Completion of exploration well on the Bask prospect in the southern Barents Sea

Completion of exploration well on the Bask prospect in the southern Barents Sea

Completion of exploration well on the Bask prospect in the southern Barents Sea

26 January 2021

Lundin Energy AB announces that its wholly owned subsidiary, Lundin Energy Norway AS (together Lundin Energy), is now completing exploration well 7219/11-1, targeting the Bask prospect in licence PL533B, in the southern Barents Sea, northwest of the Alta discovery.

The main objective of the well was to prove hydrocarbons in Paleocene aged sandstones. The targeted formation contained poorly developed reservoir, and although traces of hydrocarbons were found, it is not considered commercial and the well is classed as dry.

The Bask well was drilled 35 km northwest of the Alta discovery and due south of the Johan Castberg field by the West Bollsta semi-submersible drilling rig. Lundin Energy is the operator of PL533B with a 40 percent working interest. The partners are AkerBP ASA with 35 percent and Wintershall DEA Norge AS with 25 percent.

The West Bollsta rig will now proceed to drill the Lundin Energy operated (65 percent working interest), Segment D prospect in PL359, adjacent to the Solveig subsea tie back development project, on the Utsira High. Well 16/4-13S will target Permian and Triassic aged sandstones, similar to those found at Solveig. On the success of Segment D, development would be via a low cost tie-in to the Solveig subsea facilities. The partners are OMV (Norge) AS with 20 percent and Wintershall DEA Norge AS with 15 percent working interests.

 

 

19 licences awarded in the Norwegian licensing round

APA 2020 licence awards

19 licences awarded in the Norwegian licensing round

19 January 2021

Lundin Energy AB announces that its wholly owned subsidiary Lundin Energy Norway AS (together Lundin Energy), has been awarded a total of 19 exploration licence interests in the 2020 Awards in Predefined Areas (APA) licensing round, in Norway.

The award includes 15 licences in the North Sea, two licences in the Norwegian Sea and two licences in the Southern Barents Sea, seven of the newly awarded licences will be operated by Lundin Energy Norway.

The awards from this licensing round continue to build on the Company’s seven core exploration areas and increases by 23 percent the number of licences held by the Company. Supporting the Company’s strategy to execute an exploration programme which targets a combination of high value, near field opportunities and high potential, frontier exploration.

 The licence interests are detailed below and maps of their location are provided in the link below.

 

LicencesBlockWorking InterestLicence Area
1089*1/5,650%North Sea
10872/2, 550%North Sea
1084*3/760%North Sea
10907/130%North Sea
1091*15/5,6,840%North Sea
1092*15/6,950%North Sea
109715/3, 24/11, 1230%North Sea
1095*16/2, 25/1150%North Sea
1094*17/2,3,5,6,8  18/760%North Sea
1045B125/415%North Sea
820SB125/840%North Sea
109925/3, 26/1, 30/12, 31/1030%North Sea
110430/340%North Sea
1102*30/3, 31/1,4,560%North Sea
110634/2,3,5,620%North Sea
11266609/5,6,7,8,9,10,11,12, 6610/2,4,5,6, 6611/4,530%Norwegian Sea
11296703/7,8,9,10,11,12, 6704/7,8,10,1130%Norwegian Sea
229G17122/8,950%Southern Barents Sea
11317122/8,9,10,11,12, 7123/7,8,920%Southern Barents Sea

*Operator Lundin Energy Norway

1 Geographical extension of the licence area.

 


 

Update on Q4 2020 financial results and webcast details for Capital Markets Day presentation on 28 January 2021

Update on Q4 2020 financial results and webcast details for Capital Markets Day presentation on 28 January 2021

Update on Q4 2020 financial results and webcast details for Capital Markets Day presentation on 28 January 2021

13 January 2021

Lundin Energy AB (Lundin Energy) will publish its financial report for the fourth quarter 2020 and host its annual Capital Markets Day presentation on Thursday, 28 January 2021. For the fourth quarter 2020, Lundin Energy will expense pre-tax exploration costs of approximately MUSD 58, and recognise a net foreign exchange gain of approximately MUSD 256.

