Updated 2020 production guidance to reflect the Norwegian Government production restrictions and increased long-term production guidance

Updated 2020 production guidance to reflect the Norwegian Government production restrictions and increased long-term production guidance

Updated 2020 production guidance to reflect the Norwegian Government production restrictions and increased long-term production guidance

18 May 2020

Lundin Energy AB (Lundin Energy or the Company) announces that following the decision made by the Norwegian Government to implement production restriction measures on the Norwegian Continental shelf, the Company’s updated production guidance for the full year 2020, will be targeting 157 thousand barrels of oil equivalent per day (Mboepd). This is at the top end of the original guidance range for 2020 of 145 – 165 Mboepd, which was subsequently upgraded, to 160 – 170 Mboepd, prior to the production cuts announced by the Norwegian Government.

Updated guidance:

 

UpdatedPrevious
2020 ProductionTargeting 157 Mboepd160 – 170 Mboepd
2020 Operating CostUSD 2.80 per boeUSD 2.80 per boe
Long term Production170 – 180 Mboepd160 – 170 Mboepd

The production restriction measures being introduced will impact production output from the Company’s assets from June through December 2020, with unrestricted production levels resuming at the beginning of 2021. In addition, to take advantage of excess production capacity, the planned maintenance shutdown on Edvard Grieg, that was previously deferred from 2020 to 2021, will now be expedited to take place in the third quarter of 2020.

Due to the recently announced increased production capacity at Johan Sverdrup, the Company is increasing its long term production guidance to 170 – 180 Mboepd from 2021, from the previous guidance of 160 – 170 Mboepd.

Operating cost guidance for 2020 remains unchanged at USD 2.80 per boe, which highlights the high operating efficiency of the portfolio.

Lundin Energy donation to help people in need during the outbreak of Covid-19

Lundin Energy donation to help people in need during the outbreak of Covid-19

Lundin Energy donation to help people in need during the outbreak
of Covid-19

8 May 2020

Lundin Energy was keen to contribute to local efforts in Geneva to support those suffering during the coronavirus outbreak. The Company has therefore donated CHF 150,000 each to both The Red Cross Geneva and Serve the City Geneva.

Alex Schneiter, President and CEO comments:

“We are all facing unprecedented challenges at the moment due to the outbreak of the coronavirus. Whilst the impact is significant on all of us, both as individuals and companies, there is no doubt that those who are suffering the most are the vulnerable and elderly. I am therefore very proud, on behalf of Lundin Energy, to be able to donate a total of CHF 300,000 to two local charities who are doing amazing work. The ‘Red Cross Geneva’ and ‘Serve the City Geneva’ are at the forefront of efforts to help our most vulnerable residents and we all praise their commitment to this cause and thank them for their efforts.”

Lundin Energy salutes those working on the frontline to help those at most risk during this difficult time and we would encourage all those who can to support these or similar organisations to any extent you can.

Geneva Red Cross

https://www.croix-rouge-ge.ch/

Benjamin Lachat, Geneva Red Cross, comments:
“Thanks to the support received from various donors, the Geneva Red Cross is able to continue its support of  vulnerable people in Geneva in these most extraordinary times. As you know, many people at-risk found themselves suddenly isolated, unable to carry on normal daily activities, such as grocery shopping. Others completely lost all their social connections. With the aim to alleviate the suffering of isolated people and support them in their daily life, the Geneva Red Cross quickly mobilized its large network of volunteers and professionals. Since mid-March, every person who contacted the Red Cross has received the needed support, be it regular phone calls, delivery of grocery or medicines, disposal of domestic wastes, help in taking care of the bills, etc. We are proud of our contribution in this humanitarian effort and invite you to discover the words (in French) of the volunteers and beneficiaries of the Geneva Red Cross action on their website:”

https://www.croix-rouge-ge.ch/des-nouvelles-de-nos-beneficiaires-et-benevoles

Serve the City Geneva

https://www.servethecitygeneva.ch/

Gary Vannatter, Serve the City Geneva, comments:
“Serve the City Geneva is now in its 11th year of helping the marginalised people of the community. For the past couple of months, we have been greatly affected by the current need for maintaining what is called  “social distancing”, but we would prefer to maintain a physical distance, for everyone’s safety, but keep up a social relationship with those we serve. We have had to rethink our methods of support to the organisations and people that we serve. We have teams making hundreds of sandwiches each week, delivering them to soup kitchens who set up take-away meals for hundreds of those in need. And others looking after caregivers. We are certainly trying to be part of increasing the KQ of the community. What is KQ? It is the Kindness Quotient in our city! Serve the City is now encouraging our volunteers to develop ways of offering acts of kindness to family, friends, neighbours and the needy of the community, within the constraints of safety and health regulations. We will continue to also mobilise volunteers to show kindness in practical ways”

Lundin Energy audiocast – Q1 report 2020 presentation

Lundin Petroleum audiocast - Q3 report 2019 presentation

Lundin Energy audiocast – Q1 report 2020 presentation

30 April 2020

Listen to Alex Schneiter, President and CEO, and Teitur Poulsen, CFO, commenting on the report at a live audiocast, held on Thursday 30 April at 09:00 CEST.

