Equinor Q1 2025 earnings surge on gas strength, but investor tensions rise over renewables pivot

How Did Equinor Perform Financially in Q1 2025?

Equinor ASA began 2025 with a solid financial performance, capitalizing on robust gas pricing and consistent operational delivery across its upstream portfolio. The Norwegian energy major reported adjusted operating income of USD 8.65 billion for the first quarter, alongside adjusted net income of USD 1.79 billion and adjusted earnings per share of USD 0.66. Reported net income came in at USD 2.63 billion.

Cash flow from operations before tax and working capital adjustments reached USD 10.6 billion, while cash flow after tax stood at USD 7.39 billion. The company maintained capital discipline, recording a net debt to capital employed ratio of just 6.9%, a marked improvement from 11.9% at the end of Q4 2024. These figures reflect Equinor’s effective cost control and resilience in a volatile commodity environment.

What Drove Equinor’s Q1 Production and Energy Output?

Equinor reported total equity production of 2,123 mboe/d in Q1 2025, marginally lower than the 2,164 mboe/d posted in Q1 2024. The dip was largely due to planned and unplanned maintenance activities and the fourth-quarter shutdown at Sleipner B. Despite this, production remained stable across key fields such as Troll and Johan Sverdrup.

In the U.S., production volumes rose as the company increased ownership in onshore gas assets. However, international production outside the U.S. declined year-over-year due to Equinor’s strategic exits from Nigeria and Azerbaijan in 2024.

The company’s renewables segment generated 0.76 TWh, roughly flat compared to the same period last year. Equinor has also established a dedicated Power (PWR) business segment to better integrate renewables and gas-to-power operations, particularly in Brazil, where onshore power output rose by 15%.

What Do Johan Castberg and Halten East Mean for Equinor?

The Johan Castberg field in the Barents Sea began production on 31 March 2025, following years of investment and development delays. With an estimated operational life of over 30 years, the field is expected to be a significant contributor to Norway’s export capacity and Equinor’s upstream portfolio. According to CEO Anders Opedal, the project “opens a new region in the Barents Sea” and solidifies Norway’s role as a long-term, reliable energy supplier to Europe.

Alongside this, production commenced at Halten East in the Norwegian Sea, adding substantial near-term output with approximately 100 million barrels of oil equivalent in reserves and an expected payback time of under 12 months. These developments signal Equinor’s focus on maximizing output from existing assets while ensuring capital-efficient growth.

What Is the Strategic Importance of Northern Lights Phase 2?

Equinor has deepened its stake in Europe’s decarbonization agenda by progressing Phase 2 of the Northern Lights CO₂ storage and transport project, in partnership with Shell and TotalEnergies. A final investment decision was taken during the quarter for a NOK 7.5 billion (USD 680 million) commitment to raise annual storage capacity to at least 5 million tonnes of CO₂, up from the existing 1.5 Mtpa.

The project, located in Øygarden, will serve as a foundational hub for commercial-scale carbon transport and storage in Europe, contributing directly to Equinor’s emissions reduction roadmap and long-term low-carbon value creation. Appraisal wells for Smeaheia were also completed within budget and on schedule, reinforcing the company’s timeline toward expanding CCS capacity.

Why Is Empire Wind Facing a Legal Deadlock?

In a post-quarter development that has raised investor concern, the U.S. Department of the Interior issued a halt work order on Equinor’s Empire Wind offshore wind project in April 2025. Although the project was fully permitted in 2024 and had reached approximately 30% completion, regulatory challenges have suspended offshore construction activities.

The project, with a potential to supply power to 500,000 New York homes, holds a gross book value of USD 2.5 billion. Equinor has called the suspension “unprecedented and in our view unlawful,” emphasizing that it complied with all necessary approvals. The company is currently pursuing dialogue with U.S. authorities and evaluating legal recourse.

How Did Equinor’s Business Segments Perform in Q1?

