Lundin Petroleum proposes spin-off of its non-Norwegian producing assets into an independent oil and gas company

Lundin Petroleum proposes spin-off of its non-Norwegian producing assets into an independent oil and gas company

13 February 2017

Lundin Petroleum AB (“Lundin Petroleum” or the “Company”) is pleased to announce that its Board of Directors has proposed to spin-off its assets in Malaysia, France and the Netherlands (the “IPC Assets”) into a newly formed company called International Petroleum Corporation (“IPC”) and to distribute the IPC shares, on a pro-rata basis, to Lundin Petroleum shareholders (the “Distribution”).

Subsequent to an internal reorganisation of Lundin Petroleum whereby the various subsidiaries holding the IPC Assets will be acquired by IPC, and subject to satisfactory receipt of all necessary approvals and consents, including the approval of Lundin Petroleum’s shareholders, all of the shares of IPC will be distributed to existing Lundin Petroleum shareholders on the basis of one IPC share for every three shares held in Lundin Petroleum. IPC has applied to the Toronto Stock Exchange (“TSX”) to list its shares following the Distribution on such exchange under the ticker IPCO, and also intends to list its shares on the NASDAQ Stockholm stock exchange.

Background and reasons for the Distribution and listing
The Board of Directors and management of the Company routinely review and assess strategic alternatives available to the Company to enhance shareholder value. As part of that review, the Board of Directors and management concluded that given ongoing developments and successes with the Company’s assets in Norway, the IPC Assets, held within a separate and independent entity, would benefit from enhanced strategic flexibility and management focus, as well as be ascribed increased focus, visibility, and value from investors.

With a renewed strategy and focus, management believes that IPC can be built into a leading international independent oil and gas company, focused on the production and development of high quality assets around the world. Management believes an independent IPC will be well positioned to pursue both organic and inorganic growth opportunities over time. The significant cash flows generated from IPC’s long-lived assets will provide financial capacity to pursue this strategy.

The proposed spin-off of the IPC Assets will allow Lundin Petroleum’s management to solely focus on maximising shareholder value from its Norwegian portfolio which has continuously grown in size and value since Lundin Petroleum entered Norway in 2004, with the Norwegian assets now accounting for 96 percent of Lundin Petroleum’s reserves and 88 percent of Lundin Petroleum’s 2017 production guidance. Lundin Petroleum’s strong liquidity position of USD 1 billion of headroom coupled with its operating cashflow generation allows the Company to retain all external bank debt and still be able to fully fund its committed capital expenditure up to Johan Sverdrup first oil in late 2019. The Company’s net debt at year end 2016 amounted to approximately USD 4 billion.

Ian H. Lundin, Chairman of the Board of Lundin Petroleum, comments:

“The spin-off of our international assets into IPC creates an exciting new company with a strong balance sheet and a proven Board and management team. Their focus will be to create value at a time in the cycle when the industry remains under-capitalised and multiple opportunities are available as companies rationalise their portfolios. With the spin-off, Lundin Petroleum will become fully focused on Norway, which I am convinced will serve to further crystallise the value of our high-growth asset portfolio in the North Sea and the southern Barents Sea.”

Strong Management and Board of Directors of IPC and the ongoing commitment of the Lundin Family
IPC will be led and directed primarily by current members of the Lundin Petroleum management team and Board of Directors. Mike Nicholson, current Chief Financial Officer of Lundin Petroleum, will serve as President and Chief Executive Officer and a Director of IPC. Christophe Nerguararian, current Vice President Corporate Finance of Lundin Petroleum, will serve as Chief Financial Officer of IPC. Jeffrey Fountain, current Vice President Legal at Lundin Petroleum, will serve as General Counsel of IPC. Lukas H. Lundin, who is a director of Lundin Petroleum, will serve as Chairman of the Board of Directors of IPC. IPC’s other Directors will include Ashley Heppenstall, Chris Bruijnzeels, Torstein Sanness and Donald Charter.

The Lundin Family remains committed to the success of IPC, and entities related to the Lundin Family will continue to be the largest shareholders of IPC following the completion of the Distribution.

