lundin petroleum - norway

Lundin Petroleum - Norway

Analyst Presentation2 December 2010WF11073

1

Norway - Oil Industry Overview

Analyst Presentation - 2 December 2010WF11073

2

NCS Development Trends - Last 10 - 12 Years

Changes in company structure Privatisation of Statoil Statoil/Hydro/Saga merger General ”Mega mergers” acquisition Large amount of new companies, 50+ pre quali�ed

Increased exploration activities Award in APA rounds Tax incentive All time high in 2009 Moderate success

Decline in production Too little focus on IOR (Åm report)

High oil prices, lower gas prices

Increased cost development Unit cost doubled the last 4-5 years

New companies have the possibility to seek the best in new software PC based interpretation software from small independent suppliers A revolution in computing power enables in-house processing Web based publishing tools makes report and application work fast and �exible

WF11158 p1 11.10

Production

Exploration Wells

3

Current Drilling Activities

WF11158 p2 11.10

Company activity (wells drilled) 2010

0

1

2

3

4

5

6

7

8

9

Det Nors

ke

Statoil

LundinShe

llBG

Centrica

Petro C

anad

a

RWE-D

ea

Talism

an

Winters

hall BP

CoP EniEss

o

Nexen

Total

Noreco

Premier

num

ber o

f wel

ls

wells plannedwells drilled

18 wells by ‘oldtimers’27 wells by newcomers

4

Development in Exploration and Delineation Drilling

WF11158 p3 11.10

Stat

oil

Eni

Talis

man

Esso

CoP

Det

Nor

ske

Shel

l

Mar

atho

n

BG

BP

DO

NG

Hes

s

Che

vron

Lund

in

RW

E-D

ea

Tota

l

Cen

trica

PetC

an

Win

ters

hall

Nex

en

GdF

Nor

eco

VNG

wells2010wells 2000-2008

0

5

10

15

20

25

30

35

40

45

50

wells2010wells2009wells 2000-2008

5

Oil Discoveries above 40 MMbbl in Mature Areas

WF11158 p4 11.10

NCS oil discoveries >40 MMbblAfter year 2005

0

50

100

150

200

250

300

Avaldsnes

Dagny/E

rmintru

deLu

no

Goliat d

eep

JordbærMari

a

Grevlin

g

Grosbeak Beta

"6608/1

0-14"

Draupne

MM

bbl

Apollo

Astero

Lundin Petroleum operated(Greater Luno Area)

6

New Players in the Last 10 Years

WF11158 p5 11.10

Norwegian start-ups E&P

(14)

International E&P companies(ca 30)

European Energy companies

(8)

7

The “Right Tool” to do the “Right Job”

A new company will not start with yesterday’s “IT toolbox” and it’s defenders

A new company will start with a fresh, new, up to date “IT toolbox” PC based interpretation and data handling software from smaller and independent suppliers (Kingdom, �A, Headwave, H&R, Petrel) A revolution in storage capacity and computing power makes in-house processing of large 3D multiuser datasets possible (Promax) Lundin Petroleum will stay in front to facilitate the most competitive technical and commercial solutions

WF11158 p6 11.10

8

WF11158 p7 11.10

Taxes are pro�t related: Corporation Tax : 28% Special Petroleum Tax : 50%

No Royalty, no Ring Fence

30% uplift against special tax over four years for new investments

Interest costs can be deducted against tax

New entrants without revenue receive 78% of unsuccessful exploration spend back in December the following year

Norwegian Taxation

9

Lundin Norway Organisation

WF11165 p1 11.10

Managing DirectorTorstein Sanness

Adm./Support Finance Manager

Drilling

Johan Bysveen

ManagerRes. Development

& Partner OperationsManager

Tove Lie

ProjectsManager

Bjorn Sund

ExplorationManager

Hans C. Ronnevik

ProcurementManager

CommercialManager

Andreas Hildeng

HSE Manager

Total (2010) LNAS employees: >75 (excluding consultants)

10

Lundin Norway


11

WF11057 p1 09.10

Norway - Introduction

2P Reserves of 121 MMboe GCA + additional latest Luno 2P certi�ed Reserves of 27 MMboe (net Lundin)

