Lundin Petroleum AB (Lundin Petroleum) announced its 2013 development, appraisal and exploration budget which totals USD 1,700 million. 2013 will be the busiest year in the company’s history both in relation to exploration and development activities.
The 2013 expenditure on development projects is budgeted at USD 1,100 million which represents approximately a 150 percent increase on forecast 2012 development expenditure. The 2013 budgeted expenditure on exploration activity is USD 460 million which represents approximately 40 percent increase on the forecast 2012 exploration expenditure. The budgeted 2013 appraisal expenditure amounts to USD 150 million against a forecast 2012 appraisal expenditure of approximately USD 150 million.
Substantially all of the 2013 budgeted development expenditure relates to ongoing development projects in Norway.
1. The development of the Edvard Grieg field (WI 50% and operated by Lundin Petroleum) commenced in 2012. The 2013 net expenditure is budgeted at close to USD 550 million which will involve ongoing engineering and construction of the jacket, topside and export pipelines.
2. The development of the Brynhild field (WI 90% and operated by Lundin Petroleum) is progressing well and first production is scheduled to come onstream in the fourth quarter of 2013 at a net plateau rate of 10,800 barrels of oil equivalent per day (boepd). The 2013 net development expenditure is budgeted at approximately USD 470 million which includes topside modification of the Haewene Brim FPSO, subsea facilities construction and installation and the drilling of production and water injection wells.
3. The non-operated Bøyla field (WI 15%) which will be tied back to the Alvheim FPSO received development approval in 2012. The 2013 net development expenditure is budgeted at approximately USD 40 million which predominantly involves engineering, procurement and fabrication of subsea and topside equipment. The field is scheduled to come onstream in the fourth quarter of 2014 at a net plateau rate of approximately 3,000 boepd.
The exploration budget for 2013 is USD 460 million with a major focus on Norway which accounts for approximately 70 per cent of this amount. The exploration programme (excluding appraisal) involves the drilling of 18 exploration wells in Norway, Malaysia, Indonesia, France and the Netherlands.
The budgeted net exploration expenditure for 2013 is USD 330 million. A total of ten exploration wells will be drilled in Norway during 2013. A significant proportion of the 2013 exploration expenditure will be focused around the Utsira High Area with six exploration wells targeted in the area, on PL625 (WI 40%), PL338 (WI 50%), PL359 (WI 40%), PL544 (WI 40%), PL501 (WI 40%) and PL410 (WI 70%) all of which are operated by Lundin Petroleum. Two exploration wells will be drilled in the southern North Sea on PL495 (WI 65%) and PL453 (WI 35%) both of which are operated by Lundin Petroleum. One operated exploration well will be drilled in the Barents Sea on PL492 (WI 40%) and one non-operated exploration well will be drilled on PL330 (WI 30%) in the northern part of the Norwegian Sea.
2. South East Asia
The budgeted net exploration expenditure for 2013 is approximately USD 115 million. Three exploration wells will be drilled in Malaysia of which two will be drilled offshore Peninsular Malaysia and one well offshore Sabah. Two exploration wells will be drilled offshore Indonesia; on the Baronang (WI 100%) and Gurita (WI 100%) licences respectively.
The appraisal budget for 2013 is USD 150 million with approximately 95 per cent of the expenditure being spent in Norway. The appraisal programme involves the drilling of 6 appraisal wells in Norway and pre-investment decision work on the Bertam field in Malaysia.
The budgeted net appraisal expenditure for 2013 is USD 140 million with all the appraisal activity taking place on the Johan Sverdrup discovery and on PL338 (WI 50%). Four appraisal wells will be drilled on the Johan Sverdrup discovery in 2013, two on PL501 (WI 40%, operated by Lundin Petroleum) and two on PL265 (WI 10%, operated by Statoil). Two appraisal wells will be drilled on PL338 including one appraisal well in the south eastern section of the Edvard Grieg field.
The budgeted net appraisal expenditure for 2013 is USD 10 million relating to assessing the viability of the Bertam field in PM307 (WI 75%) ahead of a final investment decision during 2013. If the Bertam field development moves forward additional development costs will be incurred.
Ashley Heppenstall, President and CEO of Lundin Petroleum comments; “With an 85% increase in capital expenditure for 2013 this year will be our busiest year ever. I am very pleased that all our Norwegian development projects are on schedule and that we still are on target for a doubling of our current production to in excess of 70,000 boepd by the end of 2015. The appraisal of Johan Sverdrup is progressing well and by the end of 2013 it is likely that at least 18 exploration and appraisal wells will have been drilled on the discovery. Importantly we have secured the rig capacity to execute on our 16 exploration and appraisal well programme in Norway during 2013 and I am confident that this programme will prove-up yet more resources. Our 2013 budget will be fully funded from operating cash flow and existing bank facilities.”
Press Release, January 7, 2013