Follow the presentation live on www.lundin-energy.com or dial in using the following telephone numbers:
Sweden    +46 8 56642651
UK     +44 3333000804
United States    +1 6319131422
Norway    +47 23500243

Access Pin : 58812582

 

Link : https://lundinenergy.videosync.fi/2020-04-30-q1

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3 month report 2020
30.04.2020, 0.00 KB

Report for the three months ended 31 March 2020

Report for the three months ended 31 March 2020

Report for the three months ended 31 March 2020

30 April 2020

·Strong production performance of 152.4 Mboepd, above mid-point of guidance for the quarter  
·Full year production guidance increased to 160 – 170 Mboepd from 145 – 165 Mboepd
·Increased plateau rates and accelerated ramp up at Johan Sverdrup – 470 Mbopd phase 1 plateau achieved in April 2020
·Operating cost guidance revised down to USD 2.80 per boe from USD 3.40 per boe
·Cost rationalisation exercise completed with over MUSD 300 reductions in 2020
·Strong free cash flow generation of over MUSD 400, net debt reduced to MUSD 3,694 and liquidity strengthened with additional MUSD 340 corporate facility
·Swift and coordinated action taken to mitigate any potential impact from coronavirus with no disruptions to production
·Dividend of USD 1.00 per share (approximately MUSD 284) for the financial year 2019 approved by the 2020 AGM
·Name change confirmed to Lundin Energy by 2020 AGM

 

Financial summary1 Jan 2020-
31 Mar 2020
3 months
1 Jan 2019-
31 Mar 2019
3 months
1 Jan 2019-
31 Dec 2019
12 months
Production in Mboepd152.478.893.3
Revenue and other income in MUSD695.2484.12,948.7
CFFO in MUSD
Per share in USD1
638.3
2.25
345.8
1.02
1,378.2
4.36
EBITDA in MUSD1
Per share in USD1
581.1
2.05
399.7
1.18
1,918.4
6.07
Free cash flow in MUSD
Per share in USD
406.7
1.43
95.8
0.28
1,271.7
4.03
Net result in MUSD
Per share in USD
-310.6
-1.09
53.5
0.16
824.9
2.61
Adjusted Net result in MUSD
Per share in USD
66.0
0.23
58.9
0.17
252.7
0.80
Net debt in MUSD3,694.23,303.74,006.7

1 Excludes the reported after tax accounting gain of MUSD 756.7 in 2019 on the divestment of a 2.6 percent working interest in the Johan Sverdrup project.


Comments from Alex Schneiter, President and CEO of Lundin Energy:

“I am pleased to announce another period of strong operational and financial performance across the business in the first quarter of 2020. However, what we have witnessed from both an industry and global macro perspective since February is unprecedented, with the coronavirus crisis, its economic impact and the recent oil price collapse providing an exceptionally challenging market backdrop.

“In reaction to the potential threat from coronavirus, we have been focussed on reducing the risk to our operations and safeguarding the well-being of the Company’s employees and contractors, whilst at the same time minimising the potential impact on the business. To date, we have had no disruptions to production. A key decision has been to down-man offshore facilities while maintaining a minimum level of activity to allow production, and the most important project activities to continue. I am pleased to note that with the operational flexibility available within the business, we have not had to change our growing production guidance.

“It is in these times more than any other, where our high quality, low cost, low carbon assets, which are resilient to a low oil price environment, clearly differentiates our ability to weather the storm. Following the downturn in the oil market, the Company has taken decisive action to ensure we maintain our financial strength and flexibility. Total expenditure has been re-phased and reduced by MUSD 300 (more than a 20 percent reduction compared to the original CMD expenditure guidance), with further options available to defer or reduce expenditure, should low oil prices persist; we are also revising down our 2020 operating cost to USD 2.80 per boe from USD 3.40 per boe.

