STOCKHOLM, SWEDEN–(Marketwired – Feb. 13, 2015) – Lundin Petroleum AB (Lundin Petroleum) (OMX:LUPE) is pleased to announce that its wholly owned subsidiary Lundin Norway AS (Lundin Norway) together with its partners Statoil (operator), Maersk Oil, Det norske oljeselskap and Petoro, will today submit a plan for development and operation (PDO) for Phase 1 of the Johan Sverdrup field to the Norwegian Ministry of Petroleum and Energy.
The full field gross recoverable contingent resources range for Johan Sverdrup is estimated at between 1.7 – 3.0 billion barrels of oil equivalent with approximately 95 percent being oil. The gross oil and gas production capacity for the full field is expected to be in the range of 550,000 – 650,000 barrels of oil equivalent per day.
The Johan Sverdrup field will be developed in several phases and with multiple fixed platform installations. Phase 1 of the development consists of four bridge linked platforms as well as three subsea installations. The gross capital expenditures for Phase 1 is estimated at NOK 117 billion which includes oil and gas export pipelines, development wells as well as power supply from shore. Phase 1 is scheduled to start production in late 2019 with a forecast gross production level of between 315,000 and 380,000 barrels of oil per day.
The 22 appraisal wells which have been drilled on Johan Sverdrup have shown that the reservoir is of exceptional quality and the multiple production tests carried out also indicate that the well productivity will be very high. Consequently the ramp-up periods to plateau production both for Phase 1 and for the subsequent phases will be very short. Phase 2 of the Johan Sverdrup development is expected to commence production in 2022. Whilst the development concept for the full field development has not yet been approved by the partnership, the current estimated full field capital costs, including Phase 1 costs, are in the range of NOK 170 to NOK 220 billion.
The estimated annual operating costs for Johan Sverdrup for Phase 1 are estimated at NOK 3.8 billion which translates into an operating cost of less than USD 5 per barrel when Phase 1 is producing at plateau.
The Johan Sverdrup field was discovered in 2010 with the discovery of Avaldsnes, PL501, by Lundin Norway, followed by the discovery of Aldous, PL265, by Statoil in 2011.
The majority of the partnership has asked the Ministry of Petroleum and Energy to determine the final allocation of resources in Johan Sverdrup, based on the following proposal: Statoil 40.0267 percent, Lundin Norway 22.12 percent, Petoro 17.84 percent, Det norske oljeselskap 11.8933 percent and Maersk Oil 8.12 percent.
Ashley Heppenstall, President and CEO of Lundin Petroleum comments:
“The submission of the Plan for Development for Phase 1 of Johan Sverdrup is a major milestone for Lundin Petroleum, our partners and for the Norwegian offshore industry. Johan Sverdrup is one of the largest fields ever developed in the North Sea and has in addition excellent reservoir characteristics. I am convinced that this field will outperform current forecasts in respect of recoverable resources and productivity and will generate major value to our shareholders for many years to come.”
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 on NASDAQ Stockholm (ticker “LUPE”). Lundin Petroleum has proven and probable reserves of 187.5 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).
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 2014, 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, Resources and Production” in the Company’s annual report.
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. Unless otherwise stated, all contingent resource estimates contained herein are the best estimate (“2C”) contingent 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. Unless otherwise stated, all Prospective Resource estimates contained herein are reflecting a P50 Prospective Resource estimate. Risked Prospective Resources reported herein are partially risked. They have been risked for chance of discovery, but have not been risked for chance of development.
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.
Lundin Petroleum AB
Head of Corporate Communications
Tel: +41 22 595 10 00 or Tel: +46 8 440 54 50
Mobile: +41 79 63 53 641
Lundin Petroleum AB
VP Corporate Planning & Investor Relations
Tel: +41 22 595 10 00