Exploration costs
It is the Company’s policy to capitalize costs associated with its exploration activities and when it is determined that a commercial discovery has not been achieved, the associated exploration costs are charged to the income statement. For the fourth quarter of 2020, Lundin Energy will incur pre-tax exploration costs of approximately MUSD 58, which will be charged to the income statement and offset by a tax credit of approximately MUSD 45. The exploration costs are mainly related to the dry wells on the Polmak prospect (PL609/PL1027) and the Spissa prospect (PL960) and relinquished licenses.

Net debt and foreign exchange gain
The net debt position of Lundin Energy at 31 December 2020, amounted to USD 3.9 billion resulting in available liquidity of USD 1.1 billion, within its recently refinanced and cheaper, USD 5.0 billion credit facility. As a result of the refinancing, unamortized capitalized financing fees and loan modification gain were expensed during the fourth quarter.

Lundin Energy will recognise a net foreign exchange gain of approximately MUSD 256 for the fourth quarter of 2020. The Norwegian Krone strengthened against the US Dollar by approximately 10 percent and the Euro strengthened by approximately 5 percent during the fourth quarter of 2020. The foreign exchange gain is largely non-cash and mainly relates to the revaluation of loan balances at the prevailing exchange rates at the balance sheet date.

Change in inventory and under/overlift balances
Lundin Energy recognises income based on its sold volume (sales method). Consequently, changes in inventory and under/overlift balances are reported as an adjustment to cost valued at production cost, including depletion. During the fourth quarter of 2020, Lundin Energy was overlifted by 2.1 Mboepd.

Revenue from the crude oil sales from third parties
Lundin Energy markets its own crude oil production and at times markets crude oil from third parties. For the fourth quarter 2020, revenue from the sale of crude oil from third parties amounted to MUSD 24.9 offset by the purchase of crude oil from third parties of MUSD 24.5, resulting in a gross profit of MUSD 0.4 on third party activities for the fourth quarter 2020.

Fourth Quarter 2020 results and Capital Markets Day 2021
Lundin Energy’s financial report for the fourth quarter 2020, will be published on Thursday, 28 January 2021 at 07:30 CET.

Lundin Energy management team will present the financial results for the fourth quarter 2020 and Capital Markets Day presentation by webcast at 14.00 CET on the 28 January 2021. Please follow the event live at www.lundin-Energy.com or dial in using the following telephone numbers with the pin code shown below:

UK/International: +44 2071 928338
Sweden: +46 8 566 184 67
Norway: +47 21 56 30 15
USA: +1 646 741 3167

Access Pin : 6247379

Link : https://edge.media-server.com/mmc/p/oz7b59c2

 

Lundin Energy announces resource additions of 210 percent of 2020 production

Lundin Energy announces resource additions of 210 percent of 2020 production

Lundin Energy announces resource additions of 210 percent of 2020 production

12 January 2021

Lundin Energy AB (Lundin Energy) is pleased to announce that as at 31 December 2020, its proved plus probable net reserves (2P reserves) are 671 million barrels of oil equivalent (MMboe 1,2) and its proved plus probable plus possible net reserves (3P reserves) are 826 MMboe. 2P reserves plus best estimate net contingent resources (total resource) are 946 MMboe, with a total resource replacement ratio3 for 2020 of 210 percent.

Lundin Energy’s 2P reserves as at 31 December 2020 are 670.9 MMboe and reflect a positive revision of 39.3 MMboe. The 3P reserves as at 31 December 2020 are 826.0 MMboe and reflect a positive revision of 30.0 MMboe. The best estimate net contingent resources (2C resources) as at 31 December 2020 are 275.5 MMboe, which is an increase of 90.2 MMboe from year end 2019. The total resource as at 31 December 2020 are 946.4 MMboe, which reflects additions of 129.4 MMboe from year end 2019, including asset acquisitions.

