Page 11 - Euroil Week 18 2020

EurOil PERFORMANCE EurOil
Lundin trims spending further, despite Q1 strength
SWEDEN’S Lundin Energy, formerly known as Lundin Petroleum, announced additional spending cuts on April 30, despite reporting steep rises in operating profit and free cash flow in the first quarter.
The company, which works at dozens of fields and licences off Norway, said it would reduce its planned total expenditure this year by $300mn, marking a 23% decrease from the original plan of $1.31bn. Earlier it said it would cut spending by only $170mn.
Lundin has “further options available to defer or reduce expenditure, should low oil prices persist,” it said. The company also aims to slash operating costs in 2020 to $2.80 per barrel of oil equivalent (boe), from $3.40.
Lundin has delayed the start-up of the Solveig Phase 1 project from the first to the third quar- ter of 2021, and has also halved the number of exploration wells it intends to spud this year to five. Four of the wells in the original plan have been deferred to later years.
Lundin previously slashed its dividend pay- ments by 44% to $1 per share.
“As we head into the second quarter we will continue to apply very strict capital discipline across the company, to preserve the liquidity position and provide financial flexibility should opportunities arise for us to capitalise on, and I remain convinced that we are in one of the best positions to trade through the current environ- ment,”CEOAlexSchneitercommented.
Lundin posted a strong set of numbers for the first quarter, considering the market collapse in March. Its operating income was up 55% year on
year at $404mn, whereas its EBITDA increased by 45% to $581mn.
Fresh cash flow also surged more than four- fold to $407mn. The company also posted a 12% growth in its adjusted net income to $66mn, thanks in part to a $359mn foreign exchange gain relating to the weakening of the Norwegian krone.
Lundin’s net debt crept up to $3.69bn at the end of March, from $3.3bn a year earlier. But debt was higher at the end of December, at $4bn.
The driving force behind Lundin’s strong performance has been the Equinor-operated Johan Sverdrup oilfield in the North Sea, in which it has a 20% stake. Sverdrup was launched in October and its ramp-up has been accelerated. The field is now expected to reach a first-phase plateau of 470,000 barrels per day (bpd) this month, two months ahead of schedule and 7% above the original guidance.
Growth at Sverdrup led to a surge in Lundin’s oil and gas production to 152,400 barrels of oil equivalent per day in the first quarter, up from a mere 78,800 boepd a year earlier. This more than offset the impact of weaker prices, causing reve- nues to expand to $695mn.
Lundin has also raised its forecast for output in 2020 to 160,000-170,000 boepd, to factor in faster growth at Sverdrup.
Shareholders approved the company’s name changetoLundinEnergyinavoteonMarch31. Lundin announced the move back in February, while also publishing an action plan for becom- ing net carbon neutral by 2050. ™
Platform at Lundin Petroleum’s Edvard Grieg field.
Week 18 07•May•2020 w w w . N E W S B A S E . c o m
P11