On Wednesday, Equinor (NYSE:EQNR) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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The full earnings call is available at https://www.equinor.com/investors/events-and-presentations
Summary
Equinor ASA reported record high production in Q1, with a 9% increase from the same quarter last year, driven by high regularity and new fields on the Norwegian Continental Shelf (NCS) and record production in the US.
Adjusted operating income was $9.8 billion, and net income was $3.1 billion. Cash flow from operations after tax was $6 billion, affected by increased collaterals and a positive price review settlement.
The company maintained its guidance for 2026, expecting a 3% growth in oil and gas production. It plans to stay disciplined with its CapEx, focusing on high-grade investments.
Equinor announced a cash dividend of $0.39 per share and a second tranche of share buybacks of up to $375 million, with no change to the $1.5 billion share buyback guidance for the year.
Safety remains a priority despite an increase in incidents, and the company continues to focus on cost reductions, achieving a 6% underlying cost reduction.
The New Power segment, including renewables and power trading, reported close to zero results, with strong contributions from power trading.
Management highlighted geopolitical risks and market volatility, particularly the impact of the Middle East conflict on energy markets, and emphasized their role as a reliable energy supplier.
Full Transcript
OPERATOR
Ladies and gentlemen, thank you for standing by. Hello and welcome to Equinor analyst call Q1 conference call. All lines have been placed on mute to prevent any background noise. I would now like to turn the conference over to Bård Glad Pedersen, Senior Vice President and Head of Investor Relations. Please go ahead, sir.
Bård Glad Pedersen, SVP Investor Relations
Thank you, operator, and good morning to all. Welcome to the presentation of Equinor's first quarter results. As usual, I'm here with our CFO who will take us through the results and then take your questions. We plan to complete the session within one hour. So with that, Torgrim, I hand it to you.
Torgrim Reitan, CFO
Thank you very much, Bård. Good morning and good afternoon to all of you. So thank you for joining us today this quarter. War and conflict first and foremost are impacting people in a severe way. Energy markets are also fundamentally shifting and we have a particular role in providing reliable energy. Against this backdrop, I'm glad to report excellent operational performance with high regularity, new fields on stream, and in this quarter we delivered our highest production ever.
This is important for energy security and for our investors. The war in the Middle East is creating high volatility and imbalances in the markets. It is not clear when this conflict will be resolved or how long it will take to restore infrastructure in the region, or what the lasting impact to the markets will look like. We will focus on what we can control and influence: maintaining cost control and capital discipline, and being a reliable supplier of energy, delivering all of this in a very safe manner.
A good example of this is the Gullfaks field. Right now there oil is flowing into shuttle tankers bound for European customers just as it has gone for steadily 40 years. When we started the Gullfaks field in 1986, we expected to produce 1.3 billion barrels. We have now passed two and a half billion and we are still counting. The world needs energy it can trust and the Norwegian continental shelf is a stable oil and gas province that continues to deliver above and beyond expectations.
So over to the results. This quarter we delivered record high production, 9% up from the same quarter last year. High regularity and new fields on the NCS combined with record high production in the US contributes to this growth. With this we capture value from higher prices, and our trading business captures value uplift from increased volatility. This quarter the adjusted operating income was $9.8 billion and our net income was $3.1 billion. Year to date, our cash flow from operations after tax is $6 billion.
An increase in collaterals supports strong trading results during volatility but reduces our cash flow in the quarter. I will revert to this later. Our adjusted earnings per share was $1.48, positively impacted by strong results on financial items. On the NCS we made seven commercial discoveries and in January we were also awarded 35 new licenses. With this new acreage and strong exploration results, we will continue to be a reliable energy supplier.
In Brazil, we started drilling at the Raia gas field which we expect to be on stream in 2028. Portfolio optimization continues to deliver value and this quarter we received the first quarter dividend of $150 million from Aldura, then to capital distribution. For the quarter the board approved a cash dividend of $0.39 per share and a second tranche of the share buyback of up to $375 million. This is in line with what we indicated at our 4Q presentations.
At that time we expected to lean on the balance sheet in 2026 to maintain stable investments and competitive capital distribution. Higher prices will strengthen our cash flow, but there is still significant uncertainty. Competitive capital distribution remains a key priority for. As always, safety is our top priority and our safety performance has steadily improved over time. This quarter we have however seen an increase in the number of incidents and we must continue our work to improve safety and ensure everyone working with Equinor returns home safely.