Management changes at Lundin Petroleum
Teitur Poulsen, current Vice President Corporate Planning and Investor Relations at Lundin Petroleum will replace Mike Nicholson as Chief Financial Officer of Lundin Petroleum. Alex Budden will assume the role of Vice President Communications and Investor Relations for Lundin Petroleum. Alex Budden is joining Lundin Petroleum from Africa Oil where he held the position of Vice President External Relations. Henrika Frykman, current Senior Legal Counsel at Lundin Petroleum, will assume the role of Vice President Legal at Lundin Petroleum replacing Jeffrey Fountain. The other senior positions within Lundin Petroleum will remain unchanged.

Accounting Implications
The spin-off of the IPC Assets will have an effective date of 1 January 2017, however Lundin Petroleum will account for the production from the IPC Assets up to the date of completion of the spin-off with a net financial settlement at completion to account for the cash generation from the effective date to the completion date.

Implementation of Distribution
If approved by shareholders, the Distribution will be executed by way of a Lex ASEA distribution under Swedish law, with the result that no immediate taxation will arise to shareholders in Sweden. Instead, the tax basis of the Lundin Petroleum shares that confer entitlement to participate in the distribution will be allocated between these shares and the IPC shares received. It is proposed that each three shares of Lundin Petroleum will entitle the holder to one share of IPC. If the shareholding in Lundin Petroleum is not evenly divisible by three, the holder will receive an entitlement to a fraction of a share. Such fractions will be added together with the fractions held by other shareholders into whole shares in IPC, which will be sold on the market by Pareto Securities. The proceeds, without deduction of any commissions, will then be paid to the relevant IPC shareholders via Euroclear Sweden.

Extraordinary General Meeting of Lundin Petroleum
An Extraordinary General Meeting to approve the Distribution is expected to be convened shortly and held in March 2017. The Distribution is expected to occur as soon as possible after receipt of all corporate and regulatory approvals. The entities related to the Lundin family have confirmed that they will vote in favour of the Distribution at the EGM.

Preliminary Prospectus
IPC expects to file a preliminary prospectus with the Alberta Securities Commission in connection with the application to list the shares on the Toronto Stock Exchange. IPC furthermore expects to file a prospectus with the Swedish Financial Supervisory Authority to qualify the shares of IPC for trading in Sweden.

Listing of IPC’s shares on the TSX and NASDAQ Stockholm will be subject to IPC fulfilling the requirements of the respective exchange. There can be no assurance that the shares will be accepted for listing on either of the TSX or NASDAQ Stockholm.

Advisors
BMO Capital Markets Limited is acting as exclusive financial advisor to the Company for the listing of IPC. Pareto Securities in Sweden is acting as issuing agent. Blake, Cassels & Graydon LLP and Gernandt & Danielsson Advokatbyrå KB are acting as legal advisors to the Company and IPC. PricewaterhouseCoopers AG are the auditors of IPC.

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of worldclass assets primarily located in Europe and South East Asia. The Company is listed on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 743.5 million barrels of oil equivalents (MMboe) as at 31 December 2016.

For further information, please contact:

Maria Hamilton
Head of Corporate Communications
maria.hamilton@lundin.ch
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
orTeitur Poulsen
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00

This information is information that Lundin Petroleum AB is required to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact persons set out above, at 07.30 CET on 13 February 2017.

Important Information
This press release does not contain or constitute an invitation or an offer to acquire, sell, subscribe for or otherwise trade in shares or other securities in Lundin Petroleum or IPC. This press release has not been approved by any regulatory authority and is not a prospectus, accordingly investors should not purchase any securities referred to in this press release.

Forward-Looking Statements
Certain statements made and information contained herein constitute “forward-looking information” (within the meaning of applicable securities legislation). Such statements and information (together, “forward-looking statements”) relate to future events, including the Company’s future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to the proposed Distribution, expectations that applicable regulatory approvals will be obtained, the expected future activities of IPC following the Distribution, the future growth and financial capacity of IPC, future investor interest in IPC, estimates of reserves and/or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities. Ultimate recovery of reserves or resources are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.
All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions) are not statements of historical fact and may be “forward-looking statements”. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations and assumptions will prove to be correct and such forward-looking statements should not be relied upon. These statements speak only as on the date of the information and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, risks associated with completion and execution of the Spin-off of the IPC Assets and the Distribution, the ability of IPC to perform as expected as a separate, independent entity, the requirement to obtain certain regulatory and other approvals and to fulfil the conditions of the Spin-off, the ability to retain key employees, other transaction-related and operational risks (including exploration and development risks), productions costs, availability of drilling equipment, reliance on key personnel, reserve estimates, health, safety and environmental issues, legal risks and regulatory changes, competition, geopolitical risk, and financial risks. These risks and uncertainties are described in more detail under the heading “Risks and Risk Management” and elsewhere in the Company’s annual report. Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements are expressly qualified by this cautionary statement.

