RNS Number:0871U
Sodra Petroleum AB
14 November 2000
PRESS RELEASE November 14, 2000
SODRA PETROLEUM AB
Sodra Petroleum AB announces that its parent company, Lundin Oil AB ("Lundin")
has today issued the following announcement:-
Dear Shareholders
RECORD PROFIT
Your Company ended the third quarter with a record profit after tax of
MSEK188.6 (US$18.8 million) corresponding to SEK2.04 (US$0.20) per share. For
the same period last year the Company recorded a profit of MSEK0.2
(US$19,900).
The average working interest production for the period was 13,828 boepd
compared to 13,699 boepd for the same period last year. The average realised
oil price was US$24.41 per barrel, after accounting for the effects of
hedging, versus US$15.85 in the first nine months of 1999. Production was
affected negatively in the third quarter by maintenance shut-downs in the UK
North Sea during the summer.
Current production has, however, recovered to approximately 14,600 boepd,
particularly as a result of the completion of maintenance programmes in the UK
North Sea and the implementation of production enhancement projects in
Malaysia/Vietnam.
In Malaysia/Vietnam gross production from the Bunga Kekwa Field increased from
approximately 13,500 bopd to 15,000 bopd during October. Two additional
development wells will be drilled on the eastern flank of the Bunga Kekwa
Field during the first half of 2001 which should allow production to be
increased further. Meanwhile, work on Phase-II of the PM3 CAA development
project is progressing well with basic engineering completed and tenders for
the major contracts circulated to bidders.
In Libya, the Company resumed exploration drilling on Area NC177 in September
and the first of the two-well programme is now approaching its planned total
depth of approximately 3,500 metres. The development of the En Naga North and
West Field passed another milestone in early September when the order for
94,500 metres of pipeline that will carry the oil from the Field to Libya's
national export system was placed. Two major construction contracts are
awaiting final approvals to be awarded. The Field was expected to come
on-stream at the end of the first quarter of 2001. Once the construction
contracts are awarded a revised start up date later in the same year will be
announced.
The Company has signed a US$50 million project loan facility with Arab Banking
Corporation (BSC) and Arab Petroleum Investments Corporation in order to fund
the majority of the Company's development costs in Libya.
In Sudan the construction of the all-weather road on Block 5A is progressing
well and drilling and testing operations should resume in the first quarter of
next year, as previously planned.
Finally, in Albania the first exploration well to be drilled on Block 2 will
commence during November. The planned total depth is over 4,500 metres which
will take approximately 6 months to reach.
In summary, the Company is producing at record levels, the oil price remains
high and we are, as a result, generating strong cash flow and profit. We
expect to continue to increase production as our oil and gas reserves in
Malaysia and Libya are developed. We also continue to have exposure to
exploration drilling in Libya, Sudan, Albania and Malaysia on prospects with
large reserves potential.
Yours sincerely
Ian H Lundin
President
Lundin Oil AB (publ): Report for the Nine Months ended 30 September 2000
RESULT AND CASH FLOW
The Group
The Lundin Oil AB Group (Lundin Oil or the Group) reports a profit after tax
for the nine months ended 30 September 2000 of MSEK 188.6 (MSEK 0.2 for the
corresponding period during 1999) corresponding to SEK 2.04 per share (SEK 0.0
per share). The nine month result was positively affected by a non-recurring
deferred tax write back of MSEK 30.4 recognised as the result of restructuring
the UK group of companies and currency exchange gains of MSEK 37.3 on loan
balances denominated in US and Canadian dollars.
Operating cash flow for the nine months ended 30 September 2000 was MSEK 404.7
(MSEK 244.0) corresponding to SEK 4.37 per share (SEK 3.01 per share). The
operating cash flow for the nine month period has increased from the same
period in the prior year due to higher revenue as a result of higher oil
prices and production.
Oil and gas related income for the nine months ended 30 September 2000
amounted to MSEK 705.2 (MSEK 502.2) and relates to Lundin Oil's assets in the
UK North Sea and Malaysia which generated operating income of MSEK 452.6 (MSEK
341.3) and MSEK 248.6 (MSEK 156.6) respectively.