Every day. In the quarter we produced more than 2.3 million barrels per day. This is an all-time high, up 9% compared to same quarter last year. We are on track to deliver on our guidance of a 3% production growth for the year. Production on the NCS was up 10% mainly driven by high regularity across the portfolio and ramp-up of Johan Castberg, Halten East and Verdande. In the US we had record high production driven by Caesar Tonga offshore and our US gas position onshore.
Outside of the US our international production also increased driven by Aldura and Bacalhau, but it was partly offset by our reduced ownership. In Peregrino power production was stable at 1.4 terawatt hours. Then to the financials. E&P Norway's adjusted operating income totaled $7.7 billion pre-tax and $1.7 billion post-tax. This reflects the high production and strong price realization. Crude qualities that can be used for jet fuel and diesel have seen stronger differentials and we have benefited from this at Gullfaks and Johan Sverdrup.
Normally crude from Johan Sverdrup trades at a slight discount to Brent, but we are now seeing a premium of $5 and in March we sold cargoes at a $13 premium from Johan Sverdrup. Our E&P International results reflect increased production and some overlift in the quarter and are impacted also by high depreciation in Aldura. Results for the US are driven by record high production and strong realized gas prices, particularly during the cold spell at the start of the quarter.
MMP delivered close to double our quarterly guidance: $787 million before tax, mostly due to strong products and US gas trading. MMP results demonstrate how we continue to capture value from a volatile market. This is the first quarter where we report Power as a separate segment, combining renewables, flexible power and power trading. The result came in close to zero with strong contribution from the power trading business. Adjusted operational cost and SG&A was up 9% compared to the same quarter last year.
Underlying OPEX and SG&A including portfolio changes was down 6% and adjusted for currency it was down more than 10%, which was the ambition we set in February, and we deliver cost reductions even if we have more fields on stream and we are growing production. This quarter cash flow for operations after tax was $6 billion. In addition, I want to highlight two points. First, we have a cash inflow of around $800 million from a positive price review settlement.
This is cash in but it is not included in the cash flow from operations for the quarter. Second, we have put in cash collaterals of almost $900 million. This is to be expected during times of volatility and it supports strong trading results but however it does reduce the cash flow from operations in the quarter. Also, there is a net increase in working capital of $800 million in the first quarter. We paid two tax installments on the NCS this quarter totaling $4.2 billion.
Next quarter we will pay three installments of 20 billion kroner each in June. We will determine tax payments for the second half of this year and the first half of 2027. Organic CapEx for the quarter was $3 billion, in line with our CapEx guidance for the year, and we have a strong cash position of $20 billion. Our net debt ratio decreased to 15%. Higher prices will impact our outlook for cash flow and net debt towards the end of the year. In February we expected a cash flow from operations of $16 billion after tax in 2026.
This was based on a scenario with $65 Brent and $9 per MMBtu for European gas. We see large movements in forward prices on a daily basis and there is significant uncertainty making it hard to predict our cash flow for the year. However, if we assume that Brent averages $85 per barrel this year and European gas prices of $13 per MMBtu, we expect the cash flow from operations to be around $8 billion higher for 2026. At the same time, our future tax liabilities will increase with around $4 billion due to the tax lag in Norway.
This is when we measure it compared to what we expected in February. With higher prices, we no longer expect to lean on the balance sheet this year. With the scenario of $85 oil, we expect our net debt ratio to remain fairly stable through the second quarter when we will recognize the state's share of buybacks for 2025 as net debt. Then we expect it to reduce to somewhat below 15% during the second half of the year. Our guidance presented in February remains stable.
There are no changes to that. For 2026, we expect $13 billion in organic opex and around 3% growth in oil and gas production. So by that I would like to say thank you very much for your attention and I leave the word back to you, Bård, for the Q&A.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Torgrim. And we will then start the Q&A. Let me remind you that if you want to sign up to ask a question, you can press star one on your phone. We have a good list already. And we'll start with Alejandro Vigil from Santander. So please, Alejandro, your line should be open.
Alejandro Vigil, Analyst at Santander
Questions for the year. You have reiterated the $1.5 billion share buyback today.
Bård Glad Pedersen, SVP Investor Relations
Alex, sorry, yes, sorry, can you hear me? We missed the start of your question because the line wasn't open in time. So can you start over, please?
