Page 14 - EurOil Week 49 2021

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Lundin owners eye sale

SWEDEN THE owners of Swedish oil producer Lundin have bullishly said that oil demand is yet to peak,
Energy are reportedly mulling a sale of the busi- the IEA projects that it will decline significantly
Lundin is in a strong ness that could result in one of the biggest Euro- in the coming decades as the world moves
position financially pean oil and gas deals in recent years. towards net-zero emissions by 2050.
thanks to rising Lundin, owned by the family that bears the While many European oil and gas majors
production at Johan same name, produces around 190,000 barrels have responded to climate pressure by scaling
Sverdrup. of oil equivalent per day (boepd) off the coast back their hydrocarbon operations, Lundin has
of Norway. It counts a stake in the Equinor-run taken a different course. Though it is investing in
Johan Sverdrup oilfield, Norway’s biggest oil renewables, partly to cover the power needs of
producer, among its prized assets, along with the its operations, it is eager to grow its oil business.
Edvard Grieg field that it operates. And this is not to say Lundin does not have
The coronavirus (COVID-19) pandemic ini- an ambitious climate strategy. In fact, it is target-
tially resulted in a freeze in deal-making in the ing carbon neutrality from its operations as soon
oil and gas sector, as both buyers and sellers were as 2023. It plans to deliver on this goal with the
wary of the market outlook. But the subsequent help of natural carbon capture projects, such as
rebound in oil and gas prices led those larger forestation initiatives, and carbon credit offtake
players that got through the pandemic in good agreements.
shape to seek the takeover of other distressed This could make the business an attractive
assets. prospect for larger oil and gas companies looking
Lundin is in a strong position, however, hav- to burnish their climate credentials, especially
ing recorded a steep rise in core earnings in the when coupled with Lundin’s low-cost barrels.
first nine months of this year to $3.36bn, and The producer boasts a pre-tax breakeven price
record free cash flow of $1.63bn. Its production of $18 per barrel.
climbed to a record 194,000 boepd on the back of The North Sea was one of the hottest M&A
further increases at Johan Sverdrup, and it man- markets in the global oil and gas industry earlier
aged to bring its net debt down to $2.65bn, from this year, but has since cooled. But there are still
$3.9bn a year earlier. several notable deals reportedly being consid-
The Lundin family controls an invest- ered. Neptune, one of the region’s largest players,
ment vehicle that is the oil company’s largest was reported to be eyeing a merger with Harbour
shareholder, with a 33% interest, according to Energy in September, and according to Bloomb-
Bloomberg, which reported the potential sale. erg in mid-November, the focus has since shifted
The news agency said that deliberations were towards an all-out sale of the business by its own-
ongoing and that there was no certainty of a ers, which include private equity backers Carlyle
transaction being reached. Lundin could con- Partners and CVC Capital Partners.
sider other options such as a merger or asset dis- The Lundin family have a range of other
posals, sources told Bloomberg. interests in the resource industry outside oil and
Lundin responded to the report saying it gas, including major holdings in around a dozen
“continuously engages in opportunities that are listed companies, including copper producer
potentially value accretive to its shareholders.” Lundin Mining, precious metal miner Lundin
“In that context, the company does at times Gold, gold developer Bluestone Resources and
hold discussions with various parties. As of today explorer NGEx Minerals.
there are no conclusive decisions that have been The family has built something of a reputa-
made in relation to any such discussions,” it said. tion for savvy deal-making. In 2010, for exam-
There is significant uncertainty around the ple, they divested out of Red Back Mining for
outlook for oil demand. While OPEC and others $10bn.™

P14 www. NEWSBASE .com Week 49 09•December•2021