* Share buyback starts immediately
* Latest European oil firm to do so
* Johan Sverdrup oilfield starts production
* Last of the giant North Sea fields
* Shares up 7%, best performer of European STOXX index
(Adds analyst comment, updates share)
By Nerijus Adomaitis and Terje Solsvik
OSLO, Sept 5 (Reuters) - Equinor on Thursday
launched a $5 billion share buyback and said its Johan Sverdrup
oilfield, the largest North Sea discovery in more than three
decades, will come on stream in October, a month earlier than
planned, lifting its shares.
Equinor is the latest European oil firm to launch buybacks,
after BP Shell and Total. It will be
completed by end-2022, with the first tranche of $1.5 billion
starting immediately and ending no later than Feb. 25, 2020.
The Norwegian state will maintain its 67% share in the firm.
"We have over the last years built a strong financial
position with solid credit ratings and a net debt ratio around
20%," Equinor Chief Executive Eldar Saetre said in a statement.
Shares in Equinor were up 7.3% at 0854 GMT, the best
performers in the European STOXX 600, up 0.54%.
"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," said Saetre.
Analysts at Bernstein said the Equinor share buyback was
"decent compared to peers" and the Sverdrup field would be a
major driver of earnings for the company.
They also pointed to Equinor's estimate that the operational
expenditure of the field would be below $2 per barrel of oil
equivalent. Bernstein said this was even lower than Saudi
Aramco's $2.8/boe.
"Both announcements are clearly positive," Bernstein said in
a note to clients.
LAST OF THE GIANTS
Discovered in 2010, Sverdrup may be the last of the giant
North Sea oilfields. Nothing of that size has been found since,
and it is Norway's biggest industrial development by far. There
are no other field developments of that size planned in the
coming years.
Its start-up will significantly boost the North Sea region's
crude oil shipments and the cash flow of the field's owners.
Trading sources last Friday told Reuters that Equinor had
listed 11 possible Sverdrup oil cargoes for October shipment,
but the company said at the time that a November start was still
its primary target.
The field's first phase is projected to reach a peak output
of 440,000 barrels per day of oil in summer 2020.
The second phase of Sverdrup is expected to come on stream
in late 2022, after which output could reach 660,000 barrels per
day, Equinor added.
In addition to Equinor, Aker BP, Lundin
Petroleum, Total and Norwegian state firm
Petoro are licence holders in Sverdrup.
Alongside the share buyback, Equinor will continue to grow
its dividends, keep investing in new assets and maintain its net
debt ratio in a range of 15-30%, Chief Financial Officer Lars
Christian Bacher told Reuters.
For now, Equinor was keeping its full year 2019 production
guidance unchanged. It is expected to be at similar levels as in
2018, while capital spending is still seen at $10-11 billion, he
said.
Asked whether Sverdrup could be the last of the big
discoveries off Norway, Bacher said: "I hope not."
(Writing by Gwladys Fouche; Editing by Stephen Coates/Sherry
Jacob-Phillips/Jane Merriman)