Alejandro Vigil, Analyst at Santander
Okay, yeah, yeah, no problem. It's in terms of the share buybacks for the year, the guidance of $1.5 billion. This is already fixed or depending on the commodity environment. If in the second half of the year we have these higher energy prices, you will be in a position to update to increase these buybacks. That will be the first one. And the second one is about your views about the European natural gas market. We have seen, you know, relatively, I would say, relaxed energy market in Europe with forwards also relatively low versus the expectations of the situation in the Middle East.
If you can share with us your view about the situation and the outlook for the second half of the year. Thank you.
Torgrim Reitan, CFO
Thank you very much, Alejandro. So, personal capital distribution. We communicated at the fourth quarter $0.39 per share and a share buyback of $1.5 billion for the year. There's no change to that guidance. We said that we were planning to lean on the balance sheet for this year, as I said, to remain competitive. Clearly there's still a lot of uncertainty around this, so it is way too early to have a discussion on that. But what I can say is that we expect not to lean on the balance sheet for the rest of the year with the current price outlook.
Normally we announce the dividend and share buyback at the fourth quarter presentation, and that should be the starting point for any discussions around this. From the AGM we have the mandate to change during the year, but that is not the normal approach. With all this uncertainty around us, it is important for me to say that any share buyback beyond the base will have to be based on money that we have already earned. So this is clearly too early to have a discussion on that topic.
What is important for me to say is that being competitive in our capital distribution will have priority in the capital allocation going forward. Yes, so that was the first question. Let me see, the second one was on the natural gas market. It's a very, very important question. At the outset, when we started this year, we expected a softer gas market for 2026 and 2027, based on more LNG coming to the market. With the closing of the strait, 20% of global LNG is shut in, so the situation is very different.
I think the main attention has been on the oil market, but equally important is the natural gas market because when the strait opens, we believe it will take maybe half a year for oil to get back to normal; for gas it will take much longer. QatarEnergy has said that 70% of the export capacity from the Gulf is damaged and will take three to five years to repair. So currently we don't see that glut of LNG through this decade as we were expecting just half a year ago.
This is a topic that we are very occupied with, and I do think the world will see this more clearly in a bit. When it comes to the European situation, storage levels are at 30% currently. That is 6% below seasonal normal, and the curves and the market don't give incentive to inject for the time being. We believe that gas storages will likely not reach the 80% target that is set, meaning that going forward the European gas market will be vulnerable to weather events and operational issues.
In addition, there is 32 bcm of Russian gas that will leave the market over these two years. It's clear there is quite a lot of additional LNG that needs to come to Europe to satisfy the necessary demand. Clearly an area to watch. We take the role as a reliable energy supplier extremely seriously. First, it's important to produce at maximum and deliver natural gas to Europe in a situation like this.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Alejandro. Thank you. The next one is Biraj Borkhataria from RBC. Biraj, please go ahead with your question.
Biraj Borkhataria, Analyst at RBC
Hi there. Hopefully you can hear me. Just had one question and it's about your Ørsted holding. You're obviously now kind of in the black or close to the black on the investment, but you've moved from not wanting a board seat to then suggesting you want a board seat and then not nominating a board member. So I just want to understand: do you still see this as a long-term strategic holding as you previously said, or has something changed here? And then related to that, are you in discussions around a potential JV with them and should we expect an update with the CMD?
Thank you.
Torgrim Reitan, CFO
Thanks, Biraj. There is no change in the way that we view our ownership position in Ørsted. We see ourselves as a long-term industrial owner, and we believe, as we have said earlier, that this industry is now coming out of its first crisis and there is consolidation needed. We do believe that collaboration between the two companies has the potential to create shareholder value both for Ørsted's shareholders and Equinor shareholders. So this remains firm. Ørsted is a great company. When it comes to a board position, the timing for that needs to be right. We informed Ørsted that we would not nominate a board member this year. But our approach to this ownership is the same: a long-term industrial owner.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Biraj. Next one is Alistair Syme from Citi. Alistair, please, your line is open.
Alistair Syme, Analyst at Citi
Thanks. Bård, can you talk a little bit about activity levels in the US onshore? Appreciate this is a non-operated position, but how many rigs running in Eagle Ford and Marcellus, and any thoughts on ambitions to increase? And then as a follow-up, I think later on this year Germany's looking to move forward with its tenders on 9 gigawatts of gas-fired power. Is this a tender that might fit with Equinor's strategy in this area?
