Year End Report 2021

Rhea-AI Summary

Lundin Energy reported a record financial performance for 2021, achieving a free cash flow of USD 1.6 billion and reducing net debt to USD 2.7 billion. The company anticipates completing its merger with Aker BP around mid-2022, creating a leading independent E&P company in Europe. Lundin Energy's production guidance for 2022 is set between 180 and 200 Mboepd, with significant resource additions reported. The Board proposes a 25% increase in quarterly dividends until the merger's completion. The company aims to be carbon neutral by 2023.

Positive

• Achieved record free cash flow of USD 1.6 billion in 2021.
• Reduced net debt to USD 2.7 billion.
• Quarterly production reached a record of 195 Mboepd in Q4 2021.
• Production guidance for 2022 is set between 180 and 200 Mboepd.
• Proposed 25% increase in quarterly dividend until completion of Aker BP transaction.
• On track to achieve carbon neutrality by 2023.

Negative

• None.

THESE MATERIALS DO NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE OR A SOLICITATION OF AN OFFER TO PURCHASE THE SECURITIES DESCRIBED IN SUCH MATERIALS IN THE UNITED STATES. IN PARTICULAR, ANY SECURITIES REFERRED TO IN THESE MATERIALS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE WILL BE NO PUBLIC OFFERING OF SECURITIES IN THE UNITED STATES.

• Board of Directors of Lundin Energy and Aker BP agreed on a combination to create the leading European independent E&P company, with completion of the transaction anticipated around mid 2022
• Record financial performance in 2021, with free cash flow generation of USD 1.6 billion and net debt reduced to USD 2.7 billion
• Board of Directors propose to increase 2021 quarterly dividend by 25 percent to USD 0.5625 per share until completion of the Aker BP transaction
• Record quarterly production for the fourth quarter of 195 Mboepd and 2022 production guidance set between 180 and 200 Mboepd
• Key projects progressing on schedule, with Johan Sverdrup Phase 2 set for first oil in the fourth quarter of 2022 and five new projects heading towards sanction within the temporary tax incentives
• Delivering growth with resource additions of 200 percent of production in 2021
• On track with Decarbonisation Plan to achieve carbon neutrality by 2023 from operational emissions
  
  

Financial summary¹

	1 Jan 2021- 31 Dec 2021 12 months	1 Oct 2021- 31 Dec 2021 3 months	1 Jan 2020- 31 Dec 2020 12 months	1 Oct 2020- 31 Dec 2020 3 months
Production in Mboepd	190.3	194.8	164.5	185.1
Revenue and other income in MUSD	5,484.7	1,621.8	2,564.4	779.7
CFFO in MUSD	3,058.0	558.1	1,528.0	276.7
Per share in USD	10.75	1.96	5.38	0.97
EBITDAX in MUSD	4,822.8	1,462.2	2,140.2	708.4
Per share in USD	16.96	5.14	7.53	2.49
Free cash flow in MUSD	1,645.5	22.6	448.2	-97.5
Per share in USD	5.79	0.08	1.58	-0.34
Net result in MUSD	493.8	121.7	384.2	303.7
Per share in USD	1.74	0.43	1.35	1.07
Adjusted net result in MUSD	795.7	253.3	280.0	86.9
Per share in USD	2.80	0.89	0.99	0.31
Net debt in MUSD	2,747.9	2,747.9	3,911.5	3,911.5

¹ All numbers in this table relate to continuing and discontinued operations combined. For a further breakdown between continuing and discontinued operations, reference is made to pages 32-33

Nick Walker, President and CEO of Lundin Energy AB, commented on the proposed combination of Lundin Energy’s E&P business with Aker BP:
“We were very pleased to announce at the end of 2021, that the Board of Directors of Lundin Energy and Aker BP reached an agreement to combine the businesses to create the leading European independent E&P company. Value creation is at the heart of our business and this deal is a unique opportunity to create a world class company, with significant scale, production growth and strong free cash flow generation into the next decade. Coupled with that is a business with industry leading low costs and low carbon emissions.

“I am convinced that the combination proposal with Aker BP is a win-win outcome for both sets of shareholders, as it creates a business that is positioned to prosper through the energy transition and deliver increased and sustainable dividends. For Lundin Energy shareholders, this will deliver a significant up-front cash consideration, the opportunity to be a shareholder in the leading European E&P company and a retained interest in a renewables business that is positioned for growth. We are anticipating that the proposed combination will be completed around the middle of the year.”

Nick Walker, President and CEO of Lundin Energy AB, commented on the 2021 full year results:
“I’m pleased to report that in 2021 Lundin Energy delivered record production and financial results, underpinned by continued excellent operational performance and strong oil and gas prices.

“Our world class assets continue to outperform, with industry leading production efficiency and low operating costs. We exited the year with production at just under 200 Mboepd and full year production came in above the top of our original guidance range.