Contingent resources of 44.6 MMboe

Unrisked prospective resources of ~1.2 billion boe

2 producing fields: Alvheim & VolundCurrent production 20,000 boepd1 field under development (Gaupe) - first oil Q4 20116 fields fully appraised - undergoing concept selection

Nemo �rst oil 2012/13Krabbe �rst oil 2013/14Luno �rst oil 2014/15Marihøne �rst oil 2013

No resources booked for Ragnarrock, Luno South, Avaldsnes & ApolloNew discoveries: Avaldsnes & Apollo

2 wells in 4Q 20109 wells in 2011

12

Norway - Licence History

Major position built through organic growth

0

5

10

15

20

25

30

35

40

45

31.12.2003

31.12.2004

31.12.2005

31.12.2006

31.12.2007

31.12.2008

16.09.2009

19.01.2010

Norway number of licences

0

50

100

150

200

250

Stato

il

Tota

l

Det Norsk

e

ExxonENI

Win

tersh

all

Noreco

ConocoPhillips

Talis

man

GdF

RWE D

eaDong

Bayerngas

E.ON

Shell

Spring

VNGDana BG

Centrica

Faroe

HESS BP

Mara

thon

Bridge

Petro-C

anadaOM

V

Rockso

urce

Lundin Norway ranked No.3 in terms of operated licences

LUNDIN NORWAY

WF10757a 01.10

Number of licences per Company

13

Norway - 3 Key Areas

WF10757b 03.10

Greater Alvheim Area

Greater Luno Area

Barents Sea Area

Greater Luno Area

Barents Sea Area


14

Norway Reserves & Contingent Resources

WF10757c p2 08.10

0

25

50

75

100

125

150

175

200

2005 2006 2007 2008 2009 2010

Norway Reserves and Contingent ResourcesH

ydro

carb

on V

olum

e [M

Mbo

e]

CR

2P

2010 CR: Luno South discovery, Ragnarrock, Avaldsnes and Apollo not yet included

* Doesn’t include Luno latest additional certified 2P reserve increase from 95MMboe to 149 MMboe gross

2P reserves increased year by year from 36 MMboe (2005) to 121 MMboe (2010) +336% in 6 years *

15

Norway Prospective Resources

WF10757c p2 01.10

0

200

400

600

800

1,000

1,200

1,400

1,800

1,600

Norway Prospective Resources

F/O to Statoil+ new discoveries& unsuccessful wells

Hyd

roca

rbon

Vol

ume

[mm

boe]

01.01.2006 01.01.2007 01.01.2008 01.01.2009 01.01.2010

16

WF10757 p2 03.10

Norway - Proven Track Record

Exploration Wells Drilled up to Nov. 2010

Commercial Discoveries up to Nov. 2010

Cumulative E&A Spend up to Oct 2010, MMUSD

Finding Cost USD/boe

Finding Cost USD/boe - post tax

Success Rate (commercial successes)(3)

(1)

(2)

(1)

Includes USD 130 Million investment in 3D Seismic, YTD 2010 spend estimatedMid range estimate assumed for Avaldsnes & Apollo

(3) Does not include Luno South

16

7

530

2.3

0.5

44%

Volund, Luno, Gaupe, Marihøne, Viper,Avaldsnes, Apollo

People = key

Proven basin & petroleum system

Close to infrastructure

Leading edge technology with emphasis on new 3D seismic acquisitionOver 7,115 km2 acquired & 48,135 km2 of 3D seismic reprocessed since 2004.

-

100

200

300

400

-

100

200

300

400

2004 2005 2006 2007 2008 2009

MUS

D MUSD

2010Forecast

Exploration capex

Development capex

(2)

(2)

