Record profit, shares at a yearly high. Analysts still bet on a decline
Net profit jumped to nearly four times in a single quarter, and the main driver was not oil but natural gas. When a maritime strait through which roughly a fifth of the world's LNG normally flows closed a few months ago, and damaged export infrastructure at the other end of the Gulf was out of operation for months, European gas prices shot up. A producer that supplies gas to Europe both by pipeline and in liquefied form was sitting exactly on the right side of this equation.
Key points
Record quarter from gas, not oil. Adjusted operating profit for Q2 reached USD 11.48 billion (+76% y/y), driven mainly by European gas after the closed Hormuz cut off about a fifth of global LNG supply.
The state captures value through several channels. High extraction taxation (marginally 78%), a 67% stake in Equinor, and direct SDFI ownership interests in fields mean that only a minority share of the value created in the sector reaches the freely traded minority shareholder. From adjusted operating profit of 11.48 billion, adjusted net profit of 3.22 billion remained after tax.
Cyclical peak, not a new standard. This year's strength rests primarily on a geopolitical premium; once it fades, performance will likely shift significantly closer to normalized levels. The company itself plans on oil at USD 60-80, well below today's prices.
Shares at a high, analysts' targets lower. The price around USD 41 is near its yearly high, while the consensus target is around USD 35 with sell recommendations outnumbering buys.
Strong balance sheet as a cushion. Net debt of about 10% of capital and buybacks of up to USD 3 billion for 2026 (share count already -8% over a year) support shareholder returns; a counterweight to the bearish thesis is a scenario where the geopolitical premium lasts longer than the market expects.
But the result has a catch. The company is headquartered in a country where the state extracts the vast majority of margin from offshore production and also holds a majority stake in the company itself. Record numbers therefore go elsewhere than to the ordinary shareholder, to an extent one would not expect at other oil companies. The market has not lagged behind. The stock has climbed to record levels over the past year, but by doing so it has risen above the values analysts assign to it, and caution now prevails over optimism in their recommendations.
So who profited from the tension in the Gulf, and who will actually see anything from that profit?
The company is Equinor $EQNR, a Norwegian energy company under majority state control and the largest single supplier of natural gas to Europe. For the second quarter of this year, whose results the company published at the end of July, it reported adjusted operating profit of USD 11.48 billion, roughly three-quarters higher than a year earlier. After tax, however, only a portion remained, and in that difference lies much of what makes this stock different from other oil names.
It profited from gas, not oil
The war raised both oil and gas prices, but for Equinor gas was decisive, for one specific reason. The strait that effectively closed in the spring is the main artery for Qatari LNG, and Qatar is one of the largest exporters of liquefied gas in the world. When its exports stopped and part of the export infrastructure also suffered damage that, according to International Energy Agency estimates, may not be fully repaired for several years, about a fifth of global LNG supply disappeared from the market.