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.

 

CEO Letter to Shareholders

CEO letter to shareholders

CEO Letter to Shareholders

23 March 2020

Alex Schneiter, President and CEO of Lundin Petroleum AB (Lundin Petroleum) has written an open letter to shareholders in regard to current market conditions, measures taken to mitigate any impact from the current Covid-19 pandemic on operations and the resilience of the Company’s strategy and business model to low commodity prices.

A full copy of the letter can be accessed through this link to the Company’s website:
https://www.lundin-energy.com/investors/letter-to-shareholders/

Key excerpts:

The Company remains resilient against low oil prices:

  • Average breakeven oil price to achieve free cash flow neutrality before debt repayment and dividends for the next seven years is c. USD 17 per barrel of oil equivalent¹ (boe). This is a result of our world class producing fields having one of the lowest Operating Costs in our industry (long term guidance of USD 3.2 to 4.2 per boe). Our remaining capital spend to produce out our proven plus probable reserves is less than USD 3 per boe.

Swift action taken to mitigate any potential impact from the Covid-19 pandemic to production operations:

  • We are part of a coordinated industry response, that focusses on minimising the risk of coronavirus infected personnel travelling offshore, and, in the case of a suspected infection offshore, to isolate and transport to shore as soon as possible. The Norwegian authorities have introduced certain exceptional measures to help deal with the situation.
  • To minimise risk to our production operations, we are down-manning offshore personnel in order to maintain a minimum level of activity allowing us to produce, maintain and plan the anticipated and most important activities on the platforms.
  • Edvard Grieg personnel will be kept at the minimum level required, whilst preserving the infill drilling programme. Installation of the Solveig/Rolvsnes subsea equipment has commenced and currently the first oil date in 2021 is being maintained. Should we see slippage in the Edvard Grieg Area projects it will not impact 2021 production guidance as we have excess well capacity on the Edvard Grieg field. Similar actions are being taken at Alvheim and Johan Sverdrup, preserving key activities and reorganising the phasing of the activities.

Clear opportunities identified to support near term cash flow and liquidity position:

  • Cost reductions of approximately MUSD 170 (including G&A) are already being implemented for 2020. Other measures to further strengthen our liquidity position are being identified such as deferring further non-committed projects.
  • Low cash operating costs means our production generates free cash flow at low oil prices and together with our existing BUSD 5.0 reserves based lending facility (RBL), provides the Company with good liquidity to fund our committed projects. The RBL is currently drawn at approximately BUSD 3.8
  • The Board of Directors announced on 23 March 2020 the decision to amend its dividend proposal from USD 1.80 to USD 1.0 per share, in order to maintain financial prudence and provide us with further liquidity flexibility in this challenging market. This will further strengthen our balance sheet and give us more flexibility in how we deploy our capital.

Alex Schneiter, President and Chief Executive Officer of Lundin Petroleum, said:

“Whilst we remain vigilant and prepared for many different eventualities, today our strategy remains broadly unchanged and our firm intention is to deliver on our 2020 work programme as presented at our Capital Market Day in January 2020 whilst deferring non-committed projects. We will, along the way, continue to apply a very strict capital discipline on the business, to preserve our liquidity position and further reduce and re-phase our capital spend without disrupting our business plans. Although the dividend proposal has been amended, our ability to distribute cash to our shareholders in a sustainable way will continue to be based upon our Free Cash Flow generation, debt gearing levels and the medium to long-term macroeconmic outlook. Overall, I am very pleased with how our organisation has responded to these challenging times and our team is focused on swiftly adapting to this changing environment.”

¹ Based on 2P profile

 

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CEO Letter to Shareholders
23.03.2020, 147.04 KB

Amendment to proposed 2019 dividend and further update on AGM planning

Amendment to proposed 2019 dividend and further update on AGM planning

Amendment to proposed 2019 dividend and further update on AGM planning

23 March 2020

The Board of Directors of Lundin Petroleum AB (Lundin Petroleum or the Company) announces that in order to maintain financial prudence and further liquidity flexibility in the light of current market conditions, it is amending its dividend proposal to the 2020 Annual General Meeting (AGM) down to USD 1.0 per share (corresponding to MUSD 284) from USD 1.80 per share, as set out in the notice of the AGM published on 27 February 2020. The Company would also like to make shareholders aware that due to the deteriorating situation in regards to the Covid-19 viral pandemic, no member of the Board of Directors and no member of group management will be attending the AGM in person, but members of the Board of Directors and group management will instead attend via live video link.