17

Norway Production Growth

WF10925 p8 04.10

2010Forecast

Actual 2010

boep

d

16,8

00-1

8,30

0

14,3

00

17,9

00

increasein

production

LunoOnstream

Avaldsnes/Apollo

GaupeOnstreamVolund

Onstream

NemoOnstream

KrabbeOnstream

MarihøneOnstream

2011 2012 2013 2014/2015Q1 Q2

20,0

00Q3

Production Growthfrom Norway

Development Projects

18

Norway - Production

Analyst Presentation - 2 December 2010WF11073WF11073

19

WF10819 p5 04.10

PL203

PL203

PL150

PL150

P1283

PL340

PL340

PL505

PL547S

PL505BS

PL340BS

PL413

PL088 BS

P090

PL036C

PL036C

PL088PL088

PL088

PL088 bs

PL088 BS

GEKKO

ALVHEIM

VOLUND

GAMMA

HEIMDAL

PEIK

SKENE

0025

009

0024

25/7-6

25/7-5

25/4-8

25/4-7

25/4-3

24/9-624/9-5

24/9-4

24/6-3

24/6-2

24/6-1

9/19-12

9/15b-49/15b-3

9/15a-2

9/15a-1

9/14a-6

9/14b-2B

0 KM 4

LundinPetroleum PartnerLundinPetroleum Operator

UK

Norway

Alvheim Field

Volund Field

Norway - Greater Alvheim Area

Marihøne ADiscovery

Peik

Volund

Alvheim

Lundin Petroleum 15% Marathon 65% (operator), ConocoPhillips 20%

Gross ultimate recovery 246 MMboe

Lundin Petroleum 35% Marathon 65% (operator)

Gross ultimate recovery 49 MMboe

20

Norway - 2P Production Alvheim & Volund

0

2,000

4,000

6,000

8,000

1,0000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

22,000

24,000

0

2,000

4,000

6,000

8,000

1,0000

12,000

14,000

16,000

18,000

20,000

2008 Q22008 Q1 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3

Quar

tly P

rodu

ctio

n R

ate

[boe

/d]

Quartly Production Rate [boe/d]

Norway Production

Volund

Alvheim

WF11043 p4 11.10

21

Norway - Development


22

WF10762 p9 04.10

Norway Development Projects - Summary

Nemo

Marihone

Krabbe

Gaupe (Pi)

Luno

FieldFirst Oil

dateNet Reserves

MMboeProduction(1)

boe/day

11

3

9

11

75

6 000

TBA

4 800

5 000

>30 000

2012/13

2013

2013/14

2011

2014/15

(1)Lundin Initial Production

Total 109 45 800

23

Norway - Luno Project


24

WF10018 11.10

Lundin Petroleum interest: 50% (operator) Wintershall 30%, RWE 20%

Plateau production forecast >60,000 boepd gross

Certi�ed 2P reserves increased from 95 MMboe to 149 MMboe gross

Good progress with development planning Subsurface work completed Concept selection in late 2010 Submission of PDO in 2011 First oil 2014/15

Greater Luno Area - Luno Field Development

2P reserves increase

009

0016

0025

016

008

0015015

0024

0026

0017

PL304

PL359

PL338

PL501

PL265

PL505

PL505BS

PL547S

PL340BSPL546

PL544

PL410

PL409

PL412

PL363

PL203

PL340

PL150

PL036c

PL167PL167B

0 20KM

Alvheim fieldPeik field

Volund field

Lundin Petroleum OperatorLundin Petroleum Partner

UK

Norway

Avaldsnes discoveryApollo discovery

Luno Field

25

WF10766 p10 07.10

Greater Luno Area - Luno Development Options

PDO Submission 2011First Oil 2014/15

Luno

Gas export to Sleipner, 40km

Oil export to Grane

26

WF10766 p7 07.10

Luno Well Development Outline (9OP + 3WI)

SW1.0

0.2

0.8

0.6

0.4

Water InjectorWater Injector

Oil Producer Oil Producer

16/1-1016/1-13

16/1-8 R16/1-8 R Luno Field

Greater Luno Area 27

Norway - Exploration


28

Lundin Norway Exploration Strategy

WF11159 p1 11.10

Cash �ow protected organic growthLeverage on what we know and develop new concepts

E�cient exploration through early drilling decisions and continuous drilling activityTailor yearly balanced drilling portfolio in relation to

Standalone Frontier explorationGrowth ExplorationMature tie in exploration

Maintain production from existing and emerging developments (Alvheim and Volund)Data driven subsurface understanding, with a clear appreciation of the limitations of Data, Tools, Methods and Theories at any time

