Lundin Petroleum secured up to US$5 billion in a seven-year deal to fund the company’s stake in Statoil’s giant Johan Sverdrup project, offshore Norway.
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Johan Sverdrup rendering. Image from Lundin Facebook. |
The deal, which includes 23 international banks that combine existing and new lenders to Lundin, is for an initial committed amount of $4.3 billion.
As one of the five biggest oilfields on the Norwegian continental shelf, the Johan Sverdrup field is located on the Utsira High about 155km west of Stavanger. At 110-120m water depth, the field covers about a 200sq km area with the reservoir at around 1900m.
Costs for the first phase are now estimated to be $12.2 billion (NOK 108.5 billion), representing a 42% drop. The anticipated costs for full-field development have been reduced to between $18-21 billion (NOK 160 billion – 190 billion). Statoil cut the costs by more for the first phase of the project in September 2015 by more than $1 billion.
The facility includes the option to bring in additional commitments from existing and new lenders “the accordion option” of up to $700 million, the Swedish exploration firm said.
The new facility is due to mature at the end of 2022, with no reduction in committed facility size before the end of 2020, which is after Johan Sverdrup is expected to deliver first oil.
It also replaces the current credit facility of $4 billion, which was due to reduce in availability beginning June and mature in 2019.
"This facility, along with cash flows generated from the strongest production our company has ever achieved, will allow us to fund the Johan Sverdrup development through to first oil,” Alex Schneiter, president and CEO of Lundin Petroleum said.
Late last month, the company announced its decision to decrease its development spending by 12%, compared to 2015, to $935 million. Lundin expects to spend the bulk of the budget on Johan Sverdrup, as work on the project will ramp up this year.
Construction on three steel jackets and three topsides is due to begin soon, as construction of the first steel jacket for the riser platform, and the topside for the drilling platform began in 2015.
Pre-drilling of development wells is scheduled to commence in Q2 2016, and to continue until 2019, when 17 production and water injection wells have been completed. The project is on schedule for first oil in Q4 2019.
In mid-January, Statoil acquired 11.93% stake in Lundin’s shares in a move that the Norwegian giant said would increase its indirect exposure to core assets on the Norwegian Continental Shelf, including the Johan Sverdrup and Edvard Grieg fields.
Read more:
Lundin drops budget but activity remains high
Statoil makes further Johan Sverdrup cuts
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