Lundin Petroleum expects to double 2P reserves in 2014 (Photo: Subsea World News)

Lundin Petroleum expects to double 2P reserves in 2014 (Photo: Subsea World News)

Norway's largest domestic non-state owned oil producer, Lundin Petroleum (LUP:TSX) announced fourth quarter and full year 2013 production results today.  The company produced an average of 31,100boe/d in the fourth quarter and 32,700boe/d for the full year average.  In the fourth quarter, Lundin Petroleum received an average price per barrel of US$109.  This remains a key reason why we are bullish on the international E&P space; the top line pricing remains high due to adequate supply channels.

The company warned investors that accounting profitability will be negatively impacted by non-cash exploration expenses, but that there would be no impact on cash flow or EBITDA for the fourth quarter of 2013.  This is as a result of management's decision to expense US$135 million in exploration costs for the fourth quarter.  Specifically in Norway, the company's Sverdrup prospect and the Luno II well were expensed in the quarter resulting in an after-tax charge of US$30 million.

The company is targeting roughly $1 billion in operating cash flow for the full year 2013.  It's group of lenders (25 banks) have agreed to increase their credit facility to $4 billion from $2.5 billion.  This will allow them to further develop their enormous Johan Sverdrup target which is expected to produce 150,000boe/d at peak production (start-up in 2018)

A couple of weeks ago, the company announced a $2.1 billion capital budget for 2014 that would include 19 exploration wells and would target over 600 million barrels of oil equivalent of unrisked prospective resources.  The company says they have the potential to double the current 2P reserve base through a six appraisal well program in 2014.  They are currently sitting on 201.5MMboe in 2P reserves.

Another news release from Lundin Petroleum this morning revealed that the company had been awarded nine exploration licenses including five licenses in the North Sea and four licenses in the Barents Sea. Four of the awarded licenses will be operated by Lundin Petroleum.

Read: LUNDIN PETROLEUM UPDATES ON FORECAST FOURTH QUARTER 2013 FINANCIAL PERFORMANCE AND ANNOUNCES AN INCREASED CREDIT FACILITY

Read: LUNDIN PETROLEUM AWARDED NINE LICENCES IN NORWEGIAN LICENSING ROUND

Related: Lundin Petroleum Allocates US$2.1 Billion in 2014 Targeting 620 Million Barrels of Unrisked Oil Resources