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Capital Markets Day – Lundin Petroleum

Lundin Petroleum · Jan 31, 2020 · 81 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

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  1. Capital Markets Day – Lundin Petroleum – slide 1
    Lundin Petroleum Capital Markets Day 31 January 2020 1
  2. Capital Markets Day – Lundin Petroleum – slide 2
    Lundin Petroleum 2020 Capital Markets Day Agenda 1. 2019 a truly transformative year Who will be presenting today.... - focused on future growth 2. World class assets - producing assets and production growth 3. Johan Sverdrup -…
  3. Capital Markets Day – Lundin Petroleum – slide 3
    2019 a truly transformative year focused on future growth 3
  4. Capital Markets Day – Lundin Petroleum – slide 4
    The Reality and the Challenge Energy Transition to Take Decades 26% er h Since 1970 ot ble/ a Oil demand +50% % e/ ew r 20 bl e Population doubled ot n wa Re h 285 Rene MMboepd te) equivalent…
  5. Capital Markets Day – Lundin Petroleum – slide 5
    Lundin Petroleum Strategies and Priorities Organic production growth Capital discipline Lundin Strategies Low breakeven price projects & Priorities Strong free cash flow generation Innovative, efficient and technology driven…
  6. Capital Markets Day – Lundin Petroleum – slide 6
    Lundin Petroleum A Brief Glance at the Past Production (Mboepd) 2P Reserves (MMboe) Carbon Emissions (kg CO2/boe) 93 9 813 4x 1 623 2 693 5 21 (1) 120 produced 2015 2019 2015 (1) 2019 2015 2019 Operating Cost…
  7. Capital Markets Day – Lundin Petroleum – slide 7
    Lundin Petroleum Shareholder Returns - Track Record Value Returned to Shareholders 4,000 511 1520 3,000 3.8 MUSD 2,000 460 Bn USD 153 410 1,000 720 0 2010 2017 2017 2018 2019 2019 EnQuest/ IPC Dividends…
  8. Capital Markets Day – Lundin Petroleum – slide 8
    Lundin Petroleum 2019 Highlights Industry Leading Production Operating Costs 93.3 Mboepd 4.03 USD/boe upper end of original guidance 5% below guidance Strong Free Cash Flow Johan Sverdrup First Oil Ramp-up 1.3 Bn USD ahead of…
  9. Capital Markets Day – Lundin Petroleum – slide 9
    Lundin Petroleum What to Expect in 2020 Production Sustained Low OPEX 145165 3.40 Mboepd USD/boe Johan Sverdrup Organic Growth Phase 1 Plateau 4 projects underway Summer 2020 10 E&A wells targeting 650 MMboe (1)…
  10. Capital Markets Day – Lundin Petroleum – slide 10
    Lundin Petroleum Capital Allocation 20202026(1) Good flexibility on capital allocation CFFO Capex Debt Repayment E&A Renewable Dividends WF12611 p12 01.20 65 USD/bbl Brent +2% ESC (1) Based on 2P reserves and…
  11. Capital Markets Day – Lundin Petroleum – slide 11
    Lundin Petroleum Long-term Production Growth Target Long-term guidance 200 Mboepd with upsides 160170 145165 Mboepd Mboepd 93.3 Mboepd 2019 2020 2021 onwards WF12611 p14 01.20 Capital Markets Day 2020 Lundin…
  12. Capital Markets Day – Lundin Petroleum – slide 12
    Lundin Petroleum Organic Growth Strategy Southern Barents Sea Multiple Organic Growth Norway Pure Play Opportunities Material Acreage Position 7 Core Areas Maximise Mature Recovery/ Basins Step-outs Significant Norwegian…
  13. Capital Markets Day – Lundin Petroleum – slide 13
    Lundin Petroleum Decarbonisation Strategy Roadmap Industry leading low carbon business targeting Carbon Neutrality by 2030 (1) .the path to carbon neutrality Carbon Reduction Measures Starting Emissions Point…
