Lundin Slips to Lowest Level in Six Months on Norway Field Delay

Lundin Petroleum AB, the Swedish oil explorer focused on Norway, fell to its lowest level in six months in Stockholm after turning to a loss and announcing further delays to its Brynhild field.

The shares fell as much as 4.2 percent to 116.4 kronor, the lowest level since Feb. 5. More than 800,000 shares were traded as of 11:04 a.m., almost 80 percent of the daily average volume over the last three months.

The Brynhild oil field in the North Sea probably won’t start producing before the fourth quarter, compared with an earlier third-quarter target, Chief Executive Officer Ashley Heppenstall said in the second-quarter earnings report today. The latest postponement, which pushes the start of production back about a year from initial plans, is due to a delay in preparing a floating production facility on Royal Dutch Shell Plc’s Pierce field in the neighboring U.K. to receive oil from Brynhild, Lundin said.

“It’s been a very frustrating process for Lundin,” Heppenstall said in a conference call. “First oil slipping into the fourth quarter is the most likely scenario.”

Lundin reported a net loss of $1.2 million in the second quarter, missing a profit estimate of $26.8 million. The company incurred a $35.7 million foreign-exchange loss due to the weakening of the Norwegian krone.

As earnings before interest, tax, depreciation and amortization beat expectations, the negative share reaction is mostly due to the Brynhild delay, analyst Teodor Sveen Nilsen of Swedbank First Securities said in an e-mail. Swedbank recommends clients buy Lundin shares with a price estimate of 170 kronor within a year.

Lundin, which is a stakeholder in the Johan Sverdrup discovery, the biggest oil find off Norway in decades, has fallen 11 percent from an April 30 high this year. The European STOXX 600 Oil & Gas Index has fallen 2 percent in the period.

“Over the past months, Lundin share price has been weaker than fundamentals could justify,” Sveen Nilsen said in a note e-mailed to clients earlier today. “We do not rule out that we will lift our recommendation one notch.”

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