Lundin Petroleum (LUP:TSX) released their fiscal 2013 numbers (although production was pre-released on January 21st) which saw them produce an average of 32,700 boe/d in the year and make $975.6 million operating cash flow on $1.2 billion of revenue. However, EBITDA fell from $1.14 billion in 2012 to $960.9-million this year. Q4 EBITDA fell below slightly consensus of $223 million to $219 million.
Overall daily average production dropped over the year as existing fields matured from 35,700boe/d in 2012, but the company increased their operating cash flow from $831.4 million even though revenue dropped by 14% ($1.4 billion of revenue in 2012). The company has exposure to Brent oil which will continue to help profit margins and remains a key reason for us liking the international E&P space.
Over the year, Lundin was active on the exploration front and made two significant discoveries; Luno II offshore Norway and Gohta in the Barents Sea, Norway. They also signed an agreement with Russian oil giant Rosneft to sell them a 51% interest in the Lagansky block in Russia.
Comments from C. Ashley Heppenstall, President and CEO: "The primary source of funding for our development, appraisal and exploration programs is operating cash flow from our existing production. Our current production activities are Brent oil dominated with low operating costs and cash taxes, which therefore generate high operating cash flow.
In Norway, we believe that there are more hydrocarbons to be found in the Utsira High. We are at the forefront of exploration activity in the region and still have the largest acreage position as this area develops infrastructure with the Edvard Grieg and Johan Sverdrup developments proceeding. We are also very excited with progress in the Barents Sea, which we see emerging as an oil-producing province in the next few years."
Lundin is actively developing a number of very large-scale fields in their blocks in Norway's Barents Sea. These include the Edvard Grieg field which is expected to grow production to over 50,000boe/d by 2015 and grow 50% in 2015 to end the year at 75,000boe/d. When Johan Sverdrup comes online in 2018, the company expects to see production to grow to close to 150,000boe/d as that field enters peak production.
The company has increased its lending capacity to $4 billion in order to remain flexible in their development plans for the Jovan Sverdrup field and the necessary infrastructure surround that project. They are planning to aggressively explore in the area as they see many more hot spots for potentially significant oil discoveries.
A conference call will be held with President and CEO, Mr. Heppenstall, and CFO, Mike Nicholson, on Feb. 5 at 9 a.m. CET.
Please dial in to listen to the presentation on the following telephone numbers:
Sweden: 46-8-505-564-74
International: 44-203-364-5374
International toll-free number: 1-855-753-2230