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Lundin Petroleum announces 2020 budget

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Oilfield Technology,

Lundin Petroleum AB (Lundin Petroleum) has announced its 2020 development, appraisal, exploration and abandonment budget which totals US$1.27 billion and represents a 30% increase on 2019 capital expenditure. The production guidance for 2020 is between 145 to 165 000 boe/d and the long-term production guidance is increased to 160 – 170 000 boe/d from 2021 with a target of over 200 000 boe/d.

2020 production guidance

The average production in 2019 was 93.300 boe/d, which was above the mid-point of the upgraded 2019 production guidance of between 90 and 95 000 boe/d, and 10% above the mid-point of the original guidance of 75 to 95 000 boe/d. Lundin Petroleum’s production guidance for 2020 is between 145 to 165 000 boe/d, reflecting the ramp-up of Johan Sverdrup Phase 1 to plateau levels by the summer of 2020 and a planned two-week maintenance shutdown at Edvard Grieg in the second quarter of 2020. The production contribution is split approximately 50% from the Johan Sverdrup field, 40% from the Edvard Grieg field and the remainder from the other assets.

The long-term production guidance for the company has been increased to between 160 and 170 000 boe/d from 2021 onwards, with a target of over 200 000 boe/d from upsides from existing fields. The updated long-term guidance reflects the sale of a 2.6% interest in Johan Sverdrup during 2019, which is offset by an extension of the Edvard Grieg plateau period.

Development budget

The 2020 development expenditure is budgeted at US$895 million, which is an increase of one-third over 2019 levels. The Edvard Grieg tie-back projects, Solveig and Rolvsnes EWT will see increased activity compared to last year, and drilling will start on the Edvard Grieg infill campaign.

Approximately 40% of the 2020 budgeted development expenditure relates to the non-operated Johan Sverdrup field (WI 20%). The remaining spend for the Phase 1 project relates mainly to the drilling of additional development wells, while the Phase 2 project will see another active year of construction ahead of scheduled start-up in 4Q22.

Approximately 35% of the budgeted development expenditure relates to the operated Solveig project (WI 65%) and the Rolvsnes Extended Well Test (WI 80%). Both projects will be subsea tie-backs to Edvard Grieg and are being implemented together. In 2020, offshore construction activities will take place, which include the installation of the subsea equipment and pipelines. On Solveig, drilling will start on the first development wells during the year and the project remains on track for first oil in 1Q21.

The Edvard Grieg field (WI 65%) 2020 programme, includes drilling of the first of the three infill wells sanctioned in 2019, as well as contribution to the Utsira High Area power from shore system.

Budgeted expenditure at the non-operated Alvheim area involves the drilling of two infill wells.

Exploration and appraisal budget

The exploration and appraisal budget for 2020 is US$225 million and involves the drilling of 10 wells, of which five are operated, and is targeting over 650 000 boe/d of net unrisked resources.

Four exploration wells are planned in the Southern Barents Sea. Two wells will be drilled on the Loppa high area close to the Alta/Gohta discoveries, targeting the Polmak prospect in PL609 (WI 40%) and the Bask prospect in PL533B (WI 40%). The other wells to be drilled are Schenzhou in PL722 (WI 20%) close to the Wisting oil discovery, and Spissa in PL960 (WI 20%).

In the Norwegian Sea two wells are planned, an appraisal well on the Balderbrå gas discovery made in 2018 in PL894 (WI 10%) estimated to contain between 50 and 140 000 boe/d of gross resources and an exploration well on the Melstein prospect in PL886 (WI 60%).

Four exploration wells are planned to be drilled in the Norwegian North Sea, Iving in PL820S (WI 40%) and Hasselbaink in PL917 (WI 20%) both located east of the Alvheim area, Merckx in PL981 (WI 60%) in the greater Utsira High area within tie-back distance to Edvard Grieg, and the Dovregubben prospect in PL976 (WI 50%) on the Sele High southeast of the Utsira High.

Abandonment expenditure

The 2020 abandonment expenditure budget is US$50 million for abandonment of the Brynhild development wells, representing the bulk of the field abandonment costs, and with the subsea facilities scheduled to be decommissioned in 2021.

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