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Risk of Johan Sverdrup shutdown from union strike action

Risk of Johan Sverdrup shutdown from union strike action

Risk of Johan Sverdrup shutdown from union strike action

7 October 2020

Lundin Energy AB (Lundin Energy) announces that due to the ongoing strike action by the Norwegian labour union Lederne, there is a risk that the Johan Sverdrup field will have to temporarily shut down production upon the next crew rotation on 14 October 2020.

It is hoped that the Norwegian Oil and Gas Association (NOROG) and Lederne, in the intervening period, may reach a settlement and avert a temporary shutdown of Johan Sverdrup.

None of Lundin Energy’s other producing fields have been impacted by the Lederne strike action.

 

 

Lundin Energy Announces Nick Walker appointed as President and CEO of Lundin Energy effective 1 January 2021

Lundin Energy Announces Nick Walker appointed as President and CEO of Lundin Energy effective 1 January 2021

Lundin Energy Announces Nick Walker appointed as President and CEO of Lundin Energy effective 1 January 2021

18 August 2020

Lundin Energy AB (Lundin Energy) is pleased to announce that the Board of Directors has appointed Nick Walker as President and Chief Executive Officer (CEO) of Lundin Energy following Alex Schneiter’s decision to step-down from the position. This will become effective as of 1 January 2021.

Nick Walker has been appointed CEO effective 1 January 2021 as Alex Schneiter has today advised the Board of his decision to step-down from his position as of 1 January 2021. Nick has been Chief Operating Officer (COO) of Lundin Energy since 2015 and has worked closely with the strong Norwegian team to deliver the on-going out-performance at the Edvard Grieg field, overseeing the continuous drive for organic production growth and operational efficiency and help successfully deliver the world class Johan Sverdrup project. He brings to the job of CEO over 30 years’ experience in the industry, coming from a technical and operational background. He has also developed a strong relationship with the investment and financial community and will continue to work closely with the Board of Directors to continue the strategic growth of the company.

Alex Schneiter has offered to remain on the Board as a non-Executive Director and will also stay involved in an advisory capacity with the wider Lundin Group of Companies. He has held the position of CEO since 2015, having been with the business since its inception in 2001. Alex has led Lundin Energy on a strong growth trajectory over his five years as CEO, creating significant shareholder value and overseeing an eight-fold growth in production. His focus on exploration, financial resilience and production efficiency coupled with a passion for responsible practices, has positioned Lundin Energy at the forefront of the upstream operators’ response to the energy transition. He personally led the Company to develop its first ever Decarbonisation Strategy, placing Lundin Energy firmly on the map as the first offshore oil company to target carbon neutrality by 2030, setting out a deliverable timeline in which to achieve that.

Alex and Nick will work closely over the next five months to ensure a seamless transition. The appointment of a new Chief Operating Officer will be announced shortly.

Ian Lundin, Chairman of the Board of Lundin Energy commented:
“The Board and I very much look forward to working with Nick in his new capacity as CEO with his expert knowledge, not only of our assets but the offshore oil and gas industry as a whole. He is the ideal leader to take the Company into the next, exciting phase of our organic growth story and retain our position as best in class.”

“Alex has played a major role in the success of the Company not just as CEO, but throughout his career here, and the wider Lundin Group, for almost 30 years. His contribution has been outstanding, both as a technical expert and explorer, and as a CEO and leader of the teams across all the jurisdictions in which we have operated. I wish him all the best in his future endeavours and look forward to continuing to work with him in his advisory role for the wider Lundin Group.”

Please follow this link for a Shareholder Letter from Alex Schneiter, President and CEO of Lundin Energy:



Report for the six months ended 30 June 2020

Report for the six months ended 30 June 2020

Report for the six months ended 30 June 2020

29 July 2020

·Despite very low oil prices, free cash flow was positive from the oil and gas operations in second quarter and over MUSD 380 free cash flow for the six months period
·Record quarterly production of 162.9 Mboepd in the second quarter
·Accelerated ramp up and increased phase 1 plateau production at Johan Sverdrup; phase 1 capacity of 470 Mbopd to be tested for further upside, during second half of this year
·Significant increase in liquidity during the period from cost reductions and phasing, tax incentives and additional debt facilities
·Continued out performance at Edvard Grieg; increase in reserves and extension of plateau production anticipated
·Eight potential projects to be accelerated due to recent Norwegian tax incentives, targeting over 120 MMboe of net resources
·Awarded credit rating of ‘BBB-‘ with stable outlook by S&P Global, confirming strength of liquidity and credit position