Data integration platform is Petrel, Kingdom, �A, Easy DC, LNAS NR @risk modelMulticube 3D data and in-house processingIn house formation evaluation analysis In house core description and paleofacies analysisIntegrate at highest possible entropy level for a max of parameters

Skilled specialists and interpreters in an open co-creation mode

Lundin strategy:

Subsurface work �ow:

People:

Utilise synergy in portfolio in relation to improved exploration and development

29

Norway - Prospective Resource

1.2 billion boe of unrisked prospective resources

36 exploration licences

Seismic new coverage

7,115 km2 of 3D

WF11057 p4 08.10

3 rigs on hire

Transocean WinnerSonga DeeBredford Dolphin

Rig secured for all and targeting >120 MMboe (net Lundin Petroleum)

2 wells remaining to be drilled or ongoing in 2010

9 wells estimated in 2011

30

Exploration - Norway - 3 Key Areas

WF10757b 03.10


Greater Luno Area

Barents Sea Area

Greater Luno Area

Barents Sea Area


31

Exploration - Greater Luno Area

WF11159 p2 11.10

WILL:Why?

Conceptual knowledge

PROCESS:

SKILL:How?

Operational knowledge

PURPOSE:Create values

Intellect

*Capital

*Land

Visions

Relations

Concepts

Acreage

Resources

Reserves

Production

Interlinking ofmultiple activitiesto discrete events

Source: EFQM

WILL:Why?

Conceptual knowledge

PROCESS:

SKILL:How?

Operational knowledge

PURPOSE:Create values

Intellect

*Capital

*Land

Visions

Relations

Concepts

Acreage

Resources

Reserves

Production

Interlinking ofmultiple activitiesto discrete events

Exploration targets in GLA/GAA:Explore inlier basins and fractured porous basement shallower than 1940m MSL on the high and all structural and stratigraphic traps fringing the high in the west

Primarily exploration for light oil

Exploration strategy:Have been our own fast follower

Focus on exploration and delineation of early stand alone prospects within each JV

De�ne and then realize prospects with tie in potential that can in�uence development solutions as in PL 338

Utilize at any time the impact of new geological and geophysical data on the totality

Enable parallel exploration and delineation within the various licenses

Retain all proli�c acreage as required in the APA regime

Create a common purpose for all stakeholders

32

New 3D Seismic Techniques Introduced in GLA

WF11159 p3 11.10

LN0803

LN0902

LN1002

LN10M06

33

Southern Utsira High at BCU and Basement Levels

WF11159 p4 11.10

34


WF11159 p5 11.10

16/2-6

35

WF11159 p6 11.10


16/2-6

Avaldsnes disc

36

PL501 (40%) Avaldsnes discovery contingent resources estimates 100-400 MMboe gross

2 appraisal wells to be drilled in 2011

PL 338 (50%) Apollo discovery contingent resources estimate 15-65 MMboe gross

Tellus prospect Prospective resources 40 MMboe gross unrisked

1 exploration well in 2011

PL 409 (70%) Norall exploration well to be drilled end 2010 prospective resources 27 MMboe gross unrisked

PL 265 (10%) 1 appraisal + 1 exploration well to be drilled in 2011 (Statoil) - Avaldsnes West and Aldous North prospect

WF10988 p12 11.10

Greater Luno Area - Further Exploration Potential

2 exploration wells and 3 appraisal wells to be drilled in 2011

00160015

0 KM 20UK

SLEIPNER WEST

SLEIPNER EAST


PL359

PL410

PL409

PL304

PL546

PL544

PL338

PL502

PL265

Norway

PL501

Norall27 MMboe

Luno and Luno Southdiscoveries

Apollo Discovery16/1-14

Avaldsnes discovery

Ragnarrock16/2-6

Aldous North

TorvastadTellus

37

WF11111 p12 11.10

Greater Luno Area - Further Upside - Exploration

00160015

0 KM 20OilGasProspectLead


PL304

PL546

PL501

PL544

PL410

PL359

PL338

PL502

PL265Ragnarrock

Draupne

16/2-6

Tellus ProspectPR unrisked gross: 40 MMboeCoS: 40%Drilling: Jan 2011

Avaldsnes West

Apollo discoveryContingent gross: 15 - 65 MMboe

Avaldsnes discoveryContingent resource estimate 100 - 400 MMboe (on block).Appraisal drilling to start inMarch 2011

