The board of the main Irish arm of Equinor approved a dividend payout of €100m days before the energy company sold its stake in the Corrib gas field.
That is according to new accounts for Norway’s Equinor Energy Ireland Ltd which also show that the firm’s pre-tax losses increased almost seven fold to €138.9m in 2020.
The firm’s losses soared after revenues declined by 47pc, or €91.9m, from €195.1m to €103.2m due to the global drop in gas prices brought about by lower demand arising from the pandemic in 2020.
Prices have rebounded since and last November, Equinor agreed to sell its 36.5pc stake in the Corrib gas field through the sale of its main Irish unit to partner Vermilion Energy.
Equinor and the Canadian-based Vermilion agreed a price of $434m (€383m).
Now, the new accounts for Equinor Energy Ireland Ltd show that the board approved the €100m dividend on November 18 and paid the dividend to Equinor ASA on November 29 – the same day as the sale to Vermilion.
As part of the transaction, Equinor and Vermilion agreed to hedge approximately 70pc 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.
The deal followed Vermilion reporting that its revenues from its then 20pc share in the Corrib gas field almost tripled to C$105m (€73.24m) for the first nine months of last year on the back of the soaring gas prices.
The gas reserves at the Corrib field have already peaked with Vermilion previously stating that the gas extraction there is subject to a natural decline in reserves at the field.
The pre-tax loss at Equinor Energy Ireland Ltd for 2020 took account of non-cash depreciation costs of €73.6m.
At the end of December 2020, the Equinor Irish unit had shareholder funds totalling €172.63m and the post year-end dividend payout would reduce shareholder funds by €100m.
The company paid no dividend last year and paid out a dividend of €160m in 2019.
Vermilion has previously stated, concerning its own share of the project, that given “the significant level of investment in Corrib and the resulting tax pools, we do not expect to incur current income taxes in the Ireland Business Unit for the foreseeable future”.
This position is further strengthened with the purchase of Equinor’s shareholding in the field as a note attached to the accounts states that at the end of December31, 2020, the company had tax losses carried forward of €1.2bn that are available to offset taxable profits.