Introduction to IPC from CEO Mike Nicholson

19 April 2017

Welcome to the IPC website.

IPC is a newly formed Lundin Group Company. It was created following a decision by the Board, management and shareholders of Lundin Petroleum to spin-off the assets held in Malaysia, France and the Netherlands.

Given the scale of success of Lundin Petroleum’s business in Norway, it was clear that in terms of management attention, capital allocation and stakeholder focus, that the full potential of the non-Norwegian assets was not being harnessed.

The natural next step was therefore to separate each business and put in place a strong management team and board, with the goal of maximising the value for all of our stakeholders in both companies.

I am personally very excited by this new challenge. Having worked in various roles in Lundin Petroleum during the past thirteen years, most recently as the CFO of Lundin Petroleum, I feel honoured to be given the role of CEO of IPC. I have the pleasure of leading a highly competent leadership team of professionals who have a deep knowledge and understanding of the upstream exploration and petroleum business. In addition, we are in the fortunate position to have a panel of Board directors that most upstream companies would envy.

Our board will be led by serial entrepreneur and master of value creation, Lukas Lundin. We will also have a number of very experienced former Lundin Petroleum colleagues and a leading Canadian entrepreneur to guide us as we seek to build and develop a leading independent exploration and production company.

We have an excellent start, better than most companies, with a portfolio of high quality oil weighted assets, based in stable jurisdictions (France, Netherlands and Malaysia) with favourable fiscal terms. Our cash operating costs compare favourably with the rest of the industry and this combination provides leverage to value creation from rising commodity prices.

There is no question in my mind that our asset portfolio has not received the full attention it deserved in recent years as most if not all of our capital was deployed towards our growth projects in Norway. One of our first priorities will be to seek out opportunities to grow organically, searching for example for infill drilling opportunities and evaluating near field development and exploration potential. Replacing reserves organically will have a priority.

However, we need to be realistic and recognise that our existing asset base will decline naturally through time. A second priority will be to re-invest the positive free cash flow we are generating into new opportunities and deliver growth. That will involve becoming more active in the mergers and acquisitions space.
I do believe that now is the optimal time in the industry cycle to pursue this strategy. We are entering the fourth year of weak oil prices, industry balance sheets are over levered, and many industry players, burdened by high debt levels are being forced to divest of their assets. The majors are also looking at rationalising their portfolios. What is immaterial for them can still provide a material base for value creation for companies like IPC.

We have limited leverage and the ability to access both debt and equity capital markets to fund our growth.

With all the key elements referred to above, I believe we have all we need to build a successful new independent exploration and production company.

Mike Nicholson