Torgrim Reitan, CFO
Okay, thanks, Alistair. Our onshore position in the US is now fully concentrated in the Marcellus, and we are not operating any longer. We are together with [partner] in Marcellus. That produces very well. The production area increased by 17,000 barrels per day and we are now at 320 barrels per day. So that is good, and [the partner] is a good operator. This is, as you know, the area in the US with the lowest breakeven, around a dollar for that production, well situated in future demand to data centers and gas-to-power and all of that.
So it remains a very strategic asset for us. When it comes to offshore wind and auctions in Europe, I would say that Europe in general is an area where clearly there is quite a bit of support for this, driven by energy security now much more than decarbonisation. I just want to repeat what we said at the fourth quarter: our priority within the renewables space is to finalize and conclude the projects that we have under development in the US, the UK, and Poland, and the bar for further capital commitments into the offshore wind space is very high.
That also goes for the Ørsted position.
Alistair Syme, Analyst at Citi
Torgrim, my second question is actually on the gas-fired power in Europe, so in Germany rather.
Torgrim Reitan, CFO
Oh, maybe I misheard you, Alistair. We have nothing particular to mention in that regard, but clearly we do see that Europe, and Germany in particular, needs to invest into the electricity system and grid. So we follow that situation closely.
Alistair Syme, Analyst at Citi
Thanks very much.
Bård Glad Pedersen, SVP Investor Relations
Okay, thank you, Alistair. Next one on my list is Theodor Sjørr Nielsen from SpareBank 1 Markets. Theodor, please go ahead.
Theodor Sjørr Nielsen, Analyst at SpareBank 1 Markets
Good morning. Thanks for my questions. A few questions from me. First, on price differentials: we know that there was a pretty good realized price in Q1. In Q2 we are of course seeing even higher dated Brent prices. Just wonder if you can share what you've seen on the realized prices for specific cargoes so far in Q2. Second question is on the potential postponing of maintenance in the upcoming summer season, given the high energy prices we currently have seen.
Torgrim Reitan, CFO
Okay, thanks, Theodor. Strong price realizations in the quarter. First of all, we do not hedge our production, neither on the gas side nor on the oil side. We want to be exposed to the volatility, and that is what we benefit from in this price environment. When it comes to the oil on the NCS, we achieved close to a three-dollar premium to Brent in the first quarter. Normally we trade at a discount to Brent in general. This is driven by a few things.
One is that the demand for certain qualities has really increased because many of them replace Middle Eastern quality. As an example, Johan Sverdrup traded at a $5 premium to Brent; normally it is a discount, and we actually sold cargoes at a $13 premium to that. Johan Castberg, the new one, is also another one. We have had premiums above $20 to differentials, and Gulf Coast is a third one. Clearly we are able to take out quite a bit from the differentials.
There has been quite a bit of difference between the physical delivery, the dated versus the front month, and that has moved up and down. The differential was very high in March, and we sold or lifted a lot of volumes in March. It's an example that through trading and through marketing we are able to take out value through dislocations in the market. Going into April and all of that, it is too early to be specific, but clearly the demand for our oil is still very high.
What we have seen is that the curve has come up somewhat, so the differentials between the physical delivery and front month are less than they were in March. We'll have to wait and see, Theodor, where it ends. We will be specific on price realizations in the consensus invite to the quarter. Yeah, the answer to that is no, Theodor. Maintenance programs on our installations are major industrial projects that take a massive amount of planning and involvement of suppliers, and clearly we do not want to disturb any of that. The most important thing is to do that effectively and safely.
Theodor Sjørr Nielsen, Analyst at SpareBank 1 Markets
Understood. Thank you.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Theodor. We go to the next question, and that is Henri Patricot from UBS. Henri, please go ahead.
Henri Patricot, Analyst at UBS
Yes, thank you, Bård. Hello everyone. So, two questions from my side. The first one just on the production. You have very strong performance in the first quarter but you've kept the guidance unchanged for the year. Just wanting to what extent are you seeing an upside to the rest of the year? Because it's noted with a slightly higher production on average in Q1 '25 versus Q1 '25, but still the guidance for 2016 implied a drop over the rest of the year, so we're starting to understand what's driving that.
