Former Corrib Gas stakeholder Equinor approved a dividend payout of €100 million days before it sold its stake in the field.
Newly filed accounts for Norway's Equinor Energy Ireland Ltd also show that pretax losses jumped almost sevenfold to €138.9 million in 2020.
A global drop in gas prices as the Covid-19 pandemic hit demand for the fuel that year was blamed for the rapid rise in the company’s losses, with revenues falling by 47 per cent, or €91.9 million, to €103.2 million.
Prices have rebounded since and, last November, Equinor agreed to sell its 36.5 per cent stake in the Corrib gas field through the $434 million sale of its main Irish unit to partner Vermilion Energy.
The accounts for Equinor Energy Ireland Ltd show that the board approved the €100 million dividend on November 18th and paid the money to its parent, Equinor A.S.A., on November 29th – the same day as the sale to Vermilion.
As part of the transaction, Equinor and Vermilion have agreed to hedge approximately 70 per cent of the production of the Corrib gas field for 2022 and 2023, and have also agreed a contingent payment that will be paid on a portion of the revenue if European gas prices exceed a given level.
Vermilion has already reported that revenues from its then 20 per cent share in the gas field off Ireland’s west coast almost trebled to CAN$105 million (€73.24 million) for the first nine months of last year on the back of resurgent gas prices.
Depreciation costs
The gas reserves at the Corrib gas field have already peaked. The pretax loss at Equinor Energy Ireland Ltd for 2020 took account of non-cash depreciation costs of €73.6 million.
Equinor Energy Ireland paid no dividend last year. It had paid a dividend of €160 million in 2019.
Vermilion has previously stated it does not expect to incur income taxes on its Corrib gas investment “for the foreseeable future” due to its significant level of investment in Corrib and the resulting tax pools.
This position is further strengthened with the purchase of Equinor’s shareholding in the field. A note attached to the accounts states that, at the end of 2020, the company had tax losses carried forward of €1.2 billion that are available indefinitely to offset against future taxable profits.
