Lundin Petroleum has announced a US$1.45 billion 2015 development, appraisal and exploration budget - representing a 31% drop compared to its forecast 2014 spending.
Spending on development projects will drop about 30%, to $980 million, as a number of projects compete. Meanwhile, exploration spending will drop 27% to about $320 million, and appraisal spending, which takes the hardest hit, will drop 48%, to $150 million.
The Swedish exploration and production firm, focused on Norway and Malaysia, yesterday announced its latest dry hole, prompting Swedbank to lower its estimate of the value of the company's assets. Lundin has had a string of dry holes, with the latest, drilled on the Kopervik prospect, using the Island Innovator semisubmersible (pictured) in Norway's North Sea.
Ashley Heppenstall, President & CEO of Lundin Petroleum said: "The major focus of our 2015 capital budget will be the completion of our development projects on Boyla (Norway), Bertam (Malaysia) and Edvard Grieg (Norway), which will increase our production to 75,000 boe/d. We remain firmly focused upon our exploration program in Norway and Malaysia, with a particular emphasis on the Utsira High and the Barents Sea areas, where we have had excellent historical success. We have a strong balance sheet and I expect our 2015 capital program to be fully funded from internally generated cash flow and bank debt.”
Of the firm's 2015 development spending budget, some 77%, or $750 million, will be spent in Norway, with the rest on the Bertram development in Malaysia.
By the end of 2015 the Brynhild, Bøyla and Bertam development projects will have completed, leaving no further planned capital expenditure beyond 2015. Edvard Grieg will see the development drilling campaign concluded in 2017.
Lundin is a partner on the Johan Sverdrup development, for which the Phase 1 development plan is due to be submitted in February, but will not impact 2015 spending, says Lundin.
Edvard Grieg is due to come onstream in Q4 2015 and is estimated to produce 50,000 boe/d net to Lundin Petroleum once plateau production is reached mid 2016.
Norway exploration
Lundin's pre-tax exploration budget for 2015 is $320 million, focusing on Norway, which accounts for approximately 85% of the exploration budget.
A total of seven exploration wells will be drilled in Norway during 2015 targeting net unrisked prospective resources of 480 MMboe. The 2015 exploration campaign is targeting prospects in both of Lundin Petroleum’s core exploration areas on the Norwegian Continental Shelf, namely the Utsira high in North Sea and in the Barents Sea. The Utsira High campaign comprises of four wells; on PL674 (WI 35%, Zulu), on PL359 (WI 50%, Luno II North), on PL544 (WI 40%, Fosen) and on PL338C (WI 80%, Gemini). The Barents Sea exploration campaign consists of one operated well on PL708 (WI 40%, Ornen) and one operated well on PL609 (WI 40%, Neiden). One operated well will also be drilled in the More Basin in the North Sea on PL579 (WI 50%, Morkel). Rigs have been secured for all seven wells.
Appraisal wells will also be drilled on the 2014 Alta discovery on PL609 (WI 40%) in the Barents Sea and the Edvard Grieg field in PL338.
Malaysia exploration
The budgeted net exploration expenditure for 2015 is $35 million, involving the drilling of two operated exploration wells on PM307 (WI 75%, Rengas and Mengkuang) as well as a seismic survey on PM328 (WI 50%).
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