 

2P Reserves3P ReservesTotal Resources
2P + 2C
End 2019693.3857.5878.6
  – Produced 4-61.6-61.6-61.6
  – Sales/+Acquisitions+78.4
  + Revisions/Discoveries+39.3+30.0+51.0
End 2020670.9826.0946.4
Reserves replacement ratio 3,564%49%210%

 

The increase in 2P reserves relates primarily to the Edvard Grieg field, along with minor reserves additions at other assets. The increase in 2C contingent resources relates to the acquisition of interests in the Wisting and Alta discoveries in the southern Barents Sea, as well as exploration success at the Iving prospect in the Norwegian North Sea. Oil accounts for approximately 90 percent of Lundin Energy’s total resource.

As announced in September 2020, gross 2P reserves at Edvard Grieg have been increased by 51 MMboe from year end 2019 (33 MMboe net to Lundin Energy), which lifts the gross 2P ultimate recovery for the field to 350 MMboe6, representing an increase of 90 percent from the original PDO estimate. Gross 2P ultimate recovery for the Greater Edvard Grieg Area has therefore grown to 410 MMboe, which includes the Solveig Phase 1 and Rolvsnes Extended Well Test (EWT) tie-back developments. These additional reserves extend the plateau production period for the Greater Edvard Grieg Area by one year to late 2023, representing a five-year extension from the original PDO. Activity in the Greater Edvard Grieg Area will continue in 2021, with the drilling of three infill wells at Edvard Grieg, first oil from the two tie-back developments and further exploration drilling.

The Johan Sverdrup field continues to exceed expectations, with excellent reservoir performance and well productivities. The Phase 1 facility capacity has been increased to 500 thousand barrels of oil per day (Mbopd), with potential for a further increase, post modifications to the water injection system, which is planned in mid-2021. When Phase 2 comes on stream, scheduled for the fourth quarter of 2022, it is expected that the production capacity will be lifted to 720 Mbopd. More production experience is required to further understand the reservoir performance prior to any potential revisions to the reserves estimate.

In March 2020, Lundin Energy announced discoveries at the Iving and Evra prospects in in the Norwegian North Sea, close to the Balder and Ringhorne fields. The discoveries are estimated to contain between 12 and 71 MMboe of gross resources and will be further appraised in 2021.

In October 2020, Lundin Energy announced the acquisition of a 10 percent working interest in the Wisting oil discovery and a further 15 percent working interest in the operated Alta discovery, both located in the Southern Barents Sea. Equinor, the operator of Wisting in the development phase, is targeting a PDO by end 2022, to benefit from the temporary tax incentives established by the Norwegian Government in June 2020. The transaction adds 2C resources of 78 MMboe.

The reserves estimates have been audited by ERCE, a third-party independent reserves auditor, and have been calculated using the 2018 Petroleum Resource Management System (SPE PRMS) Guidelines of the Society of Petroleum Engineers (SPE), World Petroleum Congress (WPC), American Association of Petroleum Geologists (AAPG) and Society of Petroleum Evaluation Engineers (SPEE). The contingent resource estimates associated with the Edvard Grieg, Alvheim area, Johan Sverdrup, Solveig and Rolvsnes assets have been audited by ERCE. For the other assets, the contingent resource volumes are based on management estimates.

Nick Walker, President and CEO of Lundin Energy, commented:
“Growth and value creation are the key drivers for our business, and I am pleased that in a year when our production almost doubled, we were still able to deliver total resource additions of over two times our produced barrels. Our strong track record of growing the business continues, as we have now achieved a total resource replacement of 150 percent of our production over the last five years.

“Our growth strategy is underpinned by our world class producing assets which continue to outperform, a pipeline of potential new projects that we are prioritising for development within the new tax environment and an exciting exploration portfolio. With our 2021 programme already underway, I am confident that we will deliver another year of resource growth.”