 

Financial summary1 Jan 2020-
30 Jun 2020
6 months
1 Apr 2020-
30 Jun 2020
3 months
1 Jan 2019-
30 Jun 2019
6 months
1 Apr 2019-
30 Jun 2019
3 months
1 Jan 2019-
31 Dec 2019
12 months
Production in Mboepd157.7162.977.576.193.3
Revenue and other income in MUSD1,097.7402.5984.0499.92,948.7
CFFO in MUSD
Per share in USD
898.1
3.16
259.8
0.91
754.5
2.23
408.7
1.21
1,378.2
4.36
EBITDA in MUSD1
Per share in USD1
916.2
3.23
335.1
1.18
811.6
2.40
411.9
1.22
1,918.4
6.07
Free cash flow in MUSD2
Per share in USD2
381.5
1.34
-25.2
-0.09
167.4
0.49
71.6
0.21
1,271.7
4.03
Net result in MUSD
Per share in USD
-131.8
-0.46
178.8
0.63
149.7
0.44
96.2
0.28
824.9
2.61
Adjusted Net result in MUSD
Per share in USD
117.3
0.41
51.3
0.18
128.4
0.38
69.5
0.21
252.7
0.80
Net debt in MUSD3,796.13,796.1 3,359.33,359.34,006.7

1Excludes 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.
2Includes renewable energy business. Free cash flow for second quarter 2020 excluding renewable energy business was MUSD 19.5 positive.


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

“The resilience Lundin Energy has shown in the face of the sharpest downturn in the history of the oil industry is a testament to the quality of the asset base, flexibility of our financial resources and operational excellence of the business and our people; this has been further demonstrated by the award of a ‘BBB-‘ credit rating. We generated over MUSD 380 of free cash flow in the period and delivered a positive free cash flow result from the oil and gas operations for the second quarter. This all in a period where we encountered some of the lowest realised pricing we have witnessed, both when taking into account the historic negative dated Brent differential and physical discount; a situation which has now normalised and in fact we are witnessing premiums for our barrels in the market again.

“The risk posed by coronavirus presented a unique challenge to the offshore industry and following swift and effective action, any potential threat was mitigated and all of our staff have come through the period safely and we saw no disruptions to production. As we enter the second half of the year, all offshore facilities have returned to normal manning levels and the projects are progressing on plan.

“Although faced with an uncertain market backdrop, operationally Lundin Energy performed exceptionally well. Johan Sverdrup reached its increased plateau rate of 470 Mbopd in April 2020 and since then a further new production well has been completed. The capacity of the facilities will be tested for further upside in the second half of the year. At Edvard Grieg, reservoir performance continues to exceed expectations. The reservoir model is currently being updated along with the recently completed 4D seismic survey and we already see clear potential for a further increase in reserves and an extension of the plateau production.

“The Norwegian government also played an active role during the period; establishing a tax incentive package which as well as improving near term liquidity also significantly improves future project economics assuming plan of development(s) are submitted prior to end of 2022. The Company has identified up to eight potential new projects targeting over 120 MMboe of net resources, which could benefit from these tax incentives. We will be aiming to accelerate appraisal activities and field development studies for all of these potential projects, with the objective of maturing them to sanction prior to the deadline at the end of 2022.

“As well as maintaining a very low operating cost base during the period of USD 2.78 per boe, we were also able to deliver a carbon emission per barrel produced of 2.8 Kg CO2, which is 50 percent lower than in 2019 and significantly below our emission target in 2020 of 4 kg CO2 per barrel produced. Our carbon footprint will be further reduced by the end of 2022 when the Edvard Grieg field will be fully electrified using mostly onshore renewable electricity. By then we will be targeting less than 2 Kg CO2 per barrel produced and be close to our objective of reaching carbon neutrality from our operations.

“The second half of the year will see us resuming exploration activities in the fourth quarter, as well as continuing to focus on maintaining strict capital discipline and opportunistically looking to take advantage of this low point in the cycle to complement our portfolio. It is times like these which show the true mettle of a business and I would like to take this opportunity to thank all staff for their hard work and determination, as we not only successfully traded through this difficult period but are indeed in a stronger and fitter position. As the founder of the Lundin Group, Adolf Lundin, used to tell me, “when the going gets tough, the tough get going!”

