Spin-off for global business

Lundin Petroleum is spinning off its international business to give it more room to expand while the parent company focuses on its fast-growing Norwegian activities, writes Beate Schjolberg.

After a decade of successful exploration and development of new fields, Norway accounts for 96% of Lundin’s oil and gas reserves, 99% of this year’s investment budget, and 88% of expected 2017 production, with assets including the Edvard Grieg field and the Johan Sverdrup development.

“The Norwegian success story has put a shadow over our other assets, which have been small, but good,” Lundin Petroleum chief executive Alex Schneiter said.

“We want to create more value for the international assets.”

The international division, consisting mainly of field stakes in Malaysia, France and the Netherlands, will be spun off as a share dividend to Lundin’s existing owners under the new name International Petroleum Corporation (IPC).

IPC will have production of between 9000 and 11,000 barrels of oil equivalent per day this year and plans an investment of $10 million.

It will be able to leave all debts behind at the parent company, starting with a clean slate ahead of any new acquisitions.

Lundin board member Lukas Lundin will become IPC’s chairman, and the Lundin family is committed to remaining the largest shareholder in the new company.

“We have a board that wants to see us build long-term value,” said Mike Nicholson, who will move from his current position as chief financial officer of Lundin Petroleum to take the helm at IPC.

“It is a great time to launch a company like this. We are debt-free, and there are a lot of assets on the market.”

IPC’s expansion drive will focus on “high-quality” assets, either at the development stage or in early production, said Nicholson.

The company has experience both from onshore activities in France and offshore production in Malaysia, but will not seek to go into unconventional oil and gas production, he added.

Geographically, IPC will not limit itself to any particular area, though its existing activity regions will be a natural starting point, said Nicholson.

Shares in IPC are set to be listed both in Toronto and in Stockholm.