Lundin narrows net loss in 4Q, launches first dividend
Swedish oil company Lundin Petroleum narrowed its loss for the fourth quarter 2017 compared to the prior-year period as its revenues grew helped by production increase and higher oil prices. The oil company also surprised with an announcement that it would start paying dividends.
In its financial report for the fourth quarter and full year 2017 on Thursday, the oil company posted revenues of $593.7 million for the fourth quarter of 2017, an increase compared to revenues of $326.2 million in the year-before period.
Lundin’s profit before tax for 4Q 2017 was $121.9 million compared to a loss of $688.4 million in the fourth quarter 2016.
The company’s net loss from continuing operations amounted to $50.9 million compared to a loss of $662.7 million in the year-before period.
Including discontinued operations, the company’s loss for 4Q 2017 was $52 million versus a loss of $739.1 million in 4Q 2016.
To remind, the spin-off of Lundin Petroleum’s non-Norwegian producing assets into International Petroleum Corporation (IPC) was completed on April 24, 2017 and the results from the assets in Malaysia, France and the Netherlands are reported as discontinued operations.
The company’s production for the fourth quarter 2017 increased to 83.1 Mboepd compared to 71.1 Mboepd in the fourth quarter of 2016. The increase was achieved through reservoir and facilities outperformance and increased capacity at the Edvard Grieg field offshore Norway.
Lundin’s poduction for the full year 2017 amounted to 86.1 Mboepd, compared to 59.3 Mboepd for 2016, which was above the revised production guidance for the year of at or above 85 Mboepd and 15 percent above the midpoint of the original production guidance of 70 to 80 Mboepd. This performance is due to strong facilities and reservoir performance at both the Edvard Grieg field and the Alvheim area, Lundin explained.
According to the company, full year production at record level and at low cash operating costs resulted in highest operating cash flow and EBITDA to date. Following these results, Lundin Petroleum’s board of directors proposed an inaugural cash dividend for 2017 of SEK 4.00 per share totaling approximately $175 million. The dividend will be paid after the 2018 AGM.
Alex Schneiter, President and CEO of Lundin Petroleum, said: “Based on current market conditions we anticipate an annual cash dividend of at least $350 million from next year.”
The production guidance for 2018 is between 74 to 82 Mboepd.
Full year performance
Revenue and other income for the year amounted to $1.997 billion compared to $950 million in 2016 and was comprised of net sales of oil and gas, change in under/over lift position and other revenue.
The operating profit from continuing operations for the financial year ended December 31, 2017 amounted to $812.4 million compared to a loss of $244.7 million. The operating profit for the year was driven by the increased production and higher oil prices compared to 2016 which was also negatively impacted by an impairment charge of $506.1 million in respect of Russia.
The net result from continuing operations for the year amounted to $380.9 million compared to a loss of $399.3 million. The net result from continuing operations in 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, partly offset by expensed exploration costs and an impairment charge.
Offshore Energy Today Staff