Report for the six months ended 30 June 2017

Lundin Petroleum inleder återköpsprogram av egna aktier

2 August 2017

Lundin Petroleum reports record high production at continued low cash operating cost for the first half of 2017 with solid operating cash flow generation.

Continuing operations: six months ended 30 June 2017 (30 June 2016)
·    Production of 86.1 Mboepd (49.2 Mboepd)
·    Revenue of MUSD 886.1 (MUSD 354.8)
·    EBITDA of MUSD 689.3 (MUSD 260.5)
·    Operating cash flow of MUSD 705.9 (MUSD 314.0)
·    Net result of MUSD 204.8 (MUSD 93.6) including a net foreign exchange gain of MUSD 139.2 (MUSD 110.2)
·    Net debt of MUSD 4,081 (31 December 2016: MUSD 4,075)
·    Net result from discontinued operations of MUSD 47.9 (MUSD -27.6)

Continuing operations: second quarter ended 30 June 2017 (30 June 2016)
·    Production of 89.5 Mboepd (50.6 Mboepd)
·    Revenue of MUSD 464.6 (MUSD 209.7)
·    EBITDA of MUSD 333.5 (MUSD 163.1)
·    Operating cash flow of MUSD 340.0 (MUSD 180.6)
·    Net result of MUSD 145.6 (MUSD -72.1) including a net foreign exchange gain of MUSD 118.8 (MUSD -78.1)

Comments from Alex Schneiter, President and CEO
I am pleased to report that Lundin Petroleum has delivered excellent results for the second quarter 2017 while maintaining a strong HSE performance. The quarter was characterised by strong production at low cash operating cost, solid operating cash flow generation, good progress on development projects and successful appraisal activity and organic growth in the southern Barents Sea. At the end of April, the spin-off of IPC was also successfully completed, resulting in a dividend distribution, through IPC shares, of USD 410 million to Lundin Petroleum’s shareholders.

Lundin Petroleum’s production for the second quarter 2017 was above the upper end of the quarter production guidance. Edvard Grieg in particular continues to outperform at both the subsurface and facilities levels and I expect a reserves increase by year end. This performance has led us to revise, for the second time this year, Lundin Petroleum’s full year guidance to a new increased production level of between 80 and 85 Mboepd and cash operating costs down to USD 4.60 per barrel from the previous guidance of USD 4.90 per barrel.

Our major world class development project Johan Sverdrup is progressing according to plan with Phase 1 now over 50 percent completed and first oil remaining firmly on track for end of 2019. We also continue to be active on the organic growth front, successfully completing the Alta-4 appraisal well. In August we begin a very active exploration drilling campaign in the southern Barents Sea, starting with the significant Korpfjell prospect. Our organic growth story is as exciting as ever with significant growth potential.

Audio cast presentation
Listen to Alex Schneiter, President and CEO, and Teitur Poulsen, CFO, commenting on the report at a live audio cast held on Wednesday 2 August 2017 at 09.00 CEST.

Follow the presentation live on www.lundin-petroleum.com or by dialling in on the following telephone numbers:
Sweden:         +46 8 519 993 55
Norway:         +47 23 500 211
UK/International:     +44 203 194 05 50
International Toll Free:     +1 855 269 26 05

Link to Audiocast

Lundin Petroleum to release second quarter report 2017 on 2 August 2017

Lundin Petroleum to release second quarter report 2017 on 2 August 2017

26 July 2017

Lundin Petroleum’s financial report for the second quarter 2017 will be published on Wednesday 2 August at 07.30 CEST, followed by a live audio cast at 9.00 CEST.

Listen to Alex Schneiter, President and CEO, and Teitur Poulsen, CFO, commenting on the report and the latest developments from Lundin Petroleum.

Follow the presentation live on www.lundin-petroleum.com. Presentation slides will be available on the website prior to the audio cast.