  14. Capital Markets Day – Lundin Petroleum – slide 14
    Lundin Petroleum Safe and Responsible Operations Safety ESG Ratings 2018 Total Recordable Incident Rate (TRIR) (1) 2.6 Top 10 ESG in Europe Top 5 on human rights globally Prime Status 0.6 Outperformer Norway (2) Lundin…
  15. Capital Markets Day – Lundin Petroleum – slide 15
    160170 Long-term Target Mboepd long-term value creation Industry leading low OPEX 200 Mboepd Multiple organic 3.24.2 USD/boe 2020 onwards growth sources 1 Bn USD average free cash flow per year (1) Free Cash Flow 10%…
  16. Capital Markets Day – Lundin Petroleum – slide 16
    World class assets producing assets and production growth 16
  17. Capital Markets Day – Lundin Petroleum – slide 17
    Lundin Petroleum 2019 Production 2019 production 93.3 Mboepd 2019 above mid-point of updated Production Efficiency guidance 90-95 Mboepd(1) 40 60 140 135.1 20 80 120 0 98% 100 Edvard Grieg 100 40 60 Net Mboepd 78.8…
  18. Capital Markets Day – Lundin Petroleum – slide 18
    Lundin Petroleum 2020 Production Guidance 2020 production guidance 145 165 Mboepd Net Production Mboepd Asset Split 200 180 Johan Sverdrup Edvard Grieg Jan to date (1) Ramp-up to Phase 1 Plateau production 160 plateau - Summer…
  19. Capital Markets Day – Lundin Petroleum – slide 19
    Lundin Petroleum Industry Leading Low Operating Costs Opex (USD/boe) 15 Lundin Petroleum 8 4.0 4.2 Updated 3.4 3.2 Guidance (3) UK (1) Norway (1) 2019 2020 2021Onwards(2) Average Average Guidance Edvard Grieg /…
  20. Capital Markets Day – Lundin Petroleum – slide 20
    Lundin Petroleum Greater Edvard Grieg Area - Keeping the Facilities Full Edvard Grieg 3 firm infill wells sanctioned Further reserves upside Extended Plateau Production to around end 2022 from mid-2020 Edvard Grieg out…
  21. Capital Markets Day – Lundin Petroleum – slide 21
    Edvard Grieg Continued Strong Operating Performance Production Efficency: 98% 2019 2020 assumption 93%, reflecting 2 week maintenance OPEX 4.18 USD/boe (1) shutdown in Q2 Production outlook reflects contractual capacity allocation…
  22. Capital Markets Day – Lundin Petroleum – slide 22
    Edvard Grieg 300 MMboe and Counting Edvard Grieg Reservoir Outperformance Well capacity significantly above contractual facilities capacity Continued limited water production < 5% Infill Drilling Sanctioned 3 well programme 18…
  23. Capital Markets Day – Lundin Petroleum – slide 23
    Greater Edvard Grieg Area Solveig Phase 1 and Rolvsnes EWT Solveig 20% complete Solveig Rolvsnes EWT Rolvsnes EWT 35% complete First Oil First Oil Edvard Grieg 2020 2021 Solveig Plateau Production 30 Mboepd (2) Rolvsnes and…
  24. Capital Markets Day – Lundin Petroleum – slide 24
    0 KM 4 Oil Gas Prospect Greater Edvard Grieg Area Lead Lille Prinsen Lundin Petroleum Licences Operated Significant Upside Opportunities Non-operated Ivar Aasen 360 MMboe (1) 916 Producing / Under Development Tellus…
  25. Capital Markets Day – Lundin Petroleum – slide 25
    Greater Edvard Grieg Area Further Plateau Extension Gross (Mboepd) 120 4 yrs Plateau Extension from PDO Further Plateau Extension 100 E. Grieg PDO 80 Exploration and further upsides 2C on C 60 3P Reserves tin…
  26. Capital Markets Day – Lundin Petroleum – slide 26
    Lundin Petroleum Alvheim Area - Continuous Reserves Growth Alvheim Gross Reserves/Resources (MMboe) 605 495 Frosk test producer on stream OPEX 6.23 +93% Alvheim infill pilots successful USD/boe (2) 257 2 infill wells in 2020…
