Lundin Petroleum announces reserves and contingent resources update
22 January 2018
Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that as at 31 December 2017, its proved plus probable net reserves (2P reserves) are 726 million barrels of oil equivalent (MMboe), its proved plus probable plus possible net reserves (3P reserves) are 895 MMboe and its best estimate net contingent resources (contingent resources) are 203 MMboe. The Edvard Grieg field, Lundin Petroleum’s main producing asset, represents an increase of 51 MMboe gross 2P reserves from year end 2016, excluding production, and a 47 percent increase in best estimate ultimate recovery from the original PDO.
Lundin Petroleum’s 2P reserves as at 31 December 2017 are 726.3 MMboe1,2 and reflect a positive revision of 45.8 MMboe, excluding sales. The 3P reserves as at 31 December 2017 are 895.5 MMboe1,2 and reflect a positive revision of 31.5 MMboe, excluding sales.
|2P Reserves||3P Reserves|
|Reserves replacement ratio4||144%||99%|
The main reason for the increase in reserves relates to Lundin Petroleum’s two main assets, the Edvard Grieg and Johan Sverdrup fields, both located on the Utsira High in the Norwegian North Sea. The reserves upgrade on Edvard Grieg is driven by the drilling results and production performance to date which indicate more oil-in-place and with a greater proportion of the oil-in-place in the high quality high recovery factor sands as compared to the lower quality conglomerate reservoir. The best estimate gross ultimate recovery from Edvard Grieg as at end 2017 is 274 MMboe, which is cumulative production to end 20175 plus 2P reserves. This represents an increase of 51 MMboe from year end 2016 and a 47 percent increase from the original PDO. Additionally, the high estimate gross ultimate recovery from Edvard Grieg as at end 2017 is 337 MMboe, which is cumulative production to end 20175 plus 3P reserves. This represents an increase of 27 MMboe from year end 2016. Further contingent resources are identified associated with infill drilling opportunities.
The upgrade of reserves in the Johan Sverdrup field are consistent with the upgrade announced by Statoil during 2017 and reflects positive drilling results and optimisation of the reservoir development plan. Further reserves increases have been attributed to the Alvheim and Volund fields. Oil accounts for 93 percent of Lundin Petroleum’s 2P reserves.
The reserves are based upon a third party independent audit conducted by ERCE. The reserves have been calculated using 2007 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).
1 BOEs 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 a value equivalency at the wellhead.
2 The reserves were calculated using a nominal Brent oil price of USD 58 per barrel in 2018, 61 in 2019, 66 in 2020, 71 in 2021, 75 in 2022, 77 in 2023, 78 in 2024, 80 in 2025 and increasing by 2 percent per year thereafter.
3 As per industry standards the reserves replacement ratio is defined as the ratio of reserve additions to production during the year, excluding sales and acquisitions.
4 Reserves are measured in saleable 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 Gross production to 31 December 2017 is 66.1 MMboe.
Lundin Petroleum’s net contingent resources as at 31 December 2017 are 203 MMboe6. Contingent resources have been added associated with infill drilling opportunities at the Edvard Grieg field and from the Filicudi oil discovery in the southern Barents Sea. At the Alvheim area contingent resources have been transferred to reserves associated with finalising infill drilling plans for 2018. Contingent resources have been reduced at the Gohta oil discovery in the southern Barents Sea due to the results from the appraisal well drilled in 2017 and have also been reduced at the adjacent Alta oil discovery following a detailed review of all the wells completed in 2016 and 2017. Based on this, the combined gross contingent resource range for the Alta and Gohta discoveries is between 115 and 390 MMboe. An extended well test will be conducted at Alta in 2018 to reduce reservoir uncertainty and provide the basis for development studies.
6 This volume is a combination of independently audited and management estimates. Contingent resources for the Edvard Grieg, Alvheim area and Johan Sverdrup assets are based on a third party independent audit conducted by ERCE and for the other assets are estimated by Lundin Petroleum’s management.