You can also dial in to listen to the presentation on the following telephone numbers:

Sweden:        +46 8 519 993 55
Norway:        +47 23 500 211
UK/International:     +44 203 194 05 50
International Toll Free:     +1 855 269 26 05

Link to audio cast

Update on second quarter 2017 financial results

Update on second quarter 2017 financial results

19 July 2017

Lundin Petroleum AB (Lundin Petroleum) will expense pre-tax exploration costs and impairment charges of approximately MUSD 35 and recognise a net foreign exchange gain of approximately MUSD 118 as well as a gain on sale of assets of MUSD 52 in relation to the IPC spin-off for the second quarter of 2017.

The profitability for the second quarter of 2017 will be impacted by certain expensed exploration costs and impairment charges, as well as a net foreign currency exchange gain mainly related to the revaluation of loan balances. The IPC spin-off completed on 24 April 2017 will also result in a gain on sale of assets for the second quarter 2017. These items are largely non-cash and will have no impact on operating cash flow or EBITDA.

Exploration Costs
During the second quarter of 2017, Lundin Petroleum will incur pre-tax exploration costs of approximately MUSD 22 which will be charged to the income statement and offset by a tax credit of approximately MUSD 17. The exploration costs are mainly related to the unsuccessful Gohta appraisal well in PL492 and a dry well on the Volund West prospect as well as a number of Norwegian exploration licences in the process of relinquishment.

Impairment Costs
Lundin Petroleum recently announced the divestment of a 39 percent working interest in the Brynhild field in PL148 in the Norwegian North Sea. As a consequence of this divestment, Lundin Petroleum will incur a non-cash impairment charge in the second quarter of 2017 of MUSD 13 with a corresponding tax credit of MUSD 10 resulting in a negative impact on the second quarter net results of MUSD 3.

Foreign Exchange
Lundin Petroleum will recognise a net foreign exchange gain of approximately MUSD 118 for the second quarter of 2017. The Norwegian Krone and the Euro strengthened against the US Dollar by approximately 2 and 7 percent respectively during the second quarter of 2017 and the foreign exchange gain mainly relates to the revaluation of loan balances at the prevailing exchange rates at the end of the reporting period.

IPC spin-off
Lundin Petroleum completed the IPC spin-off on 24 April 2017. The results of the IPC business are included in the Lundin Petroleum financial statements up until the end of April and are shown as discontinued operations. The gain on the spin-off of the IPC business amounted to approximately MUSD 52 and will also be shown as discontinued operations.

Successful Alta appraisal well

Finansiell uppdatering för det andra kvartalet 2017

13 July 2017

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that its wholly owned subsidiary Lundin Norway AS (Lundin Norway) has successfully completed the drilling and production testing of Alta appraisal well 7220/11-4 (Alta-4) located in PL609 in the southern Barents Sea.

The Alta-4 well was located approximately 2 km south of the original Alta discovery well 7220/11-1 and approximately 2.5 km north of the previous appraisal well 7220/11-3. The main objectives of the well were to further appraise the Alta discovery and to provide a calibration point for the drilling of a horizontal well for a possible extended well test that is being planned for 2018.

The well encountered a gross hydrocarbon column of 48 metres, comprising 4 metres of gas and 44 metres of oil in a sequence of Permian-Triassic clastic carbonate sediments. Extensive data acquisition and sampling was carried out in the reservoir, including conventional coring and fluid sampling. Pressure data show the same fluid contacts and gradients as observed in previous wells drilled on the Alta discovery, confirming good communication across the large Alta structure.

A production test was performed in the oil zone, producing at a stabilised rate of 6,050 barrels of oil per day with low pressure drawdown and constrained by rig testing facilities. The production test confirmed very good reservoir properties and good lateral continuity within the Permian-Triassic clastic reservoirs.

A geological sidetrack will now be drilled approximately 900 metres north of the Alta-4 well to assist with placement of a horizontal well for an extended well test that is planned for next year.

Alex Schneiter, CEO and President of Lundin Petroleum comments: “I am pleased with the good well results from Alta-4 which confirm very good reservoir properties, communication across the large Alta structure and excellent production rates. We will now proceed to plan a possible extended well test for 2018, which is the next step in moving the significant Alta discovery towards development.”

The well was drilled using the semi-submersible drilling rig Leiv Eiriksson which following completion of the Alta-4 sidetrack well will proceed to drill the Børselv prospect, also located in PL609.

