Lundin Petroleum AB
OMX : LUPE

Lundin Petroleum AB

February 04, 2015 01:42 ET

Lundin Petroleum AB: Year End Report 2014

STOCKHOLM, SWEDEN--(Marketwired - Feb. 4, 2015) - Lundin Petroleum AB (OMX:LUPE) -

Twelve months ended 31 December 2014 (31 December 2013)

  • Production of 24.9 Mboepd (32.7 Mboepd)(1)
  • Revenue of MUSD 785.2 (MUSD 1,132.0)
  • EBITDA of MUSD 671.3 (MUSD 955.7)
  • Operating cash flow of MUSD 1,138.5 (MUSD 967.9)
  • Net result of MUSD -431.9 (MUSD 72.9) including a pre-tax impairment of MUSD 400.7 and a net foreign exchange loss of MUSD 356.3
  • Net debt of MUSD 2,609 (31 December 2013: MUSD 1,192)
  • The Brynhild field, offshore Norway, commenced production in December 2014
  • Alta oil discovery in the Barents Sea - gross recoverable resources estimated at between 125 and 400 MMboe
  • Gohta appraisal well successfully completed in the Barents Sea
  • Increased credit facility from USD 2.5 billion to USD 4.0 billion
  • Johan Sverdrup Phase 1 conceptual development plan was approved by the licence partners
  • Nine exploration licences awarded in the Norwegian 2013 APA licensing round, four as operator

Fourth quarter ended 31 December 2014 (31 December 2013)

  • Production of 22.0 Mboepd (31.1 Mboepd)(1)
  • Revenue of MUSD 135.2 (MUSD 274.1)
  • EBITDA of MUSD 164.4 (MUSD 218.0)
  • Operating cash flow of MUSD 334.5 (MUSD 203.3)
  • Net result of MUSD -437.0 (MUSD 23.0)

Comments from C. Ashley Heppenstall, President and CEO

We have seen oil prices fall further over the last three months to current levels where spot Brent is trading around USD 50 per barrel. There is currently a lot of uncertainty as to how long a period of low oil prices it will take to balance supply with demand and indeed where oil prices will trade during this period. I personally believe we are close to the bottom right now but there is certainly a possibility that we may see oil prices go even lower.

Lundin Petroleum is well prepared to weather the storm and will come out of this cycle as a stronger and much more valuable company. We are generating positive cash flow even at low oil prices due to our low cash operating costs and negligible cash taxes.

I am pleased that the Brynhild and Bøyla fields, offshore Norway have now commenced production. And with the Bertam and Edvard Grieg development projects due to come onstream in the second and fourth quarter of this year we are forecasting 2015 production of between 41,000 and 51,000 boepd with a 2015 exit rate of over 75,000 boepd. It is very encouraging to see our production rates starting to increase again and I remain confident in our target to triple production over the course of 2015.

In today's oil price environment there is little focus from the markets on exploration assets. Indeed many view them as a liability. We however continue to believe in higher medium term oil prices and as such the key to create long term value will remain access to resources. We do believe the best way to do this is through an organic growth model driven by exploration drilling.

Our objectives for 2015 are very clear. We will deliver on our promise of project execution by bringing the Bertam and Edvard Grieg fields onstream to meet our year end production target. The Johan Sverdrup development project will be sanctioned and will secure a pipeline of further production growth for our Company of in excess of 150,000 boepd.

(1)Including production from Russian onshore assets accounted for using the equity method under IFRS 11 Joint Arrangements up to completion of the sale of these assets in mid-July 2014.

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of world-class 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 187.5 million barrels of oil equivalent (MMboe).

This information has been made public in accordance with the Securities Market Act (SFS 2007:528) and/or the Financial Instruments Trading Act (SFS 1991:980).

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 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, 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.

Reserves and Resources

Unless otherwise stated, Lundin Petroleum's reserve and resource estimates are as at 31 December 2014, and have been prepared and audited in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). Unless otherwise stated, all reserves estimates contained herein are the aggregate of "Proved Reserves" and "Probable Reserves", together also known as "2P Reserves". For further information on reserve and resource classifications, see "Reserves, Resources and Production" in the Company's annual report.

Contingent Resources

Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. There is no certainty that it will be commercially viable for the Company to produce any portion of the Contingent Resources. Unless otherwise stated, all contingent resource estimates contained herein are the best estimate ("2C") contingent resources.

Prospective Resources

Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both a chance of discovery and a chance of development. There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources. Unless otherwise stated, all Prospective Resource estimates contained herein are reflecting a P50 Prospective Resource estimate. Risked Prospective Resources reported herein are partially risked. They have been risked for chance of discovery, but have not been risked for chance of development.

BOEs

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

To view the Year End Report 2014, please visit the following link: http://media3.marketwire.com/docs/990606.pdf

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