Lundin Reduces CAPEX by 26%, Increases Reserves by 292%
Lundin Petroleum announced Friday that it has reduced its capital expenditure to $1.08 billion in in 2016, marking a 26 percent decrease from its CAPEX last year.
The company’s budget for exploration and appraisal activity was the hardest hit, dropping down to $145 million. The decrease marked a 64 percent reduction on 2015 exploration and appraisal expenditure. Lundin’s 2016 spend on development projects is budgeted at $935 million, which is a 12 percent cut compared to last year.
As at December 31, 2015 the company’s proven and probable working interest reserves stood at 685 million barrels of oil equivalents, representing an increase of 292 percent compared to Lundin’s reserve position a year earlier. The main reason for the increase in reserves was due to Johan Sverdrup resources being included as reserves for the first time. Further reserves increases were seen from the successful appraisal of the Edvard Grieg field during 2015 as well as positive reserves revisions to the Volund field.
Lundin Petroleum’s production guidance for 2016 is between 60,000 to 70,000 barrels of oil equivalent per day, with approximately 80 percent of the output contribution relating to production from Norway. The energy firm’s 2016 exploration program involves the drilling of four wells in Norway and Malaysia in addition to re-entering the Neiden exploration well in the southern Barents Sea. Two non-operated onshore wells in the Netherlands will also be drilled during the year.
Alex Schneiter, president and CEO of Lundin Petroleum, said in a company statement:
"2016 will be a transformational year for Lundin Petroleum with production guidance being between 60,000 and 70,000 boepd. Our capital expenditure will focus on continued development drilling on Edvard Grieg and on the execution of Phase 1 of Johan Sverdrup. Both projects will drive significant production growth in the coming years. I am particularly pleased with the Edvard Grieg performance to date and with the cost reductions we have seen on the Johan Sverdrup project which I expect to continue through 2016 as we finalise the concept selection for Phase 2.
“Our 2016 production guidance is about double the average rate achieved in 2015 and will be dominated by the Edvard Grieg performance which so far, I am pleased to say, has outperformed both in terms of facility uptime and well productivity potential. Gross rates achieved have been in excess of 85,000 boepd with three wells at 100 percent facility uptime and this excellent rate provides us with a good indication of the field’s potential in terms of production capacity and gives me confidence in reaching the plateau rate of 100,000 boepd by the time the first two water injection wells are completed and the fourth production well comes onstream in the second half of 2016.
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