1 BOE’s may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf : 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent the value equivalency at the wellhead.
2 The reserves were calculated using a nominal Brent oil price of USD 50 per barrel in 2021, 54 in 2022, 58 in 2023, 60 in 2024, and increasing by 2 percent per year thereafter.
3 Total resource replacement ratio is the sum of 2P reserves revisions and 2C Contingent resources revisions including assets transactions divided by the yearly production.
4Reserves are measured in salable quantities (saleable oil, natural gas liquids and dry gas converted to oil equivalents), which may differ from production volumes provided in corporate reports which are given in wellhead production quantities (oil and rich gas converted to oil equivalents).
5 As per industry standards the reserves replacement ratio is defined as the ratio of reserves additions to production during the year, excluding the effect of acquisitions and dispositions.
6 2P ultimate recovery is cumulative production to date plus remaining proved plus probable (2P) reserves.

The fourth quarterly instalment of the dividend of USD 0.25 per share will amount to SEK 2.08 per share

The fourth quarterly instalment of the dividend of USD 0.25 per share will amount to SEK 2.28 per share

The fourth quarterly instalment of the dividend of USD 0.25 per share will amount to SEK 2.08 per share

23 December 2020

Lundin Energy AB (Lundin Energy) announces that the fourth quarterly dividend instalment of USD 0.25 per share, will amount to SEK 2.08 per share, with a total amount of MSEK 591, corresponding to approximately MUSD 71.

Information about the fourth quarterly instalment of the dividend:

Amount per share
(SEK)
Total dividend amount
(MSEK)
Ex-dividend dateRecord dateExpected payment date
2.0859130 December 20204 January 20218 January 2021

The Annual General Meeting of Lundin Energy held on 31 March 2020 resolved on a dividend for 2019 of USD 1.00 per share, to be paid in quarterly instalments of USD 0.25 per share.

According to the dividend resolution, before payment, each quarterly dividend of USD 0.25 per share shall be converted into a SEK amount based on the USD to SEK exchange rate published by Sweden’s central bank (Riksbanken) four business days prior to each record date (rounded off to the nearest whole SEK 0.01 per share) and the exchange rate used for the conversion is 8.305.

Information about the approved dividend is available on www.lundin-energy.com.

 

Successful refinancing into a USD 5 billion corporate credit facility

Successful refinancing into a USD 5 billion corporate credit facility

Successful refinancing into a USD 5 billion corporate credit facility

14 December 2020

Lundin Energy AB (the ‘Company”) is pleased to announce that is has successfully completed the refinancing of its existing secured USD 4.75 billion Reserves Based Lending facility (“RBL”) and other corporate facilities, into a new, lower margin USD 5 billion five year corporate facility, (the “Facility”).

Highlights
• New USD 1.5 billion five-year Revolving Credit Facility (“RCF”)
• New USD 3.5 billion 2 to 5 year maturity term loans
• Weighted average margin of 1.6 percent above LIBOR(1) which is 0.9 percentage points lower compared to the current RBL margin
• Inclusion of ESG Key Performance Indicators (“KPI”), impacting margin according to performance
• 16 international banks in the Facility
• Additional ‘accordion’ option of up to USD 1 billion

The Facility is a combination of a five-year USD 1.5 billion RCF and USD 3.5 billion term loans, split across two, three, four and five year maturities, replacing the current USD 4.75 billion RBL and USD 500 million of other credit facilities. The average margin across the Facility is significantly improved to 1.6 percent above LIBOR1, from the current RBL rate of 2.5 percent above LIBOR. The Facility also includes the option to bring in additional commitments in an accordion option of up to USD 1 billion. In line with the Company’s best in class environmental profile, ESG KPIs on carbon intensity and renewable electricity generation have been incorporated into the margin payable, providing further financial incentives for the delivery of the Decarbonisation Strategy and 2030 carbon neutrality target. The structure of the Facility is such, that it is compatible with unsecured bond issuances through the debt capital markets at pari passu terms, which could be utilised at an appropriate time to diversify the Company’s capital structure.

