Equinor ASA’s U.S. natural gas production ticked up in the first quarter, driven by activity in the Appalachian Basin, offsetting a drop in the Norwegian major’s overall output.

Equinor

The company logged 236,300 boe/d from its Marcellus Shale in 1Q2021, compared to 207,000 boe/d reported in the previous quarter and 186,600 boe/d in 1Q2020. Total Marcellus production including liquids amounted to 258,700 boe/d in 1Q2021, 233,400 boe/d in 4Q2020, and 210,700 in 1Q2020.

“The increase in gas production in the first quarter comes from new operated and nonoperated wells being put into production in the Appalachian Basin,” an Equinor spokesperson told NGI on Thursday.

The company reported total equity production of 2.17 million boe/d in the first quarter, down from 2.23 million boe/d in the same period in 2020 but higher than 2.043 million boe/d in 4Q2020. 

The year/year decline was driven by the shut down of the Hammerfest liquefied natural gas (LNG) plant and maintenance at its Peregrino asset offshore Brazil. The drop, however, was “partially offset by higher flex gas volumes, increased gas volumes from the U.S. onshore and increased production from” fields offshore Norway, Equinor said in its earnings report.

Despite the production drop, Equinor posted higher earnings than in the previous year largely because of improved commodity prices. The company saw liquids prices average $56.40/bbl, a 28% increase over the prior-year quarter. 

The report included the company’s Bakken Shale position, the sale of which was completed in April.

“Higher realised prices for gas and liquids positively impacted the results from all upstream segments, further supported by sustained costs improvements and strict capital discipline,” Equinor said. However, “results from the marketing, midstream and processing segment were impacted by losses on derivatives for gas forward sales, shut down of the Hammerfest LNG plant and weak refinery margins.”

Commenting on the stronger pricing, CFO Svein Skeie said cold weather in Asia and Europe in the first quarter, combined with a greater draw of LNG volumes into Asia, resulted in “better than anticipated” European natural gas prices.

With European natural gas futures in $7-8/MMBtu territory, Skeie said the company was “taking advantage” of the market, “utilizing the capacity that we have at our fields to gain this value for our business.”

Equinor reported a quarterly net income of $1.85 billion (57 cents/share) in the first quarter, compared to minus $710 million (minus 75 cents) in the first quarter of 2020. 

For the U.S. assets, earnings were $192 million compared with $11 million in the same period a year ago. The assets generated $600 million in cash flow while recording a 6% decline in expenses.