Amended 2019 dividend proposal
Lundin Petroleum operates with one of the lowest cost bases in the offshore industry and has a free cash flow breakeven on average over the next seven years of around USD 17 per barrel of oil equivalent (boe), which gives the Company certain resilience to commodity price cycles. However, in the light of the recent fall in the oil price, compounded by a significant deterioration of the macro economic environment, the Board of Directors has taken the prudent measure, in order to provide further liquidity flexibility, of amending its dividend proposal to USD 1.0 per share (corresponding to MUSD 284), from USD 1.80 per share (corresponding to MUSD 511), which is to be voted on by shareholders at the AGM on 31 March 2020. The full revised dividend proposal together with a statement from the Board of Directors is available on the Lundin Petroleum website www.lundin-petroleum.com.

Details in regards to the updated proposed 2019 dividend to be paid in four equal instalments in 2020 and 2021
The Board of Directors will propose to the 2020 Annual General Meeting a dividend for 2019 of USD 1.0 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). Before payment, each quarterly dividend of USD 0.25 per share shall be converted into a SEK amount, and paid out in SEK, 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.

Information about the proposed dividend to be paid out as follows:

Expected Ex-dividend dateExpected Record dateExpected payment date
1 April 20202 April 20207 April 2020
2 July 20203 July 20208 July 2020
1 October 20202 October 20207 October 2020
30 December 20204 January 20218 January 2021

In order to comply with Swedish company law, a maximum total SEK amount shall be pre-determined to ensure that the dividend distributed does not exceed the available distributable reserves of the Company and such maximum amount for the dividend has been set to a cap of SEK 5.188 billion (i.e. SEK 1.297 billion per quarter). If the total dividend would exceed the cap of SEK 5.188 billion, the dividend will be automatically adjusted downwards so that the total dividend corresponds to the cap of SEK 5.188 billion.

Update on precautionary measures at the AGM
The AGM will take place on 31 March 2020 in “Vinterträdgården” at Grand Hôtel, Södra Blasieholmshamnen 8, in Stockholm, commencing at 13.00.

Given the deteriorating situation in regards to the Covid-19 viral pandemic and restrictions in relation to it, the Company has decided to take the precautionary measure of restricting attendance in person to a minimum and instead, members of the Board of Directors and group management will be present via live video link. All other precautionary measures as announced on 13 March 2020 will remain in place, namely:

  •  The AGM agenda will be addressed by the Chairman of the AGM without any specific presentations, and it is proposed that there be no speech by the Chief Executive Officer
  • To enable shareholders to vote whilst not being physically present at the AGM, the registrar Computershare is offering a service to any shareholder registered to attend the AGM and holding no more than 100,000 shares to appoint Computershare to vote on their behalf, the proxy is available on request by contacting Computershare at telephone +46-8-518 01 554 or by e-mail info@computershare.se – the Company encourages shareholders to exercise their voting rights accordingly
  • Any shareholders displaying symptoms of illness or being part of a risk group are specifically requested not to attend the AGM and to exercise their voting power through proxy There will be no ancillary showcases or informal engagement with representatives of Lundin Petroleum
  • There will be no food or beverages served before, during or after the AGM
  • The meeting will be held entirely in Swedish and no translation services will be provided
  • Attendees, who nonetheless wish to attend in person, may be subject to health screening at the entrance and will be asked to spread out in the room and avoid close contact with other attendees
  • Under all circumstances, only registered shareholders (including proxies and advisers) that have given notice of attendance to the Company in due order will be allowed to enter the meeting, meaning that the AGM will resolve that no external guests, including media and other stakeholders will be allowed to attend

Farm down of Finland wind farm project to join forces with Sval Energi

Farm down of Finland wind farm project to join forces with Sval Energi

Farm down of Finland wind farm project to join forces with Sval Energi

20 March 2020

Lundin Petroleum AB (Lundin Petroleum) announces that is has successfully farmed down 50 percent of its Metsälamminkangas (MLK) wind farm project, in mid Finland to Sval Energi AS (Sval), a portfolio company of HitecVision.

As announced on 31 January 2020, Lundin Petroleum concluded a transaction with OX2 AB (OX2) to acquire a 100 percent interest in the MUSD 200 MLK wind farm project, which will produce around 400 GWh per annum gross, once it is fully operational in 2022, from 24 onshore wind turbines. Sval has farmed into 50 percent of the MLK project worth MUSD 100, which includes acquisition cost and future capital expenditure, and is on equivalent terms as Lundin Petroleum acquired the project from OX2.