“Operationally, one of the stand out successes since the start of the year has been the performance at Johan Sverdrup. The accelerated ramp up was complemented by the higher established processing capacity, which has enabled the phase 1 plateau production rate to be increased from 440 Mbopd gross to 470 Mbopd (and as a result full field plateau to increase to 690 Mbopd), two months ahead of schedule and 7 percent above original plateau guidance. I would also like to mention that both Edvard Grieg and Alvheim again delivered above expectations during the quarter with a production efficiency of 99 and 98 percent respectively.

“Whilst the end of the quarter was marked by severe market uncertainty, we delivered a very robust financial performance with free cash flow of over MUSD 400 and ending the period with a net debt of MUSD 3,694. Our recently agreed MUSD 340 corporate facility, expenditure savings and dividend reduction, has improved the pre-tax liquidity position in 2020 by over MUSD 780 to date.

“As we head into the second quarter we will continue to apply very strict capital discipline across the Company, to preserve the liquidity position and provide financial flexibility should opportunities arise for us to capitalise on and I remain convinced, that we are in one of the best positions to trade through the current environment.”

Audiocast Presentation
Listen to Alex Schneiter, President and CEO, and Teitur Poulsen, CFO, commenting on the report at a live audiocast, held on Thursday 30 April at 09:00 CEST.

Follow the presentation live on www.lundin-energy.com or dial in using the following telephone numbers:
Sweden    +46 8 56642651
UK     +44 3333000804
United States    +1 6319131422
Norway    +47 23500243

Access Pin : 58812582

Link : https://lundinenergy.videosync.fi/2020-04-30-q1

 

Update on Q1 2020 financial results and audiocast details for 30 April 2020

Update on Q1 2020 financial results and audiocast details for 30 April 2020

Update on Q1 2020 financial results and audiocast details for 30 April 2020

15 April 2020

Lundin Energy AB (Lundin Energy) will publish its financial report for the first quarter 2020 on Thursday 30 April 2020. For the first quarter 2020, Lundin Energy will expense pre-tax exploration costs of approximately MUSD 28 and recognise a net foreign exchange loss of approximately MUSD 359. In addition Lundin Energy announces that it has secured additional credit commitments of MUSD 340.

Exploration costs
It is the Company’s policy to capitalize costs associated with its exploration activities and if it is determined that a commercial discovery has not been achieved, the associated exploration costs are charged to the income statement. For the first quarter of 2020, Lundin Energy will incur a pre-tax charge to the income statement of MUSD 28 relating to exploration costs. These exploration costs will be offset by a tax credit of approximately MUSD 22. The costs are mainly related to the appraisal of the Balderbrå discovery and other exploration costs on PL894, the Hasselbaink exploration well (PL917) and relinquished licences.

Foreign exchange
Lundin Energy will recognise a net foreign exchange loss of approximately MUSD 359 for the first quarter of 2020. The Norwegian Krone weakened against the US Dollar by approximately 20 percent and the Euro weakened against the US Dollar by approximately 2 percent during the first quarter of 2020. The foreign exchange loss 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 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 first quarter of 2020, Lundin Energy was overlifted by 0.7 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 first quarter 2020, revenue from the sale of crude oil from third parties amounted to MUSD 55.9 offset by the purchase of crude oil from third parties of MUSD 55.2, resulting in a gross profit of MUSD 0.7 on third party activities for the first quarter 2020.

Additional MUSD 340 credit commitments
During the current oil market uncertainty, Lundin Energy has taken the prudent measure of securing further credit commitments of MUSD 340 through an unsecured corporate facility with five banks. The credit commitments remain subject to legal documentation which is expected to be put in place over the next few weeks. This new facility comes in addition to the existing MUSD 5,000 reserve-based lending (RBL) facility and the existing MUSD 160 corporate facility for renewable investments and will provide the Company with further financing flexibility and optionality. It also has the effect of offsetting the impact of the RBL amortisation schedule which starts in the second half of 2020 and reduces the RBL from the current commitments of MUSD 5,000 to MUSD 4,000 by 1 January 2021. As at 31 March 2020, net debt stood at MUSD 3,694.

Release of report and audiocast on 30 April 2020
Lundin Energy’s financial report for the first quarter 2020 will be published on Thursday 30 April at 07:30 CEST, followed by a live audiocast at 09:00 CEST where Alex Schneiter, President and CEO, and Teitur Poulsen, CFO, will be commenting on the report and the latest developments in Lundin Energy.

