Equinor’s US business
Publication of report from the review into Equinor’s US business
In June, the Board of Directors in Equinor ASA initiated a review of the company’s US investments, with a particular focus on the onshore business. The review has been led by state authorized accountant Eli Moe-Helgesen from PwC. Learning and improvement have been the main objectives, and the review team has now presented their report to the board.
“We have received a thorough and critical report. Equinor has recorded large financial losses in the US. These were mainly driven by an ambitious growth strategy and investments that were based on overly optimistic price assumptions. In addition, rapid growth for a period led to significant control problems. The board and management should have seen and addressed this sooner. It is now the responsibility of the board and management to ensure that we learn from this experience. The report also confirms that comprehensive improvement efforts were launched when the extent of the challenges were identified in 2014. We have a good foundation on which to follow up the recommendations in the report, and this job has already started,” says board chair of Equinor, Jon Erik Reinhardsen.
The report describes how Equinor followed a growth strategy when building the US onshore business, and how this came at the expense of value and control. The onshore acquisitions in the period from 2008 to 2011 were based on overly optimistic price assumptions and were not robust when prices fell from 2014. This has led to large losses, and impairments in the onshore business of 9.2 billion USD as of the end of 2019.
The report also describes how Equinor experienced serious challenges in business support functions such as production revenue accounting, land management and procurement in the onshore business.
The review is based on over 120 interviews and documentation going back to 2005.
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