Equinor (Hold, TP: NOK300.00) - Near-term cash-flow gain
Our raised gas-price assumptions for 2024–2025 suggest higher near-term FCF generation. Given Equinor’s strong balance sheet, we expect buybacks to remain at USD6bn in 2025. Along with ordinary dividends, this would bring the total shareholder yield to ~14% (versus peers’ ~10–11%). However, we see uncertainty in 2026e, as lower YOY gas-price assumptions, higher YOY capex and a catch-up of NCS tax instalments are set to bring the FCF yield down to 6%, leaving investor uncertainty about the competitiveness of Equinor’s shareholder distributions. We reiterate our HOLD and NOK300 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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