Luno South

Luno discoveryRevised certi�ed 2P reserves149 MMboePDO submission 2011

PL359Numerous Pre and PostCretaceous prospects

PL410Two Pre Cretaceous Leads

Torvastad Prospect

Aldous North Prospect

Luno 3 Prospect

38

WF11111 p10 10.10

PL501PL546

PL410

(30m Jurassic Gross Thickness)

16/3-2Triassic

pinchout ?Rotliegendes

potential OWC1922 mss

PL265

Resources estimate on blockat 100-400 MMboe

Geological model assumesno Jurassic reservoir in white area

Avaldsnes Discovery

16/2-6(33m Jurassic

Gross Thickness)

39

WF11111 p11 11.10

Avaldsnes Discovery - Further Upside

PL501PL546

PL410

(30m Jurassic Gross Thickness)

16/3-2

Aldous North prospect

Torvastad prospect

Triassic pinchout ?

Rotliegendes potential OWC

1922 mss

16/2-6(33m Jurassic

Gross Thickness)

PL265

Avaldsnes post-drill Contingent resource estimate 100 - 400 MMboe (on block)

Additional potential in Avaldsnes West located in PL265

Avaldsnes drilling to commence inMarch 2011 with two appraisal wells.

Avaldsnes West and Aldous Northexploration wells in 2011. Locatedin PL265

Additional prospectivity in Torvastadprospect in PL501

Appraisal well

Appraisal wellAvaldsnes West (PL265)Current model showsJurassic sand reservoirthickness increasingtowards fault

40

WF11159 p7 11.10

Avaldsnes Top Jurassic sand map (m)

Approx Location 16/3-4A A’

Approx Location 16/2-7

41

Apollo discovery

WF10988 p13 04.10

Greater Luno Area - Apollo Discovery

Size 15-65 MMboe gross (PL338)

Lower Cretaceous/Upper Jurassic DiscoveryPaleocene Discovery

PL 338 - Lundin Petroleum 50% operator Wintershall 30%, RWE 20%

16/1-6 S

16/2-5

16/1-9

16/1-8

16/2-3

16/1-7

16/1-5

16/1-2

16/2-1

16/1-14

16/1-13

16/1-12

16/1-11

16/1-10

16/1-4

0 2.5 5

Kilometers


RagnarrockLuno

Tellus

Luno South

Apollo,Paleocene Discovery

Apollo, Lower Cretaceous Discovery

Draupne

Avaldsnes

42

WF11159 p8 11.10

Greater Luno Area - Apollo Discovery

Proven Paleocene owc

Flatspot owcProven Cret owc

Dip line showing Palaeocene and Jurassic/Cretaceous discoveries

Crossline showing up dip Palaeocene pot

43

Other Areas - PL519 Area

WF11046 p2 07.10

211 034210

2196201 6202

033

003 030002

220

029

0 KM 205

Lundin Petroleum Operator

Oil FieldGas Field

PL519 Lundin Petroleum 40% (operator) Spring Energy 20%, Bayerngas 20%, Noreco 20% Work commitment: - 1 firm well within first 3 years, TD 100m into Teist Fm or at 3500m Albert prospect to be drilled in 2011

PL555 Lundin Petroleum 60% (operator) Bayerngas 40% Work commitment: - 3D re-processing and G&G studies

UKNorway

PL519

PL555

Albert Prospect

44

PL 519 - Albert Prospect

WF11169 12.10

NW SE

Planned well

45

Norway - Barents Sea


46

Regional Barents Sea with New Border Line

WF11164 p1 11.10

New border (red line)

Lundin core area

47

Barents Sea

WF10825 p3 01.10

Arenaria

Source:maps.grida.no

Nucula

Goliat

Obesum

Ververis

Shtokman

Obelix?

