Update on fourth quarter 2017 financial results

Update on fourth quarter 2017 financial results

17 January 2018

Lundin Petroleum AB (Lundin Petroleum) will expense pre-tax exploration costs of approximately MUSD 31 and recognise a net foreign exchange loss of approximately MUSD 69 as well as an after tax loss on sale of assets of MUSD 15 for the fourth quarter of 2017.

The profitability for the fourth quarter of 2017 will be impacted by certain expensed exploration costs, a loss on sale of assets, as well as a net foreign currency exchange loss mainly related to the revaluation of loan balances. These items are largely non-cash and will have no impact on operating cash flow or EBITDA.

Exploration Costs
During the fourth quarter of 2017, Lundin Petroleum will incur pre-tax exploration costs of approximately MUSD 31 which will be charged to the income statement and offset by a tax credit of approximately MUSD 24. The exploration costs are mainly related to the non-commercial gas discovery on the Hufsa prospect and the dry well on the Hurri prospect, both located in PL533.

Loss on Sale of Assets
The previously announced transaction in relation to the divestment of a 39 percent working interest in the Brynhild field to CapeOmega was completed on 30 November 2017. Lundin Petroleum has previously announced that on completion of the transaction a net loss on sale of assets would be recorded as a result of the accounting for income taxes in accordance with IFRS. Consequently an after tax loss of MUSD 15 will be charged to the income statement for the fourth quarter 2017.

Net debt and Foreign Exchange Loss
The net debt position of Lundin Petroleum at 31 December 2017 amounted to USD 3.9 billion resulting in available liquidity of USD 1.1 billion within its USD 5.0 billion reserve-based lending facility.

Lundin Petroleum will recognise a net foreign exchange loss of approximately MUSD 69 for the fourth quarter of 2017. The Norwegian Krone weakened against the US Dollar by approximately 3 percent and the Euro strengthened against the US Dollar by approximately 2 percent during the fourth quarter of 2017. The foreign exchange loss mainly relates to the revaluation of loan balances at the prevailing exchange rates at the balance sheet date.