Lundin Norway is the operator of PL609 with a 40 percent working interest. The partners are DEA Norge AS and Idemitsu Petroleum Norge AS with 30 percent working interest each.

Icon

Successful Alta appraisal well
13.07.2017, 156.84 KB

Brynhild transaction between Lundin Norway and CapeOmega

Brynhild transaction between Lundin Norway and CapeOmega

28 June 2017

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that its wholly-owned subsidiary Lundin Norway AS (Lundin Norway) on 27 June 2017 entered into a sales and purchase agreement with CapeOmega AS (CapeOmega) to divest a 39 percent working interest in the Brynhild field in PL148 in the Norwegian North Sea.

Lundin Norway will retain operatorship and following the transaction will have a 51 percent working interest in the Brynhild field, a subsea tie-back oil field to the Shell operated Pierce field on the UK Continental Shelf.

Existing partner CapeOmega will increase its working interest in the Brynhild field from 10 to 49 percent.

The transaction involves a consideration of NOK 774 million, including historic tax and uplift balances and the effective date of the transaction is 1 January 2017.

The transaction is subject to customary Norwegian government, as well as Lundin Petroleum lender, approvals.

Allocation of acquisition cost

Allocation of acquisition cost

9 June 2017

The allocation of the acquisition cost for shares as a result of Lundin Petroleum AB’s (“Lundin Petroleum”) distribution of shares in International Petroleum Corporation (“IPC”) has been determined to be 92.5 percent for Lundin Petroleum shares and 7.5 percent for IPC shares.

Lundin Petroleum completed in April 2017 the distribution of all of the Company’s shares in IPC to its shareholders. Each three shares in Lundin Petroleum entitled the holder to one common share in IPC. The last day of trading with the right to participate in the dividend was 18 April 2017 and the first day of trading excluding the right to participate in the dividend was 19 April 2017. The record date to receive shares in IPC was 20 April 2017 and the distribution occurred on 24 April 2017.

The Swedish Tax Agency has in a letter reply considered that the requirements for treating the distribution in accordance with the so-called Lex ASEA-rules have been met. The distribution shall in such case not be taxed in Sweden. The acquisition cost for shares in Lundin Petroleum shall instead be divided between Lundin Petroleum shares and the shares received in IPC.

The Swedish Tax Agency has issued general advice regarding the allocation of the acquisition cost and has determined that 92.5 percent of the acquisition cost for shares in Lundin Petroleum shall be allocated Lundin Petroleum shares and 7.5 percent to shares received in IPC. The general advice applies as of the fiscal year 2017.

The Swedish Tax Agency’s general advice SKV A 2017:5 and notice SKV M 2017:4 are available (in Swedish) on the Swedish Tax Agency’s website www.skatteverket.se.

Appraisal well spudded on the Alta discovery on the Loppa High

Appraisal well spudded on the Alta discovery on the Loppa High

11 May 2017

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that its wholly owned subsidiary Lundin Norway AS (Lundin Norway) has commenced drilling of appraisal well 7220/11-4 (Alta-4) on the Alta discovery in PL609, located on the Loppa High in the southern Barents Sea.

The Alta-4 well is located approximately 2 km south of the original discovery well 7220/11-1 and is the fourth well to be drilled on the Alta discovery. The main objective of the Alta-4 well is to further appraise the Alta discovery and to provide a calibration point for the drilling of a horizontal well for a possible extended well test that is being planned for 2018. The Alta discovery is estimated to contain gross contingent resources of between 125 and 400 million barrels of oil equivalents (MMboe).

The Alta-4 well will be drilled by the semi-submersible drilling rig Leiv Eiriksson and is expected to take approximately 65 days.

Lundin Norway is the operator of PL609 with a 40 percent working interest.

Annual General Meeting of Lundin Petroleum AB 4 May 2017

Annual General Meeting of Lundin Petroleum AB 4 May 2017

4 May 2017

The Annual General Meeting of Shareholders of Lundin Petroleum AB (publ) (the “Company”) was held today Thursday 4 May 2017 in Stockholm.