Audiocast Presentation
Listen to Alex Schneiter, President and CEO, and Teitur Poulsen, CFO, commenting on the report at a live audiocast, to be held at 09:00 CEST this morning (29 July 2020). Follow the presentation live on www.lundin-energy.com or dial in using the following telephone numbers:

UK/International: ….+44 207 192 8338
Sweden: ………………..+46 8 566 184 67
Norway: ………………..+47 21 56 30 15
USA: ……………………..+1 646 741 3167
Access code/pin : 4291718

Link : https://edge.media-server.com/mmc/p/pa874z3y

 

Update on second quarter 2020 financial results and audiocast details for presentation on 29 July 2020

Update on second quarter 2020 financial results and audiocast details for presentation on 29 July 2020

15 July 2020

Lundin Energy AB (Lundin Energy) will publish its financial report for the second quarter 2020 on Wednesday, 29 July 2020. For the second quarter 2020, Lundin Energy will expense pre-tax exploration costs of approximately MUSD 19 and recognise a net foreign exchange gain of approximately MUSD 131.

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 second quarter of 2020, Lundin Energy will incur a pre-tax charge to the income statement of MUSD 19 relating to exploration costs. These exploration costs will be offset by a tax credit of approximately MUSD 15. The costs are mainly related to relinquished licenses, including the part relinquishment of Area 5 of PL338 containing the Apollo discovery.

Foreign exchange
Lundin Energy will recognise a net foreign exchange gain of approximately MUSD 131 for the second quarter of 2020. The Norwegian Krone strengthened against the US Dollar by approximately 7 percent and the Euro strengthened against the US Dollar by approximately 2 percent during the second 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 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 second quarter of 2020, Lundin Energy was overlifted by 9.4 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 second quarter 2020, revenue from the sale of crude oil from third parties amounted to MUSD 8 offset by the purchase of crude oil from third parties of MUSD 8.

Release of report and audiocast on 29 July 2020
Lundin Energy’s financial report for the second quarter 2020 will be published on Wednesday 29 July 2020 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:

UK/International:    +44 207 192 8338
Sweden:     +46 8 566 184 67
Norway:     +47 21 56 30 15
USA:     +1 646 741 3167
Access code/pin :  4291718

Link : https://edge.media-server.com/mmc/p/pa874z3y

 

Lundin Energy AB’s Nomination Committee

Lundin Energy AB's Nomination Committee

Lundin Energy AB’s Nomination Committee

16 June 2020

Lundin Energy AB (Lundin Energy) is pleased to announce the composition of the Nomination Committee for the 2021 Annual General Meeting (AGM) to be held on 30 March 2021 in Stockholm.

The Nomination Committee has been formed with the following members:

• Filippa Gerstädt (Nordea Funds)
• Aksel Azrac (Nemesia S.à.r.l.)
• Ian H. Lundin, Chairman of the Board of Directors of Lundin Energy

At the Nomination Committee’s first meeting, Aksel Azrac was elected as Chairman of the Nomination Committee.

The Nomination Committee shall make recommendations to the 2021 AGM regarding:

• Election of the Chairman of the 2021 AGM
• Election of members of the Board of Directors, including number of members
• Election of the Chairman of the Board of Directors
• Remuneration of the members of the Board of Directors, distinguishing between the Chairman and other members, and remuneration for Board Committee work
• Election of the auditor and remuneration of the auditor
• Nomination Committee Process for the 2022 AGM, if any amendments are proposed to the Process for the 2021 AGM

Shareholders who wish to present a motion to the Nomination Committee regarding the above-mentioned issues should contact the Chairman of the Nomination Committee, Aksel Azrac, at nomcom@lundin-energy.com not later than 21 December 2020.

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

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.

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

 

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

Lundin Petroleum publishes the Annual Report and the Sustainability Report for 2019

Annual Report 2019

Lundin Petroleum publishes the Annual Report and the Sustainability Report for 2019

4 March 2020

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce the publication of the Annual Report and the Sustainability Report for 2019.

The reports are available to read and to download on Lundin Petroleum’s website, www.lundin-petroleum.com, and on the Lundin Petroleum IR App. Shareholders who wish to receive a printed copy of the Annual Report 2019 or the Sustainability Report 2019 can request one on Lundin Petroleum’s website or by telephone on +46 8 440 54 50.

 

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Annual report 2019
04.03.2020, 3.37 MB

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Sustainability report 2019
04.03.2020, 6.05 MB

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Latest corporate presentation

Lundin Energy Licence Summary

Edvard Grieg reserves increased by 50 million barrels of oil equivalent and plateau production extended to late 2023 (regulatory)