Net financial income and expenses for the nine months ended 30 September 2000
were MSEK 18.2 (MSEK -14.4). Included within the nine months ended 30
September 2000 was interest income of MSEK 19.1 (MSEK 4.0) offset by interest
expenses of MSEK 35.4 (MSEK 35.6) arising primarily from bank debt. The nine
month period ended 30 September 1999 also included the gain of MSEK 16.4
resulting from the sale of shares in Talisman Energy Corporation. Currency
exchange gains for the nine months ended 30 September 2000 were MSEK 37.3
(MSEK 3.0).
Parent Company
The net profit for the parent company for the nine months ended 30 September
2000 amounted to MSEK 13.0 (net loss of MSEK 11.3). The profit resulted mainly
currency exchange gains of MSEK 33.0 (MSEK -0.7) and interest income of MSEK
4.3 (MSEK 3.6) offset by administration charges of MSEK 12.2 (MSEK 10.0) and
interest expense of MSEK 13.6 (MSEK 13.4).
PRODUCTION
Production for the nine months ended 30 September 2000 on a working interest
basis amounted to 3,775,176 (3,744,808) barrels of oil equivalents of which
3,338,384 (3,369,595) were barrels of oil. This corresponds to a production of
13,828 (13,699) barrels of oil equivalents per day (boepd) for the nine months
ended 30 September 2000 including production from the UK North Sea and
Malaysia of 8,101 (8,379) boepd and 5,727 (5,339) boepd, respectively.
Production allocated for the nine months ended 30 September 2000 from Malaysia
on an entitlement basis after government share amounted to 1,077,886
(1,021,218) barrels, corresponding to 3,948 (3,741) bopd. The production for
the quarter ended 30 September 2000 was 12,287 boepd (14,187 boepd). The
reduction from the previous year and the first half of 2000 was primarily due
to maintenance shutdowns in the United Kingdom.
FINANCING AND LIQUIDITY
Liquid assets at 30 September 2000 amounted to MSEK 372.3 (MSEK 217.8). The
exercise of warrants in the company raised MSEK 1.4. The exercise of warrants
in a subsidiary company raised MSEK 27.6, net to Lundin Oil.
Parent Company
Liquid assets at 30 September 2000 amounted to MSEK 2.1 (MSEK 2.4).
INVESTMENTS
During the nine months ended 30 September 2000, the Group has made investments
in oil and gas assets of MSEK 206.8 (MSEK 207.9). A further MSEK 189.1 has
been allocated to the Libyan cost centre as the result of the excess
acquisition price over the book value of the minority interest in Red Sea Oil
Corporation.
FINANCIAL INSTRUMENTS
The Group entered into interest rate hedging contracts commencing on 1 January
1999 to tie the LIBOR based floating rate for part of the Group's USD
borrowings to a fixed rate of interest for a period of three years. The
contracts are in the amount of USD50.0 million with an interest rate fixed at
5.87%.
The Group has also entered into an oil price hedge for part of its oil
production from the UK North Sea. From 1 January 2000 to 31 December 2000,
4,000 bopd of production have been fixed at an average dated Brent price of
USD 18.58 per barrel.
The Group has brought a put option set at USD 19.00 for Dated Brent in respect
of 5,000 bopd for the calendar year 2001. This transaction ensures that should
the average monthly oil price for Dated Brent fall below USD 19.00 per barrel,
Lundin would receive USD 19.00 per barrel for 5,000 bopd for such month. This
transaction does not affect the Group's ability to achieve a higher oil price.
Subsequent to period end, the Group has entered into an oil price hedge for
part of its oil production. From 1 January 2001 to 31 December 2001, 2,750
bopd of production have been fixed at an average West Texas Intermediate price
of US$28.55 per barrel. This oil price hedge represents approximately 30% of
the Group's forecast oil entitlement production for the calendar year 2001.