“Johan Sverdrup keeps on delivering above expectations. Phase 2 of the project, which will lift production to 755 Mbopd gross, is making excellent progress and is firmly on track for first oil in the fourth quarter of 2022.

“At the Greater Edvard Grieg Area the completion of the infill drilling programme and the Solveig and Rolvsnes tie-back projects, together with a number of new projects being planned, will keep the facilities full in the long term. This is a prolific area where I see great opportunity to further extend the production plateau.

“We completed the acquisition of a further interest in the major Wisting oil development project, taking our share to 35 percent, which will help sustain the production profile of the business long term with a significant addition of low carbon emissions barrels. The Wisting development concept has been decided upon and the project is heading towards sanction at the end of 2022.

“Our growth strategy continues to deliver results with total resource additions in 2021 of 200 percent of produced volumes, supported by further reserves growth in the Greater Edvard Grieg Area and the additional interest in Wisting. I see multiple opportunities to continue to grow the business with significant potential resource upside at Johan Sverdrup, a pipeline of new projects being progressed towards development and an active exploration programme.

“At the same time, we are making great progress on our industry leading Decarbonisation Plan and are set to become carbon neutral by 2023 from operational emissions, with around 60 percent of our production already being carbon neutral. I see this as a key value differentiator for Lundin Energy.

“Financially we had a very strong year, delivering free cash flow of USD 1.6 billion, covering our 2021 dividend three times and allowing us to reduce net debt to USD 2.7 billion. I’m pleased to note that the Board of Directors is recommending a 25 percent increase in the quarterly dividend until completion of the Aker BP transaction, clearly demonstrating our commitment to long-term growth of shareholder returns.

I would like to thank all our stakeholders for their continued support over the last year, and our employees for their tremendous efforts in delivering these record results.”

Webcast presentation
Listen to Nick Walker, President and CEO, Dan Fitzgerald, COO and Teitur Poulsen, CFO, commenting on the report and providing a 2022 business update at a live webcast held today, at 14:00 CET. Follow the presentation on www.lundin-energy.com or dial in using the following telephone numbers:

UK/International: +44 3333000804
Sweden: +46 856642651
Norway: +47 23500243
USA: +1 6319131422
Access Pin: 17161382
Webcast link: https://edge.media-server.com/mmc/p/ifchzb4n

For further information, please contact:

Edward Westropp
VP Investor Relations and Communications
Tel: +41 22 595 10 14
edward.westropp@lundin-energy.com

Robert Eriksson
Director Media and Corporate Affairs
Tel: +46 701 11 26 15
robert.eriksson@lundin-energy.com

Lundin Energy is an experienced Nordic oil and gas company that explores for, develops and produces resources economically, efficiently and responsibly. We focus on value creation for our shareholders and wider stakeholders through three strategic pillars: Resilience, Sustainability and Growth. Our high quality, low cost assets mean we are resilient to oil price volatility, and our organic growth strategy, combined with our sustainable approach and commitment to decarbonisation, firmly establishes our leadership role in a lower carbon energy future. (Nasdaq Stockholm: LUNE). For more information, please visit us at www.lundin-energy.com or download our App www.myirapp.com/lundin

Forward-looking statements
Certain statements made and information contained herein constitute “forward-looking information” (within the meaning of applicable securities legislation). Such statements and information (together, “forward-looking statements”) relate to future events, including Lundin Energy’s future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to estimates of reserves and/or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities. Ultimate recovery of reserves or resources are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions) are not statements of historical fact and may be “forward-looking statements”. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations and assumptions will prove to be correct and such forward-looking statements should not be relied upon. These statements speak only as on the date of the information and Lundin Energy does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, operational risks (including exploration and development risks), productions costs, availability of drilling equipment, reliance on key personnel, reserve estimates, health, safety and environmental issues, legal risks and regulatory changes, competition, geopolitical risk, and financial risks. These risks and uncertainties are described in more detail under the heading “Risk management” and elsewhere in Lundin Energy’s Annual Report. Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements are expressly qualified by this cautionary statement.

Attachment

• Lundin Energy - Year end report 2021 - V1 - 01022022en

FAQ

What were Lundin Energy's financial results for 2021?

Lundin Energy reported a record free cash flow of USD 1.6 billion and net debt reduced to USD 2.7 billion for 2021.

What is the production guidance for Lundin Energy in 2022?

Lundin Energy's production guidance for 2022 is set between 180 and 200 Mboepd.

What is the planned dividend increase by Lundin Energy's Board?

The Board proposes a 25% increase in the quarterly dividend until the completion of the Aker BP transaction.

When is the merger with Aker BP expected to be completed?

The merger with Aker BP is anticipated to be completed around mid-2022.

When does Lundin Energy aim to achieve carbon neutrality?

Lundin Energy aims to achieve carbon neutrality by 2023.