  27. Capital Markets Day – Lundin Petroleum – slide 27
    Alvheim Area Continued Strong Performance Strong facilities performance 2019 production efficiency 97% Good results from 2019 infill wells No decline in 2019 2 Alvheim infill wells to be drilled in 2020 On stream in 2020 and…
  28. Capital Markets Day – Lundin Petroleum – slide 28
    Lundin Petroleum Year-end 2019 Reserves (Net) 2P Reserves 3P Reserves 693.3 MMboe(1,2) 857.5 MMboe(2,3) Ivar Aasen 1.7 Ivar Aasen 1.4 Alvheim Area Alvheim Area Edvard Grieg Area(4) Edvard Grieg Area(4) Johan Sverdrup Johan…
  29. Capital Markets Day – Lundin Petroleum – slide 29
    Lundin Petroleum Track Record of Growing Reserves Reserve Replacement Ratio (%) (1, 2, 3) 6754% Johan Sverdrup 6th consecutive year of reserves growth while growing production 4x 242% Reserves Growth 163% 144% 150%…
  30. Capital Markets Day – Lundin Petroleum – slide 30
    Lundin Petroleum Increased Long-term Production Guidance (Mboepd) Target 200 Mboepd with upsides 2C Resources (3) 3P Reserves (2) Long-term guidance 145- 160170 Mboepd 165 2P reserves 93 2P Reserves (1) 86 81 59…
  31. Capital Markets Day – Lundin Petroleum – slide 31
    Johan Sverdrup in a league of its own 31
  32. Capital Markets Day – Lundin Petroleum – slide 32
    Johan Sverdrup OPEX Carbon In a League of its…
  33. Capital Markets Day – Lundin Petroleum – slide 33
    Johan Sverdrup 2019 From Discovery to First Oil First Oil ahead of schedule 4 platforms 20 development wells Rise of a giant Power cable from shore Oil and gas export pipelines 2015 PDO Sizing it up 2010 Johan…
  34. Capital Markets Day – Lundin Petroleum – slide 34
    Johan Sverdrup Phase 1 Ramp-up Ahead of Expectations Production 8 pre-drilled wells 2 more wells Development Drilling wells onstream producing to reach plateau 350 Mbopd (1) Plateau 440 Mbopd(1) from 8 wells 80% of plateau…
  35. Capital Markets Day – Lundin Petroleum – slide 35
    Johan Sverdrup Excellent Reservoir Performance 63 wells Reserves Range (Bn boe)(1) 2.2 2.7 3.2 Phase 1 - 35 wells, 20 pre-drilled Phase 2 - 28 wells Recovery Ambition 70% Facilities prepared for infill drilling Fibre…
  36. Capital Markets Day – Lundin Petroleum – slide 36
    Johan Sverdrup Phase 2 on Track PDO approved - first oil Q4 2022 20% complete New processing platform Field centre modifications Power from shore area solution Five subsea templates 28 wells WF12607 p05 01.20 WAG…
  37. Capital Markets Day – Lundin Petroleum – slide 37
    30% Johan Sverdrup of Norways A field for the future oil production Leading low OPEX Quarter Norway average Low carbon emissions 5% of world average Phase 2 on track for first oil Q4 2022 660 Mbopd (1) Phase 1 on track…
  38. Capital Markets Day – Lundin Petroleum – slide 38
    Continued organic growth focused on growing through the drill bit 38
  39. Capital Markets Day – Lundin Petroleum – slide 39
    Lundin Petroleum Organic Value Creation through Innovation Subsurface expertise Cutting-edge technology Maximising recovery 0.8 USD/boe Lundin Petroleum finding costs (1) New reservoirs and plays WF12613 p01 01.20…
  40. Capital Markets Day – Lundin Petroleum – slide 40
    Lundin Petroleum Organic Growth Strategy Southern Barents Sea 7 Transforming core Hammerfest the portfolio exploration 7 areas core areas Harstad 90 No. of licenses 35% 3 core areas increase in number of licences…
