Update on first quarter 2022 financial results and audiocast details for the presentation on 27 April 2022
14 April 2021
Lundin Energy AB (“Lundin Energy” or the “Company”) will publish its financial report for the first quarter 2022 on Wednesday, 27 April 2022. For the first quarter 2022, Lundin Energy will expense pre-tax exploration costs of approximately MUSD 22 and recognise a net foreign exchange loss of approximately MUSD 36.
Aker BP Combination
On 21 December 2021, Lundin Energy announced that it had entered into an agreement with Aker BP whereby Aker BP will absorb Lundin Energy’s E&P business through a cross-border merger in accordance with Norwegian and Swedish law (the “Combination”). Before the cross-border merger is effectuated, the shares in the company holding Lundin Energy’s E&P business (Lundin Energy MergerCo AB) will be distributed to Lundin Energy’s shareholders. Consequently Lundin Energy presents its E&P business as discontinued operations in the consolidated Income Statement and the asset and liabilities associated with the E&P business, are presented as assets and liabilities held for distribution.
Once the Combination with Aker BP is completed, the remaining renewable focused business, which is reported as continuing operations, will be debt free and have a cash balance of MUSD 130, to cover capital expenditure and other costs. The renewables business is expected to be free cash flow positive from late 2023, when the renewables portfolio has been fully built out and all projects are operational.
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 first quarter of 2022, Lundin Energy 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 Melstein well in PL886 and relinquished licenses.
Foreign exchange loss
Lundin Energy will recognise a net foreign exchange loss of approximately MUSD 36 for the first quarter of 2022. The foreign exchange loss mainly relates to the Euro weakening by approximately two percent against the US Dollar and somewhat offset by the Norwegian Krone strengthening against the US Dollar. 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.
As a result of the Aker BP transaction, part of the outstanding foreign currency contracts and interest rate swap contracts are no longer considered as effective hedges under hedge effectiveness testing. The mark-to-market fair value of these ineffective contracts are recognized as a non-cash item in the income statement for discontinued operations. Lundin Energy will recognize a gain on interest rate swap contracts of approximately MUSD 108 for the first quarter of 2022, as a result of rising interest rates during the quarter.
Change in inventory and 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 2022, Lundin Energy was overlifted by 9.1 Mboepd.
Following the announcement of the Aker BP Combination on 21 December 2021 and the subsequent presentation of the asset and liabilities associated with the E&P business as assets and liabilities held for distribution, the Company ceased depletion as per IFRS5, resulting in no depletion costs recognized for the first quarter 2022.
Release of report and audiocast on 27 April 2022
Lundin Energy’s financial report for the first quarter 2022 will be published on Wednesday 27 April at 07:30 CEST, followed by a live audiocast at 14:00 CEST, where Nick Walker, 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:|
|United States||+1 6319131422|
|Access Pin :||62505911|
|Link : https://edge.media-server.com/mmc/p/y8c5e7kc|