Capital Market Day 2017

Capital Market Day 2017

13 February 2017

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that the yearly Capital Market Day is being held in Oslo in Norway on Monday 13 February 2017.

Follow the webcast live from 13.30 CET at www.lundin-petroleum.com. The slides will be available on the website before the Capital Market Day begins.
Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of worldclass assets primarily located in Europe and South East Asia. The Company is listed on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 743.5 million barrels of oil equivalents (MMboe) as at 31 December 2016.

For further information, please contact:

Maria Hamilton
Head of Corporate Communications
maria.hamilton@lundin.ch
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
orTeitur Poulsen
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00

 

Forward looking statement link

Year end report 2016

Year end report 2016

1 February 2017

Twelve months ended 31 December 2016 (31 December 2015)

·Production of 72.6 Mboepd (32.3 Mboepd)
·Revenue of MUSD 1,159.9 (MUSD 569.3)
·EBITDA of MUSD 902.6 (MUSD 384.7)
·Operating cash flow of MUSD 1,010.8 (MUSD 699.6)
·Net result of MUSD -499.3 (MUSD -866.3) including an after tax impairment charge of MUSD 548.6 (MUSD -296.3) and a net foreign exchange gain of MUSD 15.0 (loss of MUSD 507.3)
·Net debt of MUSD 4,075 (31 December 2015: MUSD 3,786)
·Annual record production of 72.6 Mboepd following the Edvard Grieg field start up in November 2015.
·Record low cost of operations per boe of USD 6.25 and cash operating costs per boe of USD 7.80 in 2016.
·In August 2016, the operator provided a guidance update on the Johan Sverdrup project announcing reduced capital costs to NOK 99 billion gross for Phase 1 and NOK 140-170 billion gross for Phase 1 and Phase 2 and an increased Phase 1 and Phase 2 production capacity of 660,000 bopd gross. The resource range increased to 1.9-3.0 billion boe.
·Secured new fully committed reserve-based lending facility of USD 5.0 billion.

Fourth quarter ended 31 December 2016 (31 December 2015)

·Production of 83.4 Mboepd (38.3 Mboepd)
·Revenue of MUSD 385.9 (MUSD 136.0)
·EBITDA of MUSD 317.9 (MUSD 93.6)
·Operating cash flow of MUSD 343.0 (MUSD 175.4)
·Net result of MUSD -739.1 (MUSD -493.7) including an after tax impairment charge of MUSD 548.6 (MUSD -296.3) and a net foreign exchange loss of MUSD -215.9 (MUSD -129.2).
·Quarterly record production of 83.4 Mboepd due to the exceptional performance and uptime of the producing assets.
·Record low cost of operations per boe of USD 5.38 and cash operating costs per boe of USD 6.51.

Comments from Alex Schneiter, President and CEO
2016 has been an outstanding year for Lundin Petroleum. We have seen record production levels achieved with over 72,000 boepd produced for the year at a record low cash operating cost of USD 7.80 per barrel. However, our net result for the year was impacted by a non-cash after tax impairment charge of MUSD 548.6 following the decision taken to remove the booked contingent resources associated with discoveries in Russia and in Malaysia. In addition, we have seen the reserves in Edvard Grieg increasing from the original PDO estimate of 186 MMboe to 223 MMboe and we all know that big fields tend to get bigger.

The year was further marked by the acquisition of an additional 15 percent equity in Edvard Grieg from Statoil. This transaction not only increased our production and reserves but also strengthened our financial position further by improving an already very solid liquidity position following the signing of the USD 5.0 billion reserve-based lending facility earlier in the year.

