Equinor ASA

Equinor ASA, (NYSE: EQNR) formerly Volue AS is a Norway-based international energy company. The Company’s purpose is to turn natural resources into energy. Equinor sells crude oil and delivers natural gas to the European market. It is also engaged in processing, refining, offshore wind and carbon capture and storage activities.

Recent Financial and Business Updates:

• Financial and Operational Performance:
  • Earnings and Cashflow: Equinor achieved solid earnings and cashflow from operations, although impacted by lower prices.
  • Strong Liquids Production: The company reported strong liquids production, with increased capacity at Johan Sverdrup and high production from the Peregrino field in Brazil contributing to this result.
  • NCS Gas Production Impact: Gas production on the Norwegian Continental Shelf (NCS) was impacted by planned maintenance and shutdowns at Hammerfest LNG and Nyhamna.
  • Tax and Capital Distribution Payments: Equinor made high tax and capital distribution payments, reflecting the strong results achieved in 2022.

• Strategic Progress:
  • Increased Capacity: The company increased capacity at the Johan Sverdrup field.
  • BM-C-33 Project: Equinor made a final investment decision for the BM-C-33 project in Brazil.
  • Acquisition and Transactions: Equinor acquired Rio Energy and completed transactions with Suncor and Wellesley.

• Competitive Capital Distribution:
  • Dividends and Share Buy-Back: Equinor declared an ordinary cash dividend of USD 0.30 per share, continued an extraordinary cash dividend of USD 0.60 per share, and initiated the third tranche of the share buy-back program worth USD 1.67 billion.

• Equinor's Second Quarter Highlights:
  • Total Equity Production: Equinor delivered total equity production of 1,994 mboe per day for the second quarter, slightly higher than the same period last year.
  • Power Production: The company increased power production from renewable energy sources in the quarter.
  • Exploration Wells: Equinor completed 7 exploration wells offshore, resulting in 3 commercial discoveries.
  • Realized Prices: Equinor's realized prices for piped gas to Europe and liquids decreased significantly compared to the second quarter of 2022.
  • Adjusted Earnings: Equinor reported solid adjusted earnings of USD 7.54 billion and USD 2.25 billion after tax, mainly impacted by lower prices for liquids and gas.
  • Cash Flow and Financial Position: Cash flow provided by operating activities before taxes and working capital items amounted to USD 10.5 billion for the second quarter. The company maintained a strong financial position, with an adjusted net debt to capital employed ratio of negative 35.1% by the end of the second quarter.
  • Capital Distribution and Share Buy-Back: The board of directors declared dividends and continued the extraordinary cash dividend. The expected total capital distribution for 2023 is around USD 17 billion, including a share buy-back program of USD 6 billion. The third tranche of the share buy-back program, worth USD 1.67 billion, commenced on 27 July 2023 and will end no later than 26 October 2023. The second tranche, with a value of approximately USD 1.67 billion, was completed on 12 July 2023.
    

Technical Observation (on the daily chart)

Currently, the stock is near an important resistance range of USD 32.0-USD 35.00, from where price has taken resistances in the past. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction. The RSI (14 period) momentum indicator is at a value of 56.46, correcting from around the overbought zone, with expectations of some consolidation or a short-term correction. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.­­­

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to Equinor ASA, (NYSE: EQNR) at the current price of USD 30.53 as of July 26, 2023, at 10:50 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 26, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.