Exploration & Production Norway (E&P Norway) remained the standout contributor, driven by a realized European gas price of USD 14.80 per mmbtu. Adjusted pre-tax operating income for the segment rose to USD 7.45 billion, compared to USD 5.76 billion in Q1 2024.

U.S. Upstream (E&P US) posted improved results with adjusted income of USD 511 million pre-tax, buoyed by higher production volumes and a North American gas price increase to USD 4.06 per mmbtu.

E&P International saw a decline in earnings due to the exit from legacy assets and extended UK Energy Profits Levy (EPL) provisions.

MMP (Marketing, Midstream & Processing) registered lower earnings at USD 253 million, primarily due to reduced trading margins and CCS-related costs.

Renewables (REN) trimmed its losses to USD 48 million pre-tax, a year-on-year improvement as the company scaled back early-phase development expenditures.

What Capital Returns Were Delivered in Q1?

Equinor’s Board of Directors approved a Q1 2025 cash dividend of USD 0.37 per share. The company also confirmed the initiation of a second share buyback tranche worth up to USD 1.265 billion, contingent on authorization from the Annual General Meeting on 14 May 2025.

Equinor expects total 2025 capital distributions to reach USD 9 billion, including USD 5 billion in share repurchases. The first tranche of 2025’s buyback program, valued at USD 1.2 billion, was completed in March. All figures include shares to be redeemed by the Norwegian State, Equinor’s majority shareholder.

What Is the Full-Year 2025 Outlook?

Equinor is targeting 4% growth in oil and gas production for the full year, with organic capital expenditure forecasted at USD 13 billion. Continued investment in core upstream assets, CCUS infrastructure, and select low-carbon initiatives will shape the remainder of 2025. The company reiterated its commitment to cost leadership and value delivery, particularly in managing breakeven levels amid commodity price volatility.

How Are Investors Reacting to Equinor’s Strategy?

Despite Equinor’s strong Q1 showing, the stock has experienced a year-to-date decline of nearly 10%, underperforming its European oil and gas peers. This performance suggests growing caution among investors, even as the company delivers solid financial metrics and healthy returns.

Institutional Flows and ESG Pressure

Investor sentiment has grown mixed due to perceived inconsistency between Equinor’s climate ambitions and its renewed focus on oil and gas. Notably, Sarasin & Partners—a leading UK-based asset manager and co-leader of Equinor’s engagement through the Climate Action 100+ initiative—recently exited its stake. The firm cited strategic misalignment with the Paris Agreement and disapproval of Equinor’s de-emphasis on renewables.

While Sarasin’s departure represents a minority view, it signals rising scrutiny from ESG-focused funds. Other large institutions have not yet followed suit, but are reportedly watching closely as Equinor balances its legacy hydrocarbon operations with emerging low-carbon assets.

FII/DII Perspective and Market Positioning

Within the broader financial community, foreign institutional investors (FIIs) and domestic institutional investors (DIIs) have largely maintained a cautious stance. Norwegian state ownership remains a stabilizing factor, though the delay in U.S. offshore wind projects could complicate long-term strategy narratives.

Equinor remains a preferred exposure in European gas-linked portfolios but is no longer seen as a front-runner in the energy transition segment. Buy-side analysis now focuses more on Equinor’s ability to execute on CCUS, rather than wind or solar scaling.

Buy, Sell, or Hold?

Buy: Investors with an emphasis on upstream cash flows, Norwegian gas exposure, and secure dividend yield continue to support Equinor as a solid income stock.

Hold: Shareholders wary of U.S. regulatory instability or needing clarity on the future of Equinor’s renewables strategy may choose to hold, awaiting resolution of Empire Wind’s status.

Sell: ESG-aligned funds, or those seeking faster rotation into clean energy leaders, may reallocate capital if Equinor delays broader green investment acceleration.

Overall, the investment narrative for Equinor in 2025 is defined by a classic trade-off: near-term cash reliability versus long-term strategic alignment with decarbonization pathways.