Norway’s Equinor and Italy’s Eni have become the latest energy companies to report bumper earnings as the oil and gas industry heads towards its most profitable year ever.
State-controlled Equinor said it would raise its special dividend by $0.20 to $0.70 a share for the third quarter after it achieved record adjusted pre-tax earnings of $24.3bn for the three months to September, up from $9.8bn a year earlier.
Eni’s adjusted net profit for the third quarter jumped to €3.73bn, bringing its total profits for the year so far to €10.81bn, four times higher than its earnings in the first nine months of 2021.
Equinor and Eni, buoyed by continued volatility in European gas markets, are the latest oil and gas companies to beat analyst forecasts in the third quarter. Shell on Thursday reported quarterly earnings of $9.5bn, the second-highest in its history, while adjusted net income at TotalEnergies doubled year on year to a higher than expected $9.9bn.
“The Russian war in Ukraine has changed the energy markets, reduced energy availability and increased prices,” Anders Opedal, Equinor president and chief executive, said it in a statement.
As Europe has sought to reduce its dependence on Russian gas, Equinor, the largest supplier to the EU after Gazprom, has increased production from the Norwegian continental shelf to “record levels”, Opedal added.
Eni’s performance was also driven by its global gas business, where earnings before interest and tax rose to €1.08bn in the third quarter from €50mn a year earlier.
A share buyback programme of €2.4bn will now be completed by the end of the year, rather than in the first quarter of 2023 as previously announced.
“In the first nine months of 2022, we entirely covered our capex and cash return to shareholders,” said chief executive Claudio Descalzi.
Equinor’s and Eni’s shares climbed 2.5 per cent and 1 per cent respectively on Friday morning.
European gas prices hit a record high above €343 per megawatt hour in August, up more than 250 per cent since the start of the year, as Russia cut supplies and EU countries scrambled to secure alternatives. Although prices have now fallen back to about €100 per megawatt hour, they are still remain far above their historical average.
Oil prices have fallen too, from more than $120 a barrel in June to about $90 a barrel as recession fears in Europe hit economic activity, but they also remain high compared with historical levels.
Eni said it had compensated for weaker crude prices and lower refining margins by optimising operations and cost savings.
The Italian group added that it would reduce its dependence on Russian gas by 50 per cent over the winter by boosting supplies from gasfields it owns in other countries and growing its activities in liquefied natural gas.
In the third quarter, Eni agreed to acquire two gas projects in Algeria from BP and purchased a floating LNG vessel, which will be able to produce approximately 600,000 tons of the fuel a year from fields in the Republic of Congo.
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