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Lundin Energy AB

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Year End Report 2020

  • Strong financial performance with free cash flow generation of MUSD 448, operating cost below guidance at USD 2.69 per boe and reduced net debt to USD 3.9 billion
  • Balance sheet re-financed with USD 5 billion corporate facility with significantly improved terms
  • Board of Directors propose to increase 2020 dividend by 80 percent to USD 1.80 per share corresponding to MUSD 512
  • Record quarterly production in the fourth quarter of 185 Mboepd and 2021 production guidance set between 170 to 190 Mboepd
  • Johan Sverdrup Phase 1 plateau production raised to 500 Mbopd gross, with expectation to increase up to 535 Mbopd by mid-2021
  • Edvard Grieg reserves increased by 50 MMboe to 350 MMboe gross 2P ultimate recovery, extending plateau a further year to late 2023
  • Delivering growth with resource additions of 210 percent of production in 2020 and pipeline of new projects with net resources of approximately 200 MMboe being matured for development within the temporary tax incentives
  • Acceleration of Decarbonisation Strategy achieving carbon neutrality from 2025 from operational emissions

Financial summary

 1 Jan 2020-
31 Dec 2020
12 months
1 Oct 2020-
31 Dec 2020
3 months
1 Jan 2019-
31 Dec 2019
12 months
1 Oct 2019-
31 Dec 2019
3 months
Production in Mboepd164.5185.193.3135.1
Revenue and other income in MUSD2,564.4779.72,948.7749.7
CFFO in MUSD1,528.0276.71,378.2392.9
Per share in USD5.380.974.361.20
EBITDAX in MUSD12,140.2708.41,918.4695.5
Per share in USD17.532.496.072.45
Free cash flow in MUSD448.2-97.51,271.7153.8
Per share in USD1.58-0.344.030.54
Net result in MUSD384.2303.7824.9155.3
Per share in USD1.351.072.610.56
Adjusted net result in MUSD280.086.9252.778.9
Per share in USD0.990.310.800.28
Net debt in MUSD3,911.53,911.54,006.74,006.7

1 Excludes the reported after tax accounting gain of MUSD 756.7 in 2019 on the divestment of a 2.6 percent working interest in the Johan Sverdrup project.

Comment from Nick Walker, President and CEO of Lundin Energy:
"I’m pleased to report that in 2020 Lundin Energy delivered another strong set of results. Our operations and key projects remain on track, despite the impact of COVID-19 and unprecedented oil price volatility, demonstrating the resilience of our industry leading, low-cost business.

"This was a challenging year for all, with the impact from COVID-19 on people’s health, society and of course the global oil market. At Lundin Energy we continue to handle the impact with agility and flexibility, safeguarding our people’s well-being whilst keeping our main business priorities on course. We exited 2020 with record production in the fourth quarter of 185 Mboepd, resulting in annual production of 165 Mboepd at the top end of the original guidance range, despite the production cuts imposed by the Norwegian government. Operating costs were just USD 2.69 per boe, below the guidance for the year.

"Our world class assets continue to outperform and production is now set to exceed 200 Mboepd by 2023. Edvard Grieg gross 2P ultimate recovery was raised to 350 MMboe, almost double the original project sanction level. Alongside area tie-back developments this extends the production plateau to end 2023, which I anticipate will go further with upsides and area exploration opportunities. At Johan Sverdrup we reached Phase 1 plateau production ahead of schedule and the facilities capacity has been lifted significantly with an expectation of reaching up to 535 Mbopd gross from mid-2021. This is an increase of 95 Mbopd on design levels, and the full field plateau should increase to 720 Mbopd, when Phase 2 starts up in the fourth quarter of 2022.

"Our growth strategy continues to deliver results with total resource additions in 2020 of 210 percent of produced volumes. With a pipeline of nine potential new projects, prioritised for development within the new tax environment, and our active exploration and appraisal programme in 2021, targeting over 300 MMboe of net unrisked resources, I am confident that we can continue to grow resources.

"Financially we had a strong year, despite record low oil prices, delivering free cash flow of MUSD 448, covering our 2020 dividend more than 1.4 times, enabling us to deleverage the business at an average realised oil price of USD 40.0 per barrel. Liquidity was further strengthened with the successful refinancing of the business through a USD 5 billion committed corporate facility, with significantly improved terms. I am pleased to note that the Board of Directors is recommending a 80 percent increased dividend of USD 1.80 per share (in total MUSD 512), clearly demonstrating our commitment to sustain and increase shareholder returns. The Company’s policy remains to pay a sustainable dividend even below USD 50 per barrel.

"We have also delivered on our Decarbonisation Strategy in 2020. Work continues on the electrification of our key producing assets alongside our investments in renewable energy to offset and replace the electricity we consume. When combined with our natural carbon capture projects, we can now achieve carbon neutrality from 2025; a first for the upstream industry, and showing we can deliver both profitable growth and environmental benefits.

"It is an honour to be taking up the reins of this industry-leading Company and I would like to express my deep gratitude to Alex Schneiter for providing exceptional leadership over the past five years. His foresight and ambition means that Lundin Energy is, and will continue to be, at the forefront of the industry. I would like to thank all our stakeholders for their support during this very challenging year. I look forward to reporting on our active 2021 programme and I am encouraged by the outlook for the business, which is well positioned to deliver resilient, sustainable growth into the future."

2021 Capital Markets Day information

Lundin Energy will be hosting its 2021 Capital Markets Day on 28 January 2021 at 14.00 CET (08.00 EST) via a webcast and conference call facility. The Capital Markets Day will include presentations by the Company’s management team on its fourth quarter 2020 financial results, the business strategy, the 2021 budgeted development campaign, its exploration and appraisal programme and decarbonisation strategy. Please follow the event live at www.lundin-energy.com or dial in using the following telephone numbers with the pin code shown below:

  
UK/International:+44 2071 928338
Sweden:+46 8 566 184 67
Norway:+47 21 56 30 15
USA:+1 646 741 3167
Access Pin :6247379
Webcast link: https://edge.media-server.com/mmc/p/oz7b59c2


Lundin Energy has grown from an oil and gas exploration company into an experienced Nordic energy developer and operator. We continue to explore new ideas, new concepts and new solutions to maintain our position as an industry leader in production efficiency, sustainability and decarbonisation. (NASDAQ Stockholm: LUNE). For more information, please visit us at www.lundin-energy.com or download our App www.myirapp.com/lundin


For further information, please contact:

Edward Westropp
VP Investor Relations
Tel: +41 22 595 10 14
edward.westropp@lundin-energy.com 
Robert Eriksson
Head of Media Communications
Tel: +46 701 11 26 15
robert.eriksson@lundin-energy.com


This is information that Lundin Energy AB is required to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact persons set out above, at 07.31 CET on 28 January 2021.

Forward-looking statements
Certain statements made and information contained herein constitute "forward-looking information" (within the meaning of applicable securities legislation). Such statements and information (together, "forward-looking statements") relate to future events, including Lundin Energy’s future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to estimates of reserves and/or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities. Ultimate recovery of reserves or resources are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions) are not statements of historical fact and may be "forward-looking statements". Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations and assumptions will prove to be correct and such forward-looking statements should not be relied upon. These statements speak only as on the date of the information and Lundin Energy does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, operational risks (including exploration and development risks), productions costs, availability of drilling equipment, reliance on key personnel, reserve estimates, health, safety and environmental issues, legal risks and regulatory changes, competition, geopolitical risk, and financial risks. These risks and uncertainties are described in more detail under the heading "Risk management" and elsewhere in Lundin Energy’s Annual Report. Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements are expressly qualified by this cautionary statement.

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