible change in
interest rates. A decrease in interest rates will have
an estimated positive impact on net financial items in
the Consolidated statement of income, while an
increase in interest rates will have an estimated
negative impact on net financial items in the
|
Currency risk sensitivity
|
At 31 December 2024
|
||
|
(in USD million)
|
NOK
|
EUR
|
GBP
|
|
Impact from a
|
|||
|
Shareholders equity through OCI
|
|
|
|
|
Shareholders equity through PL
|
|
(
|
(
|
|
Impact from a
|
|||
|
Shareholders equity through OCI
|
(
|
(
|
(
|
|
Shareholders equity through PL
|
(
|
|
|
|
Currency risk sensitivity
|
At 31 December 2023
|
||
|
(in USD million)
|
NOK
|
EUR
|
GBP
|
|
Impact from a
|
|||
|
Shareholders equity through OCI
|
|
|
|
|
Shareholders equity through PL
|
(
|
(
|
(
|
|
Impact from a
|
|||
|
Shareholders equity through OCI
|
(
|
(
|
(
|
|
Shareholders equity through PL
|
|
|
|
|
Interest risk sensitivity
|
At 31 December
|
|||
|
2024
|
2023
|
|||
|
(in USD million)
|
-
points
|
+
points
|
-
points
|
+
points
|
|
Positive/(negative) impact on net financial items
|
|
(
|
|
(
|
Equinor
2024
Annual Report on Form 20-F 93
|
93
|
ABOUT US
|
|
Equity price risk
|
|
Equinor
’s captive insurance company holds listed
equity securities as part of its portfolio. In addition,
Equinor
holds some other listed and non-listed
equities, mainly for long-term strategic purposes. By
holding these assets,
Equinor
is exposed to equity
price risk, defined as the risk of declining equity prices,
which can result in a decline in the carrying value on
certain of
Equinor
’s assets recognised in the balance
sheet. The equity price risk in the portfolio held by
Equinor
’s captive insurance company is managed,
with the aim of maintaining a moderate risk profile,
through
geographical diversification and the use of
broad benchmark indexes.
|
Equity price sensitivity
|
At 31 December
|
|||
|
2024
|
2023
|
|||
|
(in USD million)
|
-
|
|
-
|
|
|
Net gains/(losses)
|
(
|
|
(
|
|
The following equity pr
ice risk sensitivity has been
calculated, by assuming a
35
%
reasonable possible
change in equity prices that impact
Equinor
’s financial
accounts, based on balances at
31 December 2024
.
At
31 December 2023
, a change of
35
%
in equity
prices was equally viewed as a reasonable
possible
change.
The estimated gains and the estimated losses
following from a change in equity prices would impact
the Consolidated statement of income.
Liquidity risk
Liquidity risk is the risk that
Equinor
will not be able to
meet obligations of financial liabilities when they
become due. The purpose of liquidity management is
to ensure that
Equinor
always has sufficient funds
available to cover its financial obligations.
The main cash outflows include the quarterly dividend
payments and Norwegian petroleum tax payments
made six times per year. Trading in collateralised
commodities and financial contracts also exposes
Equinor
to liquidity risk related to potential collateral
calls from counterparties.
If the cash flow forecasts indicate that the liquid
assets will fall below target levels, new long-term
funding will be considered.
Equinor
raises debt in all
major capital markets (USA, Europe and Asia) for
long-term funding purposes. The policy is to have a
|
At 31 December
|
||||||
|
2024
|
2023
|
|||||
|
(in USD million)
|
Non-
derivative
financial
liabilities
|
Lease
liabilities
|
Derivative
financial
liabilities
|
Non-
derivative
financial
liabilities
|
Lease
liabilities
|
Derivative
financial
liabilities
|
|
Year 1
|
|
|
|
|
|
|
|
Year 2 and 3
|
|
|
|
|
|
|
|
Year 4 and 5
|
|
|
|
|
|
|
|
Year 6 to 10
|
|
|
|
|
|
|
|
After 10 years
|
|
|
|
|
|
|
|
Total specified
|
|
|
|
|
|
|
maturity profile with repayments not exceeding
5
%
of
capital employed in any year for the nearest five
years.
Equinor
’s non- current financial liabilities have
a weighted average maturity of approximately nine
years. For more information about
Equinor
’s non-
Short-term funding needs will normally be covered by
the
USD
5.0
billion
US Commercial paper programme
(CP) which is backed by a revolving credit facility of
USD
5.0
billion
, supported by
19
core banks, maturing
i
n
2029
. Th
e facility supports secure access to
funding, supported by the best available short-term
rating. As at
31 December 2024
the facility has not
been drawn upon.
undiscounted contractual cash flows, for
Equinor
’s
financial liabilities.
Equinor
2024
Annual Report on Form 20-F 94
|
94
|
ABOUT US
|
|
Credit risk
|
|
Credit risk is the risk that
Equinor
’s customers or
counterparties will cause
Equinor
financial loss by
failing to honour their obligations. Credit risk arises
from credit exposures with customer accounts
receivables as well as from financial investments,
derivative financial instruments and deposits with
financial institutions.
Equinor
uses risk mitigation tools
to reduce or control credit risk both on a
counterparty and portfolio level. The main tools
include bank and parental guarantees, prepayments,
and cash collateral.
Prior to entering into transactions with new
counterparties,
Equinor
’s credit policy requires all
counterparties where
Equinor
has material credit
exposure to be formally identified and assigned
internal credit ratings. The internal credit ratings
reflect
Equinor
’s assessment of the counterparties'
credit risk and are based on a quantitative and
qualitative analysis of recent financial statements and
other relevant business information. All
counterparties are re-assessed regularly
.
Equinor
has pre-defined limits for the absolute credit
risk level allowed at any given time on
Equinor
’s
portfolio as well as maximum credit exposures for
individual counterparties.
Equinor
monitors the
portfolio on a regular basis and individual, material
exposures against limits on a daily basis.
Equinor
’s
total credit exposure is geographically diversified
among a number of counterparties within the oil and
energy sector, as well as larger oil and gas
consumers and financial counterparties. The majority
of
Equinor
’s credit exposure is with investment- grade
counterparties.
Equinor
’s financial receivables and derivative financial
instruments split by
Equinor
’s assessment of the
counterparty's credit risk. Receivables that are
overdue with more than 30 days represents less than
A provision has been recognised for expected credit
losses of trade and other receivables using the
expected credit loss model. Only non-exchange
traded instruments are included in derivative financial
instruments.
|
(in USD million)
|
Non-current
financial
receivables
|
Current
financial
receivables
|
Trade and
other
receivables
|
Non-current
derivative
financial
instruments
|
Current
derivative
financial
instruments
|
|
At 31 December 2024
|
|||||
|
Investment grade, rated A or above
|
|
|
|
|
|
|
Other investment grade
|
|
|
|
|
|
|
Non-investment grade or not rated
|
|
|
|
|
|
|
Total financial assets
|
|
|
|
|
|
|
At 31 December 2023
|
|||||
|
Investment grade, rated A or above
|
|
|
|
|
|
|
Other investment grade
|
|
|
|
|
|
|
Non-investment grade or not rated
|
|
|
|
|
|
|
Total financial assets
|
|
|
|
|
|
|
|
|||||
Following the disaggregation of Trade and other receivables, see
note 16
and
18
for details, a new column Current
financial receivables has been added to the table above.
Equinor
2024
Annual Report on Form 20-F 95
|
95
|
ABOUT US
|
|
|
|
the terms of various offsetting agreements for
financial assets and liabilities. These agreements are
mainly entered into to manage the credit risks
associated with over-the-counter commodity trading
as well as regular commodity purchases and sales
and enable
Equinor
and their counterparties to set off
financial liabilities against financial assets in the
ordinary course of business as well as in case of
default. In addition, exchange-traded commodity
derivatives are offset towards collateral receipts/
payments as a result of day-to-day cash settlements
based on change in fair value of open derivative
positions. Amounts not qualifying for offsetting
consists of collateral receipts or payments which
usually is settled on a gross basis. Normally these
amounts will offset in a potential default situation.
There exist no restrictions on collaterals received.
|
(in USD million)
|
Gross amounts
of recognised
financial assets/
liabilities
|
Gross amounts
offset in the
balance sheet
|
Net amounts
presented in the
balance sheet
|
Amounts of
remaining rights
to set-off not
qualifying for
offsetting
|
Net amount
|
(in USD million)
|
Gross amounts
of recognised
financial assets/
liabilities
|
Gross amounts
offset in the
balance sheet
|
Net amounts
presented in the
balance sheet
|
Amounts of
remaining rights
to set-off not
qualifying for
offsetting
|
Net amount
|
|
|
At 31 December 2024
|
At 31 December 2023
|
|||||||||||
|
Financial assets
|
Financial assets
|
|||||||||||
|
Trade and other receivables
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
|
|
Current interest-bearing financial
receivables and accrued interest
|
|
|
|
|
|
Current interest-bearing financial
receivables and accrued interest
|
|
|
|
|
|
|
|
Collateral receivables
|
|
|
|
|
|
Collateral receivables
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
Total financial assets
|
|
|
|
|
|
Total financial assets
|
|
|
|
|
|
|
|
Financial liabilities
|
Financial liabilities
|
|||||||||||
|
Trade payables
|
|
|
|
|
|
Trade payables
|
|
|
|
|
|
|
|
Accrued expenses and other
current financial liabilities
|
|
|
|
|
|
Accrued expenses and other
current financial liabilities
|
|
|
|
|
|
|
|
Collateral liabilities
|
|
|
|
|
|
Collateral liabilities
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
|
|
|
|
Total financial liabilities
|
|
|
|
|
|
Following the disaggregation of Trade and other
item Current interest-bearing financial receivables
and accrued interest has been added to the tables
above. Similarly, the disaggregation of Trade, other
details, a new line item Accrued expenses and other
current financial liabilities has been added to the
tables above.
Equinor
2024
Annual Report on Form 20-F 96
|
96
|
ABOUT US
|
|
Capital management
|
|
The main objectives of
Equinor
's capital management
policy are to maintain a strong overall financial
position and to ensure sufficient financial flexibility.
Equinor
’s primary focus is on maintaining its credit
rating in the A category on a stand alone basis
(excluding uplifts for Norwegian Government
ownership).
Equinor
’s current long-term ratings are
AA- with a stable outlook (including one notch uplift)
and Aa2 with a stable outlook (including two notch
uplift) from SP and Moody’s, respectively. In order to
monitor financial robustness, a key ratio utilised by
Equinor
is the non- GAAP metric of “Net interest-
bearing debt adjusted (ND2) to Capital employed
adjusted (CE2)”
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Net interest-bearing debt adjusted, including lease liabilities (ND1)
|
|
(
|
|
Net interest-bearing debt adjusted (ND2)
|
|
(
|
|
Capital employed adjusted, including lease liabilities (CE1)
|
|
|
|
Capital employed adjusted (CE2)
|
|
|
|
Net debt to capital employed adjusted, including lease liabilities (ND1/CE1)
|
|
(
|
|
Net debt to capital employed adjusted (ND2/CE2)
|
|
(
|
ND1 is defined as
Equinor
's interest-bearing financial
liabilities less cash and cash equivalents and current
financial in
vestments, adjusted for collateral deposits
and balances held by
Equinor
's captive insurance
company (amounting to
USD
2,583
million
and
USD
2,030
million
for
2024
and
2023
, respectively).
CE1 is defined as
Equinor
's total equity (including non-
controlling interests) and ND1. ND2 is defined as ND1
adjusted for lease liabilities (amounting to
USD
3,510
million
and
USD
3,570
million
for
2024
and
2023
,
respectively). CE2 is defined as
Equinor
's total equity
(including non-controlling interests) and ND2.
Note
5.
Segments
Accounting
policies
areas and followed up through operating
segments in order to effectively manage and
execute our strategy, including the ability to
measure the progress of the business against its
strategic goals. The operating segments are
defined based on the components of
Equinor
that
undergo regular
review
by the chief operating
decision maker,
Equinor
's Corporate Executive
Officer (CEO). The following reportable segments
correspond to the operating segments:
Exploration
Production Norway
(
EP Norway
),
Exploration
Production International
(
EP International
),
Exploration Production USA
(
EP USA
),
Marketing, Midstream Processing
(
MMP
) and
Renewables
(
REN
). Based on materiality
considerations, the remaining operating segments
consisting of
Projects, Drilling Procurement
(
PDP
),
Technology, Digital Innovation
(
TDI
) and
Corporate staff and functions, are aggregated
into the reportable segment Other. The majority of
the costs in
PDP
and
TDI
is allocated to the three
Exploration Production segments,
MMP
and
REN
.
The Exploration Production operating segments
are responsible for the discovery and appraisal of
new resources, commercial development and safe
and efficient operation of the oil and gas portfolios
within their respective geographical areas:
EP
Norway
on the Norwegian continental shelf,
EP
USA
in USA and
EP International
worldwide
outside of
EP Norway
and
EP USA
.
PDP
is responsible for oil and gas field
development
,
well deliveries, and sourcing across
Equinor
.
are consistent with those described in these
Consolidated financial statements, except for the
following
: movements related to changes in asset
retirement obligations are excluded from the line-
item Additions to PPE,
intangibles
and Equity
accounted investments, and provisions for
onerous contracts reflect only obligations
towards group external parties. The
measurement basis of segment profit is net
operating income/(loss). Deferred tax assets,
pension assets, non-current financial assets, total
current assets and total liabilities are not
allocated to the segments. Transactions between
the segments, mainly from the sale of crude oil,
gas, and related products, are performed at
defined internal prices which have been derived
from market prices. The transactions are
eliminated upon consolidation
.
TDI
encompasses research, technology development,
specialist advisory services, digitalisation, IT,
improvement, innovation, and ventures and future
business.
MMP
is responsible for the marketing, trading,
processing and transportation of crude oil and
condensate, natural gas, NGL and refined products,
and includes refinery, terminals, and processing plant
operation.
MMP
is also managing power and
emissions trading and the development of
transportation
solutions for natural gas, liquids, and
crude oil, including pipelines, shipping, trucking and
rail. In addition,
MMP
is in charge of low carbon
solutions in
Equinor
.
Equinor
2024
Annual Report on Form 20-F 97
|
97
|
ABOUT US
|
|
REN
is developing, exploring, investing in, and
operating areas within renewable energy such as
offshore wind,
green hydrogen
, storage solutions and
solar power.
|
|
31 December 2024
,
2023
, and
2022
are presented
further information on the following items affecting
the segments, please refer to the related notes:
note
and contingent assets.
|
2024
(in USD million)
|
EP Norway
|
EP
International
|
EP USA
|
MMP
|
REN
|
Other
|
Eliminations
|
Total group
|
|
Revenues third party
|
|
|
|
|
|
|
(
|
|
|
Revenues and other income inter-segment
|
|
|
|
|
|
|
(
|
—
|
|
Net income/(loss) from equity accounted investments
|
|
|
|
(
|
|
(
|
|
|
|
Other income
|
|
|
|
|
|
|
|
|
|
Total revenues and other income
|
|
|
|
|
|
|
(
|
|
|
Purchases [net of inventory variation]
|
|
|
|
(
|
|
|
|
(
|
|
Operating, selling, general and administrative expenses
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Depreciation and amortisation
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Net impairment (losses)/reversals
|
(
|
|
|
|
(
|
(
|
|
(
|
|
Exploration expenses
|
(
|
(
|
(
|
|
|
|
|
(
|
|
Total operating expenses
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Net operating income/(loss)
|
|
|
|
|
(
|
(
|
(
|
|
|
Additions to PPE, intangibles and equity accounted investments
|
|
|
|
|
|
|
|
|
|
Balance sheet information
|
||||||||
|
Equity accounted investments
|
|
|
|
|
|
|
|
|
|
Non-current segment assets
|
|
|
|
|
|
|
|
|
|
Non-current assets not allocated to segments
|
|
|||||||
|
Total non-current assets
|
|
Equinor
2024
Annual Report on Form 20-F 98
|
98
|
ABOUT US
|
|
|
2023
(in USD million)
|
EP Norway
|
EP
International
|
EP USA
|
MMP
|
REN
|
Other
|
Eliminations
|
Total group
|
|
Revenues third party
|
|
|
|
|
|
|
|
|
|
Revenues and other income inter-segment
|
|
|
|
|
|
|
(
|
-
|
|
Net income/(loss) from equity accounted investments
|
|
|
|
|
(
|
(
|
|
(
|
|
Other income
|
|
|
|
|
|
|
|
|
|
Total revenues and other income
|
|
|
|
|
|
|
(
|
|
|
Purchases [net of inventory variation]
|
|
(
|
|
(
|
|
(
|
|
(
|
|
Operating, selling, general and administrative expenses
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Depreciation and amortisation
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Net impairment (losses)/reversals
|
(
|
(
|
|
(
|
(
|
(
|
|
(
|
|
Exploration expenses
|
(
|
(
|
(
|
|
|
|
|
(
|
|
Total operating expenses
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Net operating income/(loss)
|
|
|
|
|
(
|
(
|
(
|
|
|
Additions to PPE, intangibles and equity accounted investments
|
|
|
|
|
|
|
|
|
|
Balance sheet information
|
||||||||
|
Equity accounted investments
|
|
|
|
|
|
|
|
|
|
Non-current segment assets
|
|
|
|
|
|
|
|
|
|
Non-current assets not allocated to segments
|
|
|||||||
|
Total non-current assets
|
|
|
|
Equinor
2024
Annual Report on Form 20-F 99
|
99
|
ABOUT US
|
|
|
2022
(in USD million)
|
EP Norway
|
EP
International
|
EP USA
|
MMP
|
REN
|
Other
|
Eliminations
|
Total group
|
|
Revenues third party
|
|
|
|
|
|
|
|
|
|
Revenues and other income inter-segment
|
|
|
|
|
|
|
(
|
—
|
|
Net income/(loss) from equity accounted investments
|
|
|
|
|
|
(
|
|
|
|
Other income
|
|
|
|
|
|
|
|
|
|
Total revenues and other income
|
|
|
|
|
|
|
(
|
|
|
Purchases [net of inventory variation]
|
|
(
|
|
(
|
|
|
|
(
|
|
Operating, selling, general and administrative expenses
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Depreciation and amortisation
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Net impairment (losses)/reversals
|
|
(
|
|
|
|
|
|
|
|
Exploration expenses
|
(
|
(
|
(
|
|
|
|
|
(
|
|
Total operating expenses
|
(
|
(
|
(
|
(
|
(
|
(
|
|
(
|
|
Net operating income/(loss)
|
|
|
|
|
(
|
(
|
|
|
|
Additions to PPE, intangibles and equity accounted investments
|
|
|
|
|
|
|
|
|
|
Balance sheet information
|
||||||||
|
Equity accounted investments
|
|
|
|
|
|
|
|
|
|
Non-current segment assets
|
|
|
|
|
|
|
|
|
|
Non-current assets not allocated to segments
|
|
|||||||
|
Total non-current assets
|
|
|
|
Equinor
2024
Annual Report on Form 20-F 100
|
100
|
ABOUT US
|
|
|
Non-current assets by country
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Norway
1)
|
|
|
|
USA
2)
|
|
|
|
Brazil
|
|
|
|
UK
2)
|
|
|
|
Angola
|
|
|
|
Canada
|
|
|
|
Argentina
|
|
|
|
Denmark
|
|
|
|
Poland
|
|
|
|
Algeria
|
|
|
|
Other
|
|
|
|
Total non-current assets
3)
|
|
|
|
1) Decrease is mainly due to strengthening of USD versus NOK.
3) Excluding deferred tax assets, pension assets and non-current financial assets. Non-current assets are attributed to
country of operations.
|
||
|
|
Note
6
.
