LONDON (Reuters) – “A report about the company’s investment loss in the United States highlighted major problems that the state-controlled company should have dealt with better” the chairman and chief executive of Norwegian energy company Equinor said on Friday.
The Norway’s energy minister reported in June that Equinor should be clearer about its foreign businesses after the losses from US onshore oil and gas investments.
“I know this is a difficult situation for many,” said Elder Seiter, Equinor CEO” We made investments that weren’t rigid when the market shifted, and we should have been alert to the internal business control issues earlier“. He added “From now on we will be focusing on learning from these mistakes, and trying to turn the recommendations into concrete actions to ensure we never experience similar situations again.“
Equinor had made a series of acquisitions on onshore and offshore oil in the United States in the years leading up to the 2014 2016 oil price crash, ultimately resulting in $20.4 billion in accumulated losses and cancellations.
“Equinor has recorded significant financial losses in the United States. It was primarily driven by an ambitious growth strategy and investments that were based on over-optimistic price assumptions” said Chairman John Reinhardsen.
He added “The rapid growth of a period has led to significant control issues. The board should have looked into that and addressed it earlier.“
Equinor reports that the review, led by PwC accountant Eli Helgeson, is based on more than 120 interviews and documents going back to 2005.
The report provided details about Equinor’s “limited internal process efficiency in senior leadership“, but added that the situation has improved since 2014. “Since the internal acquisitions, a lot has changed at Equinor. We still see room for improvement” Helgesen says. The recommendations reflect this, essentially showing how Equinor acquires and consolidates assets and companies outside of its core business.”