January 31, 2020 / 7:10 AM / 25 days ago

UPDATE 2-Lundin Petroleum raises output forecast after beating Q4 forecasts

* Raises dividend by 22%

* Expects higher output growth

* Cuts production cost estimate

* Says budget to rise 30% including renewables investment (Adds quote, background)

OSLO, Jan 31 (Reuters) - Sweden’s Lundin Petroleum , a partner in Norway’s giant Sverdrup oilfield, raised its dividend payment and output expectations on Friday after beating fourth-quarter profit forecasts.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $695.5 million from $480.7 million a year earlier as Sverdrup came on stream.

That topped a mean estimate of analyst forecasts of $613.2 million, Refinitiv Eikon data showed.

Sverdrup, in which Lundin holds a 20% stake, started operating on Oct. 5, a month ahead of plan, and hit a run-rate of 350,000 barrels of oil equivalent per day (boe/d) by early December, making it western Europe’s largest producing entity.

Operator Equinor has predicted the field will reach plateau production of 440,000 boe/d by summer, although Lundin has said this may happen earlier.

Lundin now expects output of 145,000-165,000 boe/d in 2020 versus a previous forecast of some 150,000 and compared with 93,300 in 2019.

Next year, output will likely rise to between 160,000-170,000 boe/d, Lundin said, with a goal of raising it in subsequent years to more than 200,000. The company had previously said it would exceed 170,000 only in 2023.

Lundin said it would pay a dividend of $511 million, or $1.80 per share, in instalments of $0.45 over the next four quarters, an increase from the $0.37 paid in each of the last four quarters.

“I am glad to note the board is recommending a 22% increase in dividend ... clearly demonstrating our focus on driving shareholder returns,” CEO Alex Schneiter said in a statement.

The company also lowered its forecast for operating cost to $3.20-$4.20 boe from a previous range of $3.40-$4.40 from 2020 onwards.

The company cut its 2020 exploration budget to $220 million from $298 million in 2019.

It said it plans to drill 10 exploration and appraisal wells this year.

Its overall budget for field development, appraisal and exploration, as well as paying for the abandonment of older installations, will increase by 30% in 2020 to $1.27 billion, the company said.

The increase will primarily stem from investments in field developments as well as $100 million in planned spending on renewable energy.

Lundin’s shares have risen 6.6% in the last 12 months versus a 5.5% drop in European oil and gas stocks. (Reporting by Terje Solsvik; editing by David Evans and Jason Neely)

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