Lundin profits soar in Q3 on higher prices, record output
Core earnings (Ebitdax) at Sweden's Lundin leapt up to $1.28bn in the third quarter, from $516mn a year earlier, the company reported on October 29, thanks to higher oil and gas prices and record output.
The company, focused on the Norwegian continental shelf, delivered an adjusted net result of $234mn for the three-month period, compared with $75.8mn a year before. Free cash flow surged to $674mn from $164mn, and its net debt shrank to $2.65bn from $3.71bn.
Lundin CEO Nick Walker attributed the result to "continued strong operational performance and further strengthening of oil and gas prices."
"Whilst certain challenges of the COVID-19 crisis remain, we’ve normalised the management of these and continue to deliver on our key business priorities," he said. "Our world class producing assets keep on outperforming, with excellent production efficiency and industry leading low operating costs, delivering record production in the third quarter."
Production averaged 193,600 barrels of oil equivalent/day in the third quarter, versus 157,500 boe/d, primarily thanks to further growth at the Equinor-operated Johan Sverdrup field in the North Sea, where Lundin has a 20% position. Lundin also increased flow at its flagship Edvard Grieg field it operates in the North Sea.
Lundin said it was on track to flow oil and gas at the upper end of its 180,000-195,000 boe/d guidance for this year. The second stage of Sverdrup is slated to come on stream in the fourth quarter of 2022, it noted, which will bring the field’s output to an eventual gross rate of 755,000 boe/d.
"At the Greater Edvard Grief Area we’re delivering on our projects that support the long term plateau extension, with excellent results from the completed Edvard Grieg infill well programme, and first oil achieved at the Rolvsnes and Solveig projects," Walker said. "All these projects delivered on schedule and below budget."
The CEO said the company expected to increase its reserves at year-end, thanks to work undertaken at Grieg and Solveig.
"There's lots more upside in the area and we're working hard to bring forward a number of new projects," he said.
Lundin also struck a deal this week with OMV to expand its stake at the Wisting oil discovery in the Barents Sea from 10% to 35%, agreeing to pay at least $320mn.