The Company’s and the Group’s income statements and balance sheets for the financial year 2016 were adopted and the members of the Board of Directors and the Chief Executive Officer of the Company were discharged from liability for the financial year 2016.

The Meeting resolved that no dividends should be paid for the financial year 2016.

Peggy Bruzelius, C. Ashley Heppenstall, Ian H. Lundin, Lukas H. Lundin, Grace Reksten Skaugen, Alex Schneiter and Cecilia Vieweg were re-elected as members of the Board of Directors and Jakob Thomasen was elected as a new member of the Board of Directors. Magnus Unger had declined re-election.

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

The Meeting resolved to remunerate the members of the Board of Directors as follows: (i) annual fees of the members of the Board of Directors of SEK 525,000 (excluding the Chairman of the Board of Directors and the Chief Executive Officer); (ii) annual fees of the Chairman of the Board of Directors of SEK 1,100,000; (iii) annual fees for Committee members of SEK 110,000 per Committee assignment (excluding the Committee Chairmen); and (iv) annual fees for each assignment as Committee Chairman of SEK 165,000; with the total fees for Committee work, including Committee Chairmen fees, not to exceed SEK 1,000,000.

PricewaterhouseCoopers AB was re-elected as the auditor of the Company for a period until the 2018 Annual General Meeting. The Meeting resolved that auditors’ fees shall be paid upon approval of their invoice.

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

–    to approve the Company’s 2017 Policy on Remuneration for Lundin Petroleum’s Group Management, which includes four key elements of remuneration: a) base salary; b) yearly variable salary; 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 2017 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 to 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 2017 as at the date of award may not exceed 465,000 and the maximum cost for granting awards under LTIP 2017, excluding costs related to delivery of the performance shares, is approximately USD 6.9 million (approximately SEK 60.8 million), excluding social security charges;

–    to authorise the Board of Directors to issue new shares and/or convertible debentures corresponding to in total not more than 34,000,000 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; and

–    to authorize the Board of Directors to decide on repurchases and sales by the Company of its shares on NASDAQ Stockholm, where the number of shares so repurchased shall be limited so that shares held in treasury from time to time do not exceed ten per cent of all outstanding shares of the Company.

The Meeting rejected the shareholder proposal in relation to the Company’s past operations.

Gohta appraisal well completed

Gohta appraisal well completed

3 May 2017

Lundin Petroleum AB (Lundin Petroleum) announces that its wholly owned subsidiary Lundin Norway AS (Lundin Norway) has completed the Gohta appraisal well 7120/1-5 located in PL492 in the southern Barents Sea.

The Gohta discovery, made in Permian carbonate reservoir rocks in well 7120/1-3 in 2013, was estimated to contain gross contingent resources of between 91 and 184 million barrels of oil equivalents (MMboe) prior to the drilling of well 7120/1-5.

The appraisal well was located some 4 km north of the original discovery well and was the second appraisal well on the Gohta discovery. The main objective of the well was to delineate the northeastern segment of the discovery. The well encountered a 300 metres gross sequence of Permian age carbonates with poor reservoir quality. Hydrocarbon shows were observed but no pressure gradients could be established. The well will be permanently plugged and abandoned. Extensive data acquisition and conventional coring was carried out in the reservoir.

The resource estimate for the discovery will be reduced as a consequence of this well. An updated gross contingent resource estimate will be provided at year end taking into account all the new data.

This fourth well in the 2016/2017 drilling campaign on the Loppa High was drilled to a total depth of 2,502 metres below mean sea level and in a water depth of 344 metres.

Gohta is considered a satellite opportunity to the larger adjacent Alta discovery and this result has no impact on Lundin Norway’s appraisal and conceptual development plans for Alta, which includes an appraisal well which will be spudded imminently and an extended well test planned for 2018.

Lundin Norway is the operator of PL492 and holds a 40 percent working interest in the licence. Aker BP is partner with a 60 percent working interest.

The well was drilled using the semi-submersible drilling rig Leiv Eiriksson. Once the rig has plugged and abandoned the 7120/1-5 well, it will move some 15 km to the northeast to spud the Alta appraisal well 7220/11-4 in PL609 where Lundin Norway is also operator.