Sweden’s Lundin Petroleum has returned to profit in the first quarter of 2016, reporting a net result of $114.3 million. For comparison, the group reported a net loss of $230 million in the corresponding quarter a year ago.
The company said the profit in the first quarter of the year was mainly driven by the excellent production performance and a net foreign exchange gain as a result of the weakening US Dollar against the Norwegian Krone and the Euro, partially offset by lower oil prices and expensed exploration costs.
The company’s oil and gas production grew to 62.4 thousand barrels of oil equivalent per day (Mboepd) compared to 25.8 Mboepd for the same period in 2015.
Production was boosted by contribution from the Edvard Grieg field in Norway, which started producing on November 28, 2015. Output from the field averaged 30.200 boepd.
Contribution from Edvard Grieg does not stop there, as in April 2016 Lundin Petroleum acquired an additional 15 percent working interest in the field from Statoil ASA,in exchange for stock.
The effective date of the transaction is 1 January 2016 and as a result of this transaction Lundin Petroleum has increased its reserves by 31 MMboe (1 January 2016). The additional production from this transaction will be accounted for from the date of completion. Assuming a completion date of 1 July 2016 the additional full year 2016 production from this transaction will be 5,000 boepd net to Lundin Petroleum thus changing Lundin Petroleum full year production guidance from between 60,000 and 70,000 boepd to between 65,000 and 75,000 boepd.
In a letter to shareholders, CEO Alex Schneiter, who assumed position in October 2015, said the first quarter was challenging, with oil prices averaging below $35 a barrel, with a low of $26 a barrel in January, lowest since November 2003.
He said: “It has been truly a challenging period but at the same time a very rewarding one. Whilst we have continued to witness extreme volatility in oil prices, I believe a rebalancing of supply and demand is likely in the second half of 2016 as a consequence of significant underinvestment and project deferrals in our industry both onshore and offshore.”