In 2017 we will continue to see our production increasing while on the project development side, we will have the most active year ever with Johan Sverdrup Phase 1 project execution. In parallel, we will be drilling some world class exploration targets in the southern Barents Sea while continuing to work on an appraisal programme in our Alta and Gohta discoveries.

Our health, safety and environmental track record for 2016 has also been solid and we will continue to keep a strong focus on HSE excellence as the Company grows.

My first year as the new CEO of Lundin Petroleum has been a very rewarding one and it is all down to the great team work and team spirit that exists within the Company.

Webcast presentation
Listen to President and CEO Alex Schneiter and CFO Mike Nicholson comment on the report at a live webcast on Wednesday 1 February 2017 at 09.00 CET.

The presentation slides will be available on www.lundin-petroleum.com prior to the commencement of the webcast. Please dial in to listen to the presentation on the following telephone numbers: Sweden: +46 8 519 993 55, International: +44 203 194 05 50, International Toll Free Number: +1 855 269 26 05.

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Year End Report 2016
01.02.2017, 180.07 KB

Webcast presentation – 1 February 2017 at 9.00 CET

 

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of worldclass assets primarily located in Europe and South East Asia. The Company is listed on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 743.5 million barrels of oil equivalents (MMboe) as at 31 December 2016.

For further information, please contact:

Maria Hamilton
Head of Corporate Communications
maria.hamilton@lundin.ch
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
orTeitur Poulsen
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00

 

This information is information that Lundin Petroleum AB is required to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the contact persons set out above, at 07.00 CET on 1 February 2017.

Forward looking statement link

Lundin Petroleum to release year end report 2016 on Wednesday 1 February 2017

Lundin Petroleum to release year end report 2016 on Wednesday 1 February 2017

24 January 2017

A live webcast presentation will be held on Wednesday, 1 February 2017 at 9.00 Central
European Time (CET), following the release of Lundin Petroleum’s financial report for the year end 2016.

The report will be published at 07.30 CET.

Alex Schneiter, President and CEO, and Mike Nicholson, CFO, will comment on the report and the latest
developments in Lundin Petroleum.

Follow the presentation live on www.lundin-petroleum.com. The slides will be available on the website prior to
the presentation.

You can also dial in to listen to the presentation on the following telephone numbers:

Sweden:        +46 8 519 993 55
International:         +44 203 194 05 50
International Toll Free:     +1 855 269 26 05

Webcast presentation – 1 February 2017 at 9.00 CET

 

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of worldclass assets primarily located in Europe and South East Asia. The Company is listed on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 743.5 million barrels of oil equivalents (MMboe) as at 31 December 2016.

For further information, please contact:

Maria Hamilton
Head of Corporate Communications
maria.hamilton@lundin.ch
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
orTeitur Poulsen
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00

Forward looking statement link

2017 budget and updated reserves and contingent resources

2017 budget and updated reserves and contingent resources

19 January 2017

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce its 2017 development, appraisal and exploration budget which totals USD 1.3 billion. Lundin Petroleum is also pleased to announce that as at 31 December 2016 its proved plus probable working interest reserves (reserves) are 743.5 million barrels of oil equivalents (MMboe) and its best estimate contingent resources (contingent resources) are 267 MMboe.

Reserves and contingent resources
Lundin Petroleum’s reserves as at 31 December 2016 are 743.5 MMboe 1, 2,  and reflect a positive reserves revision of 55.3 MMboe, excluding acquired reserves. The average production in 2016 was 72,600 barrels of oil equivalent per day, in line with the mid-point of the 2016 revised production guidance.

End 2015
– Produced
– Sales / + Acquisitions
+ revisions
End 2016Reserves replacement 3
685.3
-26.6
+29.5
+55.3
743.5208%

The main reason for the increase in reserves as at year end 2016 relates to Lundin Petroleum’s two biggest assets, the Edvard Grieg and Johan Sverdrup fields, both located on the Utsira High in the Norwegian North Sea. The reserves upgrade on Edvard Grieg is driven by drilling results to date which indicate more oil-in-place in the western flank of the field than originally foreseen. Lundin Petroleum plans to drill a well to further appraise this part of the field in the first half of 2017. The upgrade of reserves in the Johan Sverdrup field reflects better understanding of the reservoir, in particular the waterflood performance characteristics following the acquisition and evaluation of additional core data. Further reserves increases have been attributed to the Alvheim field, offshore Norway, as the result of the identification of further infill drilling targets, and also at the Bertam field, offshore Malaysia, due to reservoir outperformance. 96 percent of the reserves relate to Norway and oil accounts for 93 percent of Lundin Petroleum’s reserves.