And secondly, you mentioned the cost reduction. If you could elaborate on what's working for you in terms of driving cost reduction—exactly which part of the business. Thank you.
Torgrim Reitan, CFO
Thanks, Henri. First on the production guidance: 3% production growth we expect for the year. In the first quarter, we are very proud of what the organization has done on the quality of the operations—very high production efficiency and regularity—and the new fields coming in are performing well and ramping up as they should. In the first quarter we have produced more than we had in our plans. But it is way too early to make any changes to the guidance.
We are moving into the second and third quarter where we will have turnarounds. In the second quarter it's a 75,000 barrels per day program and in the third quarter 40,000 barrels per day, and you all know that contains some uncertainty as well. But I can leave you with that the production has gone very well in the first quarter. On costs, yeah, so there is a 9% sort of Growth in reported cost that is driven by record production and more fields in production. So that is natural. However, you know, we have the transportation costs have increased driven by shipping rates and also energy costs and also currency. The strengthening of the Norwegian kroner has a certain impact on that. And if you sort of take away, you know, those types of elements that are not related to underlying performance, and also we have royalties in there, the underlying there is a cost reduction of 6%.
So that is without currency changes actually. So meaning that we are putting more field in production, we are growing our production while we are reducing the cost. This is just a result of a systematic work over many years. Associated comment is that the unit production cost, we expect that to be reduced from $6.36 per barrel to $6 during the year. You know, just improving the quality and underlying profit of our earnings.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Henri. Next one in the line is Matt Lofting from JP Morgan. Matt, please go ahead.
Matt Lofting, Analyst at JP Morgan
Hi, thanks for taking the questions Torgrim. Given your earlier comments on gas and hopefully now a better balance sheet outcome for 2026. You were very clear earlier around needing to maintain the baseline on maintenance, et cetera, which makes full sense. But I just wondered whether you see the merit yet in higher capex to fund an acceleration in Norwegian or non-Middle East, as it were, located production, or is it simply too early to be able to take that view and warrant any capital allocation revisions at this point?
And then secondly, I just wanted to ask you about production. I mean Q1 looked very strong in terms of the operational performance. I think you termed it earlier as putting the company on track for 3% full year growth rather than ahead. Do you see any upside emerging to the 3% growth for this year? Thank you.
Torgrim Reitan, CFO
Thanks Matt. You know, in February we guided on a significant improvement in the free cash flow driven by both lower cost and a high-graded investment program as such. And there is no, excuse me, there is no changes to that. We have a program that is very consistent with our production growth ambitions and so on. So there are no use into that. What is very important for us when we consider the investment program is to see to that it is high graded, that it has the maximum profitability that we can get out of the program.
And that will remain the case even if sort of prices go up. I mean we are living in seldom times with a lot of uncertainty and we need to be prepared for that. Things can be very different again. So we will remain disciplined. On production. It was a strong first quarter production, better than assumed in sort of the 3% guiding. But it's too early to do anything with it due to sort of uncertainty going forward and particularly related to the turnaround programs.
Bård Glad Pedersen, SVP Investor Relations
Thanks Matt. Next question is Jon Leisen from ABG Sundal Collier. Please, your line is open.
Jon Leisen, Analyst at ABG Sundal Collier
Yes, thanks a lot for taking my question. Many of your competitors are talking a lot about international exploration going forward. You seem to be standing out as one of the companies that have reduced international exploration. And if I'm right, you're only planning for two exploration wells in 2026 and two ILX wells in Angola. I just wonder if you could talk a little bit about your ambitions when it comes to international exploration and maybe a little bit about details about the drilling plans for 2026, please.
Torgrim Reitan, CFO
Thanks. Thanks Jon. Yes, I think I'll start with a little bit of highlights on how we think about international business. And over the last few years we have streamlined that significantly into fewer countries and focusing on sort of where we see that we can create the most values. And then clearly we have done some divestments and acquisitions to support that. So currently we are looking at higher international production growth. You know, raising 950,000 barrels per day in 2030 and growing cash flow, lower unit production costs and lower CO2 emissions.
So over the years we have actually been able to make this into something better than a few years back. Exploration is an integrated part of how we think about developing the international business. The exploration will be first and foremost focused on areas where we currently are. Brazil, Angola, US to mention a few. So this year it is a rather, you know, limited program focusing on Angola and ILX opportunities, you know, great opportunities though going forward.