Acquisitions and disposals
Accounting policies
Business combinations, except for transactions between entities under common control, are accounted for
using the acquisition method when control is transferred to the Group. The acquired identifiable assets,
liabilities and contingent liabilities are measured at fair value at the date of acquisition. Acquisition costs
incurred are expensed under Selling, general and administrative expenses. The total consideration transferred
includes contingent consideration at fair value and changes in fair value resulting from events after the
acquisition date are recognised in the Consolidated statement of income under Other income.
When
Equinor
loses control over a subsidiary, the assets and liabilities of the subsidiary are derecognised
together with related Non-controlling interests (NCI) and other components of equity. Any retained interest in
the former subsidiary is measured at fair value at the time control is lost, and resulting gain or loss is recognised
in the Consolidated statement of income under Other income or Operating expenses, accordingly. Partial
divestments are addressed in detail in the accounting judgement section below.
On the NCS, all disposals of assets are performed including the tax base (after-tax). Any gain includes the
release of previously
recognised tax liabilities
related to the assets in question and is fully recognised in Other
income in the Consolidated statement of income.
Non-current assets or disposal groups are classified separately as held for sale in the Consolidated balance
sheet if it is highly probable that they will be recovered primarily through sale rather than through continuing
use. This condition is met when such assets or disposal groups are available for immediate sale in their present
condition,
Equinor
’s management is committed to the sale, and the sale is expected to be completed within one
year from the date of classification as held for sale. In
Equinor
, these requirements are normally met when
management has approved a negotiated letter of intent with the counterparties. Liabilities directly associated
with the assets classified as held for sale and expected to be included as part of the sales transaction, are also
classified separately.
Determining whether an acquisition meets the definition of a business combination or an asset acquisition
requires judgement on a case-by-case basis. The conclusion may materially affect the financial statements both
in the transaction period and subsequent periods. Similar assessments are performed upon the acquisition of
an interest in a joint operation. Depending on the specific facts, acquisitions of oil and gas exploration and
evaluation licences where a development decision has not yet been made have generally been accounted for
as asset purchases. Conversely, acquisition of producing assets have generally been accounted for as business
Equinor
2024
Annual Report on Form 20-F 101
|
101
|
ABOUT US
|
|
|
|
divestments
The accounting policy for partial divestments of
subsidiaries is based on careful consideration of
the requirements and scope of IFRS 10
Consolidated Financial Statements and IAS 28
Investments in Associates and Joint Ventures.
The assessment requires judgement on a case-
by-case basis, considering the substance of the
transactions. In evaluating the IFRS Accounting
Standards’ requirements,
Equinor
notes
considerations related to several relevant and
similar issues that are under consideration by
the IASB. In situations where assets are
transferred into separate legal entities
concurrently with a partial sale of the entities’
shares to a third party, resulting in
Equinor
’s
losing control of those asset-owning
subsidiaries, and where investments in
associates/joint ventures are established
simultaneously,
Equinor
only recognises the gain
or loss on the divested portion.
2024
Acquisitions
Swap of onshore oil gas assets in the US
On 31 May 2024, Equinor and EQT Corporation
closed the swap transaction in which Equinor sold
formations in the Appalachian Basin, located in
southeastern Ohio, and transferred the operatorship
to EQT. In exchange, Equinor acquired
40
%
of EQT’s
non-operated working interest in the Northern
Marcellus shale formation in Pennsylvania. Following
the transaction, Equinor increased its average
working interest
from
15.7
%
to
25.7
%
in certain
Expand Energy-operated Northern Marcellus gas
units. Equinor paid a cash consideration of USD
467
million (net of interim period settlement) to EQT to
balance the overall transaction. With this transaction,
Equinor continues to high-grade the US portfolio and
work to strengthen the profitability of the onshore gas
position in the Appalachian Basin. The assets
acquired and liabilities assumed were recognised in
accordance with the principles in
IFRS 3 Business
Combinations within the EP USA segment, mainly as
property, plant, and equipment
(U
SD
750
million) and
intangible assets (USD
505
milli
on).
Acquisition of additional working interests in
onshore oil gas assets in the US
On 31 December 2024, Equinor closed a transaction
to acquire an additional non-operated interest in the
Northern Marcellus shale formation in Pennsylvania in
the US from EQT Corporation (EQT). Following the
transaction,
Equinor increased its average working
interest from
25.7
%
to
40.7
%
in certain Expand
Energy-operated Northern Marcellus gas units
continuing high-grading the US portfolio. Equinor paid
a cash consideration of US
D
1,242
million to EQT. The
assets acquired and liabilities assumed were
recognised in accordance with the principles in IFRS 3
Business Combinations within the EP USA segment,
mainly as property, plant, and equipment (USD
1365
million).
Swap of US Offshore Wind assets
On 24 January 2024, Equinor entered into a swap
agreement with bp to acquire bp’s
50
%
share and
take full ownership of Empire Offshore Wind Holdings
LLC, including the Empire Wind lease and projects
(Empire Wind), in exchange for its
50
%
share in
Beacon Wind Holdings LLC, including the Beacon
Wind lease and projects (Beacon Wind). Equinor also
agreed to acquire bp's
50
%
interest in the South
Brooklyn Marine Terminal (SBMT) lease. Based on the
agreement, Equinor controls and has consolidated
Empire Wind and SBMT from the first quarter of 2024
and has divested its
50
%
share of Beacon Wind. The
swap of Empire Wind and Beacon Wind was formally
closed on 4 April and SBMT was formally closed on
30 December. The acquisitions were accounted for as
asset acquisitions, and previous holdings were not
revalued. The swap resulted in a combined loss of
USD
147
million
in the first quarter 2024, recognised in
the REN segment and presented in the line item
Operating expenses in the Consolidated statement of
income.
Disposals
Divestment of interest in Nigeria
On 6 December 2024, Equinor closed a transaction
with Chappal Energies for the sale of Equinor Nigeria
Energy Company (ENEC), which holds a
53.85
%
ownership in the oil and gas lease OML 128, including
the unitised
20.21
%
stake in the Agbami oil field. Total
consideration received amounts to USD
682
million,
including USD
482
million in cash. In addition, the
estimated fair value of deferred and contingent
consideration has been included in the gain of USD
EP International segment, and reported as Other
Income in the Consolidated statement of income. Prior
to closing, Equinor received USD
300
million in
extraordinary dividends.
Divestment of interests in Azerbaijan
On 29 November 2024, Equinor closed a transaction
with the State Oil Company of the Republic of
Azerbaijan (SOCAR) and ONGC Videsh Limited
(ONGC) to sell its interests in its Azerbaijan assets.
The assets comprise
a
7.27
%
non-operated interest in
the Azeri Chirag Gunashli (ACG) oil fields in the
Azerbaijan sector of the Caspian Sea and
8.71
%
interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline.
The total consideration for Equinor's Azerbaijan
assets amounted to USD
713
million in cash. A loss of
USD
84
million has been recognised within the EP
International segment in the fourth quarter 2024 and
presented in the line item Operating expenses in the
Consolidated statement of income. An impairment
loss of USD
310
million was recognised
in fourth
quarter 2023, upon classification as held for sale,
presented within the line item Depreciation,
amortisation and net impairments in the Consolidated
statement of income.
Equinor
2024
Annual Report on Form 20-F 102
|
102
|
ABOUT US
|
|
Held for sale
|
|
J
oint venture agreement with Shell in the UK
On 5 December 2024, Equinor and Shell agreed to
merge their UK upstream businesses and establish a
joint venture. The parties will hold a
50
%
equity
interest each. Selected UK North Sea upstream fields,
associated licenses and infrastructure will be
transferred by both parties to the joint venture,
including Equinor’s interests in Rosebank, Mariner and
Buzzard. The joint venture will be accounted for under
the equity method upon completion of the
transaction. Completion of the transaction is subject
to license partners’ and regulatory approvals and is
expected by the end of 2025. As of 31 December
2024, related assets held for sale amounted to USD
these assets held for sale amounted to USD
740
million. Equinor’s UK
upstream business is part of the
EP International segment.
2023
Acquisitions
Acquisition of Rio Energy
On 3 November 2023,
Equinor
closed a transaction
with Denham Capital to acquire
100
%
of the shares in
Horus Investimentos S.A., the parent company of Rio
Energy Participações S.A., a leading onshore
renewables company in Brazil. The cash consideration
amounted to
USD
82
million
in addition to
USD
268
million
in capital contribution to settle Rio Energy’s
external financing. The acquired portfolio includes a
producing onshore wind farm in the north-eastern
state of Bahia, a pre-construction solar photovoltaic
(PV) portfolio and a pipeline of
1.2
G
W of onshore
wind and solar projects. This transaction resulted in
an increase in
Equinor
’s property, plant and
equipment of
USD
350
million
. The transaction has
been accounted for as a business combination within
the REN segment.
Acquisition of Suncor Energy UK Limited
On 30
June 2023,
Equinor
closed a transaction with
Suncor Energy UK Holdings Ltd to acquire
100
%
of
the shares in Suncor Energy UK Limited for a total
consideration of
USD
847
million
after customary
adjustments for working capital. The transaction
includes a non-operated interest in the producing
Buzzard oil field (
29.89
%
) and an additional interest in
the operated Rosebank development (
40
%
). The
transaction has been accounted for within the EP
International segment as a business combin
ation,
resulting in an increase in
Equinor
’s property, plant
and eq
uipment of
USD
1,490
million
and deferred tax
liabilities of
USD
672
million
.
Acquisition of BeGreen
On 26 January 2023,
Equinor
closed a transaction
with the Bregentved Group and members of the
executive board of BeGreen Solar Aps to acquire
BeGreen Solar Aps. The cash consideration
amounted to
USD
252
million (
EUR
235
million
), in
addition to a consideration contingent on the
successful delivery of future solar projects above an
agreed megawatt threshold. The transaction has
been accounted for within the REN segment as a
business combination, resulting in an increase of
Equinor
’s intangible assets of
USD
423
million
.
Disposals
Equinor
Energy Ireland Limited
On
31 March 2023,
Equinor
closed the transaction
with Vermilion Energy Inc (Vermillion) to sell
Equinor
’s
non- operated equity position in the Corrib gas
project in Ireland, covering
100
%
of the shares in
Equinor Energy Ireland Limited (EEIL). Prior to closing,
Equinor
received an extraordinary dividend of
USD
371
million
from EEIL. Total consideration
amounted to
USD
362
million
, including cash
settlement of contingent consideration. A loss of
USD
258
million
has been recognised within the EP
International segment and pr
esented in the line item
Operating expenses in the Consolidated statement of
income.
Equinor
2024
Annual Report on Form 20-F 103
|
103
|
ABOUT US
|
|
N
ote
7.
Total revenues and other income
|
|
Accounting policies
Equinor
presents Revenue from contracts with
customers and Other revenue as a single caption,
Revenues, in the Consolidated statement of income.
Revenue from contracts with customers
Revenue from the sale of crude oil, natural gas,
petroleum products, power and other merchandise is
recognised when a customer obtains control of those
products, which for tangible products normally is
when title passes at point of delivery, based on the
contractual terms of the agreements. Each such sale
normally represents a single performance obligation.
In the case of natural gas as well as power, which is
delivered on a continuous basis through pipelines and
grid, sales are completed over time in line with the
delivery of the actual physical quantities.
Sales and purchases of physical commodities are
presented on a gross basis as Revenues from
contracts with customers and Purchases [net of
inventory variation] respectively in the Consolidated
statement of income. When the contracts are
deemed financial instruments or part of
Equinor
’s
trading activities, they are settled and presented on a
net basis as Other revenue. Reference is made to
note 28
Financial instruments and fair value
measurement for a description of accounting policies
regarding derivatives. Sales of
Equinor
’s own
produced oil and gas volumes are always reflected
gross as Revenue from contracts with customers.
Revenues from the production of oil and gas in which
Equinor
shares an interest with other companies are
recognised on the basis of volumes lifted and sold to
customers during the period (the sales method).
Where
Equinor
has lifted and sold more than the
ownership interest, an accrual is recognised for the
cost of the overlift. Where
Equinor
has lifted and sold
less than the ownership interest, costs are deferred
for the underlift.
Other revenue
Items that represent a form of revenue, or are
related to revenue from contracts with customers,
are presented as other revenue if they do not meet
the criteria for classification as revenue from
contracts with customers. These other revenue items
include taxes paid in-kind under certain production
sharing agreements (PSAs) and the net impact of
commodity trading and commodity-based derivative
instruments related to sales contracts or revenue-
related risk management.
Transactions with the
Norwegian state
Equinor
markets and sells the Norwegian state's share of
oil and gas production from the Norwegian continental
shelf (NCS). The Norwegian state's participation in
petroleum activities is organised through the Norwegian
State’s Direct Financial Interests (SDFI). Purchases and
sales of the SDFI's
share of crude
oil and natural gas
liquids
(NGL) production, as well as the majority of the
SDFI’s share of liquefied natural gas (LNG) production,
are presented as purchases [net of inventory variation]
and revenues from contracts with customers,
respectively.
Equinor
sells, in its own name, but for the SDFI’s account
and risk, the SDFI’s
share of
natural gas volumes. These
sales and related expenditures refunded by the SDFI are
presented net in the Consolidated financial statements.
However, if such sales are made in the name of
Equinor
’s
subsidiaries, the
related balance sheet items are
reflected gross in the Consolidated balance sheet.
Accounting judgement related to transactions with the
Norwegian state
Whether to account for the transactions gross or net
involves the use of significant accounting judgement. In
making the judgement,
Equinor
has considered whether
it controls the SDFI's share of the volumes prior to
onwards sales to third party customers, taking into
account the pricing mechanisms and the flow of benefits
to Equinor and the SDFI. The assessment is also
impacted by the geographical area in which the sale
takes place.
With regard to the sales of crude oil, natural gas liquids
(NGL), and a major part of liquefied natural gas (LNG)
,
Equinor
directs the use of the volumes and, although
certain benefits from the sales subsequently flow to the
SDFI,
Equinor
purchases the volumes from the SDFI and
obtains substantially all the remaining benefits. On this
basis,
Equinor
has concluded that it acts as principal in
these sales.
Regarding sales of natural gas,
Equinor
has concluded
that control of the volumes does not transfer from the
SDFI to
Equinor
. Although
Equinor
has been granted the
ability to direct the use of the volumes, all the benefits
from the sales of these volumes flow to the SDFI. On this
basis,
Equinor
is not considered the principal in these
sales.
details regarding transactions performed between
Equinor
2024
Annual Report on Form 20-F 104
|
104
|
ABOUT US
|
|
Revenues from contracts with customers by
|
|
geographical areas
Equinor
has business operations in
aroun
d
30
countries
.
When attributing the line-item Revenues from contracts
with customers in
2024
to the country of the legal entity
executing the sale, Norway
and
the USA account
ed for
79
%
and
18
%
respectively (
79
%
and
18
%
respectively i
n
2023
,
and
84
%
and
13
%
respectively in
2022
). Revenues from
contracts with customers are mainly reflecting such
revenues from the reporting segment
MMP
.
|
Revenues from contracts with customers and other revenues
|
||||
|
(in USD million)
|
Note
|
2024
|
2023
|
2022
|
|
Crude oil
|
|
|
|
|
|
Natural gas
|
|
|
|
|
|
- European gas
|
|
|
|
|
|
- North American gas
|
|
|
|
|
|
- Other incl LNG
|
|
|
|
|
|
Refined products
|
|
|
|
|
|
Natural gas liquids
|
|
|
|
|
|
Power
1)
|
|
|
|
|
|
Transportation
|
|
|
|
|
|
Other sales
1)
|
|
|
|
|
|
Total revenues from contracts with customers
|
|
|
|
|
|
Taxes paid in-kind
|
|
|
|
|
|
Physically settled commodity derivatives
|
|
|
(
|
|
|
Gain/(loss) on commodity derivatives
|
|
(
|
|
|
|
Change in fair value of trading inventory
|
|
(
|
(
|
|
|
Other revenues
|
|
|
|
|
|
Total other revenues
|
|
|
(
|
|
|
Revenues
|
|
|
|
|
|
Net income/(loss) from equity accounted investments
|
|
(
|
|
|
|
Other income
|
|
|
|
|
|
Total revenues and other income
|
|
|
|
|
|
1) As from 2024, the line item Power has been disaggregated from the line item Other sales. 2023 and 2022 figures have been disaggregated accordingly.
|
||||
Equinor
2024
Annual Report on Form 20-F 105
|
105
|
ABOUT US
|
|
Note
8.
Salaries and personnel expenses
|
|
|
(in USD millions, except average number of employees)
|
2024
|
2023
|
2022
|
|
Salaries
1)
|
|
|
|
|
Pension costs
2)
|
|
|
|
|
Payroll tax
|
|
|
|
|
Other compensations and social costs
|
|
|
|
|
Total payroll expenses
|
|
|
|
|
Average number of employees
3)
|
|
|
|
|
1) Salaries include bonuses and expatriate costs in addition to base pay.
|
|||
|
|
|||
|
3) Part time employees amount to
|
Total payroll expenses are accumulated in cost-pools and partially charged to partners of Equinor operated licences
on an hours incurred basis.
|
Compensation to the board of directors (BoD) and the corporate executive committee (CEC)
|
|||
|
Full year
|
|||
|
(in USD million)
1)
|
2024
|
2023
|
2022
|
|
Current employee benefits
|
|
|
|
|
Post-employment benefits
|
|
|
|
|
Other non-current benefits
|
|
|
|
|
Share-based payment benefits
|
|
|
|
|
Total benefits
|
|
|
|
|
1) All figures in the table are presented on accrual basis.
|
|||
At 31 December 2024, 2023, and 2022 there are
no
loans to the members of the BoD or the CEC.
Share-based compensation
Equinor
's share saving plan provides employees with the opportunity to purc
hase
Equinor
shares through monthly
salary deductions and a contribution by
Equinor
. If the shares are kept for two full calendar years of continued
employment following the year of purchase, the employees will be allocated
one
bonus share for each share they
have purchased.
Estimated compensation expense including the contribution by
Equinor
for purchased shares, amounts vested for
bonus shares granted and related social security tax wa
s
USD
83
million
,
USD
78
million
, and
USD
85
million
re
lated to
the
2024
,
2023
and
2022
programmes, respectively. For the
2025
programme (granted in
2024
), the estimated
compensation expense is
USD
82
million
.
At
31 December 2024
the amount of compensation cost yet to be expensed
throughout the vesting period is
USD
176
million
.
See
note 20
Shareholders’ equity, capital distribution and earnings per share for more information about share-
based compensation.
Equinor
2024
Annual Report on Form 20-F 106
|
106
|
ABOUT US
|
|
Note
9.
Auditor’s remuneration and Research and development expenditures
|
|
|
Auditor’s remuneration
|
|||
|
Full year
|
|||
|
(in USD millions, excluding VAT)
|
2024
|
2023
|
2022
|
|
Audit fee
|
|
|
|
|
Audit related fee
|
|
|
|
|
Tax fee
|
|
|
|
|
Other service fee
|
|
|
|
|
Total remuneration
|
|
|
|
In additio
n to the figures in the table above, the audit fees and audit related fees related to
Equinor
operated
licences amount to
USD
0.5
million
,
USD
0.5
million
and
USD
0.6
million
for
2024
,
2023
and
2022
, respectively.
Research and development expenditures (RD)
Equinor
has RD activities within exploration, subsurface, drilling and well, facilities, low carbon and renewables. RD
activities contribute to maximising and developing long-term value from
Equinor
’s assets. RD expenditures are
partially financed by partners of
Equinor
operated licences.
RD expenditures including amounts charged to partners were
USD
348
million
,
USD
311
million
and
USD
308
million
in
2024
,
2023
and
2022
, respectively.
Equinor
's share of the expenditures has been recognised within Total operating
No
te
10
.
