Lundin Petroleum AB (Lundin Petroleum) will expense post-tax exploration costs of approximately MUSD 14 and recognise a net foreign exchange gain of approximately MUSD 28 for the second quarter of 2015.
The profitability for the second quarter of 2015 will be impacted by certain expensed exploration costs as well as a foreign currency exchange gain, mainly related to the revaluation of loan balances. These items will have no impact on the reported operating cash flow or EBITDA for the period.
Exploration Costs During the second quarter of 2015 Lundin Petroleum will incur pre-tax exploration costs of approximately MUSD 61 which will be charged to the income statement and offset by a tax credit of approximately US$47 million. The exploration costs mainly relate to an exploration well drilled in Norway during the second quarter of 2015 on the Morkel prospect in PL579 which was announced as an uncommercial oil discovery.
Foreign Exchange Lundin Petroleum will recognise a net foreign exchange gain in its income statement for the second quarter of 2015 of approximately US$28 million. The foreign exchange gain mainly relates to the revaluation of loan balances at the prevailing exchange rates at the end of each reporting period. The US Dollar weakened against the Euro during the second quarter of 2015 resulting in a foreign currency exchange gain on the US Dollar denominated external loan which is borrowed by a subsidiary using a functional currency of the Euro. This foreign exchange gain was partly offset by settled foreign currency hedges and a weakening of the Norwegian Krone against the Euro during the quarter, generating a foreign currency exchange loss on an intercompany loan balance denominated in Norwegian Krone.
Adapted from a press release by Louise Mulhall