CHANGES IN THE BOARD OF DIRECTORS
At the AGM on 4 May 2000 all serving Directors were re-elected and Carl Bildt
was newly elected to the Board.
SHARE DATA
Lundin Oil AB's share capital at 30 September 2000 amounts to SEK 51,430,642
represented by 102,861,283 shares of nominal value SEK 0.50 each. The shares
are divided into 678,200 A shares with 10 votes each and 102,183,083 B shares
with one vote each.
In addition, outstanding at 30 September 2000 are 3,400,000 warrants with an
exercise price of SEK 0.50 expiring in November 2001, to Sodra Petroleum AB.
Under the Group incentive program for employees 1,250,000 incentive options
with a strike price of SEK 49 expiring on 15 May 2001 are available for issue.
A further 1,150,000 incentive options with a strike price of SEK 24 expiring
on 11 March 2002 are available for issue. At the AGM on 4 May 2000
shareholders approved a new series up to a total of 1,200,000 warrants to be
available for issue. The strike price was subsequently calculated at SEK
23.00. This series of warrants expire on 22 May 2003.
On 5 May 2000, 48,237 B shares were registered. These shares were subscribed
for under the warrants that expired on 31 March 2000, contributing MSEK 1.35
to the company.
Under the terms of the arrangement for the acquisition of Red Sea Oil
Corporation, Lundin Oil issued 16,999,075 series B shares to RSO shareholders
and an additional 374,513 series B shares to RSO employee stock option holders
bringing the total shares issued to 17,373,588, equal to 20.2% of the shares
outstanding at that date. The shares issued for the acquisition were valued at
a price equal to the ten day average prior to the announcement of the
intention to acquire the minority shareholding. This price amounted to SEK
23.94 and resulted in additional shareholders equity of SEK 415,923,697. The
investment in RSO was subsequently transferred to a subsidiary company in
exchange for a loan.
RED SEA OIL CORPORATION
During January 2000, 26,223,544 warrants in Red Sea Oil Corporation ("RSO")
were exercised at C$1.50 per warrant resulting in the issuance of 13,111,772
shares for proceeds of approximately C$ 19,667,658. Lundin Oil subscribed for
10,167,050 shares at a cost of C$ 15,250,575.
Financial Information
The company expects to publish its financial results on the following dates:
Annual Report 2000 23 February 2001
First Quarter Report 2001 10 May 2001
Second Quarter Report 2001 9 August 2001
Third Quarter Report 2001 8 November 2001
KEY FINANCIAL RATIOS
1 Jan 2000- 1 Jul 2000- 1 Jan 1999-
30 Sep 2000 30 Sep 2000 30 Sep 1999
9 months 3 months 9 months
Key Financial Ratios
Return on capital employed1, % 10.0 3.3 0.0
Return on total assets2, % 11.4 2.7 4.6
Equity ratio3, % 68.4 68.4 61.7
Shareholders' equity SEK per 22.2 22.2 16.3
share4
Operating cash flow SEK per 4.4 1.1 3.0
share5
Earnings SEK per share6 2.0 0.6 0.0
Earnings SEK per share fully 2.0 0.6 0.0
diluted7
Number of shares at the period 102,861,283 102,861,283 81,012,953
end
Weighted average number of 92,593,411 102,861,283 81,012,953
shares for the period
Weighted average number of 92,593,411 102,862,638 88,836,164
shares for the period, fully
diluted
1 Jul 1999- 1 Jan 1999-
30 Sep 1999 31 Dec 1999
3 months 12 months
Return on capital employed1, % 1.3 0.9
Return on total assets2, % 3.2 7.6
Equity ratio3, % 61.7 63.0
Shareholders' equity SEK per share4 16.3 17.4
Operating cash flow SEK per share5 1.2 4.5
Earnings SEK per share6 0.2 0.2
Earnings SEK per share fully diluted7 0.2 0.2
Number of shares at the period end 81,012,953 85,439,458
Weighted average number of shares for the 81,012,953 81,801,235
period
Weighted average number of shares for the 93,388,493 82,071,968
period, fully diluted
Definitions
1 Return on capital employed is defined as the Group's net result divided by
the average capital employed (the average of the net assets for the financial
period).
