Page 10 - Euroil Week 03 2020

EurOil PERFORMANCE EurOil
Lundin to take $41mn hit in Q4 on dry wells
SWEDEN
The company suffered a number of dry wells this year, but nevertheless replenished its reserves.
SWEDEN’S Lundin Petroleum has warned it will take a $41mn hit in its fourth-quarter results in connection with pre-tax exploration costs at a trio of unsuccessful wells.
The leading European independent reported on January 15 that the losses would be incurred on dry or non-commercial wells it drilled at the Toutatis, Gladsheim and Enniberg prospects off Norway. Toutatis is operated by Germany’s Wintershall DEA, while Gladsheim is operated by Norway’s Equinor and Enniberg by US major ConocoPhillips.
Lundin added it would book an additional charge of $19mn relating to pre-tax decommis- sioning costs, mainly at the Brynhild and Gaupe fields on the Norwegian shelf. But it will also include a $106mn net foreign exchange gain, thanks to a stronger euro and Norwegian krone versus the US dollar during the quarter.
Its net debt stood at $4bn at the end of December, up from $3.4bn a year earlier. This means the company still has access to a further $1bn in liquidity from its $5bn lending facility.
Lundin is scheduled to publish its full finan- cial results for last year on January 31.
Lundin took part in drilling 16 wells in the North Sea, the Norwegian Sea and the southern Barents Sea last year – a record for the company. But 11 of them were reported as dry.
Despite these disappointments, Lundin was
still able to replenish its reserves with the four discoveries it did make. The new finds were made at the Aker BP-operated Froskelar Main and Froskelar North East prospects, and the Lundin-operated Jorvik/Tellus East and Goddo prospects. The largest were at Jorvik/Tellus East and Froskelar Main, estimated at 4-37mn and 45-153mn barrels of oil equivalent (boe) respectively.
Lundin had 693.3mn boe in proven and probable (2P) and 857.5mn boe in proven, probable and possible (3P) reserves at the end of 2019. Excluding resources relating to a 2.6% stake in the Johan Sverdrup field that Lundin sold to Equinor last year, its reserves at the end of 2018 amounted to only 675.9mn boe (2P) and 818.8mn boe (3P).
On the downside, Lundin also reported on January 13 it had slashed resource estimates for its Alta discovery in the Barents Sea, dealing another blow to Norway’s efforts to establish the region as its next major oil province. The com- pany did not disclose its new estimates, but said that as a result of the downgrade, it had axed plans to develop Alta and the nearby Gohta find as a standalone project.
Instead, it now sees tying the 2013-2014 dis- coveries back to the Johan Castberg or another existing project in the area as the most viable option for their development. ™
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