Lundin Spuds Well on Gohta Prospect

Sweden's Lundin Petroleum reported Tuesday that it has begun the drilling of exploration well 7120/1-3 on Norwegian production license 492. The well is targeting the Gohta prospect, located some 90 miles northwest of the Norwegian coast and 45 miles south of the Johan Castberg discovery.

The main objective of the well is to prove the presence of hydrocarbons in Permian and Triassic reservoirs. Lundin estimates the Gohta prospect to contain un-risked, gross prospective resources of 226 million barrels of oil equivalent. The firm is the operator and holds a 40-percent working interest in PL492.

Lundin also announced in a separate statement Tuesday that it will incur exploration expenses of approximately $63 million and impairment expenses of around $82 million for the second quarter of 2013. During the period, the firm's dry Carlsberg exploration well cost $45 million to drill, while Lundin also spent $18 million drilling the sidetrack 16/2-17B targeting the Cliffhanger South prospect and certain other exploration-related costs (including the firm's participation in Norway's 22nd licensing round).

Lundin also reviewed the carrying value of its assets in Norway and concluded that the carrying value on its PL438 Skalle, PL533 Salina and PL088 Peik gas discoveries can no longer can be supported, resulting in an impairment charge for the period of $82 million.

Lundin CEO commented in the statement: "We still believe Peik, Skalle and Salina gas discoveries can be commercially developed with the appropriate gas price and transportation solutions. However in view of the recently announced Norwegian tax changes which particularly impact marginal discoveries we feel it is prudent to write down the carrying value of these assets."



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