2 Return on total assets is defined as the Group's result after financial
items plus interest expenses plus/less exchange differences on financial loans
divided by the average total assets (the average total assets less
non-interest bearing liabilities for the period).
3 Equity ratio is defined as the Group's shareholders' equity including
minority interest in relation to total assets.
4 Shareholders' equity SEK per share is defined as the Group's shareholders'
equity divided by the number of shares at the period end.
5 Operating cash flow SEK per share is defined as the Group's operating income
less production costs and less current taxes divided by the weighted average
number of shares for the period.
6 Earnings SEK per share is defined as the Group's net result divided by the
weighted average number of shares for the period.
7 Earnings SEK per share fully diluted is defined as the Group's net result
divided by the fully diluted weighted average number of shares for the period.
(Some of the warrants to employees have an exercise price in excess of the
average share price for the period and have therefore not diluted the weighted
average number of shares).
GROUP INCOME STATEMENT IN SUMMARY
1 Jan 1 Jul 1 Jan 1 Jul 1 Jan
Note 2000- 2000- 1999- 1999- 1999-
Expressed in TSEK
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2000 2000 1999 1999 1999
9 months 3 months 9 months 3 months 12 months
Operating income
Net sales of oil and gas 1 655,810 224,986 462,316 208,752 683,551
Tariff income 45,338 13,180 35,600 11,606 49,884
Service income 4,044 1,383 4,304 1,053 5,295
705,192 239,549 502,220 221,411 738,730
Cost of sales
Production costs 2 (205,007) (98,740)(217,386)(92,543)(299,499)
Depletion of oil and gas (185,645) (56,576)(175,958)(60,693)(237,005)
properties
Write-off of oil and gas - - - - (3,866)
properties
Gross profit 314,540 84,233 108,876 68,175 198,360
Other income 5,388 961 4,625 1,419 5,939
Administration expenses (41,495) (13,339) (43,731) (8,998) (61,885)
Operating profit 278,433 71,855 69,770 60,596 142,414
Financial income and
expenses, net 18,164 29,540 (14,417) (3,976) (23,890)
Profit before tax 296,597 101,395 55,353 56,620 118,524
Tax 3 (106,493) (40,945) (54,559)(38,238)(104,361)
Minority interests (1,520) 173 (560) (666) (1,541)
Net result 188,584 60,623 234 17,716 12,622
GROUP BALANCE SHEET IN SUMMARY
Expressed in TSEK Note 30 September 30 September 31 December
2000 1999 1999
ASSETS
Tangible fixed assets
Oil and gas properties 4 2,741,970 2,104,598 2,219,360
Other fixed assets 14,640 9,647 12,188
Total tangible fixed assets 2,756,610 2,114,245 2,231,548
Financial fixed assets 5 70,438 48,540 63,121
Total fixed assets 2,827,048 2,162,785 2,294,669
Current Assets
Current receivables and inventories 241,987 151,687 166,852
Cash and bank, 372,334 217,826 294,510
short term investments
Total current assets 614,321 369,513 461,362
Total assets 3,441,369 2,532,298 2,756,031
SHAREHOLDERS' EQUITY
AND LIABILITIES
Shareholders' equity including net 2,285,846 1,320,744 1,483,288
result for the year
Minority interest 67,666 242,443 252,589
Provisions and long term liabilities 339,013 239,447 288,936
Long-term interest bearing debt 423,649 442,261 420,817
Current liabilities 325,195 287,403 310,401
Total shareholders' equity and 3,441,369 2,532,298 2,756,031
liabilities
Pledged assets 6 892,339 874,950 891,626
Contingent liabilities - 639 639
GROUP CASH FLOW STATEMENT IN SUMMARY
Expressed in TSEK 1 Jan 1 Jul 1 Jan 1 Jul 1 Jan
2000- 2000- 1999- 1999- 1999-
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2000 2000 1999 1999 1999
