LUNDIN PETROLEUM ANNOUNCES 2013 CAPITAL EXPENDITURE BUDGET OF USD 1.7 BILLION
1/7/2013 2:01 AM EST
Lundin Petroleum AB
Company Announcement
LUNDIN PETROLEUM ANNOUNCES 2013 CAPITAL EXPENDITURE BUDGET OF USD 1.7 BILLION
Stockholm, 2013-01-07 08:01 CET (GLOBE NEWSWIRE) --
Lundin Petroleum AB (Lundin Petroleum) is pleased to announce its 2013
development, appraisal and exploration budget which totals USD 1,700 million.
2013 will be the busiest year in the company's history both in relation to
exploration and development activities.
The 2013 expenditure on development projects is budgeted at USD 1,100 million
which represents approximately a 150 percent increase on forecast 2012
development expenditure. The 2013 budgeted expenditure on exploration activity
is USD 460 million which represents approximately 40 percent increase on the
forecast 2012 exploration expenditure. The budgeted 2013 appraisal expenditure
amounts to USD 150 million against a forecast 2012 appraisal expenditure of
approximately USD 150 million.
Development Projects
Substantially all of the 2013 budgeted development expenditure relates to
ongoing development projects in Norway.
1. The development of the Edvard Grieg field (WI 50% and operated by Lundin
Petroleum) commenced in 2012. The 2013 net expenditure is budgeted at close to
USD 550 million which will involve ongoing engineering and construction of the
jacket, topside and export pipelines.
2. The development of the Brynhild field (WI 90% and operated by Lundin
Petroleum) is progressing well and first production is scheduled to come
onstream in the fourth quarter of 2013 at a net plateau rate of 10,800 barrels
of oil equivalent per day (boepd). The 2013 net development expenditure is
budgeted at approximately USD 470 million which includes topside modification
of the Haewene Brim FPSO, subsea facilities construction and installation and
the drilling of production and water injection wells.
3. The non-operated Bøyla field (WI 15%) which will be tied back to the Alvheim
FPSO received development approval in 2012. The 2013 net development
expenditure is budgeted at approximately USD 40 million which predominantly
involves engineering, procurement and fabrication of subsea and topside
equipment. The field is scheduled to come onstream in the fourth quarter of
2014 at a net plateau rate of approximately 3,000 boepd.
Exploration Activity
The exploration budget for 2013 is USD 460 million with a major focus on Norway
which accounts for approximately 70 per cent of this amount. The exploration
programme (excluding appraisal) involves the drilling of 18 exploration wells
in Norway, Malaysia, Indonesia, France and the Netherlands.
1. Norway
The budgeted net exploration expenditure for 2013 is USD 330 million. A total
of ten exploration wells will be drilled in Norway during 2013. A significant
proportion of the 2013 exploration expenditure will be focused around the
Utsira High Area with six exploration wells targeted in the area, on PL625 (WI
40%), PL338 (WI 50%), PL359 (WI 40%), PL544 (WI 40%), PL501 (WI 40%) and PL410
(WI 70%) all of which are operated by Lundin Petroleum. Two exploration wells
will be drilled in the southern North Sea on PL495 (WI 65%) and PL453 (WI 35%)
both of which are operated by Lundin Petroleum. One operated exploration well
will be drilled in the Barents Sea on PL492 (WI 40%) and one non-operated
exploration well will be drilled on PL330 (WI 30%) in the northern part of the
Norwegian Sea.
2. South East Asia
The budgeted net exploration expenditure for 2013 is approximately USD 115
million. Three exploration wells will be drilled in Malaysia of which two will
be drilled offshore Peninsular Malaysia and one well offshore Sabah. Two
exploration wells will be drilled offshore Indonesia; on the Baronang (WI 100%)
and Gurita (WI 100%) licences respectively.
Appraisal Activity
The appraisal budget for 2013 is USD 150 million with approximately 95 per cent
of the expenditure being spent in Norway. The appraisal programme involves the
drilling of 6 appraisal wells in Norway and pre-investment decision work on the
Bertam field in Malaysia.
1. Norway
The budgeted net appraisal expenditure for 2013 is USD 140 million with all the
appraisal activity taking place on the Johan Sverdrup discovery and on PL338
(WI 50%). Four appraisal wells will be drilled on the Johan Sverdrup discovery
in 2013, two on PL501 (WI 40%, operated by Lundin Petroleum) and two on PL265
(WI 10%, operated by Statoil). Two appraisal wells will be drilled on PL338
including one appraisal well in the south eastern section of the Edvard Grieg
field.
2. Malaysia
The budgeted net appraisal expenditure for 2013 is USD 10 million relating to
assessing the viability of the Bertam field in PM307 (WI 75%) ahead of a final
investment decision during 2013. If the Bertam field development moves forward
additional development costs will be incurred.
Ashley Heppenstall, President and CEO of Lundin Petroleum comments; "With an
85% increase in capital expenditure for 2013 this year will be our busiest year
ever. I am very pleased that all our Norwegian development projects are on
schedule and that we still are on target for a doubling of our current
production to in excess of 70,000 boepd by the end of 2015. The appraisal of
Johan Sverdrup is progressing well and by the end of 2013 it is likely that at
least 18 exploration and appraisal wells will have been drilled on the
discovery. Importantly we have secured the rig capacity to execute on our 16
exploration and appraisal well programme in Norway during 2013 and I am
confident that this programme will prove-up yet more resources. Our 2013 budget
will be fully funded from operating cash flow and existing bank facilities."
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 at the
NASDAQ OMX, Stockholm (ticker "LUPE") and at the Toronto Stock Exchange (TSX)
(Ticker "LUP"). Lundin Petroleum has proven and probable reserves of 211
million barrels of oil equivalent (MMboe).
For further information, please contact:
Maria Hamilton Teitur Poulsen
Head of Corporate Communications VP Corporate Planning & Investor Relations
E-mail: Tel: + 41 22 595 10 00
Tel: +41 22 595 10 00
Tel: +46 8 440 54 50
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 2011, 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 and Resources" 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.
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.
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.