Annual Report 2005 (6 MB) - Lundin Petroleum

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take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specifi c borrowings pending to be used for the qualifying asset is deducted from the borrowing costs eligible for capitalisation. This applies on the interest on borrowings to fi nance fi elds under development which is capitalised within oil and gas properties until production commences. All other borrowing costs are recognised in profi t or loss in the period in which they occur. Interest on borrowings to fi nance the acquisition of producing oil and gas properties is charged to income as incurred. Leases For a lease to qualify as a fi nance lease, substantially all of the risks and benefi ts of ownership must pass to the lessee. In all other cases the lease will be classifi ed as an operating lease. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Employment benefi ts Short term employee benefi ts Short-term employment benefi ts such as salaries, social premiums and holiday pay, are expensed when incurred. Pension obligations Pensions are the most common long-term employee benefi t. The pension schemes are funded through payments to insurance companies. The Group’s pension obligations consist mainly of defi ned contribution plans. A defi ned contribution plan is a pension plan under which the Group pays fi xed contributions. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an expense when they are due. The Group has one obligation under a defi ned benefi t plan. The relating liability recognised in the balance sheet is valued at the discounted estimated future cash outfl ows as calculated by an external actuarial expert. Actuarial gains and losses are charged to the income statement. The Group does not have any designated plan assets. Share-based payments Lundin Petroleum recognises cash-settled share-based payments in the income statement as expenses and as a liability in relation to the incentive warrants programme. The liability in relation to incentive warrants programmes is valued at fair value at grant date of the options using the Black & Scholes option pricing method. The fair value of the incentive warrant programme is charged to personnel costs over the vesting period. The fair value of the liability under the incentive warrant programme is remeasured at each reporting date recognising changes that aff ect the number of options expected to vest. At vesting date the liability is adjusted for the fi nal number of options vested. Income taxes The main components of tax are current and deferred. Current tax is tax that is to be paid or received for the year in question and > 55 < also includes adjustments of current tax attributable to previous periods. Deferred income tax is provided in full, using the liability method, on temporary diff erences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated fi nancial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction aff ects neither accounting nor taxable profi t or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profi t will be available against which the temporary diff erences can be utilised. Lundin Petroleum divides the tax accounts between corporation tax and petroleum tax. Petroleum Revenue Tax (PRT) is classifi ed as Petroleum tax and charged as a tax expense on taxable fi eld profi ts included in the income statement. Segment reporting The primary basis the Group uses for segmental reporting is at a country level due to the unique nature of each countries operations, commercial terms or fi scal environment. The secondary basis the Group uses for segmental reporting is oil and gas operations for which reference is made to the fi nancial statements as a whole. Related party transactions Lundin Petroleum recognises the following related parties: associated companies, jointly controlled entities, members or the family of the key management personnel or other parties that are partly, direct or indirect, controlled by key management personnel or of its family. Critical accounting estimates and judgements The management of Lundin Petroleum has to make estimates and judgements when preparing the Financial Statements of the Group. Uncertainties in the estimates and judgements could have an impact on the carrying amount of assets and liabilities and the Group’s result. The most important estimates and judgements in relation thereto are: Estimates in oil and gas reserves The business of the Group is the exploration for, development of and production of oil and gas reserves. Estimates of oil and gas reserves are used in the calculations for impairment tests and accounting for depletion and site restoration. Changes in estimates in oil and gas reserves, resulting in diff erent future production profi les, will aff ect the discounted cash fl ows used in impairment testing, the anticipated date of site decommissioning and restoration and the depletion charges in accordance with the unit of production method.
