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.
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.
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.
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.
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.