The reserves are based upon a third party independent audit conducted by ERCE. The reserves have been calculated using 2007 Petroleum Resources Management System (SPE PRMS), Guidelines of the Society of Petroleum Engineers (SPE), World Petroleum Congress (WPC), American Association of Petroleum Geologists (AAPG) and Society of Petroleum Evaluation Engineers (SPEE).

The contingent resources 4  as at 31 December 2016 are 267 MMboe of which Norway represents 249 MMboe with the contingent resource position in Norway growing by 47 MMboe during the year. The majority of the contingent resource additions during 2016 are associated with the Johan Sverdrup field with resources being assigned to infill drilling opportunities as well as water alternating gas injection potential. Contingent resources have also been added from the Neiden discovery in the southern Barents Sea as well as from re-assessing the resource potential within the fields in the Paris Basin in France. Further contingent resources have been added from newly identified infill drilling opportunities on the Alvheim and Volund fields in the Norwegian North Sea as well as on the Bertam field in Malaysia. These contingent resource additions have been offset by the write down of all contingent resources for the Sabah and Tembakau gas discoveries in Malaysia and for the Morskaya oil discovery in the Russian Caspian Sea as detailed in the separate press release dated 19 January 2017.

The 2017 production guidance will be provided on 13 February 2017 prior to Lundin Petroleum’s Capital Market Day presentation.

Development Budget
The 2017 development expenditure is budgeted at USD 1,095 million. With respect to committed development projects the 2017 capital budget represent the peak year of capital expenditure up to Johan Sverdrup first oil.

Approximately 99 percent of the 2017 budgeted development expenditure, corresponding to USD 1,085 million, relates to development projects in Norway with some minor expenditure items on the non-Norwegian assets. Most of the expenditure in Norway relates to the ongoing development activity on Phase 1 for Johan Sverdrup, continued development drilling at Edvard Grieg and further infill wells on Alvheim and Volund.

1. Between 70 and 80 percent of development expenditure in Norway for 2017 relates to the non-operated Johan Sverdrup field (WI 22.6%) with 2017 being the peak year in terms of construction activity and thus also in capital expenditure. From inception and up to year end 2016 Lundin Petroleum’s net capital expenditure on Phase 1 amounted to USD 900 million. Construction has commenced on all elements of the Phase 1 with the first steel jacket scheduled to be installed offshore during the summer of 2017 and the remaining three jackets to be installed in 2018. The riser and drilling platform topsides are scheduled to be installed in 2018 and the processing and living quarter topsides are scheduled to be installed in 2019. The pre-drilling of development wells commenced in 2016 with eight production wells completed so far and a further six water injection wells scheduled to be drilled during 2017. The project remains on schedule for first oil in late 2019 and given the current market environment and optimisation efforts, the project is achieving significant cost reductions compared to the PDO estimate.

2. The Lundin Norway operated Edvard Grieg field (WI 65%) commenced production in November 2015 and is currently producing from four wells with water injection support from two wells. The 2017 expenditure relates substantially to the drilling of production and water injection wells. Five development wells are planned to be drilled in 2017 with the development drilling programme continuing into 2018 to complete the planned drilling programme of a total of 14 production and water injection wells.

3. Net budgeted expenditure for 2017 on the non-operated Alvheim and Volund fields (WI 15% and WI 35% respectively) involves the drilling of four infill wells, two at Volund and two at the Alvheim field. The first Volund infill well is currently drilling.

4. The Lundin Petroleum operated Bertam oil field in Malaysia (WI 75%) commenced production in 2015 and is currently producing from 12 production wells. The 2017 net expenditure involves certain facilities improvement works on the Bertam field.

