Equinor Drops US Assets As Part Of Global Strategy Review
Norwegian international energy company Equinor plans to sell more assets in the United States and withdraw from several other countries in a major global reshuffle in its attempt to return to profit after writing off $ 25 billion in US assets over the past decade..
While Equinor, like many other major energy companies, hit by the fall in oil and gas prices last year, new head of international business Equinor Al Cook (Al Cook) said she lacked scale in the US shale market and underestimated the strength of local competition.
Equinor sold its Eagle Ford shale assets in 2019 and said last week that it agreed to sell its assets in the Bakken shale province of North Dakota and Montana for about $ 900 million..
«All of our active US coastal positions are subject to the same verification as on the Bakken», – Cook said in an interview with Reuters.
As of the second quarter of 2020, Equinor had approximately 232,000 acres in the Appalachian Basin, including 27,000 acres it manages and approximately 114,000 acres in Louisiana in the formation Austin Chalk, about half of which are in service.
Cook said Equinor was slow to realize that U.S. production is unprofitable with low oil prices, as the country has effectively taken on the role of OPEC’s alternative producer..
However, Equinor will maintain and possibly expand its operations in the Gulf of Mexico, its large non-operational position in the Appalachian gas and the wind industry in the northeastern United States – following a strategy similar to that in the UK, where it is the main supplier of gas and is also a producer of wind energy.
«We think this could be a lucrative low-carbon business that will flourish with the measures the President Joe Biden accepts in the US … and over time we will consider converting this natural gas into a hydrogen business», – said Cook.
Equinor is currently present in over 20 countries outside Norway, producing a third of its total production, or around 700,000 barrels of oil equivalent per day..
Cook, who joined Equinor in 2016 after ten years at BP, including serving as chief of staff to the then CEO Boba dudley (Bob Dudley) said that while he hopes that overseas production will grow, it will likely be in a handful of countries where the company operates..
«Due to the low oil price, our chickens returned home to roost and we found they were very fat and had very sharp beaks … and they wrote off the billion dollar expenses».
Equinor has already withdrawn or announced withdrawal from approximately 10 countries since the end of 2019, including South Africa, Indonesia, New Zealand, Uruguay, Turkey, Australia and the United Arab Emirates (UAE).
Cook said the company will no longer seek «material» positions onshore overseas, and will cooperate with experienced local operators such as «Rosneft» in Russia, YPF in Argentina and Chesapeake in Appalachian.
It will also focus on previously developed areas with faster ROI and less cross-border research..
The company recently wrote off the entire cost of developing liquefied natural gas (LNG) in Tanzania..
«We have to look at what we are good at. We are well versed in the subsoil, we are really good at finding oil and gas … we are good at sea conditions with big waves and strong winds», – he said, adding that it works well for Norway, the US Gulf of Mexico, Brazil and the UK, as well as Canada and Azerbaijan.
«We want to produce more for at least the next decade, but we want to produce with less emissions».