9 3 9 3 12
months months months months months
Cash flow from operations
Net result 188,584 60,623 234 17,716 12,622
Adjustment for depletion and other non 209,939 71,832 184,570 68,532 274,347
cash related items
Changes in working capital (95,680)(64,420)(61,446)(13,581) (55,401)
Total cash flow from operations 302,843 68,035 123,358 72,667 231,568
Investment in oil and gas
properties (206,783)(57,534)(207,900)(70,224)(298,239)
Investment in other fixed assets (5,399) (2,696) (4,536) (1,539) (7,603)
Investment in other shares (8,252) (8,252) - - -
Sale of short term investments - - 120,999 8,655 123,991
Total cash flow used for
investments (220,434)(68,482)(91,437 (63,108)(181,851)
Decrease in long-term liabilities (2,257) (2,257) 494 1,414 249
Increase in financial fixed assets - - - - (15,108)
Repayment of long term loan (63,278) - (76,531)(62,303)(110,018)
Proceeds from share issues 1,353 - - - 101,810
Share issue costs (3,941) - - - -
Proceeds from share issues in 27,564 - 105,721 1,938 105,721
subsidiary
Total cash flow from financing (40,559) (2,257) 29,684 (58,951) 82,654
Change in cash and bank 41,850 (2,704) 61,605 (49,392) 132,371
Cash and bank at the beginning of the 293,543 344,050 153,986 274,394 153,986
period
Currency exchange difference in cash 36,340 30,387 1,237 (8,174) 7,186
and bank
Cash and bank at the end of the period 371,733 371,733 216,828 216,828 293,543
Note 1. Sales, TSEK 1 Jan 2000- 1 Jul 2000- 1 Jan 1999- 1 Jul 1999- 1 Jan 1999-
30 Sep 2000 30 Sep 2000 30 Sep 1999 30 Sep 1999 31 Dec 1999
9 months 3 months 9 months 3 months 12 months
Crude oil - 248,586 113,335 156,637 81,758 226,057
Malaysia
Crude oil - UK 350,114 96,345 243,172 101,276 374,341
Gas - UK 51,440 13,681 45,169 11,661 62,301
NGLs - UK 5,670 1,625 17,338 14,057 20,852
655,810 224,986 462,316 208,752 683,551
Note 2. Production costs, TSEK 1 Jan 1 Jul 1 Jan 1 Jul 1 Jan
2000- 2000- 1999- 1999- 1999-
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2000 2000 1999 1999 1999
9 3 9 3 12
months months months months months
Costs of operations 144,735 56,595 118,623 41,982 161,664
Tariff expenses 74,582 26,509 61,258 23,783 86,230
United Kingdom royalty 17,057 5,281 9,389 4,939 16,577
Changes in inventories and underlift/(31,367) 10,355 28,116 21,839 35,028
overlift position
205,007 98,740 217,386 92,543 299,499
Note 3. Tax, TSEK 1 Jan 1 Jul 1 Jan 1 Jul 1 Jan
2000- 2000- 1999- 1999- 1999-
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2000 2000 1999 1999 1999
9 months 3 months 9 months 3 months 12 months
Corporation tax
- current 61,802 16,039 22,335 17,067 38,552
- deferred 797 8,737 13,435 8,071 24,463
62,599 24,776 35,770 25,138 63,015
PRT (Petroleum revenue
tax)
- current 33,728 13,513 18,457 12,903 29,916
- deferred 10,166 2,656 332 197 11,430
43,894 16,169 18,789 13,100 41,346
Total charge to income 106,493 40,945 54,559 38,238 104,361
Note 4. Oil and gas properties, TSEK Book amount Book amount Book amount
30 Sep 2000 30 Sep 1999 31 Dec 1999
United Kingdom 892,339 874,950 891,626
Malaysia 516,074 457,491 477,407
Libya 951,560 493,904 553,118
Falkland Islands 21,194 17,155 19,725
Sudan 284,557 203,520 220,972
Papua New Guinea 40,703 35,063 36,352
Albania 31,679 17,965 19,309
Others 3,864 4,550 851
2,741,970 2,104,598 2,219,360
Note 5. Financial fixed assets, TSEK 30 Sep 2000 30 Sep 1999 31 Dec 1999
Shares in Khanty Mansiysk Oil Corporation 45,450 37,200 37,200
Restricted cash 16,072 - 15,278
Deferred financing fees 8,916 11,340 10,643
70,438 48,540 63,121
Note 6. Pledged assets represent the UK North Sea assets.