Financial items
|
Full year
|
|||
|
(in USD million)
|
2024
|
2023
|
2022
|
|
Dividends received
|
|
|
|
|
Interest income financial investments, including cash and cash equivalents
|
|
|
|
|
Interest income non-current financial receivables
|
|
|
|
|
Interest income other current financial assets and other financial items
|
|
|
|
|
Interest income and other financial income
|
|
|
|
|
Interest expense bonds and bank loans and net interest on related derivatives
|
(
|
(
|
(
|
|
Interest expense lease liabilities
|
(
|
(
|
(
|
|
Capitalised borrowing costs
|
|
|
|
|
Accretion expense asset retirement obligations
|
(
|
(
|
(
|
|
Interest expense current financial liabilities and other financial expense
|
(
|
(
|
(
|
|
Interest expenses and other financial expenses
|
(
|
(
|
(
|
|
Foreign currency exchange gains/(losses) derivative financial instruments
|
|
(
|
|
|
Other foreign currency exchange gains/(losses)
|
(
|
|
|
|
Net foreign currency exchange gains/(losses)
|
|
|
|
|
Gains/(losses) financial investments
|
(
|
|
(
|
|
Gains/(losses) other derivative financial instruments
|
|
|
(
|
|
Net financial items
|
|
|
(
|
Equinor
2024
Annual Report on Form 20-F 107
|
107
|
ABOUT US
|
|
Equinor
's main financial items relate to assets and
liabilities in the fair value through profit or loss and
the amortised cost categories. For
more
information
Financial
instruments and fair value measurement.
|
|
Interest income financial investments, including cash
and cash equivalents includes interest income related
to balances at amortised cost of
USD
1,132
million
,
USD
1,410
million
, and
USD
364
million
for
2024
,
2023
and
2022
, respectively.
Interest expense bonds and bank loans and net
interest on related derivatives includes interest
expenses of
USD
787
million
,
USD
857
million
, and
USD
918
million
for
2024
,
2023
and
2022
,
respectively, on financial liabilities at amortised cost. It
also includes net interest on related derivatives at fair
value through profit or loss, amounting to a net
interest expense of
USD
425
million
,
USD
405
million
and
USD
111
million
for
2024
,
2023
and
2022
respectively.
Foreign currency exchange gains/(losses) derivative
financial instruments include fair value changes of
currency derivatives related to liquidity and currency
risk. Other foreign currency exchange gains/(losses)
includes a fair value loss from derivatives related to
non-current debt of
USD
397
million
in
2024
, a gain
of
USD
315
million
in
2023
and a loss of
USD
691
million
in
2022
.
Gains/(losses) financial investments primarily include
fair value change from shares in other companies,
with a loss of
USD
496
million
in
2024
, a gain of
USD
124
million
in
2023
and a loss of
USD
396
million
in
2022
.
Gains/(losses) other derivative financial instruments
primarily include fair value changes from interest rate
related derivatives, with a
gain
o
f
USD
33
million
in
2024
, a gain
of
USD
332
million
in
2023
and a loss of
USD
1,760
million
in
2022
.
Note
11.
Income taxes
Accounting policies
Income tax in the Consolidated statement of
income comprises current income tax and effects
of changes in deferred tax positions. Income tax is
recognised in the Consolidated statement of
income except when it relates to items recognised
in other comprehensive income (OCI).
Current tax consists of the expected tax payable
for the year and any adjustment to tax payable for
previous years. Uncertain tax positions and
potential tax exposures are analysed individually.
The outcomes of tax disputes are mostly binary in
nature, and in each case the most likely amount for
probable liabilities to be paid (including penalties)
or assets to be received (disputed tax positions for
which payment has already been made) is
recognised within Current tax or Deferred tax as
appropriate.
Deferred tax assets and liabilities are recognised
for the future tax consequences attributable to
differences between the carrying amounts of
existing assets and liabilities and their respective
tax bases, and on unused tax losses and credits
carried forward, subject to the initial recognition
exemption. A deferred tax asset is recognised only
to the extent that it is probable that future taxable
income will be available against which the asset
can be utilised. For a deferred tax asset to be
recognised based on future taxable income,
convincing evidence is required, considering the
existence of contracts, production of oil or gas in the
future based on volumes of expected reserves,
observable prices in active markets, expected
volatility of trading profits, expected foreign currency
rate movements and similar facts and circumstances.
When an asset retirement obligation or a lease
contract is initially reflected in the accounts, a
deferred tax liability and a corresponding deferred
tax asset are recognised simultaneously and
accounted for in line with other deferred tax items.
Estimation uncertainty regarding income tax
Equinor
incurs significant amounts of income taxes
payable to various jurisdictions and may recognise
significant changes to deferred tax assets and
deferred tax liabilities. There may be uncertainties
related to interpretations of applicable tax laws and
regulations regarding amounts in
Equinor
’s tax
returns, which are filed in a number of tax regimes.
For cases of uncertain tax treatments, it may take
several years to complete the discussions with
relevant tax authorities or to reach
resolutions
of the
appropriate tax positions through litigation.
The carrying values of income tax related assets
and liabilities are based on
Equinor
's
interpretations of applicable laws, regulations and
relevant court decisions. The quality of these
estimates, including the most likely outcomes of
uncertain tax treatments, is dependent upon
proper application of at times very complex sets of
rules, the recognition of changes in applicable rules
and, in the case of deferred tax assets,
management's ability to project future earnings
from activities that may apply loss carry forward
positions against future income taxes. Climate-
related matters and the transition to carbon-
neutral energy-consumption globally have
increased the uncertainty in determining key
business assumptions used to assess the
recoverability of deferred tax assets through
sufficient future taxable income before tax losses
expire.
Equinor
2024
Annual Report on Form 20-F 108
|
108
|
ABOUT US
|
|
|
Significant components of income tax expense
|
|||
|
Full year
|
|||
|
(in USD million)
|
2024
|
2023
|
2022
|
|
Current income tax expense in respect of current year
|
(
|
(
|
(
|
|
Prior period adjustments
|
|
(
|
(
|
|
Current income tax expense
|
(
|
(
|
(
|
|
Origination and reversal of temporary differences
|
(
|
(
|
(
|
|
Recognition/Derecognition of previously (un)recognised deferred tax assets
|
|
(
|
|
|
Change in tax regulations
|
(
|
|
|
|
Prior period adjustments
|
(
|
(
|
|
|
Deferred tax income/(expense)
|
(
|
(
|
|
|
Income tax
|
(
|
(
|
(
|
|
|
Changes to tax regimes
UK
On 23 May 2022, the UK introduced a new levy
intended to tax windfall profits on oil and gas
production from the United Kingdom Continental
Shelf, called the Energy (Oil Gas) Profits Levy Act
2022 (EPL). EPL was introduced as a new temporary
tax at the rate of 25%, initially from 26 May 2022 to
31 December 2025, and this was subsequently
extended to 31 March 2028, with an increase in the
rate to 35% from 1 January 2023. It applies to profits
on transactions from that date forward with no tax
relief for prior expenditures or brought forward
losses and with no EPL tax relief for interest and
decommissioning costs. Capital cost incurred since
26 May 2022 are eligible for an EPL deductible uplift
(“investment allowances”) originally of 80%, although
was reduced to 29% from 1 January 2023 for
expenditure other than that in respect of de-
carbonisation where the rate of uplift was 80%. As of
1 November 2024, the EPL rate was increased to 38%
(making the overall tax rate for petroleum activities in
the UK to 78% while the EPL is in effect) and was
extended until 30 March 2030, although the
extension of the tax was not substantially enacted at
year-end 2024. Capital expenditures incurred after
1 November 2024 are no longer eligible for the EPL
deductible uplift, with the exception of capital
expenditures for de-carbonisation, where the rate of
uplift is now 66%. EPL losses can be carried forward
without limitation and carried back for one year. The
UK Government has stated that it would publish a
consultation in early 2025 regarding how it intends to
respond to price shocks when the EPL regime ends in
March 2030.
Equinor
2024
Annual Report on Form 20-F 109
|
109
|
ABOUT US
|
|
|
Reconciliation of statutory tax rate to effective tax rate
|
|||
|
Full year
|
|||
|
(in USD million)
|
2024
|
2023
|
2022
|
|
Income/(loss) before tax
|
|
|
|
|
Calculated income tax at statutory rate
1)
|
(
|
(
|
(
|
|
Calculated Norwegian Petroleum tax
2)
|
(
|
(
|
(
|
|
Tax effect uplift
3)
|
|
|
|
|
Tax effect of permanent differences regarding divestments
|
|
|
|
|
Tax effect of permanent differences caused by functional currency different from
tax currency
|
|
|
|
|
Tax effect of other permanent differences
|
|
|
|
|
Recognition/Derecognition of previously (un)recognised deferred tax assets
4)
|
|
(
|
|
|
Change in unrecognised deferred tax assets
|
(
|
(
|
(
|
|
Change in tax regulations
|
(
|
|
|
|
Prior period adjustments
|
(
|
(
|
(
|
|
Other items including foreign currency effects
|
(
|
(
|
(
|
|
Income tax
|
(
|
(
|
(
|
|
Effective tax rate
|
|
|
|
|
|
1)
Th
e weighted average of statutory tax rates was
24.8
%
in
2024
,
23.3
%
in
2023
and
23.1
%
in
2022
. The rates are
influenced by earnings composition between tax regimes with lower statutory tax rates and tax regimes with
higher statutory tax rates.
2)
The Norwegian petroleum income is taxable at a tax rate of
71.8
%
after deducting a calculated
22
%
corporate
tax.
3)
As from
2023
the uplift deduction for investments on NCS has been abolished except for asset investments that
fall under the temporary rules enacted under the Covid-19 pandemic. For investments with PUD submitted to the
authorities before
31 December 2022
the rules allow a direct deduction of the whole uplift in the year the capital
expenditure is incurred. In
2023
the rate was
12.4
%
and this rate did not change in 2024.
4)
Equinor
performs its assessment on DTA recognition based on sources of income such as the reversal pattern of
taxable timing differences and projections of taxable income and recognises the amount of deferred tax assets
that is probable to be realised. In
2024
USD
60
million
was recognised mainly related to updated cash flow
forecast for Angola, compared to a derecognition of
USD
137
million
in
2023
due to an increase in valua
tion
allowance mainly related to Angola and Canada,
Equinor
2024
Annual Report on Form 20-F 110
|
110
|
ABOUT US
|
|
|
Deferred tax assets and liabilities comprise
|
||||||||
|
(in USD million)
|
Tax losses
carried forward
|
Property, plant and
equipment and
intangible assets
|
Asset retirement
obligations
|
Lease liabilities
|
Pensions
|
Derivatives
|
Other
|
Total
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
(
|
|
(
|
(
|
(
|
(
|
(
|
|
Net asset/(liability) at 31 December 2024
|
|
(
|
|
|
|
|
|
(
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
(
|
(
|
|
(
|
(
|
|
(
|
(
|
|
Net asset/(liability) at 31 December 2023
|
|
(
|
|
|
|
|
|
(
|
|
|
|
Changes in net deferred tax liability during the year were as follows:
|
|||
|
(in USD million)
|
2024
|
2023
|
2022
|
|
Net deferred tax liability at 1 January
|
|
|
|
|
Charged/(credited) to the Consolidated statement of income
|
|
|
(
|
|
Charged/(credited) to Other comprehensive income
|
|
(
|
|
|
Acquisitions and disposals
|
(
|
|
(
|
|
Foreign currency translation effects and other effects
|
(
|
(
|
(
|
|
Net deferred tax liability at 31 December
|
|
|
|
Deferred tax assets and liabilities are offset to the extent that the deferred taxes relate to the same fiscal authority,
and there is a legally enforceable right to offset current tax assets against current tax liabilities.
taxes are presented on the Consolidated balance sheet as follows:
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Deferred tax assets
|
|
|
|
Deferred tax liabilities
|
|
|
|
Net deferred tax asset/(liability) classified as held for sale
|
|
(
|
Equinor
2024
Annual Report on Form 20-F 111
|
111
|
ABOUT US
|
|
Deferred tax assets are recognised based on the
|
|
expectation that sufficient taxable income will be
available through reversal of taxable temporary
differences or future taxable income
. At year-end
2024
, the deferred tax assets of
USD
6,850
million
were primarily recognised in the US, the UK, Norway,
Angola, Canada and Brazil. Of this a
mount,
USD
3,553
million
was recognised in entities which have suf
fered
|
Unrecognised deferred tax assets
|
||||
|
At 31 December
|
||||
|
2024
|
2023
|
|||
|
(in USD million)
|
Basis
|
Tax
|
Basis
|
Tax
|
|
Deductible temporary differences
|
|
|
|
|
|
Unused tax credits
|
|
|
|
|
|
Tax losses carried forward
|
|
|
|
|
|
Total unrecognised deferred tax assets
|
|
|
|
|
Approxima
tely
90
%
of the unrecognised carry
forward tax losses can be carried forward indefinitely.
The majority of the unrecognised tax losses that
cannot be carried forward indefinitely expire
after
2027
. The unrecognised tax credits expire from 20
30,
while the unrecognised deduc
tible temporary
differences do not expire under the current tax
legislation. Deferred tax assets have not been
recognised in respect of these items because
currently there is insufficient evidence to support that
future taxable profits will be available to secure
utilisation of the benefits.
a ta
x loss in either the current or the preceding
period. The corresponding amounts for
2023
, were
USD
7,952
million
and
USD
965
million
, respectively.
The tax losses will be utilised through reversal of
taxable temporary differences and future taxable
income, mainly from pr
oduction of oil and gas. Around
as deferred tax assets, excluding deferred tax assets
classified as held for sale, are expected to be fully
utilised within
10
years
.
At yea
r-end
2024
, unrecognised deferred tax assets
in Angola and Canada represents
USD
650
million
and
USD
401
million
, respectively, of the total
unrecognised deferred tax assets of
USD
2,164
million
. Similar amounts for
2023
were
USD
712
million
in Angola and
USD
415
million
in Canada of a tot
al of
USD
2,162
million
. The rem
aining unrecognised
deferred tax assets originate from several different
tax jurisdictions.
Note 12.
Property, plant and
equipment
Accounting policies
Property, plant and equipment is measured at cost,
less accumulated depreciation and impairment. The
initial cost of an asset comprises its purchase price
or construction cost, any costs directly attributable
to bringing the asset into operation, the initial
estimate of an asset retirement obligation,
exploration costs transferred from intangible
assets and, for qualifying assets, borrowing costs.
Contingent consideration included in the acquisition
of an asset or group of similar assets is initially
measured at its fair value, with later changes in fair
value other than due to the passage of time
reflected in the book value of the asset or group of
assets, unless the asset is impaired. Property, plant
and equipment include costs relating to
expenditures incurred under the terms of
production sharing agreements (PSAs) in certain
countries, and which qualify for recognition as
assets of
Equinor
. State- owned entities in the
respective countries, however, normally hold the
legal title to such PSA-based property, plant and
equipment.
Expenditure on major maintenance refits or repairs
comprises the cost of replacement assets or parts
of assets, inspection costs and overhaul costs.
Inspection and overhaul costs, associated with
regularly scheduled major maintenance
programmes planned and carried out at recurring
intervals exceeding one year, are capitalised and
amortised over the period to the next scheduled
inspection and overhaul. All other maintenance
costs are expensed as incurred.
Capitalised exploration and evaluation
expenditures, development expenditure on the
construction, installation or completion of
infrastructure facilities such as platforms, pipelines
and the drilling of production wells, and field-
dedicated transport systems for oil and gas are
capitalised as Producing oil and gas properties
within Property, plant and equipment. Such
capitalised costs, when designed for significantly
larger volumes than the reserves from already
developed and producing wells, are depreciated
using the unit of production method (UoP) based
on proved reserves expected to be recovered
from the area during the concession or contract
period. Depreciation of production wells uses the
UoP method based on proved developed reserves,
and capitalised acquisition costs of proved
properties are depreciated using the UoP method
based on total proved reserves. In the rare
circumstances where the use of proved reserves
fails to provide an appropriate basis reflecting the
pattern in which the asset’s future economic
benefits are expected to be consumed, a more
appropriate reserve estimate is used. Depreciation
of other assets and transport systems used by
several fields is calculated on the basis of their
estimated useful lives, normally using the straight-
line method. Each part of an item of property, plant
and equipment with a cost that is significant in
relation to the total cost of the item is depreciated
separately. For exploration and production assets,
Equinor
has established separate depreciation
categories which as a minimum distinguish between
platforms, pipelines and wells.
Equinor
2024
Annual Report on Form 20-F 112
|
112
|
ABOUT US
|
|
|
|
The estimated useful lives of property, plant and
equipment are reviewed on an annual basis, and
changes in useful lives are accounted for
prospectively. An item of property, plant and
equipment is derecognised upon disposal. Any gain or
loss arising on derecognition of the asset is included in
Other income or Operating expenses, respectively, in
the period the item is derecognised.
Monetary or non-monetary grants from
governments, when related to property, plant and
equipment and considered reasonably certain, are
recognised in the Consolidated balance sheet as a
deduction to the carrying value of the asset and
subsequently recognised in the Consolidated
statement of income over the life of the depreciable
asset as a reduced depreciation expense.
Equinor
undertakes research and development both
on a funded basis for licence holders and on an
unfunded basis for projects at its own risk, developing
innovative technologies to create opportunities and
enhance the value of current and future assets.
Expenses relate both to in-house resources and the
use of suppliers.
Equinor
's own share of the licence
holders' funding and the total costs of the unfunded
projects are considered for capitalisation under the
applicable IFRS Accounting Standard requirements.
Subsequent to initial recognition, any capitalised
development costs are accounted for in the same
manner as Property, plant and equipment. Costs not
qualifying for capitalisation are expensed as incurred,
development expenditures for more details.
gas reserves
Reserves quantities are, by definition, discovered,
remaining, recoverable and economic. Recoverable
oil and gas quantities are always uncertain.
Estimating reserves is complex and based on a high
degree of professional judgement involving
geological and engineering assessments of in-place
hydrocarbon volumes, the production, historical
recovery and processing yield factors and installed
plant operating capacity. The reliability of these
estimates depends on both the quality and availability
of the technical and economic data and the efficiency
of extracting and processing the hydrocarbons.
Estimation uncertainty; Proved oil and gas reserves
Proved oil and gas reserves may impact the carrying
amounts of oil and gas producing assets, as changes
in the proved reserves, will impact the unit of
production rates used for depreciation and
amortisation. Proved oil and gas reserves are those
quantities of oil and gas, which, by analysis of
geoscience and engineering data, can be estimated
with reasonable certainty to be economically
producible from a given date forward, from known
reservoirs, and under existing economic conditions,
operating methods, and government regulations.
Unless evidence indicates that renewal is reasonably
certain, estimates of proved reserves only reflect the
period before the contracts providing the right to
operate expire. For future development projects,
proved reserves estimates are included only where
there is a significant commitment to project funding
and execution and when relevant governmental and
regulatory approvals have been secured or are
reasonably certain to be secured.
Proved reserves are divided into proved developed
and proved undeveloped reserves. Proved
developed reserves are to be recovered through
existing wells with existing equipment and operating
methods, or where the cost of the required equipment
is relatively minor compared to the cost of a new well.
Proved undeveloped reserves are to be recovered
from new wells on undrilled acreage, or from existing
wells where a relatively major capital expenditure is
required. Undrilled well locations can be classified as
having proved undeveloped reserves if a
development plan is in place indicating that they are
scheduled to be drilled within five years unless specific
circumstances justify a longer time horizon. Specific
circumstances are for instance fields which have
large up-front investments in offshore infrastructure,
such as many fields on the NCS, where drilling of wells
is scheduled to continue for much longer than five
years. For unconventional reservoirs where continued
drilling of new wells is a major part of the investments,
such as the US onshore assets, the proved reserves
are always limited to proved well locations scheduled
to be drilled within five years.
