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Lundin Energy AB Report for the nine months ended 30 September 2021

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·7-min read
In this article:
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  • Quarterly revenue of USD 1.5 billion with a realised oil price of USD 72 per barrel for the third quarter

  • Record free cash flow generation of USD 1.6 billion for the first nine months, operating costs below guidance at USD 2.9 per boe and net debt reduced to USD 2.6 billion

  • Board of Directors anticipates to propose to the Annual General Meeting 2022, a 2021 dividend of USD 2.25 per share, corresponding to MUSD 640, an increase of 25 percent from 2020 dividend

  • Record production of 194 Mboepd for third quarter and full year production anticipated towards the upper end of the guidance range of 180 to 195 Mboepd

  • Key projects on track and first oil achieved at the Rolvsnes and Solveig projects, on schedule and below budget

  • Strategic acquisition of 25 percent working interest from OMV in the high quality Wisting oil development, taking the Company’s interest to 35 percent and adding 130 MMboe fully appraised net contingent resources for USD 2.5 per boe

  • Further acceleration of decarbonisation plans to achieve carbon neutrality by 2023 from operational emissions

Financial summary

1 Jan 2021-
30 Sep 2021
9 months

1 Jul 2021-
30 Sep 2021
3 months

1 Jan 2020-
30 Sep 2020
9 months

1 Jul 2020-
30 Sep 2020
3 months

1 Jan 2020-
31 Dec 2020
12 months

Production in Mboepd

188.8

193.6

157.6

157.5

164.5

Revenue and other income in MUSD

3,862.9

1,478.2

1,784.7

687.0

2,564.4

CFFO in MUSD

2,499.9

1,012.0

1,251.3

353.2

1,528.0

Per share in USD

8.79

3.56

4.40

1.24

5.38

EBITDAX in MUSD

3,360.6

1,282.6

1,431.8

515.6

2,140.2

Per share in USD

11.82

4.51

5.04

1.81

7.53

Free cash flow in MUSD

1,622.9

673.8

545.7

164.2

448.2

Per share in USD

5.71

2.37

1.92

0.58

1.58

Net result in MUSD

372.1

137.5

80.5

212.3

384.2

Per share in USD

1.31

0.48

0.28

0.74

1.35

Adjusted net result in MUSD

542.4

234.0

193.1

75.8

280.0

Per share in USD

1.91

0.83

0.68

0.27

0.99

Net debt in MUSD

2,646.9

2,646.9

3,706.8

3,706.8

3,911.5


Comment from Nick Walker, President and CEO of Lundin Energy:
“I’m pleased to report another set of record production and financial results in the third quarter, underpinned by 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.

“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. Full year production is anticipated to be towards the upper end of our guidance range.

“Johan Sverdrup continues to consistently perform at a high level and Phase 2 of the project, which will boost gross production to 755 Mbopd, is making great progress and remains firmly on track for first oil in the fourth quarter of 2022.

“At the Greater Edvard Grieg 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; all these projects delivered on schedule and below budget. We are set to see reserves increases at year end due to the continued strong Edvard Grieg performance and the excellent drilling results at Solveig. There’s lots more upside in the area and we’re working hard to bring forward a number of new projects.

“I’m pleased to announce the purchase of a further 25 percent interest in the Wisting oil development, which adds resources of almost two times our 2021 production volumes. The deal takes the Company’s interest to 35 percent in this high quality, 500 MMbo development, which has strong economics and will be powered from shore. This strategic deal, done at a purchase price of USD 2.5 per boe, is very value accretive and fits with our ambition to sustain the business long term with low carbon emission barrels.

“We delivered free cash flow of USD 1.6 billion for the first nine months, enabling net debt to be reduced to USD 2.6 billion. Due to the strong financial outlook for the business, I’m pleased to note that the Board of Directors anticipates to propose to the AGM 2022, a 25 percent increased dividend for 2021 of USD 2.25 per share (in total MUSD 640), clearly demonstrating our commitment to grow shareholder returns.

“We continue to be firmly positioned as an industry leader on carbon emissions and during the third quarter we further accelerated our decarbonisation plans to become carbon neutral by 2023 from operational emissions. With around 60 percent of our production today produced as carbon neutral and with a clear deliverable pathway to carbon neutrality, I see this as a key value differentiator for Lundin Energy.

“The Company has again delivered excellent results, all our key business priorities are on track and we’ve made a strategic value accretive acquisition, which together positions us to keep delivering resilient sustainable growth.”

Audiocast presentation
Listen to Nick Walker, President and CEO, and Teitur Poulsen, CFO, commenting on the report and the latest developments at a live audiocast held today, at 14:00 CEST. Follow the presentation on www.lundin-energy.com or dial in using the following telephone numbers:

Sweden +46 8 56642651
UK +44 3333000804
United States +1 6319131422
Norway +47 23500243
Access Pin : 73770326
Link: https://edge.media-server.com/mmc/p/egyufnjf


For further information, please contact:

Edward Westropp
VP Investor Relations
Tel: +41 22 595 10 14
edward.westropp@lundin-energy.com

Robert Eriksson
Head of Media Communications
Tel: +46 701 11 26 15
robert.eriksson@lundin-energy.com


Lundin Energy is an experienced Nordic oil and gas company that explores for, develops and produces resources economically, efficiently and responsibly. We focus on value creation for our shareholders and wider stakeholders through three strategic pillars: Resilience, Sustainability and Growth. Our high quality, low cost assets mean we are resilient to oil price volatility, and our organic growth strategy, combined with our sustainable approach and commitment to decarbonisation, firmly establishes our leadership role in a lower carbon energy future. (Nasdaq Stockholm: LUNE). For more information, please visit us at www.lundin-energy.com or download our App www.myirapp.com/lundin


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 Lundin Energy’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 Lundin Energy 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 “Risk management” and elsewhere in Lundin Energy’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.

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