  41. Capital Markets Day – Lundin Petroleum – slide 41
    Lundin Petroleum Organic Growth Opportunity Set (MMboe net) Multiple Growth Opportunities 1 billion barrels resource base Reserve Replacement Ratio 2015-2019 158% (1) WF12613 p03 01.20 (1) 2P Reserves is Proved…
  42. Capital Markets Day – Lundin Petroleum – slide 42
    Lundin Petroleum Front Runner in Geophysics Edvard Grieg Johan Sverdrup Loppa…
  43. Capital Markets Day – Lundin Petroleum – slide 43
    Lundin Petroleum Reservoir Development - Value Adding Technology 4D seismic Edvard Grieg, Alvheim, Johan Sverdrup, Ivar Aasen Inflow Control Valves Edvard Grieg (R&D) Fishbones Completion Edvard Grieg, Ivar Aasen WF12613…
  44. Capital Markets Day – Lundin Petroleum – slide 44
    Lundin Petroleum Year-End 2019 2C Contingent Resources (net) 2C Contingent Resources 185.3 MMboe MMboe End 2018 225.4 Acquisitions / Dispositions 8.7 Discoveries 5.3 New IOR projects 4.4 Technical Revisions -9.2 End 2019…
  45. Capital Markets Day – Lundin Petroleum – slide 45
    Lundin Petroleum Southern Barents Sea Pipeline of New Projects Loppa High 8 Potential new projects Alta/Gohta 110300 MMboe (1) targeting 100300 MMboe Hammerfest net resources Projects Underway Harstad 2019 2020 2021 PDO First…
  46. Capital Markets Day – Lundin Petroleum – slide 46
    Lundin Petroleum Southwestern Barents Sea Strategy 2020 Wells Prospects Lundin Petroleum Licences Shenzhou Strategic 2020 Programme 360 MMbo (1) 4 Prospects 1.2 Bn bo(1) Area Upside 1,200 MMbo(1) Area Upside Potential 2.5 Bn…
  47. Capital Markets Day – Lundin Petroleum – slide 47
    Lundin Petroleum Building New Core Areas Horda Platform Norwegian Sea Stratigraphic traps 100 MMboe 2 wells in 2020 0 5 KM 20 Large acreage position built in 2 years 2020 Well Lundin Petroleum Licences Snorre Aasta Hansteen…
  48. Capital Markets Day – Lundin Petroleum – slide 48
    Lundin Petroleum Central North Sea ALVHEIM AREA Norway Iving Alvheim Area Alvheim Drilling 750 MMboe(2) discovered Hasselbaink Byla 45 MMboe(1) (drilling) Usitra High / Alvheim Area Continuing to find oil in prolific areas…
  49. Capital Markets Day – Lundin Petroleum – slide 49
    2020 Wells Lundin Petroleum Shenzhou Barents Sea 2020 Exploration and Appraisal Programme Southern Barents Sea Polmak Bask Spissa Targeting 700 650 MMboe net unrisked resources 600 150 MMboe net risked resources Net…
  50. Capital Markets Day – Lundin Petroleum – slide 50
    Multiple growth opportunities Maximise recovery/step-outs, Mature Basins, Frontier Areas Pipeline of new projects 4 underway, 4 appraisal/concept phase Significant Exploration Programme 2020 targetting 650 MMboe(1)…
  51. Capital Markets Day – Lundin Petroleum – slide 51
    Coffee break 51
  52. Capital Markets Day – Lundin Petroleum – slide 52
    Decarbonisation Strategy the path to carbon neutrality 52
  53. Capital Markets Day – Lundin Petroleum – slide 53
    Lundin Petroleum Decarbonisation Strategy - The Path to Carbon Neutrality Capital Spend (1) 270 MUSD 750 MUSD J.Sverdrup Ph 2 Edvard Grieg Commit to Commit to full J.Sverdrup Ph 2 Utsira High electrification Edvard Grieg…
  54. Capital Markets Day – Lundin Petroleum – slide 54
    Decarbonisation Strategy Replacing Power Usage with Renewables Lundin (Edvard Grieg & Johan Sverdrup) Net Power Usage and Replacement Leikanger Hydropower 500 Lundin to aquire 50% operated by Sognekraft Net investment for…