Lundin Licence area

SnøhvitOil & GasGas

Oil

48

Distribution of oil prone source rocks

WF11164 p2 11.10

49

WF9900 p4 10.10

6309

6915

69146916

68146813SWEDEN

PL438 Lundin Petroleum 25% (operator) 3 prospects Skalle to be drilled in Q1 2011, 250 MMboe gross prospect size in multiple targets

Barents Sea - Drilling to Commence in 2011

ICELAND

71227121

71207119

7118

7116

7123

72247223

72227221

7225

72207219

72187217

7216

7124

7127

7226

71267125

7227

7317

7019

72287318 7319

7020

7320

7021

73217316 7323

7022

7215

7324 7325

Hammerfest

KM0 80

Barents Sea

PL438

PL492

PL533

PL563

PL490 SnoehvitArea Goliath

21°E

0 KM 8

Lundin Norway Licences

Operated

Non-Operated

Licenced Area (NPD)

Prospect

Lead

Oil field

Gas field

22°E

72°N

71°45’N

Lavvo

Bieksu & Geres

Snurrevad

Rein

Juksa

Pulk (Salina)

Skalle

Gohta

Rauto

PL490PL563

PL533

PL438

PL492

PL533 Lundin Petroleum 20% Rauto & Pulk prospects Pulk 500 MMboe gross prospect size in multiple targets likely to be drilled in 2011

PL490 Lundin Petroleum 30% (operator) Juksa and Snurrevad prospects likely drilling in 2012 380 MMboe gross prospect size

Numerous multi-stacked prospects matured in the portfolio

50

Geological play types

WF10980 p4 04.10

Lower to Middle Triassic

Paleocene

Shallow gas anomalies Shallow gas anomalies

1000

2000

3000

Upper Paleozoic Carbonates

Late Triassic

Early Jurassic

Cretaceous?

Cretaceous

Paleocene

Pleistocene

Pre Carboniferous

7120/1-1R

PL533 PL492 PL438 PL490

7120/2-1SkalleLavvo

0 KM 4

21°E22°E

72°N

71°45’N

Lavvo Rein

X-SectionPulk

SkallePL490

PL563

PL533

PL438

PL492

NW

SEBright Spot

Possible Flat Spot

Numerous structural and stratigraphic play types

Potential for stacked reservoirs, as seen at other discoveries in the region

Oil and gas potential in proven good quality reservoirs

NW SE

51

Skalle well will be drilled with the Polar Pioneer rig spudded approx. March 2011

WF11159 p12 11.10

PL438 Skalle

52

Pulk well will be drilled with Scarabeo 8tentatively July 2011

WF11159 p11 11.10

PL533 Pulk/Salinas

53

Triassic channels mapped in by 3D and observed in field

WF11164 p3 11.10

Analogue channel seen from outcrop at Edgeøya, Spitsbergen

PL490

GohtaProspect Middle Triassic

channel anomaly

Well with oil showsoutside closure

54

Norway - Drilling Schedule


55

Norway Targeted Prospective Resources – 2010-11 Drilling Schedule

WF11117 p2 12.10

Licence - Prospect Operator LUPE% NURPR CoS%

3

2

1

4

5

6

7

8

10

1112

13

14

14

Lundin

Marathon

Marathon

70.00

15.00

30.00

19

2

24

36

50

18

Lundin 40.00 – –PL501 - Avaldsnes

PL409 - Norall

PL340 - Caterpillar

PL505 - Earb South

Lundin 50.00 75

NRPR

7

1

4

9

40.00

Lundin

Lundin

50.00 20 40 8

–

– – –

25.00 63 19-41 22

21.30 (3) 107 14-19 16

40.00

10.00

– – –

TBA – –

TBA – –

Lundin 50.00 – –PL338 - Apollo –

1318PL400 - Barchan

394 90

operated

Discovery

Discovery

non operated

Q3 Q4

2010 2011

Q3Q1 Q2 Q4(1)

(1) Net Unrisked Prospective Resources (MMboe)(2) Net Risked Prospective Resources (MMboe)

(2)

Lundin

Statoil

10.00Statoil

PL501 - Avaldsnes 1st Appraisal

PL338 - Tellus

Lundin 40.00 84 22 19PL519 - Albert

PL501 - Avaldsnes 2nd Appraisal

PL265 - Avaldsnes West

PL265 - Aldous North

Lundin

ENI

PL438 - Skalle

PL533 - Pulk

(3) Propsect split between PL533 (20% equity) and PL 492 (30% equity)

56

lundin petroleum - norway

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