Equinor launches $5 billion share buy-back program
OSLO - Equinor is launching a share buy-back program of up to $5 billion over a period until the end of 2022. The first tranche of the program of around $1.5 billion is commencing today and will end no later than 25 February 2020.
“Equinor is committed to capital distribution to our shareholders. We have over the last years built a strong financial position with solid credit ratings and a net debt ratio around 20%. The upcoming start-up of the world-class Johan Sverdrup field, combined with several other new fields in production, provides additional confidence in our outlook for production growth and increased cash generation capacity. We are therefore in a good position to increase capital distribution, while continuing to invest in our high-quality project portfolio”, says Eldar Sætre, president and CEO of Equinor ASA.
“Following strong operational improvements over recent years, we increased the quarterly dividends by 13% this year. Utilizing share buy-backs as an additional tool to strengthen capital distribution is aligned with our dividend policy”, says Equinor’s chief financial officer, Lars Christian Bacher.
The share buy-back program of up to $5 billion, including shares to be redeemed from the Norwegian State, is intended to be executed in the market until the end of 2022. Based on the closing Equinor share price and the USD/NOK exchange rate on 4 September 2019 the full program represents around 292 million shares or around 8.7 % of the share capital. The purpose of the share buy-back program is to reduce the issued share capital of the company. All shares repurchased as part of the program will be cancelled.
According to an agreement between Equinor and the Norwegian State, represented by the Ministry of Petroleum and Energy, the Norwegian State will participate in share buy-backs on a proportionate basis, ensuring that its ownership interest in Equinor remains unchanged at 67%.
The share buy-back program will be structured into tranches where Equinor will buy back a certain USD value of shares over a certain period. For the first tranche, running from 5 September 2019 up to no later than 25 February 2020, Equinor is entering into a non-discretionary agreement with a third party who will make its trading decisions independently of the company. In this first tranche, shares for up to USD 500 million will be purchased in the market, implying a total first tranche of around USD 1.5 billion including redemption of shares from the Norwegian State.
The execution of further tranches of the program will be notified to the market and is conditional upon future annual general meetings renewing the authorization to buy back own shares and renewal of the agreement with the Norwegian State. Future tranches are also subject to commodity price conditions and balance sheet strength.
As described in the dividend policy, it is Equinor’s ambition to grow its annual cash dividend, measured in USD per share, in line with long term underlying earnings growth. In addition to cash dividend, the dividend policy outlines that Equinor might buy back shares as part of total distribution of capital to shareholders.