  55. Capital Markets Day – Lundin Petroleum – slide 55
    Decarbonisation Strategy Industry Leading 18 Carbon Intensity (kg CO2/boe) 8 Lundin Petroleum…
  56. Capital Markets Day – Lundin Petroleum – slide 56
    Financial discipline and strength proving the model works 56
  57. Capital Markets Day – Lundin Petroleum – slide 57
    Full Year 2019 and Fourth Quarter Financial Highlights Q4 Full Year 2019 2019 Production (boepd) 135.1 93.3 Average Brent oil price (USD/boe) 63.08 64.21 Cash operating costs (USD/boe) 3.54 4.03 695.5 1,918.4 (1) EBITDA…
  58. Capital Markets Day – Lundin Petroleum – slide 58
    Financial Results Fourth Quarter 2019 Q4 18 Q4 19 Q4-18 Q4-19 Price USD/boe 65.03 60.75 -7% 65.03 60.75 -7% Sales boepd 88.2 132.5 50% 88.2 132.5 50% EBITDA Free Cash Flow Net Result 695.5 700 45% 600 3.0 USD per Share…
  59. Capital Markets Day – Lundin Petroleum – slide 59
    Financial Results Full Year 2019 2018 2019 2018 2019 Price USD/boe 67.89 61.00 -10% 67.89 61.00 -10% Sales boepd 83.6 93.2 11% 83.6 93.2 11% Exploration costs MUSD 53.2 125.6 EBITDA Free Cash Flow Net Result 2,000 1,932.5 -1%…
  60. Capital Markets Day – Lundin Petroleum – slide 60
    Full Year 2019 Realised Prices Brent Oil price achieved Blended oil & gas Strong demand for Grane blend price achieved - premium during Q4 2019 70 70.30 Positive impact from timing of 66.42 liftings during Q4 2019 65.03 65.41…
  61. Capital Markets Day – Lundin Petroleum – slide 61
    Full Year 2019 Operating Costs 51.8 50 Good cost control on all assets 40 39.0 37.9 37.2 36.4 Johan Sverdrup lowering the average unit costs 30 2020 Guidance: 3.40 USD/boe 5 MUSD 4.51 4.46 4.14 4 20 3.97 3.54 3…
  62. Capital Markets Day – Lundin Petroleum – slide 62
    Full Year 2019 Cash Flow 1,571.2 -193.0 959.0 Free Cashflow MUSD 1,271.7 -355.6 MUSD Organic -1,065.5 Free Cashflow MUSD 312.7 627.0 -6.7 19.2 0 Cash Flows Cash Flow Cash Flow 2.6% Dividend Share Debt Others Cash…
  63. Capital Markets Day – Lundin Petroleum – slide 63
    2019 Actuals Compared to CMD CMD Actual 60 USD/bbl 64.21 USD/bbl Production (Mboepd) 7595 93.3 EBITDA (MUSD) 1,625 1,918 Free Cash flow (MUSD) 140 313(1) Cash OPEX (USD/boe) 4.25 4.03 CAPEX and E&A Spend (Bn USD) 1.23…
  64. Capital Markets Day – Lundin Petroleum – slide 64
    Lundin Petroleum 2019 Financial Summary - 2020 Outlook EBITDA (MUSD) 1,933 1,918 CFFO 1,501 (MUSD) 1,718 1,299 1,378 2017 2018 2019 2020 2017 2018 2019 2020 Free Cash Flow(1) Financial (MUSD) 1,272 Position Robust 663…
  65. Capital Markets Day – Lundin Petroleum – slide 65
    Lundin Petroleum Financial Model High quality and low cost production base EBITDA margin 90% 93% Oil - Quality close to Brent 90% of reserves in production < USD 3/bbl of remaining 2P Capex spend Portfo lio Strong free…
  66. Capital Markets Day – Lundin Petroleum – slide 66
    Lundin Petroleum 2020 Highlights Dividends CFFO Net Debt/EBITDAX 511 MUSD 2.0 Bn USD (1) YE 2020 Increase of…
  67. Capital Markets Day – Lundin Petroleum – slide 67
    2020 Forecast Netback (USD/boe) Forecast 2020 Average Brent oil price USD/boe 50.00 65.00 80.00 Revenue 49.50 63.55 77.59 Cash Operating Costs (1) -3.40 -3.40 -3.40 Other -0.03 -0.03 -0.03 Cash Margin Netback 46.07 60.11 74.16…
  68. Capital Markets Day – Lundin Petroleum – slide 68
    2020 Forecast Profit Netback (USD/boe) Forecast 2020 Average Brent oil price USD/bbl 50.00 65.00 80.00 Cash Margin Netback 46.07 60.11 74.16 Depletion/Depreciation -10.95 -10.95 -10.95 G&A -0.57 -0.57 -0.57 Financial Items, net…
