Business & Finance
Lundin Petroleum provides update on Q4 2017 profitability
18 January 2018 -

Lundin Petroleum AB (STO:LUPE), an independent oil and gas exploration and production company with operations focused on Norway, announced on Wednesday that the profitability for Q4 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.

According to the company, during Q4 2017, its will incur pre-tax exploration costs of approximately USD31m, which will be charged to the income statement and offset by a tax credit of approximately USD24m. These 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.

Also, the transaction in relation to the divestment of a 39% working interest in the Brynhild field to CapeOmega was completed on 30 November 2017. Lundin Petroleum had previously announced that on completion of this 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 USD15m be charged to the income statement for Q4 2017.

Reportedly, the net debt position of Lundin Petroleum at 31 December 2017 amounted to USD3.9bn, resulting in available liquidity of USD1.1bn within its USD5.0bn reserve-based lending facility.

In addition, the company will recognise a net foreign exchange loss of approximately USD69m for Q4 2017. The Norwegian Krone weakened against the US Dollar by approximately 3% and the Euro strengthened against the US Dollar by approximately 2% during Q4 2017. This foreign exchange loss mainly relates to the revaluation of loan balances at the prevailing exchange rates at the balance sheet date.

These items are largely non-cash and will have no impact on operating cash flow or EBITDA, the company clarified.

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