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Equinor Clips Investments for Norwegian Project Developments


Equinor ASA EQNR recently announced that it has slashed cost of investment needed for developing its Norwegian continental shelf projects by around NOK 30 billion ($3.6 billion) from the original estimates with the help of cost-cutting measures and improving drilling efficiency. Notably, the state-run energy major’s reduction in investment is part of the Norwegian government’s 2019 national budget proposal. The curtailment incorporates the effect of weak Norwegian Kroner.

Aasta Hansteen, Bauge, Johan Castberg, Johan Sverdrup Phase 1, Martin Linge, Njord Future, Oseberg Vestflanken 2, Snorre Expansion, Trestakk, and Utgard are the Equinor-operated oil and gas fields, which are incorporated in the Norwegian government’s budget. Among these, cost of development of the Johan Sverdrup Phase 1 alone has been reduced 30% to NOK 86 billion.

However, the estimated cost of developing the Martin Linge oil and gas field — wherein Equinor bought 51% stake from TOTAL S.A. TOT in 2017 — is expected to go up. The project is now estimated to cost NOK 47.1 billion (around $5.7 billion), up NOK 3.6 billion from the previous projection. The startup of the project was earlier expected to commence in the first half of 2019, which is now pushed back by one year.

Price Performance

Equinor has gained 36% in the past year compared with 21.4% growth of its industry.

Zacks Rank and Stocks to Consider

Currently, Equinor carries a Zacks Rank #3 (Hold). Some better-ranked players in the oil and gas sector are Petroleo Brasileiro S.A. PBR or Petrobras and Chevron Corporation CVX, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.

Chevron is an integrated energy company based in San Ramon, CA. The company’s top line for 2018 is expected to grow 17.7% year over year.

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