  69. Capital Markets Day – Lundin Petroleum – slide 69
    Lundin Petroleum Norway Tax Value Tax Value from Historic CAPEX Spend (MNOK as at 1 Jan 2020) 1.4 Bn USD No Remaining Tax losses 1,007 12,656 8,363 as of YE 2019 3,286 CT Hist. CAPEX SPT Hist. CAPEX Uplift Historic Total…
  70. Capital Markets Day – Lundin Petroleum – slide 70
    Norway Tax Due and Paid 285 Tax Due 2019 Actual Tax Installments 600 200 500 Relate to 2019 tax due Relate to 2018 tax due 400 150 MUSD SPT Tax 325 MUSD 300 Loss Shelter Total due 97 MUSD 405 100 Firm 200 40 50…
  71. Capital Markets Day – Lundin Petroleum – slide 71
    Lundin Petroleum Debt and Liquidity Available Credit Debt Gearing Net Debt/EBITDAX 6 6 0.26 5.4x 0.26 5 5 5.0 4.75 0.26 4.0 4 4 4.0 3 3 Billion USD 2.6x Ratio 2.1x 2 2 1.8x 1.7x(1) 1 Renewable Facility 1…
  72. Capital Markets Day – Lundin Petroleum – slide 72
    2020 Forecast Funding and Liquidity (USD/boe) Forecast 2020 Average Brent oil price USD/bbl 50.00 65.00 80.00 CFFO A 26.88 34.25 41.62 Development Capex Oil and Gas -15.78 -15.78 -15.78 Development Capex Renewable(1) -1.76 -1.76…
  73. Capital Markets Day – Lundin Petroleum – slide 73
    Lundin Petroleum Capex Nominal (1) Renewables 1,200 Johan Sverdrup Rolvsnes 1,000 Solveig 800 Edvard Grieg Area Alvheim Area MUSD 600 400 200 - 2020 2021 2022 2023 2024 2025 2026 WF12614 p17 01.20 1) 2%…
  74. Capital Markets Day – Lundin Petroleum – slide 74
    Capital Allocation 65 USD/bbl Brent +2% ESC 20202026(1) CFFO Capex Debt Repayment Good flexibility on capital allocation Net Debt/Ebitda 1x by end 2021 Flexibility on annual E&A spend Norway fiscal regime offers protection…
  75. Capital Markets Day – Lundin Petroleum – slide 75
    Lundin Petroleum Free Cash Flow Free Cash Flow from 2P Reserves (pre-Dividend) 1,800 1,600 1,400 1,200 Average Annual Free Cash Flow at 80 USD/bbl 1,000 1.15 Bn USD MUSD 800 Average Annual Free Cash Flow at 50…
  76. Capital Markets Day – Lundin Petroleum – slide 76
    Shareholder Returns and Dividends Track Record 1.8 USD/share Value Returned to Shareholders to be paid quarterly Shares in Issue 4,000 340.38 54.46 511 285.9 1.87 284.05 1,520 -16% Million shares 3,000 3.8 MUSD…
  77. Capital Markets Day – Lundin Petroleum – slide 77
    World class production portfolio with high quality crude oil and low production costs Significant free cash flow generation even at low oil prices Debt gearing set to reduce towards 1x Net Debt/EBITDA 2019 Dividend increased by…
  78. Capital Markets Day – Lundin Petroleum – slide 78
    Concluding remarks 78
  79. Capital Markets Day – Lundin Petroleum – slide 79
    Lundin Petroleum What to Expect in 2020 Production Sustained Low OPEX 145165 3.40 Mboepd USD/boe Johan Sverdrup Organic Growth Phase 1 Plateau 4 projects underway Summer 2020 10 E&A wells targeting 650 MMboe (1)…
  80. Capital Markets Day – Lundin Petroleum – slide 80
    160170 Long-term Target Mboepd long-term value creation Industry leading low OPEX 200 Mboepd Multiple organic 3.24.2 USD/boe 2020 onwards growth sources 1 Bn USD average free cash flow per year (1) Free Cash Flow 10%…
  81. Capital Markets Day – Lundin Petroleum – slide 81
    www.lundin-petroleum.com Access Lundin Petroleums latest information by downloading the Lundin Petroleum IR App

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