Norwegian oil and gas company Equinor is the IBD Stock Of The Day, as oil prices continue to hover above $100 a barrel and natural gas surges amid the Russian war in Ukraine, to highs not seen since 2008. EQNR stock cleared a key benchmark as oil stocks are among Wednesday's market movers.
State-owned multinational energy company Equinor is primarily a petroleum company operating in 36 countries. It also invests in renewable energy.
Equinor is the largest operator on the Norwegian continental shelf, with 60% of total production. Additionally, the company operates oil and gas fields in Australia, Brazil, Canada, China and the U.S., among other countries.
Through partnerships with both Gazprom and later Rosneft, Equinor had been doing business in Russia for 30 years before pulling out due to that country's invasion of Ukraine.
"We started the year with an already tight energy market, and the invasion of Ukraine and sanctions against Russia have added to that uncertainty," said CFO Ulrica Fearn in a May 4 earnings call with investors. "Energy from the Norwegian continental shelf now plays an essential role, supporting energy security for Europe."
Filling The Gap From Russia Sanctions
Last week, Reuters reported that Equinor and Exxon Mobil had begun to expand an $8 billion oil development project off Brazil's coast.
The firms plan to boost future output from the Bacalhau oil field, Equinor's largest project outside of Norway with more than 1 billion barrels of oil, the report said, citing Equinor officials.
They're also mulling a second drilling rig and a second floating production platform.
Bacalhau is Brazil's first pre-salt field not to be developed by state-controlled Petroleo Brasileiro. Equinor and Exxon each hold a 40% stake, while Petrogal Brasil owns a 20% share.
Norway's stance in the current war is in stark contrast to the country's history of neutrality. Not only is it helping to fill the energy gap stemming from sanctions on Russia, Norway has also requested to become a member of the NATO alliance.
Equinor Earnings
Equinor has been posting triple-digit earnings growth with four straight quarters of triple-digit sales gain. In the March-ended first quarter, Equinor posted earnings of $1.60 per share, a 300% surge from the year-ago quarter. Revenue more than doubled to $36.4 billion.
"With an energy crisis in Europe, Equinor's top priority is securing safe and reliable deliveries," CEO Anders Opedal said in a May 4 statement following earnings. "Strong operational performance and good regularity gave high production in the quarter. We have optimized the gas production to deliver higher volumes, and Hammerfest LNG is on track for a safe startup on 17 May."
Hammerfest LNG is Europe's only large-scale liquid natural gas plant. Located just outside the Arctic town of Hammerfest, it can process 18 million cubic meters of gas per day when fully operational. The plant had been out of service since September 2020 due to a fire.
Equinor Stock
Shares gapped up 3.85% to 36.96 on the stock market today. EQNR stock is in a consolidation with an official buy point of 39.25, according to MarketSmith chart analysis. But an early entry is possible from Wednesday's bounce above the 50-day line.
Equinor's relative strength line is trending upward, with its RS Rating hitting a new high of 97 out of a best-possible 99.
EQNR stock has an EPS Rating of 81. With a Composite Rating of 98, Equinor is ranked No. 14 in IBD's Oil & Gas Integrated industry group.
Among other oil and gas companies, Exxon rose 2%, now slightly extended from a buy zone. Chevron added 1.6%, just above a buy point. Marathon Oil climbed 3.3%, while Canada's Suncor Energy gained 1.65%, both near highs.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
