Lundin Profits Down On Lower Output, Prices

Swedish oil and gas producer Lundin Petroleum saw earnings slide in the first half as a result of lower output and weaker oil prices, as well as increased exploration spending.

Operating profit came to $541mn in the six-month period, compared with $735mn a year earlier, the company said on July 31. This translated into a net income of $150mn, down from $267mn in the first half of 2018.

Ebitda slumped to $812mn from $975mn, while free cash flow shrunk to $167mn from $261mn.

Lundin blamed the drop in operating income on “higher expensed exploration costs during the reporting period and lower sold volumes and lower oil prices, somewhat offset by lower depletion.”

The company produced 68,700 b/day of crude oil and 8,800 boe/day of natural gas in the six months, down 5.4% and 7.4% respectively. But it noted that overall hydrocarbon output should surpass 150,000 boe/day after the launch of the Johan Sverdrup oil project, expected in November. Lundin has maintained its full-year production guidance at 75,000-95,000 boe/day.

Lundin also raised its 2019 exploration budget by $25mn to $325mn, revealing plans to sink seven exploration and appraisal wells in the second half, after drilling 12 boreholes in January through June.

The independent producer added that its Edvard Grieg project was now anticipated to produce at its plateau output rate until the end of 2022, which is later than its previous guidance of mid-2020. The revision takes into account the launch of satellite fields.