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Lundin heralds losses on empty wells

It is proving to be an expensive affair for the Swedish oil company that two drillings in the Barents Sea have not led to oil discoveries.

When Lundin Petroleum releases its fourth quarter interim report on Feb. 1, it is not set to be particularly impressive, as evident from a market update released by the company today.

Lundin reports in the update that the company's profit before tax and depreciations will be impacted by a series of one-off expenses in the fourth quarter.

This concerns exploration costs of USD 31 million in the fourth quarter 2017. The company must book the loss because the wells Hufsa and Hurri did not contain oil.

Meanwhile, Lundin has flagged a loss of USD 15 million after tax from a divestment of 39 percent of the Brynhild field to CapeOmega, while the firm will further suffer a net foreign exchange loss of approximately USD 69 million.

On the bright side however, the company can book a tax credit of USD 24 million, according to the market update.

The Swedish oil company owns 22.6 percent of Norwegian oil field Johan Sverdrup. Maersk Oil – in the midst of being acquired by France's Total – and is also a partner on the field with a stake of 8.44 percent. First oil from Johan Sverdrup is expected at the end of 2019, according to Bloomberg news.

English Edit: Gretchen Deverell Pedersen

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