Swedish independent Lundin Petroleum will expense pre-tax exploration costs of $31 million and recognize a net foreign exchange loss of $69 million as well as an after tax loss on sale of assets of $15 million for the fourth quarter of 2017.
The profitability for the fourth quarter of 2017 will be impacted by certain expensed exploration costs, a loss on sale of assets, as well as a net foreign currency exchange loss mainly related to the revaluation of loan balances, the oil company said on Wednesday.
These items are largely non-cash and will have no impact on operating cash flow or EBITDA, Lundin added.
Exploration Costs
During the fourth quarter of 2017, Lundin Petroleum will incur pre-tax exploration costs of approximately $31 million which will be charged to the income statement and offset by a tax credit of approximately $24 million. The exploration costs are mainly related to the non-commercial gas discovery on the Hufsa prospect and the dry well on the Hurri prospect , both located in PL533 in the Barents Sea.
Loss assets sale
The previously announced transaction in relation to the divestment of a 39 percent working interest in the Brynhild field in the North Sea to CapeOmega was completed on November 30, 2017. Lundin Petroleum has previously announced that on completion of the transaction a net loss on sale of assets would be recorded as a result of the accounting for income taxes in accordance with IFRS. Consequently, an after tax loss of $15 million will be charged to the income statement for the fourth quarter 2017.
Net debt & foreign exchange loss
The net debt position of Lundin Petroleum at December 31, 2017 amounted to $3.9 billion resulting in available liquidity of $1.1 billion within its $5 billion reserve-based lending facility.
Lundin Petroleum will recognize a net foreign exchange loss of approximately $69 million for the fourth quarter of 2017. The Norwegian Krone weakened against the US Dollar by approximately 3 percent and the Euro strengthened against the US Dollar by approximately 2 percent during the fourth quarter of 2017. The foreign exchange loss mainly relates to the revaluation of loan balances at the prevailing exchange rates at the balance sheet date.