Proved oil and gas reserves have been estimated by
internal qualified professionals based on industry
standards and are governed by the oil and gas rules
and disclosure requirements in the U.S. Securities and
Exchange Commission (SEC) regulations S-K and S-X,
and the Financial Accounting Standards Board
(FASB) requirements for supplemental oil and gas
disclosures. The estimates have been based on a 12-
month average product price and on existing
economic conditions and operating methods as
required, and recovery of the estimated quantities
have a high degree of certainty (at least a 90%
probability). An independent third party has
evaluated
Equinor
's proved reserves estimates, and
the results of this evaluation do not differ materially
from
Equinor
's estimates.
Estimation uncertainty; Expected oil and gas reserves
Changes in the expected oil and gas reserves may
materially impact the amounts of asset retirement
obligations, as a consequence of timing of the removal
activities. It will also impact value-in-use calculations
for oil and gas assets, possibly affecting impairment
testing and the recognition of deferred tax assets.
Expected oil and gas reserves are the estimated
remaining, commercially recoverable quantities,
based on
Equinor
's judgement of future economic
conditions, from projects in operation or decided for
development. As per
Equinor
’s internal guidelines,
expected reserves are defined as the ‘forward looking
mean reserves’ when based on a stochastic prediction
approach. In some cases, a deterministic prediction
method is used, in which case the expected reserves
are the deterministic base case or best estimate.
Expected reserves are therefore typically larger than
proved reserves as defined by the SEC, which are
high confidence estimates with at least a 90%
probability of recovery when a probabilistic approach
is used. Expected oil and gas reserves have been
estimated by internal qualified professionals based on
industry standards and classified in accordance with
the Norwegian resource classification system issued
by the Norwegian Petroleum Directorate.
Equinor
2024
Annual Report on Form 20-F 113
|
113
|
ABOUT US
|
|
|
(in USD million)
|
Machinery,
equipment and
transportation
equipment
|
Production
plants and oil
and gas assets
|
Refining and
manufacturing
plants
|
Buildings
and land
|
Assets under
development
|
Right of
use assets
4)
|
Total
|
|
Cost at 1 January 2024
|
|
|
|
|
|
|
|
|
Additions through business acquisition
7)
|
|
|
|
|
|
|
|
|
Additions and transfers
6)
|
|
|
|
|
|
|
|
|
Changes in asset retirement obligations
|
|
(
|
|
|
|
|
(
|
|
Disposals at cost
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
|
Assets reclassified to held for sale
8)
|
(
|
(
|
|
(
|
(
|
(
|
(
|
|
Foreign currency translation effects
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
|
Cost at 31 December 2024
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment at 1 January 2024
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
|
Depreciation
|
(
|
(
|
(
|
(
|
|
(
|
(
|
|
Impairment
|
|
(
|
|
|
|
(
|
(
|
|
Reversal of impairment
|
|
|
|
|
|
|
|
|
Transfers
6)
|
|
(
|
|
|
|
|
|
|
Accumulated depreciation and impairment on disposed assets
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment on assets classified as held for sale
8)
|
|
|
|
|
|
|
|
|
Foreign currency translation effects
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment at 31 December 2024⁵⁾
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
|
Carrying amount at 31 December 2024
|
|
|
|
|
|
|
|
|
Estimated useful lives (years)
|
|
UoP
1)
|
|
|
|
|
|
Equinor
2024
Annual Report on Form 20-F 114
|
114
|
ABOUT US
|
|
|
(in USD million)
|
Machinery,
equipment and
transportation
equipment
|
Production
plants and oil
and gas assets
|
Refining and
manufacturing
plants
|
Buildings
and land
|
Assets under
development
|
Right of
use assets
|
Total
|
|
Cost at 1 January 2023
|
|
|
|
|
|
|
|
|
Additions through business acquisition
7)
|
|
|
|
|
|
|
|
|
Additions and transfers
6)
|
|
|
|
|
|
|
|
|
Changes in asset retirement obligations
|
|
|
|
|
|
|
|
|
Disposals at cost
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
|
Assets reclassified to held for sale
8)
|
(
|
(
|
|
|
(
|
(
|
(
|
|
Foreign currency translation effects
|
|
(
|
(
|
|
(
|
(
|
(
|
|
Cost at 31 December 2023
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment at 1 January 2023
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
|
Depreciation
|
(
|
(
|
(
|
(
|
|
(
|
(
|
|
Impairment
|
(
|
(
|
(
|
|
(
|
(
|
(
|
|
Reversal of impairment
|
|
|
|
|
|
|
|
|
Transfers
6)
|
|
(
|
|
(
|
|
|
(
|
|
Accumulated depreciation and impairment on disposed assets
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment on assets classified as held for sale
8)
|
|
|
|
|
|
|
|
|
Foreign currency translation effects
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment at 31 December 2023⁵⁾
|
(
|
(
|
(
|
(
|
(
|
(
|
(
|
|
Carrying amount at 31 December 2023
|
|
|
|
|
|
|
|
|
Estimated useful lives (years)
|
|
UoP
1)
|
|
|
|
||
|
1) Depreciation according to unit of production method.
|
|||||||
|
2) Land is not depreciated. Buildings include leasehold improvements.
|
|||||||
|
3) Depreciation linearly over contract period.
|
|||||||
|
4) Right of use assets at
31 December 2024
mainly consist of Land and buildings
USD
|
|||||||
|
|
|||||||
|
6) The carrying amount of assets transferred to Property plant and equipment from Intangible assets in
2024
and
2023
amounted to
USD
|
|||||||
|
|
|||||||
|
|
|||||||
|
|
Equinor
2024
Annual Report on Form 20-F 115
|
115
|
ABOUT US
|
|
Note
13.
Intangible assets
|
|
Accounting policies
Intangible assets are measured at cost, less
accumulated amortisation and impairment. Intangible
assets include acquisition cost for oil and gas
prospects, expenditures on the exploration for and
evaluation of oil and natural gas resources, goodwill,
and other intangible assets. Intangible assets relating
to expenditures on the exploration for and evaluation
of oil and natural gas resources are not amortised.
When the decision to develop a particular area is
made, related intangible exploration and evaluation
assets are reclassified to Property, plant and
equipment.
Goodwill acquired in a business combination is
allocated to each cash generating unit (CGU), or
group of units, expected to benefit from the
combination’s synergies. Following initial recognition,
goodwill is measured at cost less any accumulated
impairment. In acquisitions made on a post-tax basis
according to the rules on the NCS, a provision for
deferred tax is reflected in the accounts based on the
difference between the acquisition cost and the tax
depreciation basis transferred from the seller. The
offsetting entry to such deferred tax amounts is
reflected as goodwill, which is allocated to the CGU or
group of CGUs on whose tax depreciation basis the
deferred tax has been computed.
Other intangible assets with a finite useful life, are
depreciated over their useful life using the straight-
line method.
development expenditures
Equinor
uses the
successful efforts method of accounting for oil and
gas exploration costs. Expenditures to acquire
mineral interests in oil and gas properties, including
signature bonuses, expenditures to drill and equip
exploratory wells and evaluation expenditures are
capitalised within Intangible assets as Exploration
expenditures and Acquisition costs - oil and gas
prospects. Geological and geophysical costs and
other exploration and evaluation expenditures are
expensed as incurred.
Exploration wells that discover potentially economic
quantities of oil and natural gas remain capitalised as
intangible assets during the evaluation phase of the
discovery. This evaluation is normally finalised within
one year after well completion. If, following the
evaluation, the exploratory well has not found
potentially commercial quantities of hydrocarbons,
the previously capitalised costs are evaluated for
derecognition or tested for impairment. Any
derecognition or impairment is classified as
Exploration expenses in the Consolidated statement
of income.
Capitalised exploration and evaluation expenditures
related to offshore wells that find hydrocarbon
resources, are transferred to Property, plant and
equipment at the time of sanctioning of the
development project. The timing from evaluation of a
discovery until a project is sanctioned could take
several years depending on the location and maturity,
including existing infrastructure, of the area of
discovery, whether a host government agreement is
in place, the complexity of the project and the
financial robustness of the project. For onshore wells
where no sanction is required, the transfer to
Property, plant and equipment occurs at the time
when a well is ready for production.
For exploration and evaluation asset acquisitions
(farm-in arrangements) in which
Equinor
has decided
to fund a portion of the selling partner's exploration
and/or future development expenditures (carried
interests), these expenditures are reflected in the
Consolidated financial statements as and when the
exploration and development work progresses.
Equinor
reflects exploration and evaluation asset
disposals (farm-out arrangements) on a historical
cost basis with no gain or loss recognition.
Consideration from the sale of an undeveloped part
of an asset reduces the carrying amount of the asset.
If the consideration exceeds the carrying amount of
the asset, the excess amount is reflected in the
Consolidated statement of income under
Other income. Equal-valued exchanges (swaps) of
exploration and evaluation assets with only
immaterial cash considerations are accounted for at
the carrying amounts of the assets given up with no
gain or loss recognition.
Estimation uncertainty regarding exploration
activities
Exploratory wells that have found hydrocarbon
resources, but where classification of those resources
as reserves depends on whether a major capital
expenditure can be justified, will remain capitalised
during the evaluation phase for the findings on the
exploration wells. Thereafter it will be considered a
trigger for impairment evaluation of the well if no
development decision is planned for the near future,
and there moreover are no concrete plans for future
drilling in the licence. Judgements as to whether these
expenditures should remain capitalised, be
derecognised or impaired in the period may
materially affect the carrying values of these assets
and consequently, the operating income for the
Equinor
2024
Annual Report on Form 20-F 116
|
116
|
ABOUT US
|
|
|
(in USD million)
|
Exploration
expenses
|
Acquisition
costs - oil and
gas prospects
|
Goodwill
2)
|
Other
|
Total
|
|
Cost at 1 January 2024
|
|
|
|
|
|
|
Additions through business acquisition
3)
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
Disposals at cost
|
(
|
(
|
|
(
|
(
|
|
Transfers
|
(
|
(
|
(
|
|
(
|
|
Assets reclassified to held for sale
4)
|
|
(
|
(
|
|
(
|
|
Expensed exploration expenditures previously capitalised
|
(
|
|
|
|
(
|
|
Foreign currency translation effects
|
(
|
(
|
(
|
(
|
(
|
|
Cost at 31 December 2024
|
|
|
|
|
|
|
Accumulated amortisation and impairment at 31 December 2024¹⁾
|
(
|
(
|
|||
|
Carrying amount at 31 December 2024
|
|
|
|
|
|
|
|
Equinor
2024
Annual Report on Form 20-F 117
|
117
|
ABOUT US
|
|
|
(in USD million)
|
Exploration
expenses
|
Acquisition
costs - oil and
gas prospects
|
Goodwill
2)
|
Other
|
Total
|
|
Cost at 1 January 2023
|
|
|
|
|
|
|
Additions through business acquisition
3)
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
Disposals at cost
|
|
|
(
|
(
|
(
|
|
Transfers
|
(
|
(
|
|
(
|
(
|
|
Expensed exploration expenditures previously capitalised
|
|
(
|
|
|
|
|
Foreign currency translation effects
|
|
|
|
|
|
|
Cost at 31 December 2023
|
|
|
|
|
|
|
Accumulated amortisation and impairment at 31 December 2023¹⁾
|
(
|
(
|
|||
|
Carrying amount at 31 December 2023
|
|
|
|
|
|
|
|
|||||
|
2) Carrying amount goodwill at
31 December 2024
mainly consists of technical goodwill related to business acquisitions in 2019, of which
USD
and
USD
|
|||||
|
|
|||||
|
|
|||||
|
|
Equinor
2024
Annual Report on Form 20-F 118
|
118
|
ABOUT US
|
|
|
(in USD million)
|
2024
|
2023
|
|
Less than one year
|
|
|
|
Between one and five years
|
|
|
|
More than five years
|
|
|
|
Total capitalised exploration expenditures
|
|
|
|
Full year
|
|||
|
(in USD million)
|
2024
|
2023
|
2022
|
|
Exploration expenditures
|
|
|
|
|
Expensed exploration expenditures previously capitalised
|
|
(
|
|
|
Capitalised exploration
|
(
|
(
|
(
|
|
Exploration expenses
|
|
|
|
Note
14.
Impairments
|
|
Accounting policies
right-of-use assets, intangible assets including
goodwill and equity accounted investments
Equinor
assesses individual assets or groups of
assets for impairment when events or changes in
circumstances indicate that the carrying value may
not be recoverable. Assets are grouped into cash
generating units (CGUs), typically individual oil and
gas fields, plants, or equity accounted investments.
Each unconventional asset play is considered a
single
CGU when no cash inflows from parts of the
play can be readily identified as being largely
independent of the cash inflows from other parts of
the play.
In impairment assessments, the carrying
amounts of CGUs are determined on a basis
consistent with that of the recoverable amount.
Properties that are not yet classified as reserves
are assessed for impairment when facts and
circumstances suggest that the carrying amount of
the asset or CGU to which
the
unproved properties
belong may exceed its recoverable amount, and at
least once a year. Exploratory wells that have
found hydrocarbon resources, but where
classification of those resources as reserves
depends on whether major capital expenditure can
be justified or where the economic viability of that
major capital expenditure depends on the
successful completion of further exploration work,
will remain capitalised during the evaluation phase
for the exploratory finds. If, following evaluation, an
exploratory well has not found hydrocarbon
resources, the previously capitalised costs are
tested for impairment. After the initial evaluation
phase for a well, it will be considered a trigger for
impairment testing of a well if no development
decision is planned for the near future and there is
no firm plan for future drilling in the licence.
Goodwill is reviewed for impairment annually or
more frequently if events or changes in
circumstances indicate that the carrying value
might be impaired. Impairment is determined by
assessing the recoverable amount of the CGU, or
group of units, to which the goodwill relates. When
conducting impairment testing of goodwill initially
recognised as an offsetting item to the computed
deferred tax provision in a post-tax transaction on
the NCS, the remaining amount of the deferred tax
provision will factor into the impairment valuation.
Impairment and reversals of impairment are
presented in the Consolidated statement of income
as either Exploration expenses or Depreciation,
amortisation and net impairment losses. This
classification depends on the nature of the
impaired assets, whether they are as exploration
assets (intangible exploration assets)
Equinor
2024
Annual Report on Form 20-F 119
|
119
|
ABOUT US
|
|
|
|
or development and producing assets (property,
plant and equipment and other intangible assets),
respectively.
Measurement
The recoverable amount applied in
Equinor
’s
impairment assessments is normally estimated value
in use.
Equinor
may also apply the assets’ fair value
less cost of disposal as the recoverable amount when
such a value is available, reasonably reliable, and
based on a recent and comparable transactions.
Value in use is determined using a discounted cash
flow model. The estimated future cash flows are
based on
Equinor
’s most recently approved forecasts
by management, which are based on reasonable and
supportable assumptions and represent
management’s best estimates of the range of
economic conditions that will exist over the remaining
useful life of the assets
. Assumptions and economic
conditions in establishing the forecasts are reviewed
by management on a regular basis and updated at
least annually. For assets and CGUs with an expected
useful life or timeline for production of expected oil
and natural gas reserves extending beyond five
years, including planned onshore production from
shale assets with a long development and production
horizon, the forecasts reflect expected production
volumes, and the related cash flows include project or
asset specific estimates reflecting the relevant period.
Such estimates are established based on
Equinor
's
principles and assumptions and are consistently
applied.
The estimated future cash flows are adjusted for risks
specific to the asset or CGU and discounted using a
real post-tax discount rate based on
Equinor
's post-
tax weighted average cost of capital (WACC).
Country risk specific to a project is included as a
monetary adjustment to the projects’ cashflow.
Equinor
considers country risk primarily as an
unsystematic risk. The cash flow is adjusted for risk
that influences the expected cash flow of a project
and which is not part of the project itself. The use of
post-tax discount rates in determining value in use
does not result in a materially different determination
of the need for, or the amount of, impairment that
would be required if pre-tax discount rates had been
used.
Impairment reversals
A previously recognised impairment is reversed only if
there has been a change in the estimates used to
determine the asset’s recoverable amount.
Impairments of goodwill are not reversed in future
periods.
Estimation uncertainty regarding impairment
Evaluating whether an asset is impaired or if an
impairment should be reversed requires a high
degree of judgement and may largely depend on the
selection of key assumptions about future conditions.
In
Equinor
's business context, judgement is necessary
in determining what constitutes a CGU. Development
in production, infrastructure solutions, markets,
product pricing, management actions and
other factors may over time lead to changes in CGUs
such as splitting one original CGU into multiple CGUs.
The key assumptions used are subject to change due
to the inherently volatile nature of macro- economic
factors such as
future commodity prices and discount
rates, as well as uncertainty in asset specific factors
like reserve estimates and operational decisions
impacting the production profile or activity levels.
F
luctuations
in foreign currency exchange rates will
also affect value in use, especially for assets on the
NCS, where the functional currency is NOK. When
estimating the recoverable amount, the expected
cash flow approach is applied to reflect uncertainties
in timing and amounts inherent in the assumptions
used in the estimated future cash flows. For example,
change and energy transition) are expected to have
a pervasive impact on the energy industry, affecting
not only supply, demand and commodity prices, but
also technology changes, increased emission-related
levies, and other matters with mainly mid-term and
long-term effects. These effects have been factored
into the price assumptions used for estimating future
cash flows through probability-weighted scenario
analyses.
Estimating future cash flows involves complexity, as it
requires considering assumptions from
Equinor
’s,
market participants’ and other external sources’
assumptions about the future and discounting them
to present value. In order to
establish relevant future cash flows, impairment
testing requires long-term assumptions to be made
concerning a number of economic factors such as
future market prices, refinery margins, foreign
currency exchange rates, future output, discount
rates, impact of the timing of tax incentive regulations,
and political and country risk among others. These
long-term assumptions for major economic factors
are made at a group level, and involve a high degree
of reasoned judgement. This judgement is also
required, in determining other relevant factors such
as forward price curves, in estimating production
outputs, and in determining the ultimate terminal
Equinor
2024
Annual Report on Form 20-F 120
|
120
|
ABOUT US
|
|
|
Net impairments/(reversal of impairments)
|
|||
|
Full year
|
|||
|
(in USD million)
|
2024
|
2023
|
2022
|
|
Property, plant and equipment
|
(
|
|
(
|
|
Intangible assets
|
(
|
|
|
|
Equity accounted investments
|
|
|
|
|
Total net impairments/(reversals) including exploration expenses
|
(
|
|
(
|
|
|
The intangible assets line includes Goodwill, amortisable intangible assets, and certain acquisition costs related to oil
and gas prospects.
For impairment purposes, the asset’s carrying amount is compared to its recoverable amount.
The table below
describes, per area, the Producing and development assets being impaired/(reversed), net impairment/(reversal),
and the carrying amount after impairment.
|
At 31 December 2024
|
At 31 December 2023
|
At 31 December 2022
|
||||
|
(in USD million)
|
Carrying amount
after impairment
|
Net impairment
loss/ (reversal)
|
Carrying amount
after impairment
|
Net impairment/
(reversal)
|
Carrying amount
after impairment
|
Net impairment/
(reversal)
|
|
Exploration Production Norway
|
|
|
|
|
|
(
|
|
Exploration Production USA - onshore
|
|
|
|
|
|
(
|
|
Exploration Production USA - offshore
|
|
|
|
(
|
|
(
|
|
Europe and Asia
|
|
|
|
|
|
|
|
Marketing, Midstream Processing
|
|
(
|
|
|
|
(
|
|
Renewables USA - offshore
|
|
|
|
|
|
|
|
Renewables - other
|
|
|
|
|
|
|
|
Other
|
|
(
|
|
|
|
|
|
Total
|
|
|
|
|
|
(
|
Equinor
2024
Annual Report on Form 20-F 121
|
121
|
ABOUT US
|
|
Exploration Production Norway
|
|
In
2023
, the net impairment mainly related to
reduced expected reserves on a producing asset on
the Norwegian Continental Shelf. In
2022
, the net
impairment reversal was mainly caused by increased
price estimates and changed gas export strategy.