Clearly, you know, focus will be more on Brazil where, you know, you might be aware that we hold the neighboring lease to be this Boomerang asset in Brazil. And also a couple of interesting prospects close to the Raya development further north. That's interesting. So those are concrete opportunities that we are developing and then there are more opportunities as well. So exploration will have priority. Doing significant step outs on frontier exploration beyond the countries where we are, we will be careful with.
Jon Leisen, Analyst at ABG Sundal Collier
Thank you. My second question is regarding Dogger Bank. As I noticed that Dogger Bank A has started production. I just wonder when do you expect Dogger Bank C to start production? And also what is the status of potential Dogger Bank D, E, etc.
Bård Glad Pedersen, SVP Investor Relations
Thank you.
Torgrim Reitan, CFO
Thanks Jon. Yes, so you know, there have been delays on Dogger Bank A as you would know. So that is now, you know, more and more getting back to where it should be. Dogger Bank B installation is on track and that is moving forward as planned. When it comes to Dogger Bank C, the transition pieces, you know, those things are ongoing and we actually—well, no, no, let me see. Those were actually completed. Those were actually done half a year ago. And, you know, we do expect Dogger Bank C to be completed, you know, in around two years' time as such.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Jon. Next one on my list is Nash Kiwi from Barclays. Nash, your mic is open.
Nash Kiwi, Analyst at Barclays
Thanks Bård and good morning, Torgrim. Two questions from me please. First, congratulations on the record high production number, but could I ask about safety please? I wonder if you could provide some color why the safety data in slide 3 of the presentation deteriorated during Q1. It's not really a pushback from me, but I just want to hear Equinor's plan to produce at a very high level in a safe and sustainable manner, please. And then the second question is on your New Power segment.
This is the first quarter that you officially have had this New Power segment. I wonder what has surprised you both positively and negatively.
Torgrim Reitan, CFO
Thank you, Nash. So safety is our first priority. And if you look at sort of the development over the last years, it has been a very, very positive development. You know, for this, what we see recently is that sort of things are flattening out statistically and then we have seen some more incidents as such. But clearly we are seen as a very safe operator. And I would say that sort of, I see no risk, sort of this having an impact on production efficiency.
You know, an associated point is sort of the technical integrity of an aging fleet of platforms is something that we follow very, very closely. And that technical integrity is actually higher than, sort of, you know, than it has been for many, many, many years. So the underlying quality in the operations is very high. But this is something that we follow very, very closely. The New Power segment reported, you know, close to zero this quarter. So what we do see is positive development on underlying cost and business development activities and all of that.
And then, you know, clearly a strong contribution from the power trading, you know, in the quarter. So this is going in the right direction and we are all looking forward to positive results in the future. Thank you.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Nash. Then it's Redburn. Fergus Neeve. Fergus, please take your question.
Fergus Neeve, Analyst at Redburn
Brilliant. Thank you very much for taking my questions. Just one question from me today, please. I saw some press reports recently about awards being granted for the FEED studies at Bay du Nord, which is obviously an exciting project. I was just hoping you might be able to give us some color on where you are kind of on the project, what current timelines you're working to and when we might kind of expect an FID if the FEED goes as planned.
Torgrim Reitan, CFO
Thank you very much. So Bay du Nord is a very important development. So this is a project that we have worked for quite a while and it is now getting closer to concept select and that is what we plan for this year. This is a large development. We own 60% in the asset and sort of altogether investment levels of $9 to $10 billion on a 100% basis and, you know, production plateau a little bit below 200,000 barrels per day. Very importantly, with a low tax rate as such.
So this will have a significant contribution to cash flow from operations in the 2030s. Technology-wise, this is ready. It is, you know, 500 kilometers offshore. It is dark and it is cold. But I would argue that as a company, we do have certain experience in those waters.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Fergus. Thank you. Thank you. Next is Paul Redman from BNP Paribas. Paul, please. Your line is open.
Paul Redman, Analyst at BNP Paribas
Hi. Thank you very much. First question is just on cash flow. This quarter you had two big cash impacts. You had the collaterals and you had the price review. Can you just talk to us about how you expect those collaterals to play out through the year, whether you expect a reversal, and on the price review, do we expect anything else later on in the year? Secondly, on Ørsted, you talk about collaboration of the two companies. Is that collaboration with a 10% equity stake or do you need a greater equity stake?
