Lundin Petroleum's Luno II Oil Discovery off Norway Disappoints
OSLO, Aug 29 (Reuters) – Lundin Petroleum's Luno II oil and gas discovery offshore Norway is smaller than expected and analysts said it may be too small to support a stand-alone development.
Luno II, discovered last year in the Norwegian sector of the North Sea, is now estimated to hold between 27 million and 71 million barrels of oil equivalents (boe) in gross contingent resource, below an initial estimate of 25-120 million boe, Lundin said in a statement on Friday.
"In our view, the probability for a standalone development is now minimal and that a tie back development to the Edvard Grieg platform is the most likely solution," Teodor Sveen Nilsen, an analyst at Swedbank bank, said in a note to clients.
"The updated resource estimate ... implies a more than 30 percent reduction from the previous estimate," he added.
Luno II lies about 15 kilometres (9 miles) south of Lundin's Edvard Grieg field in the North Sea, which is expected to start producing in October next year.
Lundin holds a 50 percent interest in the Luno II license while Austria's OMV has 20 percent, and Statoil and Germany's Wintershall, a unit of chemicals firm BASF, each have 15 percent.
Production tests on a well in the prospect showed oil production of 450 barrels per day and reservoir properties lower than expected.
(Reporting by Nerijus Adomaitis; Editing by Balazs Koranyi)
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