Exploration Production USA - onshore
The impairment reversal in
2022
was caused by
increased gas price assumptions.
Exploration Production USA - offshore
In
2023
, impairment reversals mainly related to
increased expected reserves on a producing asset,
while in
2022
, the impairment reversal was caused by
increased price assumptions and higher reserves
estimates.
Exploration Production International - Europe and
Asia
In
2023
, the impairment related to the held for sale
reclassification of Azerbaijan assets. In
2022
, the net
impairment was mainly caused by the decision to exit
Russia. This was to a large extent offset by a reversal
on Mariner in the UK mainly due to optimisation of the
production profile and higher prices, supported by a
slight increase in reserves estimates.
Marketing, Midstream Processing
In
2023
, the net impairment mainly related to
expectations of stabilizing refinery margins at a lower
level than the margins consumed in recent periods,
while in
2022
the net impairment reversal was mainly
related to increased refinery margin assumptions.
Renewables USA – Offshore
In
2023
,
Equinor
’s offshore wind projects on the US
North East Coast were facing increased costs due to
inflation and supply chain constraints. In October
2023
, the New York State Public Service Commission
(PSC) rejected price increase petitions related to
offtake agreements from several offshore and
onshore wind farm developers, including
Equinor
’s
joint ventures. As a consequence, an impairment of
USD
300
million
was recognised. The recoverable
amount was established applying a fair value
approach. These investments are accounted for using
the equity method.
Accounting assumptions
Management’s future commodity price assumptions
and currency assumptions are used for value in use
impairment testing.
While there are inherent
uncertainties in the assumptions, the commodity price
assumptions as well as currency assumptions reflect
management’s best estimate of the price and
currency development over the life of the Group’s
assets based on its view of relevant current
circumstances and the likely future development of
such circumstances, including energy demand
development, energy and climate change policies, as
well as the speed of the energy transition population
and economic growth, geopolitical risks, technology,
and cost development among other factors.
Management’s best estimate also takes into
consideration a range of external forecasts.
Equinor
has performed a thorough and broad
analysis of the expected development in drivers for
the different commodity markets and exchange rates.
Significant uncertainty exists regarding future
commodity price development due to the transition to
a lower carbon economy, future supply actions by
OPEC+, and other factors. Such analysis resulted in
changes in the long- term price assumptions with
effect from the second quarter of
2024
.
The main
price assumptions applied in impairment and
impairment reversal assessments are disclosed in the
table below as price-points on price curves. Previous
price-points applied from the third quarter of
2023
and up to and including the first quarter of
2024
are
provided in brackets.
|
Year
|
||||||
|
Prices in real terms
1)
|
2030
|
2040
|
2050
|
|||
|
Brent Blend (USD/bbl)
|
|
(
|
|
(
|
|
(
|
|
European gas (USD/MMBtu) - TTF
|
|
(
|
|
(
|
|
(
|
|
Henry Hub (USD/MMBtu)
|
|
(
|
|
(
|
|
(
|
|
Electricity Germany (EUR/MWh)
|
|
(
|
|
(
|
|
(
|
|
EU ETS (EUR/tonne)
|
|
(
|
|
(
|
|
(
|
|
1) Basis year 2024. The prices in the table are price-points on price-curves.
|
||||||
Equinor
2024
Annual Report on Form 20-F 122
|
122
|
ABOUT US
|
|
Further, with effect from the second quarter of 2024,
|
|
Equinor revised the long-term exchange rates. The
USD/NOK rate was revised to
10.0
(previously
8.5
),
the EUR/NOK rate was revised to
11.5
(previously
(previously
1.35
). Th
is conclusion was supported by
the historical 5-year average and forward spot
prices in the currency market.
Climate
considerations are included in the impairment
calculations directly by estimating the CO₂ taxes in
the cash flows. Indirectly, the expected effect of
climate change is also included in the estimated
commodity prices where supply and demand are
considered. The prices also have an effect on the
estimated production profiles and economic cut-off
of the projects. Furthermore, climate considerations
are a part of the investment decisions following
Equinor
’s strategy and commitments to the energy
transition.
The CO₂-tax assumptions used for impairment
calculations of Norwegian upstream assets are based
on Norway’s Climate Action Plan for the period
2021-2030 (Meld. St 13 (2020-2021)), assuming a
gradually increased CO₂ tax (the total of EU ETS +
Norwegian CO₂ tax) in Norway to
2,000
NOK/tonne
(real 2020) in
2030
.
We apply carbon price assumptions for all Equinor’s
assets, also for assets in countries outside EU where
CO
2
is not already subject to taxation or where
Equinor has not established specific estimates.
The base discount rate applied in value in use
calculations has been revised fro
m
5.0
%
applied in
2023 to
5.5
%
real after tax following our regular
annual review of discount rates. T
he discount rate is
derived from
Equinor
’s weighted average cost of
capital.
For projects, mainly within the REN segment in
periods with fixed low risk income, a lower discount
rate wil
l be considered
.
A pre-tax disco
unt rate is
derived based on
the asset’s characteristics, such as
specific tax treatments, cash flow profiles, and
economic life. The pre-tax rates for
2023
were
24
%
for
EP Norway,
6
%
for
EP USA
and
7
%
for MMP.
Sensitivities
Significant downward adjustments in
Equinor
's
commodity price assumptions would result in
impairment losses on certain producing and
development assets, including intangible assets
subject to impairment assessment, while an opposite
adjustment could lead to impairment-reversals.
Assuming a reasonably possible
30
%
decline in
commodity price forecasts over the assets' lifetime
could result in an illustrative impairment recognition of
approximately
USD
6
billion
before tax effects. See
note 3
Climate change and energy transition for
possible effect of using the prices in a 1.5ºC
compatible Net Zero Emission by 2050 scenario and
the Announced Pledges scenario as estimated by the
International Energy Agency (IEA).
Similarly, for illustrative purposes,
Equinor
assessed
the sensitivity of the discount rate used in the value in
use calculations for upstream producing assets and
certain related intangible
assets
.
An
increase
in the
discount rate from
5.5
%
to
6.5
%
real after ta
x, in
isolation, would have no material impact on the
recognised impairment amount before tax effects.
The
illustrative impairment sensitivities above are
based on a simplified method, which assumes no
changes to other input factors. However,
Equinor
notes that a price reduction of
30
%
or those
representing Net Zero Emission scenario and
Announced Pledges Scenario would likely impact
business plans and other factors used in estimating
an asset’s recoverable amount. The correlated
changes reduce the stand-alone impact of the price
sensitivities. Changes in such input factors would likely
include a reduction in the cost level in the oil and gas
industry and offsetting foreign currency effects, which
has historically occurred following significant changes
in commodity prices.
Equinor
2024
Annual Report on Form 20-F 123
|
123
|
ABOUT US
|
|
Note
15.
Joint arrangements and associates
|
|
Accounting policies
joint ventures and associates
A joint arrangement is a contractual arrangement
whereby
Equinor
and other parties undertake an
activity subject to joint control, i.e. when decisions
about the relevant activities require the unanimous
consent of the parties sharing control. Such joint
arrangements are classified as either joint
operations or joint ventures. In determining the
appropriate classification,
Equinor
considers the
nature of products and markets of the
arrangements and whether the substance of the
agreements is that the parties involved have rights
to substantially all the arrangement's assets and
obligations for the liabilities, or whether the parties
involved have rights to the net assets of the
arrangement.
Equinor
accounts for its share of
assets, liabilities, revenues and expenses in joint
operations in accordance with the principles
applicable to those particular assets, liabilities,
revenues and expenses.
Those of
Equinor
's exploration and production
licence activities that are within the scope of IFRS
11 Joint Arrangements have been classified as joint
operations. A considerable number of
Equinor
's
unincorporated joint exploration and production
activities are conducted through arrangements
that
are not jointly controlled, either because
unanimous consent is not required among all parties
involved, or no single group of parties has joint
control over the activity. Licence activities where
control can be achieved through agreement between
more than one combination of involved parties are
considered to be outside the scope of IFRS 11, and
these activities are accounted for on a pro-rata basis
using
Equinor
's ownership share. Currently,
Equinor
uses IFRS 11 by analogy for all such unincorporated
licence arrangements whether these are in scope of
for financial information related to
Equinor
’s
participation in joint operations within upstream
activities.
Joint ventures, in which
Equinor
has rights to the net
assets currently include the majority of
Equinor
’s
investments in the Renewables (REN) operating and
reporting segment.
Equinor
’s participation in joint
arrangements that are joint ventures and
investments in companies in which
Equinor
has neither
control nor joint control but has the ability to exercise
significant influence over operating and financial
policies, are classified and accounted for as equity
accounted investments.
Under the equity method, the investment is carried on
the Consolidated balance sheet at cost plus post-
acquisition changes in
Equinor
’s share of
net
assets of the entity, less distributions received and
less any impairment in value of the investment.
Equinor
also reflects its share of the investment’s
other comprehensive income (OCI) arisen after the
acquisition. The part of an equity accounted
investment’s dividend distribution exceeding the
entity’s carrying amount in the Consolidated balance
sheet is reflected as income from equity accounted
investments in the Consolidated statement of income.
Equinor
will subsequently only reflect the share of net
profit in the investment that exceeds the dividend
already reflected as income.
The Consolidated statement of income reflects
Equinor
’s share of the results after tax of an equity
accounted entity, adjusted to account for
depreciation, amortisation and any impairment of the
equity accounted entity’s assets based on their fair
values at the date of acquisition. In case of material
differences in accounting policies, adjustments are
made in order to bring the accounts of the equity
accounted investment in line with
Equinor
’s
accounting policies. Net income/loss from equity
accounted investments is presented on a separate
line as part of Total revenues and other income, as
investments in and participation with significant
influence in other companies engaged in energy-
related business activities is considered to be part of
Equinor
’s main operating activities.
Acquisition of ownership shares in joint ventures
and other equity accounted investments in which
the activity constitutes a business, are accounted
for in accordance with the requirements applicable
Acquisitions and disposals for more details on
acquisitions.
Equinor
as operator of joint operations and
similar arrangements
Indirect operating expenses such as personnel
expenses are accumulated in cost pools. These
costs are allocated on an hours’ incurred basis to
business areas and
Equinor
-operated joint
operations under IFRS 11 and to similar
arrangements (licences) outside the scope of IFRS
11. Costs allocated to the other partners' share of
operated joint operations and similar
arrangements are reimbursed and only
Equinor
's
share of the statement of income and balance
sheet items related to
Equinor
-operated joint
operations and similar arrangements are reflected
in the Consolidated statement of income and the
Consolidated balance sheet
.
Equinor
2024
Annual Report on Form 20-F 124
|
124
|
ABOUT US
|
|
|
Joint ventures and other equity accounted investments
|
||
|
(in USD million)
|
2024
|
2023
|
|
Net investments at 1 January
|
|
|
|
Net income/(loss) from equity accounted investments
|
|
(
|
|
Impairment
1)
|
(
|
(
|
|
Acquisitions and increase in capital
|
|
|
|
Dividend and other distributions
|
(
|
(
|
|
Other comprehensive income/(loss)
|
(
|
(
|
|
Divestments, derecognition and decrease in paid in capital
2)
|
(
|
(
|
|
Net investments at 31 December
|
|
|
|
1) Impairment for 2023 is mainly related to renewable offshore wind industry in the US, see also
note 14
Impairments.
|
||
|
2) For 2024 this is mainly related to swap of US Offshore Wind assets, see also
note 6
Acquisitions and disposals. For
2023 this is mainly related to change in accounting treatment for Bandurria Sur (proportionally consolidated from 1st of
April 2023).
|
||
|
|
Equity accounted investments consist of several investments, none abov
e
USD
0.5
billion
. Non
e of the investments are
significant on an individual basis. Voting rights correspond to ownership share.
For information on Net investments per 1 January and 31 December as well as Net income/(loss) from equity
accounted investments per segment, please see note 5 Segments. For information on committed investments or
funding of equity accounted entities as well as guarantees on behalf of such entities, please see note 26 Other
commitments, contingent liabilities and contingent assets. For transactions with, receivables from and payables to
equity accounted investments, see note 27 Related parties.
Note
16.
Financial investments and financial receivables
|
Non-current financial investments
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Bonds
|
|
|
|
Listed equity securities
|
|
|
|
Non-listed equity securities
|
|
|
|
Financial investments
|
|
|
Bonds and equity securities mainly relate to investment portfolios held by
Equinor
’s captive insurance company and
other listed and non-listed equities held for long-term
strategic
purposes, mainly accounted for using fair value
through
profit or loss
.
In 2024, Equinor has ac
quir
ed
42,038,108
shares in Ørsted A/S, corresponding to
10
%
of the shares and votes in the
company, but does not have a board representative. The fair value of the investment, amounting to USD
1.9
billion, is
incl
uded in listed equity securities at 31 December 2024. Ørsted A/S, a leading developer and operator in
renewables, is a Danish listed company. Equinor’s ownership position has been built over time, through a combination
of market purchases and a block trade.
|
Non-current prepayments and financial receivables
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Interest-bearing receivables
|
|
|
|
Prepayments and other non-interest-bearing receivables
|
|
|
|
Assets classified as held for sale
1)
|
(
|
|
|
Prepayments and financial receivables
|
|
|
|
|
||
Interest-bearing receivables primarily relate to loans to employees and equity accounted companies. Prepayments
and other non-interest-bearing receivables mainly relate to sales of licenses and lease prepayments.
Equinor
2024
Annual Report on Form 20-F 125
|
125
|
ABOUT US
|
|
|
Current financial investments
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Time deposits
|
|
|
|
Interest-bearing securities
|
|
|
|
Financial investments
|
|
|
|
|
Financial investments mainly relate to investments held by Equinor ASA as part of liquidity management. At
31
December 2024
,
USD
366
million
relates to investment portfolios held by
Equinor
’s captive insurance company.
T
he
corresponding balance at
31 December 2023
was
USD
458
million
.
For information about financial instruments by
|
Current prepayments and financial receivables
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Interest-bearing financial receivables and accrued interest
|
|
|
|
Collateral receivables
1)
|
|
|
|
Total current financial receivables
|
|
|
|
Prepayments and other non-financial receivables
|
|
|
|
Prepayments and financial receivables
|
|
|
|
1) Collateral receivables is related to cash paid as security for counterparties credit exposure towards Equinor.
|
||
With effect from 2024, and to provide additional information to enhance the users understanding of the composition
of current receivables, the balance sheet line-item Trade and other receivables has been disaggregated into Trade
and other receivables (see
note 18
) and Prepayments and financial receivables detailed in the table above.
Note
17.
Inventories
Accounting policies
Commodity inventories not held for trading purposes are measured at the lower of cost and net realisable
value. The cost of inventories is based on the first-in first-out allocation method and comprises direct purchase
costs, cost of production, transportation, and manufacturing expenses
.
Commodity inventories held for trading purposes are measured at fair value less cost to sell (FVLCS), with
subsequent changes in fair value recognised in the Consolidated statement of income as part of Revenues.
These inventories are categorised within level 2 of the fair value hierarchy.
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Crude oil
|
|
|
|
Petroleum products
|
|
|
|
Natural gas
|
|
|
|
Commodity inventories at the lower of cost and net realisable value
|
|
|
|
Natural gas held for trading purposes measured at fair value
|
|
|
|
Other
|
|
|
|
Total inventories
|
|
|
|
Inventories held for trading purposes consist mainly of natural gas storages held by Danske Commodities.
|
||
Equinor
2024
Annual Report on Form 20-F 126
|
126
|
ABOUT US
|
|
Note
18.
Trade and other receivables
|
|
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Trade receivables from contracts with customers
1)
|
|
|
|
Other current trade receivables
|
|
|
|
Receivables from participation in joint operations and similar arrangements
|
|
|
|
Receivables from equity accounted companies and other related parties
|
|
|
|
Trade and other receivables
|
|
|
|
1) Trade receivables from contracts with customers are shown net of an immaterial provision for expected losses.
|
||
With effect from 2024, and to provide additional information to enhance the users understanding of the composition
of current receivables, the balance sheet line-item Trade and other receivables has been disaggregated into
Prepayments and financial receivables (see
note 16
) and Trade and other receivables detailed in the table above.
For currency sensitivities and more information about the credit quality of
Equinor
's counterparties, see
note 4
Financial risk and capital management. For further information on receivables from equity accounted companies and
Note
19
.
Cash and cash equivalents
|
Accounting policies
|
|||
|
Cash and cash equivalents include cash in
hand, bank deposits, and short-term highly
liquid investments with original maturity of
three months or less. These are readily
convertible to known amounts of cash and
subject to insignificant risk of changes in fair
value.
|
Cash and cash equivalent items are mainly
accounted for at amortised cost except for money
market funds that are accounted for at fair value.
Contractually mandatory deposits in escrow bank
accounts, including collateral deposits, are included
as restricted cash and cash equivalents if the
deposits are provided as part of the Group’s
operating activities and therefore are deemed as
held for the purpose of meeting short-term cash
commitments, and the deposits can be released
from the escrow account without undue expenses.
|
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Cash at bank available
|
|
|
|
Time deposits
|
|
|
|
Money market funds
|
|
|
|
Interest-bearing securities
|
|
|
|
Collateral deposits
1)
|
|
|
|
Cash and cash equivalents
|
|
|
|
1) Collateral deposits are related to certain requirements of exchanges where
Equinor
is trading. The terms and
conditions related to these requirements are determined by the respective exchanges.
|
||
Equinor
2024
Annual Report on Form 20-F 127
|
127
|
ABOUT US
|
|
Note
20.
Shareholders' equity, capital distribution and earnings per share
|
|
|
Number of shares
|
NOK per value
|
NOK
|
USD
|
|
|
Share capital at 1 January 2024
|
|
|
|
|
|
Capital reduction
|
(
|
|
(
|
(
|
|
Share capital at 31 December 2024
|
|
|
|
|
|
Number of shares
|
NOK per value
|
Common stock
|
||
|
Authorised and issued
|
|
|
|
|
|
Treasury shares
|
||||
|
Share buy-back programme
|
(
|
|
(
|
|
|
Employees share saving plan
|
(
|
|
(
|
|
|
Total outstanding shares
|
|
|
|
Equinor ASA
has only
one
class of shares and all
shares have voting rights. The holders of shares are
entitled to receive dividends as and when declared
and are entitled to
one
vote per share at the annual
general meeting of the company.
Dividend
During
2024
, dividend for the third and for the fourth
quarter of
2023
and dividend for the first and second
quarter of
2024
were settled. Dividend declared but
not yet settled is presented as dividends payable in
the Consolidated balance sheet. The Consolidated
statement of changes in equity shows
declared
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Dividends declared
|
|
|
|
USD per share or ADS
|
|
|
|
Dividends paid
|
|
|
|
USD per share or ADS
|
|
|
|
NOK per share
|
|
|
dividend in the period (retained earnings). Dividend
declared in
2024
relates to the fourth quarter of
2023
and to the first three quarters of
2024
.
On 4
February 2025
, the board of directors
proposed to the annual general meeting on
14 May
2025
a cash dividend for the fourth quarter of 2024
of
USD
0.37
per share. T
he
Equinor
sha
re will trade
ex-dividend 15 May
2025
on Oslo Børs and 16 May
2025 for ADR holders on New York Stock Exchange.
Record date will be 16 May
2025
and payment date
will be 28 May
2025
.
Equinor
2024
Annual Report on Form 20-F 128
|
128
|
ABOUT US
|
|
|
|
Accounting policies
Where
Equinor
has either acquired own shares
under a share buy-back programme or has
placed an irrevocable order with a third party
for
Equinor
shares to be acquired in the market,
such shares are reflected as a reduction in
equity as treasury shares. The amount
exceeding nominal share capital is recognised
as reduction in additional paid-in capital until nil
and thereafter as reduction in retained
earnings. Treasury shares are not included in
the weighted average number of ordinary
shares outstanding in the calculation of Earnings
per share. The remaining outstanding part of an
irrevocable order to acquire shares is accrued
for and classified as Trade and other payables.