PARENT COMPANY INCOME STATEMENT IN SUMMARY
1 Jan 1 Jul 1 Jan 1 Jul 1 Jan
2000- 2000- 1999- 1999- 1999-
Expressed in TSEK
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2000 2000 1999 1999 1999
9 months 3 months 9 months 3 months 12
months
Other income 1,494 526 549 - 1,026
Administration expenses (12,167) (3,945) (9,984) (2,186) (14,388)
Operating loss (10,673) (3,419) (9,435) (2,186) (13,362)
Financial income and 23,640 26,065 (1,826) (4,617) (6,069)
expenses, net
Profit/(loss) before tax 12,967 22,646 (11,261) (6,803) (19,431)
Tax - - (40) - (40)
Net result 12,967 22,646 (11,301) (6,803) (19,471)
PARENT COMPANY CASH FLOW STATEMENT IN SUMMARY
1 Jan 1 Jul 1 Jan 1 Jul 1 Jan
2000- 2000- 1999- 1999- 1999-
Expressed in TSEK
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2000 2000 1999 1999 1999
9 months 3 months 9 months 3 months 12
months
Cash flow from operations
Net result 12,967 22,646 (11,301) (6,803) (19,471)
Adjustment for non cash related 424 132 (8,322) 146 (10,115)
items
Changes in working capital 2,683 1,469 (18,357) (17,899) (22,611)
Total cash flow from operations 16,074 24,247 (37,980) (24,556) (52,197)
Investment in other fixed assets (30) (2) (46) - (241)
Investment in other shares (8,252) (8,252) - - -
Loans to subsidiary companies (111,169) (36,359) (35,015) 25,461 (38,313)
Sale of other shares - - 73,519 - 75,455
Total cash flow used for (119,451) (44,613) 38,458 25,461 36,901
investments
Loans from subsidiary companies - (34,688) - - 19,556
Proceeds from share issue 1,353 - - - 101,809
Share issue costs (3,941) - - - -
Total cash flow from financing (2,588) (34,688) - - 121,365
Change in cash and bank (105,965) (55,054) 478 905 106,069
Cash and bank at the beginning of 107,935 57,024 1,866 1,439 1,866
the period
Cash and bank at the end of the 1,970 1,970 2,344 2,344 107,935
period
Stockholm, 14 November 2000
Ian H. Lundin
President
For additional information, please contact:
Ian H. Lundin, telephone: +41 22 319 66 00
Magnus Nordin, telephone: +41 22 319 66 00
Ashley Heppenstall, telephone: +41 22 319 66 00
Simon Rothschild, Millham Communications tel: 020 7256 5756
This report has not been subject to review by the auditors of the company.
Notes for editors:
1. Lundin is the parent company of Sodra by virtue of its holding of
40,506,500 Ordinary Shares of SEK0.05 each. The 40,506,476 Convertible Shares
of SEK0.05 each in Sodra listed on the AIM market are effectively convertible
into the right to subscribe for B Shares in Lundin in November 2001. Upon
exercise of the conversion right, for every 12 Convertible Shares, the holder
will receive a warrant to subscribe for 1 new Lundin B Share at the nominal
value of SEK0.50.
2. Convertible Shares in Sodra are also listed on the New Market of the
Stockholm Stock Exchange. Lundin B Shares are currently quoted on the
Stockholm Stock Exchange, Toronto Stock Exchange and the Nasdaq National
Market.
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