 

Oil and gas discoveries at Evra and Iving exploration well

Oil and gas discoveries at Evra and Iving exploration well

Oil and gas discoveries at Evra and Iving exploration well

18 March 2020

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that its wholly owned subsidiary Lundin Norway AS (Lundin Norway) as partner in PL820S, has made oil and gas discoveries at the Evra and Iving exploration well (25/8-19 S and two sidetracks), in the Norwegian North Sea, close to the Balder and Ringhorne field.

Highlights

  • Iving discovery with 12 to 71 MMboe gross resources, with further upside potential
  • Follow up prospectivity exists within the license and will be evaluated in light of this discovery
  • Discoveries will be evaluated as a potential tie-back development to existing nearby infrastructure

At Iving, a gross gas column of 34 metres above an oil column of at least 45 metres was encountered in moderate quality Skagerrak reservoirs with no oil-water contact encountered in the well. The well included two sidetracks to allow for extensive data acquisition, including coring, logging and oil sampling. The well was production tested in the Skagerrak formation, and flowed at a maximum rate of around 3,000 bopd constrained by surface equipment. Permanent pressure gauges have been installed in the well, and will assist in determining areal reservoir connectivity from further appraisal. Iving gross resources are estimated to be between 12 to 71 MMboe, (approximately 85 percent of which is light oil of 40 degrees API), part of which will be booked as contingent resources at end 2020.

At Evra, the well encountered additional gas and oil in Eocene/Paleocene age injectite reservoir sands of up to 8 metres in thickness, with further appraisal required to determine the resource potential. Oil was also found in the Statfjord sandstone formation and in weathered and fractured basement, which will require further investigation.

The discoveries will now be evaluated for further appraisal drilling with the aim to develop the discovery as a tie-back to existing nearby infrastructure. Follow-up prospectivity exists in the license and will be evaluated in light of this discovery.

The Evra/Iving well was drilled 8 km northwest of the Balder and Ringhorne Fields by the Deepsea Bergen semi-submersible drilling rig. MOL Norway is the operator of PL820 S with a 40 percent working interest. The partners are Lundin Norway with 40 percent, Pandion Energy with 10 percent and Wintershall DEA with 10 percent.

 

Precautionary measures affecting Lundin Petroleum’s Annual General Meeting as a result of the current Coronavirus (Covid-19) outbreak

Precautionary measures affecting Lundin Petroleum’s Annual General Meeting as a result of the current Coronavirus (Covid-19) outbreak

Precautionary measures affecting Lundin Petroleum’s Annual General Meeting as a result of the current Coronavirus (Covid-19) outbreak

13 March 2020

Lundin Petroleum AB (Lundin Petroleum or the Company) has taken the decision to instigate precautionary measures for the upcoming Annual General Meeting (AGM) to be held at 13.00 CET on 31 March 2020 in “Vinterträdgården” at Grand Hôtel, Södra Blasieholmshamnen 8, in Stockholm, as a result of the current Covid-19 outbreak.

In order to reduce the risk of spreading the virus and to safeguard the well-being of shareholders and Lundin Petroleum personnel, a number of precautionary measures have been introduced:

  • The AGM agenda will be addressed by the Chairman of the AGM without any specific presentations, and it is proposed that there be no speech by the Chief Executive Officer
  • Attendees from Lundin Petroleum, including Board members and management, will be kept to a bare minimum
  • To enable shareholders to vote whilst not being physically present at the AGM, the registrar Computershare is offering a service to any shareholder registered to attend the AGM and holding no more than 100,000 shares to appoint Computershare to vote on their behalf, the proxy is available on request by contacting Computershare at telephone +46-8-518 01 554 or by e-mail info@computershare.se – the Company encourages shareholders to exercise their voting rights accordingly
  • Any shareholders displaying symptoms of illness or being part of a risk group are specifically requested not to attend the AGM and to exercise their voting power through proxy
  • There will be no ancillary showcases or informal engagement with representatives of Lundin Petroleum
  • There will be no food or beverages served before, during or after the AGM
  • The meeting will be held entirely in Swedish and no translation services will be provided
  • Attendees, who nonetheless wish to attend in person, may be subject to health screening at the entrance and will be asked to spread out in the room and avoid close contact with other attendees
  • Under all circumstances, only registered shareholders will be allowed to enter the meeting, meaning that all external guests, including media and other stakeholders will not be allowed to attend

The Company hopes that by applying these precautionary measures, the AGM can be maintained. However, restrictions on multiple person gatherings in Sweden are continuing to evolve and there can be no certainty that by 31 March 2020 the AGM can take place in any format. Lundin Petroleum is monitoring the situation closely and will advise if further action is to be taken.