Lundin acquires Idemitsu Petroleum Norge Barents Sea portfolio

Source: press release, 5 October 2020

Lundin Energy Barents Sea licences, including the post IPN transaction interests
Lundin Energy Barents Sea licences, including the post IPN transaction interests (illustration: Lundin Energy)

Lundin Energy AB has announced that its wholly owned subsidiary, Lundin Energy Norway AS (together Lundin Energy), has entered into an agreement with Idemitsu Petroleum Norge AS (IPN) to acquire interests in a portfolio of licences in the Barents Sea, including a 10% working interest in the Wisting oil discovery and a further 15% working interest in the Alta oil discovery.

The transaction gives Lundin Energy a 10% working interest in the major Wisting oil discovery (licences PL537 and PL537B) with estimated gross resources of 500 million barrels of oil (MMbo), scheduled to be one of the next Barents Sea production hubs. Equinor, the operator of Wisting in the development phase, is targeting a PDO by end 2022, to benefit from the temporary tax incentives established by the Norwegian Government in June 2020.

The transaction also provides Lundin Energy with a further 15% working interest in licences PL609, PL609B and PL609D, increasing the company’s working interest in the operated Alta oil discovery, from 40% to 55%. The potential to accelerate the development of Alta is being assessed, with the aim to benefit from the temporary tax incentives.

Additionally, Lundin Energy increases its working interests in licences PL609C and PL851, raising the Company’s working interest in the operated Polmak exploration well from 40% to 47.5%. Polmak is the first of three high impact exploration prospects to be drilled by the company in the Barents Sea during the fourth quarter of 2020, which are targeting gross unrisked prospective resources of over 800 MMbo. Polmak will be drilled by the West Bollsta semi-submersible drilling rig, with spud expected in early October 2020.

The strategic transaction builds on the company’s already substantial acreage position in the Barents Sea core exploration area and provides a material interest in the major Wisting oil discovery, expected to contribute to sustaining the company’s production in the long term.

The transaction, which is effective from January 2020, adds estimated net contingent resources of approximately 70 MMboe for a cash consideration of MUSD 125, and is subject to approval of the Board of Directors of Idemitsu Kosan Co.,Ltd. (the parent company of IPN) and usual Norwegian regulatory approvals.

Alex Schneiter, President and CEO of Lundin Energy, says, “I am very pleased to announce this strategic acquisition which strengthens Lundin Energy’s position in one of our core exploration areas and provides an interest in a major commercial oil discovery, as well as increasing our working interest in the operated Alta oil discovery.”

“As we have always maintained, we will look to supplement our successful organic growth strategy with value-add, bolt-on acquisitions which add high quality, commercial resources and importantly, also complement our low cost and low carbon emissions production portfolio. With the high impact Polmak well due to spud shortly, I am excited at the opportunity and position we have built in the Barents and look forward to reporting on our progress in the months ahead,” adds Schneiter.