STOCKHOLM, SWEDEN — (Marketwired) — 07/16/13 — Lundin Petroleum AB (TSX: LUP)(OMX: LUPE) (Lundin Petroleum) will incur non-cash exploration expenses of approximately USD 63 million and impairment expenses of approximately USD 82 million for the second quarter 2013 (the Period) results. These expenses will be offset by a deferred tax credit of USD 100 million giving an after tax net impact to the income statement for the Period of USD -45 million.
Exploration expenses:
During the Period Lundin Petroleum completed the Carlsberg exploration well on PL495, offshore Norway, as a dry hole. The drilling of the well and associated licence costs amounted to USD 45 million which will be expensed to the income statement for the Period. A further USD 18 million of exploration expenses will be charged to the income statement for the Period in relation to costs associated with the drilling of the sidetrack 16/2-17B targeting the Cliffhanger South prospect on PL265, offshore Norway, the Norwegian 22nd Licensing round and certain other exploration related costs.
Impairment expenses:
Lundin Petroleum has reviewed the carrying value of its assets in Norway and concluded that its carrying value on PL438 Skalle, PL533 Salina and PL088 Peik no longer can be supported for these three gas discoveries resulting in a non-cash impairment charge for the Period, including certain other capitalised licence costs, of USD 82 million.
Ashley Heppenstall, President and CEO of Lundin Petroleum, comments as follow; “We still believe Peik, Skalle and Salina gas discoveries can be commercially developed with the appropriate gas price and transportation solutions. However in view of the recently announced Norwegian tax changes which particularly impact marginal discoveries we feel it is prudent to write down the carrying value of these assets.”
The deferred tax credit of USD 100 million represents a lower than normal Norwegian effective tax rate of 69 percent as certain of the impaired carrying values are not tax deductible.
Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of world-class assets primarily located in Europe and South East Asia. The Company is listed at the NASDAQ OMX, Stockholm (ticker “LUPE”) and at the Toronto Stock Exchange (TSX) (Ticker “LUP”). Lundin Petroleum has proven and probable reserves of 202 million barrels of oil equivalent (MMboe).
This information has been made public in accordance with the Securities Market Act (SFS 2007:528) and/or the Financial Instruments Trading Act (SFS 1991:980).
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 the Company–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 the Company 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 “Risks and Risk Management” and elsewhere in the Company–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.
Reserves and Resources
Unless otherwise stated, Lundin Petroleum–s reserve and resource estimates are as at 31 December 2011, and have been prepared and audited in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”). Unless otherwise stated, all reserves estimates contained herein are the aggregate of “Proved Reserves” and “Probable Reserves”, together also known as “2P Reserves”. For further information on reserve and resource classifications, see “Reserves and Resources” in the Company–s annual report.
Contingent Resources
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. There is no certainty that it will be commercially viable for the Company to produce any portion of the Contingent Resources.
Prospective Resources
Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both a chance of discovery and a chance of development. There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.
BOEs
BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf : 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Contacts:
Lundin Petroleum AB
Maria Hamilton
Head of Corporate Communications
+41 22 595 10 00 or +46 8 440 54 50
Mobile: +41 79 63 53 641
Lundin Petroleum AB
Teitur Poulsen
VP Corporate Planning & Investor Relations
+41 22 595 10 00