A report on Norwegian energy firm Equinor’s EQNR.OL loss-making investments in the United States detailed significant problems the state-controlled company should have dealt with faster, its chair and chief executive said on Friday.
Equinor made a series of acquisitions of onshore and offshore petroleum reserves in the United States in the years before the 2014-2016 oil price crash, eventually leading to accumulated losses and write-offs of $20.4 billion dollars.
In June, Norway’s energy minister said Equinor must be more transparent about its foreign businesses.
“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,” Equinor’s chairman Jon Erik Reinhardsen said.
“Rapid growth for a period led to significant control problems. The board and management should have seen and addressed this sooner.”
The review, led by a PWC accountant Eli Moe-Helgesen, was based on more than 120 interviews and documents dating back to 2005, Equinor said.
It revealed, among many things, that Equinor bought a turkey at a charity rodeo in Houston for $30,000; just one of many decisions the report criticised.
It referred to Equinor’s “limited onshore competence experience in senior leadership”. It said the company did not properly check if assets would make money at lower prices and key risks were “not sufficiently understood and challenged by decision makers”.
“We still see room for improvement, and the recommendations reflect this. They primarily cover how Equinor acquires and integrates assets and companies outside its core business,” said Moe-Helgesen.
“This is tough reading for many. We made investments that were no longer robust when the markets turned, and we should have seen the control problems in the onshore business earlier,” said Equinor CEO Eldar Saetre.
Norway’s Petroleum Minister Tina Bru said the report was thorough and “paints a picture of a company that underestimated the task they took on, overestimated their own abilities, took too high a risk and reacted too late to address the problems.”