Follow the presentation live on www.lundin-energy.com or dial in using the following telephone numbers:

Sweden +46 8 56642651
UK +44 3333000804
United States +1 6319131422
Norway +47 23500243
Access Pin : 58812582

Link : https://lundinenergy.videosync.fi/2020-04-30-q1

 

Lundin Energy: Transforming how oil is produced responsibly (video)

Lundin Energy: Transforming how oil is produced responsibly

Lundin Energy: Transforming how oil is produced responsibly

31 March 2020

Just as oil has transformed modern society, we are transforming how oil is produced responsibly. Our name change to Lundin Energy better reflects our role as a leading provider of oil and gas in the future energy mix, and our ambition for becoming carbon neutral. See how we will achieve this in our company video.

 

Annual General Meeting of Lundin Petroleum AB 31 March 2020

Annual General Meeting of Lundin Petroleum AB 31 March 2020

Annual General Meeting of Lundin Petroleum AB 31 March 2020

31 March 2020

The Annual General Meeting of Shareholders (AGM) of Lundin Petroleum AB (Lundin Petroleum or the Company) was held today, Tuesday 31 March 2020 in Stockholm. Of the resolutions passed, the AGM resolved to approve the change to the Company’s Articles of Association with the effect of amending the name of the Company from Lundin Petroleum AB to Lundin Energy AB.

The Company’s and the Group’s income statements and balance sheets for the financial year 2019 were adopted and the members of the Board of Directors and the Chief Executive Officer were discharged from liability for the financial year 2019.

The AGM resolved that a dividend for the 2019 financial year in the amount of USD 1.00 per share should be paid in equal quarterly instalments.. 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). The final USD equivalent amount received by the shareholders may therefore slightly differ depending on what the USD to SEK exchange rate is on the date of the dividend payment. The SEK amount per share to be distributed each quarter will be announced in a press release four business days prior to each record date.

The key dates for the quarterly dividends are set out in the table below.

Conversion dateEx-dividend dateRecord dateExpected payment date
27 March 20201 April 20202 April 20207 April 2020
29 June 20202 July 20203 July 20208 July 2020
28 September 20201 October 20202 October 20207 October 2020
23 December 202030 December 20204 January 20218 January 2021

The AGM resolved to remunerate the members of the Board of Directors as follows: (i) annual fees of the members of the Board of Directors of USD 62,000 (excluding the Chairman of the Board of Directors and the Chief Executive Officer as a Board member); (ii) annual fees of the Chairman of the Board of Directors of USD 130,000; (iii) annual fees for Committee members of USD 14,700 per Committee assignment (excluding the Committee Chairs); and (iv) annual fees for Committee Chairs of 20,300; with the total fees for Committee work, not to exceed USD 193,200.

Peggy Bruzelius, C. Ashley Heppenstall, Ian H. Lundin, Lukas H. Lundin, Grace Reksten Skaugen, Torstein Sanness, Alex Schneiter, Jakob Thomasen and Cecilia Vieweg were re-elected as members of the Board of Directors for a period until the 2021 AGM.

Ian H. Lundin was re-elected as Chairman of the Board of Directors.

The AGM resolved that auditor’s fees shall be paid upon approval of their invoice. Ernst & Young AB was elected as the new auditor of the Company for a period until the 2021 AGM.

Further, the AGM resolved, in accordance with the Board of Directors’ proposals:

  • to approve the Company’s 2020 Policy on Remuneration for Lundin Petroleum’s Group Management, which includes four key elements of remuneration: a) base salary; b) annual variable remuneration; c) Long-term Incentive Plan (LTIP); and d) other benefits, and which comprises remuneration paid to members of the Board of Directors for work performed outside the directorship;
  • to approve the LTIP 2020 for members of Group Management and a number of key employees, which gives the participants the possibility to receive shares in Lundin Petroleum subject to uninterrupted employment and the fulfilment of a performance condition over a three year performance period. The performance condition is based on the share price growth and dividends (Total Shareholder Return) of the Lundin Petroleum share compared to the Total Shareholder Return of a peer group of companies. The total number of performance shares under LTIP 2020 as at the date of award may not exceed 560,000 and the maximum cost for granting awards under LTIP 2020, excluding costs related to delivery of the performance shares, is approximately MUSD 9.7 (approximately MSEK 94.2), excluding social security charges. The total 2020 LTIP cost assumes Lundin Petroleum share price of SEK 274 as of February 2020;
  • to approve delivery of treasury shares held by the Company to the participants under the 2017, 2018 and 2019 Long-term, Performance-based Incentive Plans, subject to applicable terms and conditions;
  • to approve delivery of treasury shares held by the Company to the participants under the 2020 Long-term, Performance-based Incentive Plan, subject to applicable terms and conditions;
  • to authorise the Board of Directors to issue new shares and/or convertible debentures corresponding to in total not more than 28,500,000 new shares, with or without the application of the shareholders pre-emption rights, in order to enable the Company to make business acquisitions or other major investments;
  • to authorise the Board of Directors to decide on repurchases and sales of shares in Lundin Petroleum on Nasdaq Stockholm, where the number of shares repurchased shall be limited so that shares held in treasury from time to time do not exceed ten percent of all outstanding shares of the Company; and
  • to approve to change the Company’s Articles of Association with the effect of amending the name of the Company from Lundin Petroleum AB to Lundin Energy AB, as well as certain editorial amendments.

