Annual Report 2010
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RESERVES, RESOURCES AND PRODUCTION Strong production performance during 2010 PRODUCTION Lundin Petroleum produced a total of 11.9 MMboe in 2010 from fields in Norway, France, Netherlands, Russia, Tunisia and Indonesia and from the United Kingdom for the first quarter only. Production throughout the year has been at the upper end of the production guidance. The main contributor to the strong production has been the continued good performance of the Alvheim field in Norway. Both field production and FPSO uptime have been above forecast. Furthermore, the Volund field started production in April 2010 and produces over the Alvheim FPSO with a minimum contracted capacity of 25,000 bopd. However, well capacity is such that Volund can and has been producing more when there is additional capacity available on the Alvheim FPSO. The development of the Volund field is now complete. A further three multi-lateral development wells will be drilled on the Alvheim field in 2011 and one well in 2012. Further development options are being investigated in both Volund and Alvheim fields. Sales Lundin Petroleum sold a total of 11.7 MMboe at an average oil price achieved of USD 72.26 per boe. The average Dated Brent price for 2010 was USD 79.50 per barrel. The oil produced in Russia which is 11 percent of Lundin Petroleum’s total production is sold either on the Russian domestic market or exported into the international market. 40 percent of the Russian sales in 2010 were on the international market at an average price of USD 76.17 per barrel and the remaining 60 percent of Russian sales being sold on the domestic market at an average price of USD 34.98 per barrel. Variations Production quantities in a period can differ from sales quantities for a number of reasons. Timing differences can arise due to inventory, storage and pipeline balances effects. Several of Lundin Petroleum’s fields are producing into storage tanks onboard FPSOs, such as the Alvheim/Volund fields in Norway and the Oudna field in Tunisia or into onshore storage tanks such as the fields in the Aquitaine basin in France. These storage tanks are offloaded on a regular basis depending on the production volume and it is only at the point of having offloaded these tanks that the sale of this crude is recorded in the income statement and this can sometimes lead to a misalignment between what is reported as produced crude oil volume versus sold crude oil volumes. However, over time these differences between reported production and sales volumes will balance out. In certain fiscal regimes part of the production volume has to be transferred to the government as a tax and/or royalty payment in kind which results in lower sales volumes than production volumes. In 2010, production from Lundin Petroleum’s Oudna field in Tunisia and from the Indonesian fields (including the divested Salwati assets) were liable for such “in-kind” payments. Production forecast Lundin Petroleum’s production forecast for 2011 is in the range of 28,000 to 33,000 boepd. This compares to 28,400 boepd in 2010, excluding the production from the divested UK and Indonesian assets. boepd net 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Q1 Forecast high 35,900 32,100 UK 30,200 32,500 Q2 Forecast low Q3 Q4 Actual production 2010 PRODUCTION PERFORMANCE 28,400boepd excluding production from divested assets boepd net 35,000 30,000 25,000 20,000 15,000 Q1 Q2 Forecast high Q3 Forecast low Q4 2011 PRODUCTION FORECAST 28,000–33,000 boepd 33
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