During the fourth quarter of 2014 Lundin Petroleum achieved an average production rate of 22 000 boe/d resulting in an average production rate for the full year of 24 950 boe/d. The average Brent oil price for the fourth quarter of 2014 was US$76.58 per bbl.
The profitability for the fourth quarter of 2014 will be negatively impacted by certain expensed exploration costs and an impairment charge, as well as a foreign currency exchange loss, mainly related to the revaluation of loan balances. These items are largely non-cash charges and will have no impact on operating cash flow or EBITDA.
During the fourth quarter of 2014 pre-tax exploration costs of US$257 million will be charged to the income statement. The exploration costs in Norway relate mainly to the exploration wells drilled during the fourth quarter of 2014, including the Vollgrav South well on PL631, the Storm well on PL555, the Lindarormen well on PL584 and the Kopervik well on PL625. The total pre-tax exploration cost in Norway amounted to US$198 million resulting in an after tax charge of US$44 million. The exploration costs relating to the Kitabu-1 well on SB307/SB308, offshore Malaysia and the Gobi-1 well on the Gurita PSC in Indonesia amounted to an after tax charge of US$54 million.
As a result of the significantly lower oil price at the end of 2014, Lundin Petroleum will incur a non-cash impairment charge in the fourth quarter of 2014 relating to the Brynhild field, Norway, amounting to US$91 million after tax.
Lundin Petroleum will recognise a largely non-cash foreign exchange loss in its income statement for the fourth quarter of 2014 of US$290 million. This foreign exchange loss mainly relates to the revaluation of loan balances at the prevailing exchange rates at the end of each reporting period. The US Dollar strengthened against the Euro during the fourth quarter of 2014 resulting in a foreign currency exchange loss on the US Dollar denominated external loan, which is borrowed by a subsidiary using a functional currency of the Euro. In addition, the Norwegian Krone significantly weakened in the fourth quarter of 2014, generating a foreign currency exchange loss on an intercompany loan balance denominated in Norwegian Krone.
The net debt position of Lundin Petroleum at 31 December 2014 amounted to US$2.6 billion resulting in available liquidity of US$1.4 billion within its US$4.0 billion credit facility. Lundin Petroleum continues to receive the strong support of its syndicate of international financial institutions under the US$4.0 billion credit facility. These lenders have confirmed Lundin Petroleum's access to the full facility amount.
Adapted from press release by Joe Green