The AGM furthermore resolved to approve a revised Nomination Committee Process.

The two shareholder proposals which were put to the meeting by a minority shareholder were both rejected by the AGM.

 

Increased phases 1 & 2 plateau rates and accelerated ramp up at Johan Sverdrup

Increased phases 1 & 2 plateau rates and accelerated ramp up at Johan Sverdrup

Increased phases 1 & 2 plateau rates and accelerated ramp up at Johan Sverdrup

30 March 2020

Lundin Petroleum AB (Lundin Petroleum) announces that Johan Sverdrup phase 1 is expected to reach the plateau production rate in early May 2020, more than two months earlier than scheduled. Also, due to higher established processing capacity, the plateau production rate for phase 1 will increase from 440 thousand barrels of oil per day (Mbopd) to 470 Mbopd and as a result full field plateau, when phase 2 comes on stream, has increased to 690 Mbopd.

Johan Sverdrup phase 1 plateau production of 440 Mbopd was previously expected to be reached during the summer of 2020 from 10 wells. As at 30 March 2020, the field was producing 430 Mbopd from nine wells and when the tenth well is on stream, a new, increased plateau production rate of 470 Mbopd is expected to be achieved in early May 2020. As a consequence, full field plateau production guidance, when phase 2 comes on stream, expected in Q4 2022, has also been increased to 690 Mbopd.

Phase 1 production from the Johan Sverdrup field came on stream in October 2019, more than two months ahead of the original schedule and gross NOK 40 billion below the original estimate for development. The break-even oil price for the full-field development is below USD 20 per barrel, operating costs are below USD 2 per barrel and it will produce at a carbon intensity of less than 1 kg CO2 per barrel. The Johan Sverdrup field reserves are in the range 2.2 to 3.2 billion barrels of oil equivalent and the ambition of the partners in the field, is to achieve a recovery factor of more than 70 percent.

Alex Schneiter, President and CEO of Lundin Petroleum comments:
“The Johan Sverdrup field has yet again delivered on the upside and I am very pleased to note that as well as plateau production coming early, we are able to increase the capacity for phase 1 to 470 Mbopd and the full field plateau capacity to 690 Mbopd. This is a fantastic indictment of the combined quality of the subsurface, topsides and the teams who have delivered the development and start up of the field. With this increase in production from Johan Sverdrup, we will be upgrading our 2020 production guidance with our Q1 results on 30 April 2020.

“In this current time of oil market uncertainty, a field like Johan Sverdrup with operating costs below USD 2 per barrel, provides us with one of the lowest cost and highest quality fields in the world and delivers strong cashflow resilience and certainty to our business.”

 

The first quarterly instalment of the proposed 2019 dividend of USD 0.25 per share

The first quarterly instalment of the proposed dividend of USD 0.25 per share will amount to SEK 2.49 per share

The first quarterly instalment of the proposed dividend of USD 0.25 per share will amount to SEK 2.49 per share

27 March 2020

Lundin Petroleum AB (Lundin Petroleum) announces that the first quarterly instalment of the proposed dividend of USD 0.25 per share will amount to SEK 2.49 per share, with a total amount of MSEK 707, corresponding to approximately MUSD 71. The proposed dividend, including the first quarterly instalment, remains subject to approval by the 2020 Annual General Meeting (AGM) that will be held on 31 March 2020.

Information about the first quarterly instalment of the proposed dividend:

Amount per share
(SEK)
Total dividend amount
(MSEK)
Ex-dividend dateRecord dateExpected payment date
2.497071 April 20202 April 20207 April 2020

The Board of Directors has proposed to the 2020 AGM a revised dividend proposal for 2019 of USD 1.00 per share, corresponding to MUSD 284 (rounded off), to be paid in quarterly instalments of USD 0.25 per share, corresponding to MUSD 71 (rounded off).

According to the proposal, 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 9.9572.

The proposed dividend, including the first quarterly instalment, remains subject to approval by the 2020 AGM. The revised dividend proposal is available on www.lundin-petroleum.com.