Share buy-back programme
The purpose of the share buy-back programme is to
reduce the issued share capital of the company. All
shares repurch
ased as part of the programme will be
cancelled. According to an agreement between
Equinor
and the Norwegian state, the state will
participate in share buy-backs on a proportionate
basis, ensuring that its ownership interest in
Equinor
remains unchanged at
67
%
.
On 4 February 2025, the board of directors decided
to announce share buy-backs for 2025 of up to USD
programme for 2024-2025 of
USD
10
-
12
billion in
total as announced February 2024. The share buy-
back programme will be subject to market outlook
and balance sheet strength.
The first tranche of up to
USD
1.2
billion of the
2025
share buy-back programme will commence on 6
February and end no later than 2 April
2025
. The first
tranche of the
2025
share buy-back programme is
based on the authorisation from the annual general
meeting in May
2024
, valid until the next annual
general meeting, but no later than 30 June
2025
.
Commencement of new share buy-back tranches
after the first tranche in
2025
will be decided by the
board of directors on a quarterly basis in line with the
company’s dividend policy and will be subject to
board authorisations for share buy-back from the
company’s annual general meeting and agreement
with the Norwegian state regarding share buy-back.
|
Number of shares
|
2024
|
2023
|
|
Share buy-back programme at 1 January
|
|
|
|
Purchase
|
|
|
|
Cancellation
|
(
|
(
|
|
Share buy-back programme at 31 December
|
|
|
|
Equity impact of share buy-back programmes
|
||
|
(in USD million)
|
2024
|
2023
|
|
First tranche
|
|
|
|
Second tranche
|
|
|
|
Third tranche
|
|
|
|
Fourth tranche
|
|
|
|
Total open market share
|
|
|
|
Norwegian state share
1)
|
|
|
|
Total
|
|
|
|
1) Relates to second to fourth tranche of previous year programme and first tranche of current year programme.
|
||
Equinor
2024
Annual Report on Form 20-F 129
|
129
|
ABOUT US
|
|
Based on the authorisation from the annual general
|
|
me
eting on 14 May
2024
, the board of directors has,
on a quarterly basis, decided on share buy-back
tranches. The
2024
programme was up
to
USD
6
billion
,
including shares to be redeemed from the
Norwegian state.
During
2024
,
four
tranches of in total
USD
6
billio
n
were launched, including shares to be redeemed from
the Norwegian state. The market execution of the
fourth tranche was completed in January
2025
. As of
31 December 2024
,
USD
405
million
of the fourth
tranche had been purchased in the market, of whi
ch
USD
377
million
had been settled.
|
Employees' share saving plan
|
||
|
Number of shares
|
2024
|
2023
|
|
Share saving plan at 1 January
|
|
|
|
Purchase
|
|
|
|
Allocated to employees
|
(
|
(
|
|
Share saving plan at 31 December
|
|
|
In
2024
and
2023
treasury shares were purchased to
employees participating in the share saving plan for
USD
85
million
and
USD
68
million
, respectively. For
expenses.
Due to an irrevocable agreement with a third party,
the total market execution of the fourth tranche of
USD
528
million
has been recognised as reduction in
equity.
In order to maintain the Norwegian state’s ownership
share in
Equinor
, a proportionate share of the
second, third and fourth tranche of the
2023
programme as well as the first tranche of the
2024
programme was redeemed and cancelled through a
capital reduction by the annual general meeting on 14
May
2024
. The Norwegian state’s share of
USD
3,956
million
(
NOK
42.8
billion
) following the
capital reduction was settled in July
2024
.
A
proportionate share of the second, third and fourth
tranche of the 2024 programme as well as the first
tranche of the 2025 programme will be redeemed
and cancelled at the annual general meeting in May
2025.
|
Earnings per share
|
||
|
Number of shares
|
2024
|
2023
|
|
Basic earnings per share
|
||
|
Net income (loss) attributable to shareholders of the company
|
|
|
|
Weighted average number of ordinary shares outstanding
|
|
|
|
Basic earnings per share (in USD)
|
|
|
|
Diluted earnings per share
|
||
|
Net income (loss) attributable to shareholders of the company
|
|
|
|
Weighted average number of ordinary shares outstanding, diluted
|
|
|
|
Diluted earnings per share (in USD)
|
|
|
Basic and diluted earnings per share amounts are
calculated by dividing the Net income (loss) for the
year attributable to shareholders by relevant
weighted average number of ordinary shares
outstanding during the year. Shares purchased to
employees participating in the share saving plan is
the only diluting element.
Equinor
2024
Annual Report on Form 20-F 130
|
130
|
ABOUT US
|
|
Note
21.
Finance debt
|
|
|
Non-current finance debt
|
||||||
|
Finance debt measured at amortised cost
|
||||||
|
Weighted average
interest rates in %
1)
|
Carrying amount in
USD millions at 31 December
|
Fair value in USD
millions at 31 December²⁾
|
||||
|
2024
|
2023
|
2024
|
2023
|
2024
|
2023
|
|
|
Unsecured bonds
|
||||||
|
United States Dollar (USD)
|
|
|
|
|
|
|
|
Euro (EUR)
|
|
|
|
|
|
|
|
Great Britain Pound (GBP)
|
|
|
|
|
|
|
|
Norwegian Kroner (NOK)
|
|
|
|
|
|
|
|
Total unsecured bonds
|
|
|
|
|
||
|
Unsecured loans
|
||||||
|
Brazilian real (BRL)
|
|
|
|
|
|
|
|
Japanese Yen (JPY)
|
|
|
|
|
|
|
|
Total unsecured loans
|
|
|
|
|
||
|
Total
|
|
|
|
|
||
|
Non-current finance debt due within one year
|
|
|
|
|
||
|
Non-current finance debt
|
|
|
|
|
||
|
1) Weighted average interest rates are calculated based on the contractual rates on the loans per currency at 31 December and do not include the effect of swap agreements
|
||||||
|
2) Fair values are determined from external calculation models based on market observations from various sources, classified at level 2 in the fair value hierarchy.
For more information regarding fair value hierarchy, see
note 28
Financial instruments and fair value measurement
|
||||||
Unsec
ured bonds amounting to
USD
13,288
million
are
denominated in
USD
and unsecured bonds
denominated in other currencies amounting to
USD
7,270
million
are swapped into
USD
. One bond
denominated in EUR amounting to
USD
778
million
is
not swapped. The table does not include the effects
of agreements entered into to swap the various
28
Financial instruments and fair value measurement.
Substantially all unsecured bonds and unsecured
bank loan agreements contain provisions restricting
future pledging of assets to secure borrowings
without granting a similar secured status to the
existing bondholders and lenders.
Out of
Equinor
's total outstanding unsecured bond
portfolio,
31
bond agreements contain provisions
allowing
Equinor
to call the debt prior to its final
redemption at par or at certain specified premiums if
there are changes to the Norwegian tax laws. The
carrying amount of these agreements is
USD
21,248
million
at the
31 December 2024
closing currency
exchange rate.
For more information about the revolving credit
facility, maturity profile for undiscounted cash flows
Financial risk and capital
management.
Equinor
2024
Annual Report on Form 20-F 131
|
131
|
ABOUT US
|
|
|
Non-current finance debt maturity profile
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Year 2 and 3
|
|
|
|
Year 4 and 5
|
|
|
|
After 5 years
|
|
|
|
Total repayment of non-current finance debt
|
|
|
|
Weighted average maturity (years - including current portion)
|
|
|
|
Weighted average annual interest rate (% - including current portion)
|
|
|
|
|
|
Current finance debt
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Collateral liabilities
|
|
|
|
Non-current finance debt due within one year
|
|
|
|
Other including US Commercial paper programme and bank overdraft
|
|
|
|
Total current finance debt
|
|
|
|
Weighted average interest rate (%)
|
|
|
Collateral liabilities
mainly relate to
cash received as security for a portion of
Equinor
's credit exposure. Outstanding
amounts on
Equinor
's US Commercial paper (CP) programme amounted to
USD
4,115
million
as of
31 December
2024
and
USD
1,895
million
as of
31 December 2023
.
Equinor
2024
Annual Report on Form 20-F 132
|
132
|
ABOUT US
|
|
|
Reconciliation of cash flows from financing activities to finance line items in balance sheet
|
||||||||
|
(in USD million)
|
Non-current
finance debt
|
Current
finance debt
|
Dividend
payable
|
Lease liabilities
1)
|
Accrued trade
expenses and
other payables
2)
|
Collateral
receivables
3)
|
Other balance
sheet items
|
Total
|
|
At 1 January 2024
|
|
|
|
|
|
(
|
||
|
Repayment of finance debt
|
(
|
(
|
||||||
|
Repayment of lease liabilities
|
(
|
(
|
||||||
|
Dividend paid
|
(
|
(
|
||||||
|
Share buy-back
|
(
|
(
|
(
|
|||||
|
Net current finance debt and other finance activities
|
|
|
(
|
|
||||
|
Net cash flow from financing activities
|
(
|
(
|
(
|
(
|
(
|
|
(
|
(
|
|
Transfer to current portion
|
|
(
|
||||||
|
Dividend declared
|
|
|||||||
|
Share buy back committed
|
|
|
||||||
|
Debt in RIO Energy
|
|
|||||||
|
New leases
|
|
|||||||
|
Effect of exchange rate changes
|
(
|
(
|
(
|
(
|
|
|||
|
Other changes
|
(
|
|
|
(
|
|
|
||
|
Net other changes
|
(
|
|
|
|
|
|
||
|
At 31 December 2024
|
|
|
|
|
|
(
|
|
|
Equinor
2024
Annual Report on Form 20-F 133
|
133
|
ABOUT US
|
|
|
(in USD million)
|
Non-current
finance debt
|
Current
finance debt
|
Dividend
payable
|
Lease liabilities
1)
|
Accrued trade
expenses and
other payables
2)
|
Collateral
receivables
3)
|
Other balance
sheet items
|
Total
|
|
At 1 January 2023
|
|
|
|
|
|
(
|
||
|
Repayment of finance debt
|
(
|
(
|
||||||
|
Repayment of lease liabilities
|
(
|
(
|
||||||
|
Dividend paid
|
(
|
(
|
||||||
|
Share buy-back
|
(
|
(
|
(
|
|||||
|
Net current finance debt and other finance activities
|
|
|
(
|
|
||||
|
Net cash flow from financing activities
|
(
|
(
|
(
|
(
|
(
|
|
(
|
(
|
|
Transfer to current portion
|
|
(
|
||||||
|
Dividend declared
|
|
|||||||
|
Share buy back committed
|
|
|
||||||
|
Debt in RIO Energy
|
|
|||||||
|
New leases
|
|
|||||||
|
Effect of exchange rate changes
|
|
|
(
|
(
|
(
|
|||
|
Other changes
|
|
|
(
|
(
|
(
|
|
||
|
Net other changes
|
|
|
|
|
|
(
|
||
|
At 31 December 2023
|
|
|
|
|
|
(
|
|
|
2)
Accrued trade expenses and other payables are included in Trade and other payables in the Consolidated balance sheet. See
note 24
Trade and other payables for more information.
3)
Financial receivable collaterals are included in Trade and other receivables in the Consolidated balance sheet. See
note 18
Trade and other receivables for more information.
Equinor
2024
Annual Report on Form 20-F 134
|
134
|
ABOUT US
|
|
Note
22.
Pensions
|
|
Accounting policies
defined benefit upon retirement or a pension
based on defined contributions and returns. A
portion of the contributions are provided for as
notional contributions, for which the liability
increases with a promised notional return, set
equal to the actual return of assets invested
through the ordinary defined contribution plan. For
defined benefit plans, the benefit to be received by
employees generally depends on many factors
including length of service, retirement date and
future salary levels.
Equinor
's proportionate share of multi-employer
defined benefit plans is recognised as liabilities in
the Consolidated balance sheet as sufficient
information is considered available, and a reliable
estimate of the obligation can be made.
The cost of pension benefit plans is expensed over
the period that the employees render services and
become eligible to receive benefits. The calculation
is performed by an external actuary.
Equinor
's net
obligation from defined benefit pension plans is
calculated separately for each plan by estimating
the amount of future benefit that employees have
earned in return for their services in the current
and prior periods. That benefit is discounted to
determine its present value, and the fair value of
any plan assets is deducted.
The recognition of a net surplus for the funded
plan is based on the assumption that the net assets
represent a future value for
Equinor
, either as a
possible distribution to premium fund which can be
used for future funding of new liabilities, or as
disbursement of equity in the pension fund.
Contributions to defined contribution schemes are
recognised in the Consolidated statement of
income as pension costs in the period in which the
contribution amounts are earned by the
employees.
Notional contribution plans, reported in the parent
company
Equinor ASA
, are recognised as Pension
liabilities with the actual value of the notional
contributions and promised return at reporting
date. Notional contributions are recognised in the
Consolidated statement of income as periodic
pension cost, while changes in fair value of the
employees’ notional assets are reflected in the
Consolidated statement of income under Net
financial items.
Periodic pension cost is accumulated in cost pools
and allocated to business areas and
Equinor
’s
operated joint operations (licences) on an hours’
incurred basis and recognised in the Consolidated
statement of income based on the function of the
cost.
Pension plans in
Equinor
The main pension plans for
Equinor ASA
and its most
significant subsidiaries are defined contribution plans
which includes certain unfunded elements (notional
contribution plans).
In addition, several employees
and former employees of the
Equinor group
is a
member of certain defined benefit plans. The benefit
plan in
Equinor ASA
was closed in 2015 for new
employees and for employees with more than 15
years to regular retirement age.
Equinor
's defined
benefit plans are generally based on a minimum of
30
including an assumed benefit from the Norwegian
National Insurance Scheme
. The Norwegian
companies in the group are subject to, and complies
with, the requirements of the Norwegian Mandatory
Company Pensions Act.
The defined benefit plans in Norway are managed
and financed through
Equinor
Pensjon (
Equinor
's
pension fund - hereafter
Equinor
Pension).
Equinor
Pension is an independent pension fund that covers
the employees in
Equinor
's Norwegian companies.
The pension fund's assets are kept separate from the
company's and group companies' assets.
Equinor
Pension is supervised by the Financial Supervisory
Authority of Norway ("Finanstilsynet") and is licenced
to operate as a pension fund.
Equinor
has more than one defined benefit plan, but
the disclosure is made in total since the plans are not
subject to materially different risks. Pension plans
outside Norway are not material and as such not
disclosed separately. In this note pension costs are
presented on a gross basis before allocation to
licence partners. In the Consolidated statement of
income, the pension costs in
Equinor ASA
are
presented net of costs allocated to licence partners.
Equinor
is also a member of a Norwegian national
agreement-based early retirement plan (“AFP”), and
the premium is calculated based on the employees'
income but limited to 7.1 times the basic amount in the
National Insurance scheme (7.1 G). The premium is
payable for all employees until
age
62
. Pension from
the AFP scheme will be paid from the AFP plan
administrator to employees for their full lifetime.
Net pension cost
Total pension costs amount to
USD
495
million
in
2024
,
USD
441
million
in
2023
and
USD
459
million
in
2022
. In addition, interest cost and interest income
related to defined benefit plans are included in the
Consolidated statement of income within Net financial
items.
Equinor
2024
Annual Report on Form 20-F 135
|
135
|
ABOUT US
|
|
|
Changes in pension liabilities and plan assets during the year
|
||
|
(in USD million)
|
2024
|
2023
|
|
Pension liabilities at 1 January
|
|
|
|
Current service cost
|
|
|
|
Interest cost
|
|
|
|
Actuarial (gains)/losses and currency effects
|
(
|
|
|
Other changes in notional contribution liability and other effects
|
|
|
|
Benefits paid
|
(
|
(
|
|
Losses/(gains) from curtailment, settlement or plan amendment
|
|
|
|
Pension liabilities at 31 December
|
|
|
|
Fair value of plan assets at 1 January
|
|
|
|
Interest income
|
|
|
|
Return on plan assets (excluding interest income)
|
|
|
|
Company contributions
|
|
|
|
Benefits paid
|
(
|
(
|
|
Losses (gains) from curtailment, settlement or plan amendment
|
|
|
|
Other effects
|
|
|
|
Foreign currency translation effects
|
(
|
(
|
|
Fair value of plan assets at 31 December
|
|
|
|
Net pension liability at 31 December
|
|
|
|
Represented by:
|
||
|
Asset recognised as non-current pension assets (funded plan)
|
|
|
|
Liability recognised as non-current pension liabilities (unfunded plans)
|
|
|
|
Pension liabilities specified by funded and unfunded pension plans
|
|
|
|
Funded
|
|
|
|
Unfunded
|
|
|
|
|
Equinor
recognised an actuarial gain from changes in financial assumptions in
2024
. The interest rate increased
by
|
Actuarial assumptions
|
||
|
Assumptions used
to determine benefit
obligations in %
|
||
|
Rounded to the nearest quartile
|
2024
|
2023
|
|
Discount rate
|
|
|
|
Rate of compensation increase
|
|
|
|
Expected rate of pension increase
|
|
|
|
Expected increase of social security base amount (G-amount)
|
|
|
|
Weighted-average duration of the defined benefit obligation
|
|
|
The assumptions presented are for the Norwegian companies in
Equinor
which are members of
Equinor
's pension
fund. The defined benefit plans of other subsidiaries are immaterial to the consolidated pension assets and liabilities.
Equinor
2024
Annual Report on Form 20-F 136
|
136
|
ABOUT US
|
|
Sensitivity analysis
|
|
effects of changes in discount rate and expected rate
of pension increase for the defined benefit plans. The
following estimates are based on facts and
circumstances as of
31 December 2024
.
|
Discount rate
|
Expected rate of
pension increase
|
|||
|
(in USD million)
|
|
(
|
|
(
|
|
Effect on:
|
||||
|
Defined benefit obligation at 31 December 2024
|
(
|
|
|
(
|
The sensitivity of the financial results to each of the
key assumptions has been estimated based on the
assumption that all other factors would remain
unchanged. The estimated effects on the financial
result would differ from those that would actually
appear in the Consolidated financial statements
because the Consolidated financial statements would
also reflect the relationship between these
assumptions.
Pension assets
The plan assets related to the defined benefit plans
were measured at fair value.
Equinor
Pension invests
in both financial assets and real estate.
In
2024
,
98
%
of the equity securities and
6
%
of bonds
had quoted market prices in an active marke
t.
2
%
of
the equity securities,
94
%
of bonds and
100
%
of
money market instruments had market prices based
on inputs other than quoted prices. If quoted market
prices are not available, fair values are determined
from external calculation models based on market
observations from various sources.
In
2023
,
100
%
of the equity securities and
13
%
of
bonds had quoted market prices in an active market.
|
(in %)
|
2024
|
2023
|
Target
portfolio
weight
|
|
Equity securities
|
|
|
|
|
Interest bearing investments
|
|
|
|
|
Real estate
|
|
|
|
|
Total
|
|
|
had market prices based on inputs other than quoted
prices.
For definition of the various levels, see
note 28
Financial instruments and fair value measurement.
Estimated company contributions to be made to
Equinor
Pension in
2025
is approximately
USD
71
million
.
approved by the board of
Equinor
Pension for
2024
.
The portfolio weight during a year will depend on the
risk capacity.
Equinor
2024
Annual Report on Form 20-F 137
|
137
|
ABOUT US
|
|
Note
23.
