Equinor is the IBD Stock Of The Day, after the oil and gas exploration firm posted record, booming earnings last week as it fills the energy needs of Europeans amid panic that Russia will shut off its natural gas supply to the continent. Equinor stock is closing in on a buy point.
The state-owned Norwegian energy company is involved in oil and natural gas exploration, production and refining. It operates in 36 countries. It also invests in renewable energy.
Equinor is the largest operator on the Norwegian continental shelf (NCS), with 60% of total production. It also has oil and gas fields in Australia, Brazil, Canada, China and the U.S.
Equinor pulled its operation out of Russia after that country's invasion of Ukraine. It had partnerships with both Gazprom and Rosneft.
"Russia's invasion of Ukraine impacted already tight energy markets and has created an energy crisis with high prices affecting people and all sectors of society," said CEO Anders Opedal in an earnings call with investors on July 27. "Equinor puts its best effort into securing safe and reliable deliveries of energy to Europe, whilst continuing to invest in the energy transition."
Russia has continued to deliver natural gas to Europe, but has reduced flows to 20% of capacity, claiming delays in needed equipment.
Having taken several steps to increase gas deliveries to Europe, Equinor produced 18% more gas from the NCS in the second quarter vs. the same quarter last year, and only 4% down from the first quarter, said CFO Ulrica Fearn.
"The higher summer production has been an important contribution to help fill European storages," Fearn said in the earnings call.
After extensive repairs, improvements and maintenance, Hammerfest LNG was also safely back in production on June 1, allowing the first cargoes to Europe.
Additionally, the Peregrino field was brought back on stream amid a challenging process due to Covid restrictions in Brazil.
Equinor Earnings
Equinor's record second-quarter earnings were buoyed by sky-high energy prices and tight supply. With the price of Brent hovering around $100 a barrel, Equinor earnings surged 225% to $1.56 a share. Revenue ballooned 109% to $36.5 billion, the fifth straight quarter of triple-digit growth.
As a result, Equinor management said on the call that it's boosting its share buyback program from $5 billion to up to $6 billion for 2022.
"In total, we increased the capital distribution from $10 billion to up to $13 billion for 2022," CFO Fearn said.
Equinor Stock
Shares fell 1.7% to 37.76 on the stock market today. Equinor stock is coming up to a double-bottom buy point of 38.80, according to MarketSmith chart analysis. Shares popped following earnings, surging 12.3% last week. A pause would be a positive sign, even if it doesn't form a handle.
Its relative strength line is near highs after surging on strong earnings. Equinor's RS Rating is 98 out of a best-possible 99. Its EPS Rating is 89. With a Composite Rating of 99, EQNR stock sits atop IBD's Oil & Gas-Integrated industry group.
Among other oil and gas companies, Exxon pulled back 2.5%, after gapping up 4.6% on Friday on earnings. Exxon was Friday's IBD Stock Of The Day. Chevron fell 2% after surging 9% Friday on its earnings.
Marathon Oil lost 3.3% and Canada's Suncor Energy was down 1.6%, with both companies reporting this week.
Oil and gas stocks fell Monday as energy prices declined on weak manufacturing data from China and Europe that weighed on the demand outlook.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
