Lundin's Exploration Losses Mount in Q4
Sweden’s Lundin warned on January 15 it would book further losses from exploration failures in its fourth-quarter results.
The $41mn in pre-tax losses relate to wells that came up dry or found only non-commercial volumes of hydrocarbons at the Toutatis, Gladsheim and Enniberg prospects off Norway, Lundin said. But they will be partially offset by a $32mn tax credit. Norway's tax regime encourages drilling through tax credits when wells are dusters.
Lundin’s 2019 exploration campaign included a record number of wells, but many of them were reported as dry. It racked up a $14mn loss in its third-quarter results, mainly relating to an unsuccessful probe at the Rumpetroll.
The company is due to publish its fourth-quarter earnings on January 31. The results will also include $19mn in pre-tax decommissioning costs, offset by a $15mn tax credit, as well as a $106mn foreign exchange gain.
Lundin’s net debt stood at $4bn at the end of December, meaning it still has access to $1bn of liquidity from a $5bn loan facility. Its biggest producing asset is the Johan Sverdrup oil field which it discoverd and of which it owns a fifth. At plateau the field will produce some 660,000 b/d.