Equinor (EQNR) to Sell Stake in Two Norway Production Licenses

Zacks Equity Research
·4-min read

Equinor ASA EQNR reached an agreement to divest a 19.5% interest in two of its Norwegian production licenses to PGNiG Upstream Norway.

The strategic transaction involves the production licenses PL 048E, located in the Eirin field, and PL 1201, situated just south of Eirin. Equinor currently holds a 78.2% stake in both licenses, with PGNiG holding the rest.

The Eirin field, discovered in 1978, is located 250 kilometers west of Stavanger at a depth of 4,000 meters. It boasts an estimated 27.6 million barrels of oil equivalent in recoverable reserves, primarily composed of natural gas. The field is being developed as a subsea facility, with a subsea template under construction in Egersund, scheduled for installation in the summer of 2024.

In January 2024, Equinor received a development and operation plan approval for the Eirin field. The development concept includes a subsea template connected to the Gina Krog platform via a production pipeline and umbilical cable.

The volumes from Eirin will be processed at Gina Krog, with condensate exported to Sleipner A through a new pipeline currently under construction. The gas will be transported to Sleipner A for further processing, with sales gas exported via Gassled to the market. Unstabilized condensate will be sent to the Karsto terminal.

The electrification of the Gina Krog platform, along with the partial electrification of Sleipner, ensures that production from Eirin and Gina Krog will have low emissions, estimated at 3kg of CO2 per barrel of oil equivalent. This development aligns with Equinor's commitment to sustainable and low-emission operations.

The production license PL 1201, awarded in this year's predefined areas round, holds the potential for further discoveries. Equinor explains that any findings in this license could utilize Eirin’s infrastructure and be connected back to the Gina Krog platform.

Equinor’s decision to sell these stakes will balance the ownership between Equinor and PGNiG in the Gina Krog field, reinforcing their collaborative efforts in the region. The economic effective date for the transfers is set for Jan 1, 2024, with the deal’s closure subject to approval by the Norwegian Ministry of Petroleum and Energy.

The move is expected to extend the operational lifespan of the Gina Krog field, which plays a crucial role in supplying gas to Europe with low emissions from production and transport. The partnership between Equinor and PGNiG Upstream Norway highlights a strategic alignment aimed at enhancing resource utilization and environmental sustainability in the North Sea.

Zacks Ranks & Stocks to Consider

Equinor currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked companies mentioned below. The three companies presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

USA Compression Partners, LP USAC is one of the largest independent natural gas compression service providers across the United States in terms of fleet horsepower. USA Compression Partners earns its revenues from the overall horsepower use of natural gas transported rather than the price. As such, the partnership is largely insulated from fluctuations in commodity prices.

The Zacks Consensus Estimate for USAC’s 2024 and 2025 EPS is pegged at 77 cents and 98 cents, respectively. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Enterprise Products Partners EPD is among the leading midstream energy players in North America.  It has an extensive network of pipelines that spreads across more than 50,000 miles.

The Zacks Consensus Estimate for EPD’s 2024 and 2025 EPS is pegged at $2.71 and $2.87, respectively. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.

Sunoco LP SUN is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes more than 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $5.15 and $4.48, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days. The company has a Zacks Style Score of A for Value and Growth.

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