Lundin guides to stable 2022 output after record 2021

Norway-focused upstream independent Lundin Energy expects its oil and gas production to be broadly steady this year after hitting a record 190,000 b/d of oil equivalent (boe/d) in 2021.

The company — which is due to be acquired by rival Norwegian producer Aker BP in a $14bn cash-and-shares deal later this year — said it expects output from its assets to average 180,000-200,000 boe/d in 2022. Together with Aker BP's portfolio, the enlarged company is on track to produce over 400,000 boe/d this year.

Lundin said its 2022 guidance takes into account "normal operational efficiencies" and planned outages but it also reflects the start-up of the second phase of the North Sea's Johan Sverdrup oil field in the fourth quarter. The firm expects Johan Sverdrup to account for 55pc of its output this year, the Edvard Grieg area to make up 40pc and the Alvheim area to contribute the rest.

Lundin's assets are expected to produce over 200,000 boe/d by 2023 once Johan Sverdrup reaches its full field plateau rate of 755,000 b/d. The merger with Aker BP will leave the enlarged company with a 31.6pc stake in the giant Norwegian field.

As well as breaking production records, Lundin's free cash flow hit an all-time high of $1.6bn last year, boosted by rising oil and gas prices. This enabled the company to cut its net debt by around $1.2bn over the course of the year. Lundin reported a full-year profit of around $494mn, up from $384mn in 2020.

"I'm pleased to report that in 2021 Lundin Energy delivered record production and financial results, underpinned by continued excellent operational performance and strong oil and gas prices," chief executive Nick Walker said.

Lundin expects its takeover by Aker BP to be completed in the middle of the year. "I am convinced that the combination proposal with Aker BP is a win-win outcome for both sets of shareholders, as it creates a business that is positioned to prosper through the energy transition and deliver increased and sustainable dividends," Walker said.

By Konstantin Rozhnov