Update on third quarter 2017 financial results
18 October 2017
Lundin Petroleum AB (Lundin Petroleum) will expense pre-tax exploration costs and impairment charges of approximately MUSD 33 and recognise a net foreign exchange gain of approximately MUSD 185 for the third quarter of 2017.
The profitability for the third 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. These items are largely non-cash and will have no impact on operating cash flow or EBITDA.
During the third quarter of 2017, Lundin Petroleum will incur pre-tax exploration costs of approximately MUSD 16 which will be charged to the income statement and offset by a tax credit of approximately MUSD 13. The exploration costs are mainly related to the non-commercial gas discovery on the Korpfjell well in PL859 and the dry well on the Børselv prospect in PL609.
The Brynhild field has been shut-in for production since summer 2017 due to a restriction in the production flowline to the Haewene Brim FPSO. Specialised equipment has been ordered in an effort to clear the restriction in the production flowline and this operation is expected to take place during the fourth quarter of 2017. Consequently Lundin Petroleum will incur a non-cash impairment charge in relation to the Brynhild field in the third quarter of 2017 of approximately MUSD 17 with a corresponding tax credit of MUSD 14 resulting in a negative impact on the third quarter net results of MUSD 3.
Foreign Exchange Gain
Lundin Petroleum will recognise a net foreign exchange gain of approximately MUSD 185 for the third quarter of 2017. The Norwegian Krone and the Euro strengthened against the US Dollar by approximately 5 and 3 percent respectively during the third quarter of 2017 and the foreign exchange gain mainly relates to the revaluation of loan balances at the prevailing exchange rates at the balance sheet date.