And then, sorry, one last one was a clarification. You said $8 billion of CFFO upside, I think at higher prices of $85 a barrel, I think that's $13 TTF. Can you just walk me through? Because I don't know whether my maths is wrong. I'm not sure that works with your sensitivities, but happy to be proved wrong.
Torgrim Reitan, CFO
Okay, no, thanks. All right, so there were at least three questions in here. So let me take the cash flow first and the collaterals. So, you know, collaterals is a function of volatility in the market, and it's a function of that. We really would like to take advantage of that volatility and trade it, and we don't hedge and so on. So as volatility increases, we need to put collaterals behind the trades that we make. So in this quarter, collaterals increased by, you know, $800–$900 million, which is just natural business.
So when volatility comes down again, collateral will be reduced and that will sort of improve cash flow again. So this is normal business. I just want to give you a data point, and that is, you know, during the energy crisis, you know, with the war on Ukraine, at the maximum we had collaterals of $10 billion, you know, in the balance sheet, enabling us to trade in an environment where very few could trade. And we made huge returns on that, and we didn't lose a single dollar in sort of that.
So this is what we do. And this is for us to be able to benefit from volatility both on the gas and the oil side. Then on Ørsted, the collaboration. I don't want to be too specific on this, but clearly the 10% ownership share that we have, we are satisfied with that. And there's a high bar to commit more capital into offshore wind. And that also goes with the position in Ørsted. When that is said, we do believe that this industry will need consolidation to be, you know, to improve profitability and risk management as such.
The last question was on the price sensitivity. So what I gave you was sort of specifics for 26, which is the $8 billion in improved cash from operations if you assume $85 oil and $13 gas. However, you know, there is a tax leg related to repay taxes with a six-month delay in Norway. So there is $4 billion that sort of builds sort of tax liability for the future beyond 2036. We have in our material, you know, price sensitivities which we issue, and we say that with a $10 change in the oil price, that will change cash flow from operations with $1.2 billion, and a $2 on gas would lead to a $0.8 billion improvement in the cash from operations.
Those are sort of adjusted for the tax leg, and I think that is maybe the difference in your calculations because those numbers are after tax and adjusted for any tax leg impact. I know this is complicated, but it is important to understand, and Investor Relations will be more than ready to discuss this further with you later on.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Paul. I can confirm the latter point. The next one on my list is Jason Gabelman from TD Cowen. Jason, please go ahead.
Jason Gabelman, Analyst at TD Cowen
Yeah, hey, thanks for taking my question. Just one for me. As you think about the cash windfall you're likely to receive this year and kind of declining production growth as you look out to the 2030s, is there any appetite to, you know, execute M&A in order to increase the potential production growth opportunities you have into next decade? Thanks.
Torgrim Reitan, CFO
Thanks. Thanks, Jason. Yeah. So, you know, the investment program that we have put in place and that we are guiding on enables us to actually build this business, you know, step by step, you know, beyond this decade. We are aiming for a production on the Norwegian continental shelf in 2035 on the same level as in 2020. Internationally, you know, we are growing our production towards 950,000 barrels per day in 2030. And our power business is also growing based on sort of, you know, the guided investments that we have.
So, I mean, we are not dependent on M&A to deliver high-quality growth through the next decade. When that is said, M&A is an active tool that we use to high-grade our portfolio. And I can give you a couple of examples. We have exited Nigeria and Azerbaijan, two countries clearly declining, and we received a good price for that. We have made two acquisitions into Marcellus in the U.S., creating longevity and a robust portfolio for the long term in the U.S. As heard, we have created Adura, the company in the UK where we have sort of combined with Shell our upstream assets, significantly improving our cash flow and actually growth outlook as well. My point being that going forward you should expect us to continue to use M&A actively, to continue to high-grade the portfolio, create value and also provide longevity into the business.
Bård Glad Pedersen, SVP Investor Relations
Thank you, Jason, for your question. This time we actually managed to get to all questions within the hour, so I'm sure that's welcome on a busy day. Thank you all for your questions, for calling in. And as always, the IR team remains available if there are any topics that you would like to follow up during the day or later in the week. So have a good day, everybody, and thank you for calling.
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