Copenhagen — Swedish independent producer Lundin Petroleum — a key partner in Norway's massive Johan Sverdrup oil field — on Friday raised its production estimates after posting better than expected fourth-quarter earnings.
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Lundin raised its production estimates to 160,000-170,000 b/d of oil equivalent from 2021 with a target of over 200,000 boe/d. Previously, Lundin had guided for production of 150,000 boe/d with a target of 170,000 boe/d, assuming the Johan Sverdrup field is at full field plateau production in 2023.
Lundin --which has a 20% stake in the Johan Sverdrup field-- said the production guidance for 2020 was 145,000-165,000 boe/d compared with actual production of 93,300 boe/d in 2019.
Lundin pointed out that last year's production was above the midpoint of the upgraded 2019 production guidance of 90,000-95,000 boe/d and 10% above the midpoint of the original guidance of 75,000-95,000 boe/d. In the fourth quarter, Sverdrup averaged 277,500 boe/d with a production efficiency of 94%.
The company said the production outlook for the current year reflected the ramp-up of the Equinor-operated Johan Sverdrup Phase 1 to plateau levels by the summer of 2020 and a planned two-week maintenance shutdown of its own operated mainstay Edvard Grieg field in the second quarter.
It said the production contribution would be split approximately 50% from the Johan Sverdrup field, 40% from the Edvard Grieg field and the rest from the other assets.
Lundin said Sverdrup was producing around 350,000 boe/d gross at year-end 2019, which was 80% of Phase 1 plateau rate.
CEO Alex Schneiter said Lundin's key Edvard Grieg field last year continued to exceed expectations with operating efficiency ahead of guidance at 98%.
He said this achievement was underpinned by continued reservoir outperformance and limited water production, which alongside the infill drilling program scheduled for 2020, had enabled the company to lift the field's gross ultimate reserves to 300 million boe.
Schneiter said Grieg had consistently delivered above expectations for Lundin and he was confident this performance would continue in the future, especially as more near-field resources were seen being de-risked through the company's ongoing drilling program.
Lundin's overall 2020 capex guidance of $1.27 billion was 21% higher than the market consensus of $1.05 billion. Lundin said 2020 was set to have a very active exploration and appraisal program of 10 wells across its portfolio in Norway, targeting over 650 million boe of net unrisked resources.
The company reported Q4 2019 net income of $155.3 million compared with a loss of $98.2 million a year earlier. The result included a $128 million impairment related to development uncertainty over certain licenses in the Barents Sea.