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Equinor sells U.S. Bakken shale assets, posts record loss for 2020

* Sells Bakken assets for $900 mln to private equity buyer

* Posts record annual net loss of $5.5 bln

* Revises down 2021-2022 investment plans

* Q4 adjusted earnings in line with expectations

* Shares fall 2.1% (Adds CEO interview, context on Bakken, updates share)

By Nerijus Adomaitis

OSLO, Feb 10 (Reuters) – Norway’s Equinor has agreed to sell its assets in the U.S. Bakken shale oil province after a decade of multibillion-dollar losses and criticism for poor investment decisions.

Equinor will sell the assets in the states of North Dakota and Montana to Grayson Mill Energy, a company backed by private equity firm EnCap Investments, for around $900 million.

The Bakken region was developed during last decade’s U.S. shale boom, and currently produces more than a million barrels of oil a day, roughly half the peak reached in late 2019.

The region has a high per-barrel cost of production and investor demands for capital discipline have caused producers to throttle back output since the coronavirus pandemic erupted.

“Equinor is optimising its oil and gas portfolio to strengthen profitability and make it more robust for the future,” CEO Anders Opedal said in a statement.

“We are realising proceeds that can be deployed towards more competitive assets in our portfolio,” he added.

Opedal declined to say whether Equinor planned to sell more foreign assets, but added it was happy with its remaining U.S. operations.

“We still have a good position in the Marcellus and also in the U.S. Gulf of Mexico,” he told Reuters. “We will also focus on our operations in Brazil and Britain, and seek to improve our international business as operators or partners.”

An exit from the Bakken, which the Norwegian company entered in 2011 by acquiring Brigham Exploration Company for $4.7 billion, follows the sale of its operated assets in the Eagle Ford for $325 million to Repsol in November 2019.

Between 2007 and 2019, Equinor recorded an accounting loss of $21.5 billion on its overall U.S. activities, including $9.2 billion due to impairments of onshore shale and other assets, a company-commissioned report by accountants PwC has shown.

Norwegian lawmakers have urged the government, as Equinor’s largest shareholder, to take a more active role, and Energy Minister Tina Bru has demanded more transparency from Equinor.

Equinor separately reported a record annual net loss of $5.5 billion for 2020, as the pandemic weighed on oil and gas prices and led to large writedowns.

It also cut its planned capital expenditure for 2021-2022.

The company plans to invest $9 billion to $10 billion in each of the two years, compared with its previous guidance of $10 billion in 2021 and $12 billion in 2022, partly affected by a rise in the Norwegian currency against the dollar, it said.

Equinor reported adjusted fourth-quarter operating profit of $756 million, largely in line with analysts’ forecasts, and will pay a quarterly dividend of $0.12 per share, one cent up from the third quarter, but down from $0.27 a year earlier.

The dividend was modest, Citi analysts said in a note to clients, leaving Opedal with financial firepower to accelerate the company’s expansion into renewable energy.

Equinor’s shares were down 2.1% at 1245 GMT, underperforming a flat Oslo benchmark stock index.

UNDERESTIMATED COMPLEXITY

Equinor produced 48,000 barrels of oil equivalent per day from its 242,000 acres in the Bakken in the fourth quarter, about 15% of its U.S. output.

Most of the losses accumulated onshore in the United States over the last decade were caused by lower-than-expected oil and gas prices, the company has said.

That is not unique to Equinor, and many other oil firms that invested in shale took a hit when oil prices crashed in 2014, the PwC report published last October said.

However, Equinor underestimated the complexity of operating U.S. onshore assets and management did not tackle problems in a timely manner, it added.

Since 2013, the company has changed its strategy to focus on value rather than growth, and says it has fixed most of the issues related to its onshore U.S. operations.

(Editing by Terje Solsvik, Barbara Lewis and Mark Potter)


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