North Sea firm Lundin Petroleum has warned profits will be down after seeing exploration costs rise over the last three months.
The Swedish firm warned it faced exploration costs of $135million for the fourth quarter of the year, while an after-tax charge of $30million was also set to hit the company’s books following drilling on the giant Johan Sverdrup field and Luno II prospect.
The charges would not impact on earnings or cash flow, the firm said, but meant profits would be down for the quarter.
The news came as Lundin announced it had increased its debt facility to $4billion to fund the Johan Sverdrup field.
The £13billion project, which also involves Statoil, Det norske and Maersk, has already been delayed by up to a year while the field’s partners look to find the best way to develop its 2.8billion barrels of oil.
The new funding package increases Lundin’s debt facility from $2.5billion, with the company’s net debt currently standing at $1.2bn. The firm said the increased flexibility would allow them to cover appraisal and exploration costs.
“The new facility together with our strong operating cash flow will allow us to fund the development and appraisal costs of our existing discoveries as well as to continue to pursue our aggressive ongoing exploration programme,” said Lundin chief executive Ashley Heppenstall.
“We will also now have additional funding capacity to carry out additional developments or other potential opportunities should they arise.”
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