Lundin Energy is buying OMV’s 25% working interest in the Wisting oil development in the southern Barents Sea, for $320 million.

The acquisition takes the Swedish company’s working interest in the 500-million-barrel development from 10% to 35%.

Lundin said the agreement strengthens its position in a core area described as offering significant remaining prospectivity, contributing to its long-term production outlook.

It said the purchase adds net 130 million barrels of oil equivalent of fully appraised contingent resources at an acquisition price of about $2.5 per boe.

Operator Equinor is aiming to submit a development plan by the end of 2022 to qualify for temporary Norwegian tax incentives introduced in June last year.

Austria’s OMV has become focused on gas and petrochemicals, explaining its exit from an Arctic oil project.

OMV upstream chief and deputy chairman Johann Pleininger said: “We intend to increase the share of natural gas over oil to reduce the carbon intensity of the product portfolio in the future.”

The Wisting field is in the Hoop area of the Barents Sea in PL 537 and 537B, about 310 kilometres from mainland Norway.

Equinor is operator for the project development phase, with six wells drilled to date, the last of which, Wisting Central III, was drilled in 2017.

The project regained momentum with the tax incentives, and the planned start of the production is 2028.

In addition to its 35% stake in Wisting, Lundin holds surrounding acreage that is estimated to hold gross unrisked prospective resources of a further 500 million barrels of oil.

Wisting will be one of the largest development projects in Norway over the next few years, becoming the next Barents Sea production hub.

Concept selection is expected shortly.

Equinor this month awarded Aker Solutions a letter of intent for a contract covering front-end engineering and design for a cylindrical floating production, storage and offloading vessel at Wisting.

Lundin cash piling up

Lundin Energy highlighted the Wisting acquisition in a third quarter earnings statement that showed a net profit equivalent to $137.5 million, down from $212.3 million in the same quarter of 2021.

However, the company boasted a record free cash flow generation of $1.6 billion for the first nine months of this year, with operating costs falling below investor guidance at $2.9 per barrel of oil equivalent and net debt at $2.6 billion, down from $3.7 million at the end of the third quarter of 2020.

Lundin's production rose to an average 194,000 barrels of oil equivalent per day for third quarter, up from 157.500 boepd in the same period of 2020.

Full year production is anticipated towards the upper end of the guidance range of 180,000 to 195,000 boepd.

Nick Walker, chief executive of Lundin Energy said: " “Our world class producing assets keep on outperforming, with excellent production efficiency and industry leading low operating costs, delivering record production in the third quarter.

He praised the operational performance of projects in which Lundin has stakes, including the phase two of the Equinor-operated Johan Sverdrup development in the Norwegian North Sea, which he said remains firmly on track for first oil in the fourth quarter of 2022.

Walker highlighted other Norwegian projects.

“At the Greater Edvard Grieg Area we’re delivering on our projects that support the long term plateau extension, with excellent results from the completed Edvard Grieg infill well programme.

"We are set to see reserves increases at year end due to the continued strong Edvard Grieg performance and the excellent drilling results at Solveig," he said.

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