Provisions and other liabilities
|
|
A
ccounting policies
Provisions for asset retirement obligations (ARO)
are recognised when
Equinor
has an obligation
(legal or constructive) to dismantle and remove a
facility or an item of property, plant and equipment
and to restore the site on which it is located, and
when a reliable estimate of that liability can be
made. Normally an obligation arises for a new
facility, such as an oil and natural gas production or
transportation facility, upon construction or
installation. An obligation may also arise during the
period of operation of a facility through a change in
legislation or through a decision to terminate
operations or be based on commitments associated
with
Equinor
's ongoing use of pipeline
transport systems where removal obligations rest
with the volume shippers.
The amount recognised is the present value of the
estimated future expenditures determined in
accordance with local conditions and requirements.
The cost is estimated based on current regulations
and technology, considering relevant risks and
uncertainties. The discount rate used in the
calculation of the ARO is a market-based risk-free
rate based on the applicable currency (mainly USD)
and time horizon of the underlying cash flows. The
provisions are classified under Provisions in the
Consolidated balance sheet.
When a provision for ARO is recognised, a
corresponding amount is recognised as an increase
of the related asset within property, plant and
equipment and is subsequently depreciated over the
useful life of the asset. Any change in the present
value of the estimated expenditure is reflected as an
adjustment to the provision and the corresponding
adjustment to the carrying value of the property,
plant and equipment. When a decrease in the ARO
related to a producing asset exceeds the carrying
amount of the asset, the excess is recognised as a
reduction of Depreciation, amortisation and net
impairment in the Consolidated statement of income.
When an asset has reached the end of its useful life,
all subsequent changes to the ARO are recognised as
they occur in Operating expenses in the Consolidated
statement of income.
Removal provisions associated with
Equinor
's role as
shipper of volumes through third party transport
systems are expensed as incurred.
Estimation uncertainty regarding asset retirement
obligations
Establishing the appropriate estimates for such
obligations are based on historical knowledge
combined with knowledge of ongoing technological
developments, expectations about future regulatory
and technological development and involve the
application of judgement and an inherent risk of
significant adjustments. The costs of decommissioning
and removal activities require revisions due to
changes in current regulations and technology while
considering relevant risks and uncertainties. Most of
the removal activities are many years into the future,
and the removal technology and costs are constantly
changing. The speed of the transition to renewable
energy sources may also influence the production
period, hence the timing of the removal activities. The
estimates include assumptions of norms, rates and
time required which can vary considerably depending
on the assumed removal complexity. Moreover,
changes in the discount rate and foreign currency
exchange rates may impact the estimates
significantly. As a result, the initial recognition of ARO
and subsequent adjustments involve the application
of significant judgement.
Equinor
2024
Annual Report on Form 20-F 138
|
138
|
ABOUT US
|
|
|
(in USD million)
|
Asset retirement
obligations
|
Other provisions
and
liabilities
|
Total
|
|
Non-current portion at 31 December 2023
|
|
|
|
|
Current portion at 31 December 2023¹⁾
|
|
|
|
|
Provisions and other liabilities at 31 December 2023
|
|
|
|
|
New or increased provisions and other liabilities
|
|
|
|
|
Change in estimates
|
|
(
|
(
|
|
Amounts charged against provisions and other liabilities
|
(
|
(
|
(
|
|
Effects of change in the discount rate
|
(
|
(
|
(
|
|
Reduction due to divestments
|
(
|
(
|
(
|
|
Accretion expenses
|
|
|
|
|
Reclassification, transfer and other
|
(
|
|
(
|
|
Foreign currency translation effects
|
(
|
(
|
(
|
|
Provisions and other liabilities at 31 December 2024
|
|
|
|
|
Non-current portion at 31 December 2024
|
|
|
|
|
Current portion at 31 December 2024¹⁾
|
|
|
|
|
1) Included in the line item Current provisions and other liabilities in the Consolidated Balance sheet, further detailed below.
|
|||
|
|
Equinor
's estimated asset retirement obligations
(ARO) have decreased by
USD
1,432
million
to
USD
year-end
2023
. Changes in ARO are reflected within
Property, plant and equipment and Provisions and
other liabilities in the Consolidated balance sheet.
In certain production sharing agreements (PSA),
Equinor
’s estimated share of asset retirement
obligation (ARO) is paid into an escrow account over
the producing life of the field. These payments are
considered down-payments of the liabilities and
included in the line item Amounts charged against
provisions and other liabilities.
Claims and litigations mainly relate to expected
payments for unresolved claims. The timing and
amounts of potential settlements in respect of these
claims are uncertain and dependent on various
factors that are outside management's control. For
further information on provisions and contingent
liabilities and contingent assets.
Equinor
2024
Annual Report on Form 20-F 139
|
139
|
ABOUT US
|
|
The timing of cash outflows of asset retirement
|
|
obligations depends on the expected cease of
production at the various facilities.
The undiscounted value of the total ARO amounts to
USD
17,475
million
at year end.
Sensitivities with regards to discount rate on the total
ARO portfolio
The discount rate sensitivity has been calculated by
assuming a reasonably possible change of
1.0
percentage points
.
|
Expected timing of cash outflows
|
|||
|
(in USD million)
|
Asset retirement
obligations
|
Other provisions
and liabilities
|
Total
|
|
2025 - 2029
|
|
|
|
|
2030 - 2034
|
|
|
|
|
2035 - 2039
|
|
|
|
|
2040 - 2044
|
|
|
|
|
Thereafter
|
|
|
|
|
At 31 December 2024
|
|
|
|
An increase in the discount rate of
1.0
percentage
points
would reduce the ARO liability by
USD
1,290
million
. A corresponding reduction would increase the
liability by
USD
1,671
million
.
sensitivity with regards to change in the removal year
.
value (NPV) of ARO are shown in the “USD Risk free
rate table.
|
USD Risk free rate
|
31 December 2024
|
|
2 years
|
|
|
5 years
|
|
|
10 years
|
|
|
20 years
|
|
|
30 years
|
|
|
Current provisions and other liabilities
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Accrued expenses and other financial liabilities
|
|
|
|
Provisions
|
|
|
|
Other non-financial liabilities
|
|
|
|
Current provisions and other liabilities
|
|
|
Other commitments, contingent liabilities and
contingent assets.
With effect from 2024, and to provide additional
information to enhance the users understanding of
the composition of current liabilities, the balance
sheet line-item Trade, other payables and provisions
has been disaggregated into Trade and other
liabilities detailed in the table above.
Equinor
2024
Annual Report on Form 20-F 140
|
140
|
ABOUT US
|
|
Note
24.
Trade and other payables
|
4.1 Consolidated financial statements
|
|
|
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Trade payables
|
|
|
|
Payables due to participation in joint operations and similar arrangements
|
|
|
|
Payables to equity accounted companies and other related parties
|
|
|
|
Accrued trade expenses and other payables
|
|
|
|
Trade and other payables
|
|
|
With effect from 2024, and to provide additional
information to enhance the users understanding of
the composition of current liabilities, the balance
sheet line-item Trade, other payables and provisions
has been disaggregated into Provisions and other
detailed in the table above.
F
or information regarding currency sensitivities, see
note 4
Financial risk and capital management. For
further information on payables to equity accounted
Related parties.
Equinor
2024
Annual Report on Form 20-F 141
|
141
|
ABOUT US
|
|
|
|
Accounting policies
A lease is defined as a contract that conveys the right
to control the use of an identified asset for a period of
time in exchange for consideration. At the date at
which the underlying asset is made available for
Equinor
, the present value of future lease payments
(including extension options considered reasonably
certain to be exercised) is recognised as a lease
liability. The present value is calculated using
Equinor
’s incremental borrowing rate. A
corresponding right-of-use (RoU) asset is recognised,
including lease payments and direct costs incurred at
the commencement date. Lease payments are
reflected as interest expense and a reduction of lease
liabilities. The RoU assets are depreciated over the
shorter of each contract’s term and the assets’ useful
life.
Short term leases (12 months or less) and leases of
low value assets are expensed or (if appropriate)
capitalised as incurred, depending on the activity in
which the leased asset is used.
Many of
Equinor
’s lease contracts, such as rig and
vessel leases, involve several additional services and
components, including personnel cost, maintenance,
drilling related activities, and other items. For a
number of these contracts, the additional services
represent a not inconsiderable portion of the total
contract value. Non-lease components within lease
contracts are accounted for separately for
all
underlying classes of assets and reflected in the
relevant expense category or (if appropriate)
capitalised as incurred, depending on the activity
involved.
Accounting judgement regarding leases
In the oil and gas industry, where activity frequently is
carried out through joint arrangements or similar
arrangements, the application of IFRS 16 Leases
requires evaluations of whether the joint arrangement
or its operator is the lessee in each lease agreement
and consequently whether such contracts should be
reflected gross (100%) in the operator’s financial
statements, or according to each joint operation
partner’s proportionate share of the lease.
In many cases where an operator is the sole signatory
to a lease contract of an asset to be used in the
activities of a specific joint operation, the operator
does so implicitly or explicitly on behalf of the joint
arrangement. In certain jurisdictions, and importantly
for
Equinor
as this includes the Norwegian continental
shelf (NCS), the concessions granted by the authorities
establish both a right and an obligation for the
operator to enter into necessary agreements in the
name of the joint operations (licences).
As is the customary norm in upstream activities
operated through joint arrangements, the operator will
manage the lease, pay the lessor, and subsequently re-
bill the partners for their share of
the lease costs.
In each such instance, it is necessary to determine
whether the operator is the sole lessee in the external
lease arrangement, and if so, whether the billings to
partners may represent sub-leases, or whether it is in
fact the joint arrangement which is the lessee, with
each participant accounting for its proportionate
share of the lease. Where all partners in a licence are
considered to share the primary responsibility for lease
payments under a contract,
Equinor
’s proportionate
share of the related lease liability and RoU asset will be
recognised net by
Equinor
. When
Equinor
is considered
to have the primary responsibility for the full external
lease payments, the lease liability is recognised gross
(100%).
Equinor
2024
Annual Report on Form 20-F 142
|
142
|
ABOUT US
|
|
Equinor
leases certain assets, notably drilling rigs,
transportation vessels, storages and office facilities
for operational activities.
Equinor
has
the primary
responsibility for the full external lease payments in
the majority of the lease contracts,
and the use of
leases serves operational purposes rather than as a
tool for financin
g
.
|
|
Equinor
recognised revenues of
USD
269
million
in
2024
and
USD
337
million
in
2023
related to lease
costs recovered from licence partners related to
lease contracts being recognised gross by
Equinor
.
Commitments relating to lease contracts which had
not yet commenced at year-end are included within
note 26
Other commitments, contingent liabilities and
contingent assets.
A maturity profile based on undiscounted contractual
Financial risk and capital management.
|
Information related to lease payments and lease liabilities
|
||||
|
(in USD million)
|
2024
|
2023
|
||
|
Lease liabilities at 1 January
|
|
|
||
|
New leases, including remeasurements and cancellations
|
|
|
||
|
Gross lease payments
|
(
|
(
|
||
|
Lease interest
|
|
|
||
|
Lease repayments
|
(
|
(
|
(
|
(
|
|
Foreign currency translation effects
|
(
|
(
|
||
|
Lease liabilities at 31 December
|
|
|
||
|
Current lease liabilities
|
|
|
||
|
Non-current lease liabilities
|
|
|
|
Non-current lease liabilities maturity profile
|
||
|
At 31 December
|
||
|
(in USD million)
|
2024
|
2023
|
|
Year 2 and 3
|
|
|
|
Year 4 and 5
|
|
|
|
After 5 years
|
|
|
|
Total repayment of non-current lease liabilities
|
|
|
The Right of use assets are included within the line
item Property, plant and equipment in the
Property, plant and equipment.
Equinor
2024
Annual Report on Form 20-F 143
|
143
|
ABOUT US
|
|
Note
26.
Other commitments, contingent liabilities and contingent assets
|
|
Accounting policies
Equinor
’s global business activities are subject
to different indirect taxes (levies) in various
jurisdictions around the world. In these
jurisdictions, governments can respond to
global or local development, including climate
related matters and public fiscal balances, by
issuing new laws or other regulations stipulating
changes in value added tax, tax on emissions,
customs duties or other levies which may affect
profitability and even the viability of
Equinor
’s
business in that jurisdiction.
Equinor
mitigates
this risk by using local legal representatives and
staying up to date with the legislation in the
jurisdictions where activities are carried out.
Occasionally, legal disputes arise from
difference in interpretations.
Equinor
’s legal
department, together with local legal
representatives, estimate the outcome from
such legal disputes based on first-hand
knowledge. Such estimates may differ from the
actual results.
Contractual commitments
Equinor
had contractual commitments of
USD
11,841
million
as of
31 December 2024
. The contractual
commitments reflect
Equinor
's proportional share and
mainly comprise construction and acquisition of
property, plant and equipmen
t as well as committed
i
nvestments or funding to equity accounted entities of
USD
1,090
million.
Equinor
also had estimated expenditures related to
commitments to drill a certain number of wells, which
sometimes can be a prerequisite to be awarded oil
and gas exploration and production licences. At the
end of
2024
,
Equinor
was committed to participate in
approximately
44
%
.
Equinor
's share of estimated
expenditures to drill these wells amounts to
USD
428
million
. Additional wells that
Equinor
may become
committed to participating in depending on future
discoveries in certain licences are not included in
these numbers.
Other long-term commitments
Equinor
has entered into various long-term
agreements for pipeline transportation as well as
terminal use,
processing, st
orage and entry/exit
capacity commitments and commitments related to
specific purchase agreements.
The agreements ensure the rights to the capacity or
volumes in question, but also impose on
Equinor
the
obligation to pay for the agreed-upon service or
commodity, irrespective of actual use. The contracts'
terms vary, with durations of up to
2060
.
F
or assets (such as pipelines) that are included in the
Equinor
accounts through joint operations or similar
arrangements, and where consequently
Equinor
’s
share of assets, liabilities, income and expenses
(capacity costs) are reflected on a line-by-line basis
in the Consolidated financial statements, the amounts
in the table include the net commitment payable by
Equinor
(i.e.
Equinor
’s proportionate share of the
commitment less
Equinor
's ownership share in the
applicable entity).
The table below also includes
USD
5,738
million
as the
non-lease components of lease agreements reflected
in the accounts according to IFRS 16, as well as leases
not yet commenced. For commenced leases, please
31 December 2024
:
|
(in USD million)
|
|
|
2025
|
|
|
2026
|
|
|
2027
|
|
|
2028
|
|
|
2029
|
|
|
Thereafter
|
|
|
Total other long-term commitments
|
|
Equinor
2024
Annual Report on Form 20-F 144
|
144
|
ABOUT US
|
|
Guarantees
|
|
Equinor
has guaranteed for its proportionate share
of some of
our equity accounted companies’ lo
ng-
term bank debt and other contractual obligations.
The total amount guaranteed at year-end
2024
is
USD
1,053
million
. The book value of the guarantees is
immaterial.
Contingent liabilities and contingent assets
Claim from Petrofac regarding multiple variation
order requests performed in Algeria (In Salah)
Petrofac International (UAE) LLC (“PIUL”) was
awarded the EPC Contract to execute the ISSF
Project (the In Salah Southern Fields Project in central
Algeria). Following a suspension of activity in 2013,
PIUL issued multiple Variation Order Requests
(“VoRs”) related to the costs incurred for stand-by
and remobilization costs. Several VoRs have been
paid, but the settlement of the remaining has been
unsuccessful. PIUL initiated arbitration in August 2020
claiming an estimated amount of
USD
532
million
, of
which
Equinor
holds a
31.85
%
share.
The arbitration
process has progressed during 2024.
Equinor
's
maximum exposure amounts to
USD
169
million
.
Equinor
has provided for its best estimate in the
matter.
Withholding tax dispute regarding remittances
from Brazil to Norway
Remittances made from Brazil for services are
normally subject to withholding income tax. In 2012,
Equinor
’s subsidiaries in Brazil filed a lawsuit to avoid
paying this tax on remittances made to
Equinor ASA
and
Equinor Energy AS
under the Double Tax Treaty
Brazil had with Norway until 2024. The lawsuit relates
to services without transfer of technology on fields
where
Equinor
is a partner. Court proceedings
through several levels in the legal system have been
ongoing
and a final verdict has not yet been reached.
Withholding tax has not been paid since 2014 based
on a court ruling.
Equinor
's share of maximum
exposure in the c
ase at year end
2024
is estimated at
approximately
USD
184
million
. Although
Equinor
continues to be of the view that all applicable tax
regulations have been applie
d in the case,
developments in similar litigation in Brazil led to an
updated evaluation of the likelihood of loss, and
Equinor
has provided for the best estimate in the
case as
income tax expense.
Suit for an annulment of Petrobras’ sale of the
interest in BM-S-8 to
Equinor
In March 2017, an individual connected to the Union of
Oil Workers of Sergipe (Sindipetro) filed a class
action suit against Petrobras,
Equinor
, and ANP - the
Brazilian Regulatory Agency - to seek annulment of
Petrobras’ sale of the interest and operatorship in
BM-S-8 to
Equinor
, which was closed in November
2016 after approval by the partners and authorities.
During the last years, court decisions that confirm
Equinor’s position have been issued at the first and
second court instance levels. The plaintiff still has the
possibility of a narrower scope appeal.
At the end of
2024
, the acquired interest remains on
Equinor
’s
balance sheet, where the assets related to phase 1
have been reclassified to property, plant and
equipment and the assets related to phase 2 are
presented as intangible assets, all of which are part of
the Exploration Production International (EP
International) segment.
Brazilian law creating uncertainty regarding
certain tax incentives
Equinor
is currently part in legal matters in the state
of Rio de Janeiro in Brazil related to a law requiring
taxpayers that benefit from ICMS tax incentives (i.e.
Repetro) to deposit
10
%
of the savings
made from such benefits into a state fund.
Equinor
is
of the opinion that specific incentives so far relevant
for the Roncador and Peregrino fields are not in
scope of the law, while the state of Rio de Janeiro
requires deposits to be paid with the addition of fines
and interest. While legal developments in
2023
included clarification from the Supreme Court that
the law is constitutional, subject to a final ruling,
Equinor
’s litigation in the matter continues, mainly
related to the law’s impact specifically for Repetro
and other state tax incentives.
Equinor
believes that
our view in the matter will ultimately be upheld by the
courts, and no amounts have consequently been
provided for in the financial statements. At year-end
2024
, the maximum exposure for Equinor in the
matter
has
been estimated to be a total of
USD
96
million
.
KKD oil sands partnership
Canadian tax authorities have issued a notice of
reassessment for 2014 for
Equinor
's Canadian
subsidiary which was party to
Equinor
's divestment of
The reassessment adjusts the allocation of the
proceeds of disposition of certain Canadian resource
properties from the partnership. Maximum exposure
is estimated to be approximately
USD
350
million
.
Following an administrative appeal process with
Canadian tax authorities,
Equinor
commenced court
proceedings in the matter in 2023. While the court
process may take several years, the reassessment will
impact
Equinor
’s tax paying position while the
proceedings are ongoing.
Equinor
is of the view that
all applicable tax regulations have been applied in the
case and that
Equinor
has a strong position. No
amounts have consequently been provided for in the
financial statements.
Other claims
During the normal course of its business,
Equinor
is
involved in legal proceedings, and several other
unresolved claims are currently outstanding. The
ultimate liability or asset, in respect of such litigation
and claims cannot be determined at this time.
Equinor
has provided in its Consolidated financial statements
for probable liabilities related to litigation and claims
based on its best estimate.
Equinor
does not expect
that its financial position, results of operations or cash
flows will be materially affected by the resolution of
these legal proceedings.
Equinor
is actively pursuing
the above disputes through the contractual and legal
means available in each case, but the timing of the
ultimate resolutions and related cash flows, if any,
cannot at present be determined with sufficient
reliability.
Provisions related to claims other than those related
and other liabilities. Uncertain income tax related
liabilities are reflected as current tax payables or
deferred tax liabilities as appropriate, while uncertain
tax assets are reflected as current or deferred tax
assets.