5. Net budgeted expenditure for 2017 on the continental European business units in France and the Netherlands mainly relates to maintenance of the production facilities and pipelines in France as well as one development well offshore the Netherlands.

Appraisal Budget
The pre-tax appraisal budget for 2017 is USD 125 million, and is substantially allocated to Norway. The appraisal programme involves two operated appraisal wells on Alta (40% WI) and Gohta (40% WI) respectively. One further appraisal well is planned to be drilled in the south western part of the Edvard Grieg field which is targeting gross unrisked resources of upto 30 MMboe and will spud at the end of the first quarter 2017.

The 2017 appraisal budget also includes expenditure on development concept studies for Johan Sverdrup Phase 2. Development concept selection for Phase 2 is expected in the first half of 2017 and FEED is expected to commence thereafter.

Exploration Budget
The 2017 budgeted expenditure on exploration activity is USD 85 million.

Substantially all of the exploration budget for 2017 relates to activity in Norway with a total of five exploration wells planned. The operated Filicudi well in PL533 (WI 35%) in the southern Barents Sea is currently drilling ahead. One further operated exploration well is planned in the southern Barents Sea on PL609 (WI 40%) on the Loppa High targeting the Børselv prospect and the well is subject to partner approval. One non-operated exploration well is planned in the Barents Sea targeting the multi-billion barrel Korpfjell prospect on PL859 (15% WI). Two non-operated wells are planned to be drilled in the Norwegian North Sea with one well targeting the Volund West prospect and one well targeting the Tonjer prospect, exploring the northern extension of Johan Sverdrup.

Alex Schneiter, President & CEO of Lundin Petroleum comments:

“I am very pleased with Lundin Petroleum’s performance during 2016 which was a transformational year with record high production and record low operating costs per barrel. Despite record production we still managed to achieve a healthy reserves replacement ratio of over 200 percent with both of our main assets, Edvard Grieg and Johan Sverdrup, increasing in reserves. The capital budget continues to be dominated by the Johan Sverdrup project with the 2017 budget representing a peak year of construction activity, and therefore expenditure. Our appraisal and exploration programme is more exciting than ever with some large structures being tested in the Barents Sea. The appraisal on the southwestern area of the Edvard Grieg field has the potential to prove up additional development potential which would further extend the plateau production period for the field whilst the purpose of the Alta and Gotha appraisal wells is to take us one step closer to sanctioning both these large discoveries as commercial projects.”

 

 1 BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf : 1 Bbl is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

2 The reserves were calculated using a nominal Brent oil price of USD 55 per barrel in 2017, 62 in 2018, 69 in 2019, 74 in 2020, 77 in 2021 and increasing by 2 percent per year thereafter.

3 As per industry standards the reserves replacement ratio is defined as the ratio of reserve additions to production during the year, excluding sales and acquisitions.

4 Contingent resources are estimated by Lundin Petroleum’s management.

 

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of worldclass assets primarily located in Europe and South East Asia. The Company is listed on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 743.5 million barrels of oil equivalents (MMboe) as at 31 December 2016.

For further information, please contact:

Maria Hamilton
Head of Corporate Communications
maria.hamilton@lundin.ch
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
orTeitur Poulsen
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00

This information is information that Lundin Petroleum AB is required to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact persons set out above, at 07.30 CET on 19 January 2017

Forward looking statement link

Update on fourth quarter 2016 financial results

Update on fourth quarter 2016 financial results

19 January 2017

During the fourth quarter of 2016 Lundin Petroleum AB (Lundin Petroleum) achieved a quarterly record average production rate of 83,400 barrels of oil equivalent per day (boepd) resulting in an average production rate for the full year of 72,600 boepd. The average Brent oil price for the fourth quarter of 2016 was USD 49.33 per barrel.

The profitability for the fourth quarter of 2016 will be negatively impacted by certain expensed exploration costs and impairment charges, as well as a foreign currency exchange loss mainly related to the revaluation of loan balances. These items are largely non-cash charges and will have no impact on operating cash flow or EBITDA.

Exploration Costs
During the fourth quarter of 2016, pre-tax exploration costs of MUSD 46 will be charged to the income statement. Exploration costs incurred in Norway during the fourth quarter amounted to MUSD 44 and mainly related to the exploration well on the Neiden prospect in PL609 as well as to a number of Norwegian exploration licences in the process of relinquishment. The total after tax exploration cost will amount to a charge of MUSD 11.0.

