More than 1.2 billion barrels of reserves, low operating costs of around 3 $/boe, electrification of almost all operations and a breakeven cost of approximately 10 $/boe: Lundin Energy is surely amongst the top players in the upstream sector.
With the ambition to exceed 200 Mboepd in 2023, the company has grown its production 9-fold compared to 2015. Obviously, this is mostly thanks to the start-up of Johan Sverdrup in 2019, in which Lundin has a 20% interest.
Earlier this year, Lundin had three key assets; the Greater Edvard Grieg area, Alvheim a little further north and Johan Sverdrup. Since October, the company added a fourth asset – Wisting in the Barents Sea – through acquiring OMV’s 25% share. Together with the 10% Lundin already owned, this means a 35% working interest in the 500 MMbo development.
Good to be in big fields
Having a key share in some of the biggest fields on the Norwegian Continental Shelf is a good starting point. That’s because big fields sometimes tend to get bigger, as Nick Walker explained by using the Edvard Grieg field as an example. At PDO, the field was estimated to hold 186 MMboe of gross reserves, but this amounts to 410 at the present day and may even reach to 800 if upside and prospective resources are included.
No mention was made on small fields, as these tend to get smaller instead.
Lack of exploration success
With a replacement ratio of 190% this year, there doesn’t seem to be too many issues for the company. However, there is one nagging in the background, and that is the lack of exploration success. It can be a strategy to buy into assets to replace produced barrels, but Lundin certainly did try to replace barrels through exploration this year.
And exploration was bold. With the associated risks. For instance, the latest exploration well on the Sele High – targeting the Dovregubben prospect – must certainly be seen as a high-risk attempt to prove hydrocarbons in an area that may well never have seen any charge. Similarly, the campaign in the Barents Sea at the start of the year was not a great success at all.
For that reason, it is probably not too much of a surprise to see that when questioned about this during the Q&A, Nick Walker said that the exploration for 2022 is going to be less ambitious than 2021. There were no further comments on numbers, but with two operated E&P wells in the Edvard Grieg area and four non-operated wells on the agenda for 2022 thus far, this seems to confirm the statement made.
The Barents Sea is not over yet
That is not to say that Lundin has now written off the Barents Sea. Besides exploration around the Wisting area, the company acquired a large 3D seismic survey across the Nordkapp Basin in PL1083 this year. So, it may be expected that in a few years’ time a couple of wells will be drilled in this frontier part of the Barents Sea.
HENK KOMBRINK
