Lundin sees increase in reserves and contingent resources
Lundin Petroleum has identified an increase in reserves and contingent resources at the end of 2018, mostly due to reserves additions from the Johan Sverdrup and Edvard Grieg fields as well as from the Alvheim area.
Lundin said on Monday that the company had 745 mmboe 2P reserves, 901 mmboe 3P reserves, and best estimate net contingent resources of 225 mmboe as of December 31, 2018.
According to the company, the 2P reserves replacement ratio is 163 percent for 2018 which is the fifth consecutive year that Lundin has more than replaced production.
The 2P reserves reflected a positive revision of 49.2 mmboe, excluding sales while the 3P reserves reflected a positive revision of 35.4 mmboe, excluding sales.
The increase in reserves relates mainly to Lundin Petroleum’s largest asset, the Johan Sverdrup field, with minor reserves additions on Edvard Grieg and the Alvheim area also contributing to the result.
Oil accounts for 94 percent of Lundin’s 2P reserves and when the Johan Sverdrup field begins production in November 2019, the majority of 2P reserves will be in production.
Lundin added that the reserves upgrade on Johan Sverdrup was driven by positive drilling results and promotion of the water alternate gas injection project from contingent resources to reserves, which was sanctioned by the partnership during 2018.
Lundin said that the upgrade of reserves in the Johan Sverdrup field are consistent with the upgrades announced by the operator Equinor during 2018.
“Edvard Grieg production performance continues to exceed expectations with the significantly slower build-up of water production than anticipated, leading to around a six months extension of plateau production to mid-2020,” said the company.
Lundin also stated that an infill drilling program was planned at Edvard Grieg beginning in 2020. It will allow for the promotion of the associated 10 mmboe net contingent resources to 2P reserves, based on a three well program.
As for contingent resources, Lundin had 225 mmboe as of December 31, 2018, which represents an increase of 40 mmboe from year-end 2017 before projects matured to reserves.
New discoveries on Frosk in the Alvheim area and Lille Prinsen in the Utsira High area and positive results from the appraisal wells on Luno II, Rolvsnes, and Gekko, together with the acquisition of an additional 15 percent interest in Luno II are the main drivers for the increase.
“Contingent resources for the Alta and Gohta discoveries are unchanged from year-end 2017 and will be updated during 2019 when the future appraisal plan for the area is defined and all the additional data has been processed,” the company said.
Phase 1 of the Luno II development project is expected to be sanctioned in the first quarter of 2019, which will allow for 37 mmboe of net contingent resources to be promoted to 2P reserves.
Nick Walker, COO of Lundin, said: “In 2018, we increased both reserves and contingent resources, once again highlighting the impact our organic growth strategy has in continuing to deliver the E&P cycle of adding contingent resources and converting it into reserves and then production.
“This is the fifth consecutive year in which our reserve additions have more than replaced production, while in the same period production has significantly increased, and as we continue to invest in the portfolio during 2019, I am confident in our ability to continue to grow organically.”