Teitur Poulsen, CFO of Lundin Energy comments:
“I am very pleased to announce the successful completion of the refinancing of our credit facilities into a simplified and more flexible structure of RCF and term loans, on significantly better terms. For the first time we are also including ESG KPIs into our debt framework, which will serve to offer an economic incentive to continue improving our Carbon emissions performance. This further demonstrates the financial value which can be realised from industry leading sustainable operations. I believe it is a sign of the resilience of the business, quality of the asset base and future growth profile that we were able to secure continued support from our key lenders on enhanced terms. This was achieved while successfully trading through one of the most challenging oil markets in recent years. The Facility gives us additional flexibility in terms of our financial framework and improved liquidity headroom, which alongside our BBB– (2) credit rating, positions the Company’s balance sheet well, as we continue to pursue our organic growth strategy.

“I would like to take this opportunity to thank all of our existing lenders who continue to support us in this new Facility and also welcome the new faces into the bank syndicate.”

1) LIBOR: London Inter-Bank Offered Rate
2) S&P Global Inc.

Further capacity increase at Johan Sverdrup

Further capacity increase at Johan Sverdrup

Further capacity increase at Johan Sverdrup

18 November 2020

Lundin Energy AB (Lundin Energy) announces that Johan Sverdrup Phase 1 processing capacity has been successfully tested to over 500 thousand barrel of oil per day (Mbopd) and the full field plateau production is increased to 720 Mbopd, when Phase 2 starts up in the fourth quarter of 2022.

Following the successful increase of the Johan Sverdrup Phase 1 plateau production rate to 470 Mbopd in March 2020, further capacity testing of the oil processing system was completed in November 2020, with gross rates in excess of 500 Mbopd produced. Phase 1 production will increase to around 500 Mbopd from the end of 2020 and to increase production above this level will require additional water injection capacity to provide sufficient reservoir pressure support. Modification work to increase the water injection capacity is expected to be complete by mid-2021.

In addition, once Phase 2 of Johan Sverdrup comes on stream during the fourth quarter of 2022, full-field plateau production is expected to rise from 690 to around 720 Mbopd. Lundin Energy’s 2020 production guidance remains unchanged.

 

Exploration well completed on the Polmak prospect in the southern Barents Sea

Exploration well completed on the Polmak prospect in the southern Barents Sea

Exploration well completed on the Polmak prospect in the southern Barents Sea

16 November 2020

Lundin Energy AB announces that its wholly owned subsidiary Lundin Energy Norway AS (together Lundin Energy), has completed exploration well 7221/4-1, targeting the Polmak prospect in licences PL609 and PL1027, in the southern Barents Sea. The well was dry.

The main objective of the well was to prove hydrocarbons in Triassic aged sandstones within the Kobbe formation of the Polmak prospect. The well encountered indications of hydrocarbons in a 9 meter interval in poor quality reservoir in the targeted formation and the well was classified as dry.

The well was drilled 30 km east of the Johan Castberg discovery, by the West Bollsta semi-submersible drilling rig. Lundin Energy is the operator of Polmak with a 47.5(1) percent working interest. The partners are Wintershall DEA Norge AS with 25 percent, INPEX Norge AS with 10 percent, DNO Norge AS with 10 percent and Idemitsu Petroleum Norge AS with 7.5 percent working interests.

The West Bollsta rig will now proceed to drill the Lundin Energy operated (40 percent working interest), Bask prospect in PL533B. Well 7219/11-1 will target Paleocene aged sandstones, estimated to hold gross unrisked prospective resources of 250 MMbo. The partners are Aker BP with 35 percent and Wintershall DEA with 25 percent working interests.

1) Contingent on the completion of the previously announced acquisition of certain interests from Idemitsu Petroleum Norge AS.

 

 

Alex Schneiter Bloomberg TV interview

Alex Schneiter Bloomberg TV interview

Alex Schneiter Bloomberg TV interview

30 October 2020

Watch Alex Schneiter, President and CEO, on Bloomberg as he delivers strong quarterly results and sets out Lundin Energy’s future growth plan whilst being resilient through a challenging market.