Norway-focused Lundin ups guidance on strong Svedrup, Grieg oil performance

London — Norway-focused Lundin Energy on Oct. 30 increased its production guidance for the year after an easing of production quotas by the authorities, having almost doubled its oil and gas output year-on-year to 158,000 b/d of oil equivalent in the third quarter.

In a statement, Lundin underlined the strong performance of the Johan Sverdrup field, which came on stream in October 2019, with Lundin now holding a 20% stake, and of its Edvard Grieg field, which feeds the Grane heavy crude stream.

Johan Sverdrup was discovered by Lundin in 2010 and is estimated at 2.2 billion-3.2 billion boe. The field now accounts for around a quarter of Norwegian oil output, with shipments regularly heading to Asia.

Lundin said phase 2 of the development, intended to lift production to 690,000 b/d, had suffered disruption due to coronavirus-related work restrictions, but was back on track. "Progress is now over 45% complete, with scheduled first oil in Q4 of 2022 being maintained. Overall, the Johan Sverdrup Phase 2 project is on schedule and within budget," it said.

Lundin reiterated the full development of Johan Sverdrup is expected to break even at a $20/b oil price. It noted the partners, led by state-controlled Equinor, plan to test an increase in capacity from the existing phase 1 facilities, which is officially set at 470,000 b/d, in the current quarter. Official data show Johan Sverdrup crude output already reached 472,000 b/d in August, and total liquids output reached nearly 490,000 b/d when natural gas liquids are included. Loadings of Johan Sverdrup crude are already set to average nearly 484,000 b/d in December, according to a loading schedule.

Lundin noted production cuts implemented by Norway in June had since been eased, partly due to early over-fulfilment, enabling the company to increase its output guidance. "In Q4 2020 our fields have been granted increased production permits by the authorities, meaning we will now target approximately 175,000 boe/d for Q4, raising our full-year production guidance to a range of 161,000-163,000 boe/d" from 157,000 boe/d previously, the company said.

The Norwegian cuts were originally set to reduce the country's crude production by 250,000 b/d in June and 134,000 b/d for the rest of the year, from a "reference level" of 1.859 million b/d.

Among other projects, Lundin reiterated Equinor plans to take an investment decision by the end of 2022 on a major, but technically challenging Barents Sea oil project known as Wisting, estimated at 500 million boe. The project, in which Lundin holds a 10% stake, stands to benefit from tax breaks that were introduced in response to the coronavirus price collapse but expire at the end of 2022.

Lundin is listed on the Stockholm stock exchange and one third-owned by Sweden's Lundin family.