Equinor
2024
Annual Report on Form 20-F 145
|
145
|
ABOUT US
|
|
Note
27.
Related parties
|
|
Transactions with the Norwegian state
The Norwegian state is the majority shareholder of
Equinor
and also holds major investments in other
Norwegian companies. As of
31 December 2024
, the
Norwegian state had an ownership interest in
Equinor
of
67.0
%
(excluding Folketrygdfondet, the Norwegian
national insurance fund, of
4.0
%
). This ownership
structure means that
Equinor
participates in
transactions with many parties that are under a
common ownership structure and therefore meet the
definition of a related party.
Equinor markets and sells the Norwegian state's
share of oil and gas production from the Norwegian
continental shelf (NCS). The Norwegian state's
participation in petroleum activities is organised
through the Norwegian State’s Direct Financial
Interests (SDFI).
For accounting policies and accounting judgement
revenues and other income. Total purchases of crude
oil, natural gas liquids (NGL), and liquified natural gas
(LNG) from the Norwegian state amounted to
USD
10.2
billion
,
USD
10.1
billion
and
USD
12.6
billion
in
2024
,
2023
and
2022
, respectively. Payables to
equity accounted companies and other related
are mostly related to these purchases, and is included
in the below table within T
rade and other payables
.
In addition, Equinor sells in its own name, but for the
SDFI’s account and risk, the SDFI’s share of natural
gas volumes
.
Transactions with the Norwegian state related to
Equinor
’s share buy-back programme are presented
and earnings per share.
Other transactions
In its ordinary business operations,
Equinor
enters into
contracts such as pipeline transport, gas storage and
processing of petroleum products, with companies in
which
Equinor
has ownership interests.
Gassled and certain other infrastructure assets are
operated by Gassco AS, which is an entity under
common control by the Norwegian Ministry of Energy.
Gassco’s activities are performed on behalf of and
for the risk and reward of pipeline and terminal
owners, and capacity payments flow through Gassco
to the respective owners.
Equinor
payments that
flowed through Gassco in this respect amounted to
USD
0.9
billion
in
2024
,
USD
1.0
billion
and
USD
1.2
billion
in
2023
and
2022
respectively. The
stated amounts represent
Equinor
’s capacity
payment net of
Equinor
’s own ownership interests in
Gassco operated infrastructure. In addition,
Equinor
manages, in its own name, but for the Norwegian
state’s account and risk, the Norwegian state’s share
of the Gassco costs. These transactions are
presented net.
Equinor
has had transactions with other associated
companies and joint ventures in the course of its
ordinary business, for which amounts have not been
disclosed due to materiality. In addition,
Equinor
has
had transactions with joint operations and similar
arrangements where
Equinor
is operator. Indirect
operating expenses incurred as operator are
charged to the joint operation or similar arrangement
based on the “no-gain/no-loss” principle.
Related party transactions with management are
Related party transactions due to
Equinor
’s share
Shareholders’ equity, capital distribution and earnings
per share.
Outstanding balances to related parties
split on SDFI and other related parties are presented
in the below table. All related party transactions are
carried out on market terms.
Equinor
2024
Annual Report on Form 20-F 146
|
146
|
ABOUT US
|
|
|
At 31 December 2024
|
Norwegian
State's Direct
Financial
Interests
|
Equity
accounted
companies
and other
related
parties
|
Third parties
|
Total amount
|
|
(in USD million)
|
||||
|
Assets
|
||||
|
Non-current prepayments and financial receivables
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
Current prepayments and financial receivables
|
|
|
|
|
|
Liabilities
|
||||
|
Non-current provisions and other liabilities
|
|
|
|
|
|
Trade and other payables
|
|
|
|
|
|
Current provisions and other liabilities
|
|
|
||
|
Current finance debt
|
|
|
|
|
|
|
Following the disaggregation of Trade and other receivables, see
note 16
and
18
for details, a new line item Current
prepayments and financial receivables has been added to the tables above. Similarly, the disaggregation of Trade,
other payables and provisions, see
note 23
and
24
for details, a new line item Current provisions and other liabilities
has been added to the tables above.
|
At 31 December 2023
|
Norwegian
State's Direct
Financial
Interests
|
Equity
accounted
companies
and other
related
parties
|
Third parties
|
Total amount
|
|
(in USD million)
|
||||
|
Assets
|
||||
|
Non-current prepayments and financial receivables
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
|
|
Current prepayments and financial receivables
|
|
|
||
|
Liabilities
|
||||
|
Non-current provisions and other liabilities
|
|
|
|
|
|
Trade and other payables
|
|
|
|
|
|
Current provisions and other liabilities
|
|
|
||
|
Current finance debt
|
|
|
|
|
Equinor
2024
Annual Report on Form 20-F 147
|
147
|
ABOUT US
|
|
Note
28.
Financial instruments and fair value measurement
|
4.1 Consolidated financial statements
|
|
|
Accounting policies
Financial assets are initially recognised at fair value
when
Equinor
becomes a party to the contractual
provisions of the asset. Financial assets are
presented as current if they contractually will
expire or otherwise are expected to be recovered
within 12 months after the balance sheet date, or if
they are held for trading purposes.
Short-term highly liquid investments with
original
maturity of more than 3 months
are classified as
current financial investments, primarily accounted
for at amortised cost.
Trade receivables are carried at the original
invoice amount less a provision for doubtful
receivables which represent expected losses
computed on a probability-weighted basis.
A portion of
Equinor
's financial investments is
managed together as an investment portfolio of
Equinor
's captive insurance company and is held in
order to comply with specific regulations for capital
retention. The investment portfolio is managed and
evaluated on a fair value basis in accordance with
an investment strategy and is accounted for at fair
value through profit or loss. Financial assets and
financial liabilities are shown separately in the
Consolidated balance sheet, unless
Equinor
has
both a legal right and intention to net settle certain
balances payable to and receivable from the same
counterparty.
Gains and losses arising on the sale, settlement
or cancellation of financial assets are recognised
Financial liabilities are initially recognised at fair
value when
Equinor
becomes a party to the
contractual provisions of the liability. Subsequent
measurements depend on classification either at
fair value through profit or loss, or at amortised
cost using the effective interest method. The
latter applies to
Equinor
's non- current bank
loans and bonds.
Financial liabilities are presented as current if
they are expected to be settled within
Equinor
’s
normal operating cycle, due to be settled within
12 months after the balance sheet date, if
Equinor
does not have the right to defer
settlement more than 12 months after the
balance sheet date, or if the liabilities are held
for trading purposes.
Gains and losses arising from the repurchase,
settlement or cancellation of liabilities are
recognised within Net financial items.
Equinor
uses derivative financial instruments to
manage certain exposures to fluctuations in
foreign currency exchange rates, interest rates
and commodity prices. These instruments are
initially recognised at fair value on the contract
date and subsequently remeasured at fair value
through profit and loss. The impact of
commodity- based derivatives is recognised in
the Consolidated statement of income as part of
Revenues,
as such derivatives are related to
sales contracts or revenue-related risk
management for all significant purposes
. The
impact of other derivatives is reflected under
Net financial items.
Derivatives are carried as assets when the fair
value is positive and as liabilities when the fair
value is negative. Derivative assets or liabilities
expected to be settled, or with the legal right to
be settled more than 12 months after the
balance sheet date, are classified as non-
current. Derivative financial instruments held for
trading purposes are always classified as
current.
Contracts to buy or sell a non-financial item that
can be settled net in cash or another financial
instrument are accounted for as financial
instruments. However, contracts that are
entered into and continue to be held for the
purpose of the receipt or delivery of a non-
financial item in accordance with
Equinor
's
expected purchase, sale or usage requirements,
also referred to as own-use, are not accounted
for as financial instruments. Such sales and
purchases of physical commodity volumes and
power are reflected in the Consolidated
statement of income as Revenue from contracts
with customers and Purchases [net of inventory
variation], respectively. This is applicable to a
significant number of contracts for the purchase
or sale of crude oil and natural gas, as well as for
some contracts for the purchase or sale of
power.
For contracts to sell a non-financial item that
can be settled net in cash, but are ultimately
physically settled without qualifying as own use
prior to settlement
, the changes in fair value are
included in Gain/loss on commodity derivatives.
When these derivatives are physically settled,
the previously recognised unrealised gain/loss is
included in Physically settled commodity
derivatives. Both these elements are included as
part of Revenues. The physical deliveries made
through such contracts are included in Revenue
from contracts with customers at contract price.
Derivatives embedded in host contracts which
are not financial assets within the scope of IFRS 9
are recognised as separate derivatives and are
measured at fair value with subsequent changes
through profit and loss. This occurs, when their
risks and economic characteristics are not
closely related to those of the host contracts,
and the host contracts are not carried at fair
value. Where there is an active market for a
commodity or other non-financial item
referenced in a purchase or sale contract, a
pricing formula based on this active market will,
for instance, be considered to be closely related
to the host purchase or sales contract. However
a price formula with indexation to other markets
or products will result in the recognition of a
separate derivative. In
Equinor
, this mainly
relates to certain natural gas sales contracts
where the pricing formula references power.
Where there is no active market
for the
commodity or other non-financial item in
question, Equinor assesses the characteristics of
such a price related embedded derivative to be
closely related to the host contract if the price
formula is based on relevant indexations
commonly used by other market participants
.
Equinor
2024
Annual Report on Form 20-F 148
|
148
|
ABOUT US
|
|
Financial instruments by category
|
|
financial instruments and their carrying amounts by
the categories as they are defined in IFRS 9 Financial
Instruments.
Information on fair value of finance debt
For other financial current and non-current balance
sheet items at amortised cost, the difference between
amortised cost and fair value is not material.
|
At 31 December 2024
|
|||||
|
(in USD million)
|
Note
|
Amortised cost
|
Fair value through
profit or loss
|
Non-financial
assets
|
Total carrying
amount
|
|
Assets
|
|||||
|
Non-current derivative financial instruments
|
|
|
|||
|
Non-current financial investments
|
|
|
|
||
|
Non-current prepayments and financial receivables
|
|
|
|
||
|
Trade and other receivables
|
|
|
|||
|
Current prepayments and financial receivables
|
|
|
|
||
|
Current derivative financial instruments
|
|
|
|||
|
Current financial investments
|
|
|
|
||
|
Cash and cash equivalents
|
|
|
|
||
|
Total
|
|
|
|
|
|
At 31 December 2023
|
||||||
|
(in USD million)
|
Note
|
Amortised cost
|
Fair value through
profit or loss
|
Non-financial
assets
|
Total carrying
amount
|
|
|
Assets
|
||||||
|
Non-current derivative financial instruments
|
|
|
||||
|
Non-current financial investments
|
|
|
|
|||
|
Non-current prepayments and financial receivables
|
|
|
|
|||
|
Trade and other receivables
|
|
|
||||
|
Current prepayments and financial receivables
|
|
|
|
|||
|
Current derivative financial instruments
|
|
|
||||
|
Current financial investments
|
|
|
|
|||
|
Cash and cash equivalents
|
|
|
|
|||
|
Total
|
|
|
|
|
||
Equinor
2024
Annual Report on Form 20-F 149
|
149
|
ABOUT US
|
|
|
At 31 December 2024
|
|||||
|
(in USD million)
|
Note
|
Amortised cost
|
Fair value through
profit or loss
|
Non-financial liabilities
|
Total carrying amount
|
|
Liabilities
|
|||||
|
Non-current finance debt
|
|
|
|||
|
Non-current derivative financial instruments
|
|
|
|||
|
Trade and other payables
|
|
|
|
||
|
Current provisions and other liabilities
|
|
|
|
||
|
Current finance debt
|
|
|
|||
|
Dividend payable
|
|
|
|||
|
Current derivative financial instruments
|
|
|
|||
|
Total
|
|
|
|
|
|
|
|
At 31 December 2023
|
|||||
|
(in USD million)
|
Note
|
Amortised cost
|
Fair value through
profit or loss
|
Non-financial liabilities
|
Total carrying amount
|
|
Liabilities
|
|||||
|
Non-current finance debt
|
|
|
|||
|
Non-current derivative financial instruments
|
|
|
|||
|
Trade and other payables
|
|
|
|||
|
Current provisions and other liabilities
|
|
|
|
||
|
Current finance debt
|
|
|
|||
|
Dividend payable
|
|
|
|||
|
Current derivative financial instruments
|
|
|
|||
|
Total
|
|
|
|
|
Measurement of fair values
Quoted prices in active markets represent the best
evidence of fair value and are used by
Equinor
in
determining the fair values of assets and liabilities to
the extent possible. Financial instruments quoted in
active markets will typically include financial
instruments with quoted market prices obtained from
the relevant exchanges or clearing houses. The fair
values of quoted financial assets, financial liabilities
and derivative instruments are determined by
reference to mid-market prices, at the close of
business on the balance sheet date.
When there is no active market, fair value is
determined using valuation techniques. These
techniques include recent arm's-length market
transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis,
and pricing models and related internal assumptions.
In the valuation techniques,
Equinor
also takes into
consideration the counterparty’s credit risk and its
own credit risk. This consideration is either reflected in
the discount rate used or through direct adjustments
to the calculated cash flows. For elements of long-
term physical delivery commodity contracts, fair value
estimates, to the extent possible, are based on
quoted forward prices in the market and underlying
indexes in the contracts, as well as assumptions of
forward prices and margins where observable
market prices are unavailable. Similarly, the fair
values of interest and currency swaps are estimated
based on relevant quotes from active markets,
quotes of comparable instruments, and other
appropriate valuation techniques.
Following the disaggregation of Trade, other
details, the line item has changed name to Trade and
other payables and a new line item Current provisions
and other liabilities has been added to the tables
above.
Equinor
2024
Annual Report on Form 20-F 150
|
150
|
ABOUT US
|
|
|
|
The following table summarises each class of financial instruments which are recognised in the Consolidated balance sheet at fair value, split by
Equinor
's basis for fair value measurement.
|
(in USD million)
|
Non-current
financial
investments
|
Non-current
derivative financial
instruments -
assets
|
Current
financial
investments
|
Current derivative
financial
instruments -
assets
|
Cash equivalents
|
Non-current
derivative financial
instruments
liabilities
|
Current derivative
financial
instruments -
liabilities
|
Net fair value
|
|
At 31 December 2024
|
||||||||
|
Level 1
|
|
|
|
|
|
|
|
|
|
Level 2
|
|
|
|
|
|
(
|
(
|
|
|
Level 3
|
|
|
|
|
(
|
(
|
|
|
|
Total fair value
|
|
|
|
|
|
(
|
(
|
|
|
At 31 December 2023
|
||||||||
|
Level 1
|
|
|
|
|
|
|
|
|
|
Level 2
|
|
|
|
|
|
(
|
(
|
|
|
Level 3
|
|
|
|
(
|
(
|
|
||
|
Total fair values
|
|
|
|
|
|
(
|
(
|
|
Level 1, fair value based on prices quoted in an active
market for identical assets or liabilities, includes
financial instruments actively traded and for which
the values recognised in the Consolidated balance
sheet are determined based on observable prices on
identical instruments. For
Equinor
this category will, in
most cases, only be relevant for investments in listed
equity securities and government bonds.
Level 2, fair value based on inputs other than quoted
prices included within level 1, which are derived from
observable market transactions, includes
Equinor
's
non-standardised contracts for which fair values are
determined on the basis of price inputs from
observable market transactions. This will typically be
when
Equinor
uses forward prices on crude oil,
natural gas, interest rates and foreign currency
exchange rates as inputs to the valuation models to
determine the fair value of its derivative financial
instruments.
Level 3, fair value based on unobservable inputs,
includes financial instruments for which fair values are
determined on the basis of input and assumptions
that are not from observable market transactions.
The fair values presented in this category are mainly
based on internal assumptions. The internal
assumptions are only used in the absence of quoted
prices from an active market or other observable
price inputs for the financial instruments subject to
the valuation.
The fair value of certain earn-out agreements and
embedded derivative contracts are determined by
the use of valuation techniques with price inputs from
observable market transactions as well as internally
generated price assumptions and volume profiles.
The discount rate used in the valuation is a risk-free
rate based on the applicable currency and time
horizon of the underlying cash flows adjusted for a
credit premium to reflect either
Equinor
's credit
premium, if the value is a liability, or an estimated
counterparty credit premium if the value is an asset.
In addition, a risk premium for risk elements not
adjusted for in the cash flow may be included when
applicable. The fair values of these derivative
financial instruments have been classified in their
Equinor
2024
Annual Report on Form 20-F 151
|
151
|
ABOUT US
|
|
entirety in the third category within current derivative
financial instruments and non-current derivative
financial instruments.
During
2024
the financial in
struments within level 3
have had a net increase in fair value of
USD
75
million
,
of which a gain of
USD
216
million
was recognised in
the Consolidated statement of income, mainly due to
changes in fair value of certain embedded derivatives
and earn-out agreements. During
2023
, the same
financial instruments had a net decrease in fair value
of
USD
167
million
, of which a loss of
USD
191
million
was recognised in the Consolidated statement of
income.
TABLE OF CONTENTS
Part IItem 1. Identity Of Directors, Senior Management and AdvisersItem 2. Offer Statistics and Expected TimetableItem 3. Key InformationItem 4. Information on The CompanyItem 4A. Unresolved Staff CommentsItem 5. Operating and Financial Review and ProspectsItem 6. Directors, Senior Management and EmployeesItem 7. Major Shareholders and Related Party TransactionsItem 8. Financial InformationItem 9. The Offer and ListingItem 10. Additional InformationItem 11. Quantitative and Qualitative Disclosures About Market RiskItem 12. Description Of Securities Other Than Equity SecuritiesPart IIItem 13. Defaults, Dividend Arrearages and DelinquenciesItem 14. Material Modifications To The Rights Of Security Holders and Use Of ProceedsItem 15. Controls and ProceduresItem 16. [reserved]Item 16A. Audit Committee Financial ExpertItem 16B. Code Of EthicsItem 16C. Principal Accountant Fees and ServicesItem 16D. Exemptions From The Listing Standards For Audit CommitteesItem 16E. Purchases Of Equity Securities By The Issuer and Affiliated PurchasersItem 16F. Change in Registrant S Certifying AccountantItem 16G. Corporate GovernanceItem 16H. Mine Safety DisclosureItem 16I. Disclosure Regarding Foreign Jurisdictions That Prevent InspectionsItem 16J. Insider Trading PoliciesItem 16K. Cybersecurity DisclosurePart IIIItem 17. Financial StatementsItem 18. Financial StatementsItem 19. ExhibitsNote 1. OrganisationNote 2. Accounting PoliciesNote 3. Climate Change and Energy TransitionNote 4. Financial Risk and CapitalItem Current Interest-bearing Financial ReceivablesNote 5. SegmentsItem Additions To Ppe, Intangibles and EquityItem Additions To Ppe,Note 6. Acquisitions and DisposalsNote 7. Total Revenues and Other IncomeNote 8. Salaries and Personnel ExpensesNote 9. Auditor S Remuneration and Research and Development ExpendituresNote 10. Financial ItemsNote 11. Income TaxesNote 12. Property, Plant andNote 13. Intangible AssetsNote 14. ImpairmentsNote 15. Joint Arrangements and AssociatesNote 16. Financial Investments and Financial ReceivablesNote 17. InventoriesNote 18. Trade and Other ReceivablesNote 19. Cash and Cash EquivalentsNote 20. Shareholders' Equity, Capital Distribution and Earnings Per ShareNote 21. Finance DebtNote 22. PensionsNote 23. Provisions and Other LiabilitiesNote 24. Trade and Other PayablesNote 25. LeasesItem Property, Plant and Equipment in TheNote 26. Other Commitments, Contingent Liabilities and Contingent AssetsNote 27. Related PartiesNote 28. Financial Instruments and Fair Value Measurement