Reduced earnings for Equinor, but ongoing high dividend payments
Equinor, the Norwegian energy company, has announced its Q2 2025 earnings, revealing a drop in net income due to lower liquids (oil) prices and impairment charges related to offshore wind projects. However, the company's resilience is evident as higher gas prices and increased production helped offset these challenges.
The average realized liquids price dropped to $63.0 per barrel in Q2 2025, a significant decrease from $77.6 in the same quarter of 2024. This price drop reduced revenue from oil sales. Additionally, an impairment charge of $955 million was recorded due to regulatory changes affecting offshore wind projects (Empire Wind 1 and 2), negatively impacting operating income.
Despite these price pressures, Equinor's oil and gas production grew by over 2% year-on-year. The company's strong international asset performance and a 26% increase in renewable power generation contributed to this growth. Gas prices in Europe and North America also rose, raising realized European gas prices to $12.0 per MMBtu.
In response to these factors, Equinor announced and maintained strong capital distribution measures. The company declared a dividend of $0.37 per share for Q2 2025 and maintained its share buyback program at a pace of $1.265 billion this quarter, having repurchased $2.465 billion so far toward a $5 billion program in 2025. Total capital distribution in 2025 is expected to be $9 billion.
Organic capital expenditure for Q2 was $3.40 billion, with total capital expenditures at $3.58 billion, reflecting continued investment despite the earnings pressure. The net debt to capital employed adjusted ratio rose to 15.2% at the end of Q2 2025, impacted in part by share buyback transactions involving the Norwegian state.
Looking ahead, Equinor plans to increase oil and gas production by around 4% compared to last year. The company's board decided to pay a quarterly dividend of $0.37 per share. For the full year, Equinor expects adjusted net income to be lower than last year, but the exact figure has not been disclosed.
The third tranche of the ongoing share buyback program has been approved, with a volume of up to $1.265 billion. The third tranche is expected to start on July 24 and be completed by October 27, following the completion of the second tranche on July 17, also with a volume of $1.265 billion.
Equinor's valuation, with a P/E ratio of 9 and a dividend yield of over six percent, is relatively attractive. However, the market environment remains challenging, and Equinor's stock remains a solid hold. The average liquid gas price for the second quarter was $63 per barrel, but it is not specified if this information is still relevant after the announcement of further capital measures.
Equinor's WKN is 675213. The adjusted earnings per share for the second quarter of 2025 were $0.64, compared to $0.84 in 2024. Adjusted operating profit for the second quarter of 2025 was $6.54 billion, a 13% decrease from last year.
In summary, Equinor's earnings decline was primarily driven by lower oil prices and impairment related to offshore wind projects, with offsets from higher gas prices and production growth. The company's capital response included sustaining dividends, share buybacks, and ongoing capital expenditure plans to support operational and strategic objectives. Despite the challenges, Equinor remains optimistic about its future growth and continues to invest in its strategic objectives.
The decline in Equinor's earnings in Q2 2025 was mainly due to the drop in liquids prices and impairment charges in its offshore wind projects. Yet, the company's resilience is evident as higher gas prices and increased production helped mitigate these challenges.
Equinor's capital response to these circumstances included maintaining strong capital distribution measures, such as the declared dividend of $0.37 per share for Q2 2025 and the continuation of its share buyback program. Additionally, the company plans to increase its oil and gas production by around 4% compared to the previous year, indicating its commitment to growth in the energy industry and finance.