Impairment Costs
Lundin Petroleum has decided to remove from its contingent resources the gas discoveries in the Sabah region offshore East Malaysia and the Tembakau gas discovery in PM307 offshore Peninsular Malaysia as well as the Morskaya oil discovery in the Russian Caspian Sea. Whilst these discoveries will remain in the portfolio of Lundin Petroleum, management considers it unlikely that any of these discoveries can be commercialised within a reasonable timeframe and therefore deems it prudent to no longer carry these resources on its books. The net contingent resource write down in Malaysia amounts to 60.6 million barrels of oil equivalents (MMboe) and the net contingent resource write down in the Morskaya oil discovery amounts to 110.1 MMboe. The updated Lundin Petroleum net contingent resource position as at 31 December 2016, which will be released in a separate press release on 19 January 2017, will therefore exclude the resources associated with these discoveries.

As a consequence of writing down the contingent resources associated with these discoveries, Lundin Petroleum will incur a non-cash impairment charge in the fourth quarter of 2016 of USD 632 million with a corresponding tax credit of USD 83 million resulting in a negative impact on the fourth quarter net results of USD 549 million.

Net Debt and Foreign Exchange
The net debt position of Lundin Petroleum at 31 December 2016 amounted to USD 4.1 billion resulting in available liquidity of USD 0.9 billion within its USD 5.0 billion reserve-based lending facility.

Lundin Petroleum will recognise a net foreign exchange loss of approximately MUSD 216 in its income statement for the fourth quarter of 2016. The Norwegian Krone weakened against the US Dollar by approximately seven percent during the fourth quarter of 2016 and the foreign exchange loss mainly relates to the revaluation of loan balances at the prevailing exchange rates at the balance sheet date.

Mike Nicholson, CFO of Lundin Petroleum comments:
“I am very pleased that Lundin Petroleum begins 2017 in a strong financial position. The combination of a robust production performance, excellent cash flow generation in addition to the solid support we receive from our group of 28 international banks under our USD 5 billion reserve-based lending facility, means that we have the spare liquidity headroom required to fund our ongoing development and appraisal projects as well as an active exploration programme. The foreign exchange and impairment charges do not impact the cash flow generation of the Company given that these are largely non-cash accounting charges.”

 

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of worldclass assets primarily located in Europe and South East Asia. The Company is listed on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 743.5 million barrels of oil equivalents (MMboe) as at 31 December 2016.

 

For further information, please contact:

Maria Hamilton
Head of Corporate Communications
maria.hamilton@lundin.ch
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
orTeitur Poulsen
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00

This information is information that Lundin Petroleum AB is required to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact persons set out above, at 07.30 CET on 19 January 2017

Forward looking statement link

Lundin Norway awarded four licences in Norwegian licensing round

Lundin Norway awarded four licences in Norwegian licensing round

17 January 2017

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that its wholly owned subsidiary Lundin Norway AS (Lundin Norway) has been awarded four exploration licence interests in the 2016 Norwegian Licensing Round (Awards in Predefined Areas, APA). The awarded licences include one licence in the North Sea, two licences in the Norwegian Sea and one licence in the southern Barents Sea. Two of the awarded licences will be operated by Lundin Norway.

The licence interests are detailed below:

Licence
PL869 (Blocks 24/9, 12 and 25/7):
PL886* (Blocks 6306/6, 8, 9):
PL896 (Blocks 6610/2, 3 and 6611/1, 2):
PL902* (Blocks 7120/1, 2, 3, 4, 5, 6):
 Norway licence interest
20% – Central North Sea
40% – Norwegian Sea
20% – Norwegian Sea
50% – Southern Barents Sea

*operator Lundin Norway

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of worldclass assets primarily located in Europe and South East Asia. The Company is listed on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 716.2 million barrels of oil equivalents (MMboe) as at 1 January 2016.

