Lundin Petroleum: Sole focus is now on offshore Norway

A new company will manage most of the assets outside of Norway in order to focus more on those core offshore holdings, Lundin Petroleum announced.

Lundin, which has its headquarters in Stockholm, said it was creating a new business unit -- International Petroleum Corp. -- to steer its operations in Malaysia, France and the Netherlands.

"With the spin-off, Lundin Petroleum will become fully focused on Norway, which I am convinced will serve to further crystallize the value of our high-growth asset portfolio in the North Sea and the southern Barents Sea," Chairman of the Board Ian H. Lundin said in a statement.

Lundin struggled through a market downturn last year characterized by crude oil prices that hit record lows. In early 2016, Norwegian major Statoil spent $538 million to acquire an 11.9 percent stake in Lundin. Both sides said it was a transformative deal as it consolidated focus offshore Norway.

Looking forward, Lundin said it planned to spend about $1.3 billion on development, appraisal, exploration and production this year, with nearly all of the focus on offshore Norway. The capital budget for 2017 is dominated by construction activity tied to the Johan Svedrup project, one of the largest oil fields ever discovered off the Norwegian coast.

For the year, Lundin said it expected to produce on average between 70,000 and 80,000 barrels of oil equivalent per day. The newly-formed entity is expected to produce, at most, 10,000 barrels of oil equivalent per day.

The production guidance and announcement of the spin-off comes as Lundin declared a new discovery in the southern waters of the Barents Sea. The company estimates its Filicudi discovery holds between 35 million and 100 million barrels of oil equivalent.

In an announcement on fourth quarter results, President and CEO Alex Schneiter said the appraisal and exploration program for 2017 "is more exciting than ever" with the Barents Sea as a primary target.

The Barents Sea holds a good deal of what's left in terms of oil and natural gas reserves off the coast of Norway.