Equinor (Buy, TP: NOK420.00) - Set for a strong finish to the year
We forecast Q4 adj. EBIT of USD10.1bn for Equinor (results due at 06:45 CET on 7 February), which leaves us c4% below Bloomberg consensus. Despite paying two NCS tax instalments in the quarter, we estimate solid FCF of USD2.4bn, resulting in a year-end adj. net cash position north of USD10bn, broadly unchanged YOY. With near-term tax payables cUSD4bn lower compared to 2022, we thus expect Equinor to increase its capital distributions from USD17bn to ~USD20bn in 2024 as a tool to obtain a more efficient capital structure. This would equal an attractive 22% total shareholder yield on current pricing. We reiterate our BUY and NOK420 target price.Equinor is engaged in oil and gas exploration and production activities. Co. is primarily focused on exploration, development and production of oil and gas on the Norwegian continental shelf (NCS). Co.'s operations are organized into four segments. The Development and Production Norway and Development and Production International segments explore, develop, produce and extract crude oil, natural gas and natural gas liquids. The Marketing, Processing and Renewable Energy segment markets, trades, transports and processes oil and natural gas and renewable energy. The Other segment consists of global well and project delivery, research and develpoment, and business development.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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