Page 8 - Euroil Week 05 2020

EurOil COMMENTARY EurOil
Lundin outlook brightens on Sverdrup launch
Lundin says Sverdrup’s launch has put it on a path of ef cient production growth well into the next decade
SWEDEN
WHAT:
Lundin has raised its production forecasts, to re ect higher than expected output at the Johan Sverdrup eld.
WHY:
Production growth has shielded the company from weak prices, especially for gas.
WHAT NEXT:
Lundin is saddled with $4bn in net debt, but its spending will remain high because of further costs at Sverdrup and other new projects.
LUNDIN Petroleum has raised its production guidance following the early launch of the Johan Sverdrup oil eld o Norway last year, while also posting a strong set of fourth-quarter results.
e Swedish independent, which has a 20% stake in Sverdrup, now expects to produce 160,000-170,000 barrels of oil equivalent per day (boepd) from 2021, with an eventual tar- get of more than 200,000 boepd. Previously the company had forecast 150,000 boepd of produc- tion and a target of 170,000 boepd, assuming that Sverdrup reached its full capacity in 2023.
e 2.7bn barrel Equinior-operated North Sea eld came on stream in October last year, two months ahead of schedule and below budget. By the end of the year it was already owing oil at a rate of 350,000 boepd, a er ramping up much faster than anticipated. Production is antici- pated to crank up to 440,000 boepd this summer, under the eld’s rst stage of development, and hit 660,000 boepd at its full second-stage capac- ity in 2023.
Sverdrup’s start-up was “a signi cant mile- stone for our business and has rmly laid the foundations for a period of sustainable and e - cient production growth well into the next dec- ade,”LundinCEOAlexSchneitercommentedin
a statement.
Lundin’s own output soared to 135,100 boepd
in the fourth quarter on the back of Sverdrup’s launch, compared with 82,100 boepd a year earlier. Full-year production averaged 135,100 boepd, up from 81,100 boepd in 2018. Lundin says it is on track to produce 145,000-165,000 boepd this year, thanks to further growth at Sverdrup.
Improved performance
Production growth shielded Lundin from the impact of weaker gas prices last year.
e company sold its gas at a price of just $29.93 per boe in the fourth quarter, versus $53.50 a year earlier. e price its oil fetched was also down slightly at $65.16 per barrel, from $66.42.
Revenues were nevertheless up 15% at $749.7mn in the three-month period as a result of higher volumes, and Lundin also bene tted from a slide in operating costs from $5 to $4.16 per barrel.
Earnings before interest, tax, depreciation and amortisation (EBITDA) surged 45% to $695.5mn, while Lundin’s adjusted net income grew5%to$78.9mn.
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