Equinor Raises $5bn in Crisis Response

Norway's Equinor has raised $5bn in debt to help it weather the market turbulence, it announced on April 1.

The oil producer issued notes in five tranches: $1.25bn with a yield of 2.875% due April 6 2025; $0.5bn with a 3% yield due April 6 2027; $1.5bn with a $3.125% yield due April 6 2030; $0.5bn with a 3.625% yield due April 6 2040; and $1.25bn with a 3.7% yield due April 6 2050. The notes have been fully subscribed and the settlement date is April 6, it said.

“Equinor is in a strong position to handle market volatility and uncertainty," CFO Lars Christian Bacher said. "In combination with our $3bn action plan to reduce cost, this transaction will further strengthen our financial resilience and flexibility going forward, and ensure liquidity to prioritised projects."

The company said earlier it had slashed its capital spending plan for 2020 to $8.5bn from $10-11bn, and it is also targeting a $700mn reduction in operating costs.

Equinor can generate positive cash flow at just $25/b oil, and the company will also gain this year from rising production at its flagship Johan Sverdrup oil project in the North Sea, which needs only $20/b oil to break even. Launched last autumn, Sverdrup is now expected to reach its full first-phase capacity in May, rather than in the summer as previously anticipated, Equinor said on March 30. This capacity will also be 30,000 b/d higher than planned, at 470,000 b/d, thanks to an increase in plant capacity.

“Field production has been very good and stable from day one, and the wells have produced even better than expected,” Sverdrup’s vice-president of operations, Rune Nedregaard, said. “Johan Sverdrup has very low production costs, contributing with a strong cashflow also in periods with low prices, as we experience."

Sverdrup's second phase, due to start flowing in the fourth quarter in 2020, is also anticipated to produce at a higher rate of 690,000 b/d, rather than the 660,000 b/d targeted last year.