For further information, please contact:

Maria Hamilton
Head of Corporate Communications
maria.hamilton@lundin.ch
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
orTeitur Poulsen
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00

Forward looking statement link

Open letter to Lundin Petroleum’s shareholders

Open letter to Lundin Petroleum’s shareholders

28 November 2016

Open Letter from Ian H. Lundin

Dear Shareholders,
We are writing to update you on the Swedish Prosecutor’s preliminary investigation surrounding Lundin’s activities in Sudan over the period 1997 – 2003. We continue to cooperate fully with the investigation, which is now in its seventh year and, we hope, in its final stage.

For many years we have requested interviews with the Prosecutor so that we could share with him all the information that we have relating to our time in Sudan. The Prosecutor has now called Alex Schneiter and me for interview and notified us about the suspicions that are the basis for the investigation. This process is a normal part of Swedish legal procedure for any investigation. It is important to note that no charges have been brought and nor does this part of the process mean that they will be brought.

The Board remain convinced that there are no grounds for any allegations of wrongdoing against any representative of Lundin. Lundin has always been an advocate for peace by peaceful means in Sudan. It remains our firm belief that Lundin’s presence in Block 5A contributed to improving living conditions in the region, through our infrastructure investment, community development and humanitarian assistance, which made life better for thousands of people.
For those of you who would like further information, I invite you to explore our dedicated website and report, “Lundin history in Sudan”, which provides a detailed account of our activities in the region through the period 1997-2003.

This process is not impacting the value of our assets or the operations of the business, which continue to deliver excellent results. Regarding the outlook for Lundin Petroleum’s business, we are excited for the future. At our recent third quarter results we increased our production guidance for the year to between 70,000 and 75,000 boepd and reported a record low cash operating cost for the third quarter of USD 7.2 per barrel, leaving us on target to achieve the guided full year cash operating cost of USD 9.0 per barrel. We are also well positioned for our next phase of growth, forecasting 120,000 boepd by the time Johan Sverdrup Phase 1 comes onstream at the end of 2019.

In closing, I would like to take this opportunity to express my sincere thanks to all our stakeholders for your continued support in Lundin Petroleum and the exciting future of the Company.
Sincerely,

Ian H. Lundin
Chairman of the Board

Oil discovery in the Neiden prospect in the southern Barents Sea

Oil discovery in the Neiden prospect in the southern Barents Sea

22 November 2016

Oil discovery in the Neiden prospect in the southern Barents Sea

Lundin Petroleum AB (Lundin Petroleum) is pleased to announce that its wholly owned subsidiary Lundin Norway AS (Lundin Norway) has completed the Neiden exploration well 7220/6-2R as an oil and gas discovery. The well is located in PL609 approximately 60 km northeast of the Alta discovery on the Loppa High in the southern Barents Sea.

The main objectives of the well were to prove oil in Triassic sandstone and Permian carbonate reservoirs.

The well encountered a gross 31 metres hydrocarbon column, with 21 metres of oil and 10 metres gas in the Permian target. The total gross resource estimate for the Neiden discovery is between 25 and 60 million barrels of oil equivalents (MMboe).

Extensive data acquisition and sampling was carried out including coring, logging and light oil and gas sampled from the wireline tools. The well demonstrates high quality karstified carbonate reservoir which reduces the risk of the Børselv prospect, located 15 km north and up dip from the Neiden discovery in PL609. The Børselv prospect is a candidate for drilling in 2017.

The semisubmersible drilling rig Leiv Eiriksson will now move to the Filicudi prospect in PL533 to the northwest of the Alta discovery and south of the Statoil operated Johan Castberg discovery. The Filicudi prospect is expected to contain Jurassic sandstone reservoir analogous to the Johan Castberg discovery. The Filicudi prospect is estimated to contain gross unrisked prospective resources of 258 MMboe.

Lundin Norway is the operator of both PL609 and PL533 and holds a 40 percent and 35 percent working interest in these respective licences.

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of worldclass assets primarily located in Europe and South East Asia. The Company is listed on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 716.2 million barrels of oil equivalents (MMboe) as at 1 January 2016.

For further information, please contact:

Maria Hamilton
Head of Corporate Communications
maria.hamilton@lundin.ch
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
orTeitur Poulsen
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00

This information is information that Lundin Petroleum AB is required to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact persons set out above, at 08.00 CET on 22 November 2016.

Forward looking statement link