Sweden's Lundin Delays Projects, Cuts Costs

Sweden's Lundin Petroleum has delayed non-committed projects and aims to cut planned costs in 2020 by $170mn, according to a company statement on March 23.

The company, which produces oil and gas off Norway, said it was looking to boost its liquidity because of the impact of the Covid-19 pandemic and low commodity prices on its business. Its board of directors on March 23 also proposed a cut to dividends on 2019 profits from $1.8 to $1.0 per share.

Lundin also said it would seek to minimise risks to its production operations from the virus by reducing the number of offshore personnel to a minimum.

The operator follows many other oil firms in announcing spending cuts to protect cash flow. Lundin said it was well-prepared for the crisis, given that it expects its average breakeven oil price to be $17/boe over the next seven years. Its long-term guidance for operating costs is $3.2-4.2/boe, and the capital spending required to produce all its current proven and probable reserves is under $3/boe.

Lundin achieved a near 45% growth in profits in the fourth quarter, on the back of the launch of the Equinor-operated Johan Sverdrup oil project in October. The Swedish player has a 20% interest in the North Sea project.

In January Lundin said it expected its development, appraisal, exploration and abandonment expenditure to rise by 30% to $1.27bn this year. Production is slated to rise to 145,000-165,000 boe/d, from 93,300 boe/d in 2019, it said.