ACCOUNTING PRINCIPLES Site restoration provision Amounts used in recording a provision for site restoration are estimates based on current legal and constructive requirements and current technology and price levels for the removal of facilities and plugging and abandoning of wells. Due to changes in relation to these items, the future actual cash outfl ows in relation to the site decommissioning and restoration can be diff erent. To refl ect the eff ects due to changes in legislation, requirements and technology and price levels, the carrying amounts of site restoration provisions are reviewed on a regular basis. The eff ects of changes in estimates do not give rise to prior year adjustments and are dealt with prospectively over the estimated remaining commercial reserves of each fi eld. While the Group uses its best estimates and judgment, actual results could diff er from these estimates. Events after the balance sheet date All events up to the date when the fi nancial statements were authorised for issue and which have a material eff ect in the fi nancial statements have been disclosed. Coming IFRS accounting principles The following new standards, amendments and interpretations to existing standards have been approved by the EU and are mandatory for the Group’s accounting periods beginning on or after 1 January 2006. ■ IAS 1 Presentation of Financial Statements – Capital Disclosures, eff ective from 1 January 2007. The IAS 1 amendment on capital requires that the following is disclosed: the entity’s objectives, policies and processes for managing capital; quantitative data about what the entity regards as capital; whether the entity has complied with any capital requirements; and if it has not complied, the consequences of such non-compliance. The group will apply the amendment on Capital Disclosure on annual periods beginning 1 January 2007. > 56 < ■ IAS 19 Employee Benefi ts - actuarial gains and losses, amendment, eff ective from 1 January 2006. This standard introduces the option of an alternative recognition approach for actuarial gains and losses and adds new disclosure requirements. The group does not intend to change the accounting policy adopted for recognition of actuarial gains and losses and adoption of this amendment will only impact the disclosures. The Group will apply this amendment from annual periods beginning 1 January 2006. ■ IAS 39 Cash Flow Hedge Accounting of Forecast Intragroup Transactions, amendment, eff ective from 1 January 2006. This amendment is not relevant to the Groups operations. ■ IAS 39 Financial instruments - The Fair Value Option, amendment, eff ective from 1 January 2006. This amendment is not relevant to the Groups operations. ■ IFRS 4 Financial Guarantee Contracts, amendment, eff ective from 1 January 2006. This amendment is not relevant to the Groups operations. ■ IFRS 7 Financial Instruments: Disclosures, eff ective from 1 January 2007. IFRS 7 requires the disclosure of qualitative and quantitative information about exposure to risks arising from fi nancial instruments, including specifi ed minimum disclosures about credit risk, liquidity risk and market risk. The group will apply this standard from annual periods beginning 1 January 2007. ■ IFRIC 4 Determining whether an Arrangement contains a Lease, eff ective from 1 January 2006. IFRIC 4 is not relevant to the Groups operations. ■ IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds, eff ective from 1 January 2006. IFRIC 5 is not relevant to the Groups operations. ■ IFRIC 6 Liabilities arising from Participating in a Specifi c Market- Waste Electrical and Electronic Equipment, eff ective from 1 December 2005. IFRIC 6 is not relevant to the Groups operations.
Page 1 and 2:
ANNUAL REPORT 2005
Page 3 and 4:
PRODUCTION (BOEPD) 40,000 30,000 20
Page 5 and 6:
LETTER TO SHAREHOLDERS ...fi rst pr
Page 7 and 8: WORDS FROM THE CHAIRMAN IAN H. LUND
Page 9 and 10: UNDERSTANDING RESERVES AND RESOURCE
Page 11 and 12: MARKET DESCRIPTION World Oil Produc
Page 13 and 14: OPERATIONS REVIEW 2005 was another
Page 15 and 16: OPERATIONS REVIEW Solan/ Strathmore
Page 17 and 18: OPERATIONS REVIEW Workover rig, Par
Page 19 and 20: OPERATIONS REVIEW INDONESIA Lundin
Page 21 and 22: OPERATIONS REVIEW IRELAND In Januar
Page 23 and 24: OUR PEOPLE ARE OUR STRENGTH We have
Page 25 and 26: CORPORATE RESPONSIBILITY In view of
Page 27 and 28: SHARE INFORMATION Lundin Petroleum
Page 29 and 30: BOARD OF DIRECTORS The Annual Gener
Page 31 and 32: BOARD OF DIRECTORS From left to rig
Page 33 and 34: MANAGEMENT Standing from left to ri
Page 35 and 36: CORPORATE GOVERNANCE REPORT- Chairm
Page 37 and 38: INTERNAL CONTROL REPORT THE BOARD O
Page 39 and 40: KEY FINANCIAL DATA Data per share 2
Page 41 and 42: DIRECTORS’ REPORT PRODUCTION AND
Page 43 and 44: DIRECTORS’ REPORT Sudan A compreh
Page 45 and 46: DIRECTORS’ REPORT Write off Write
Page 47 and 48: DIRECTORS’ REPORT hydrocarbons an
Page 49 and 50: BALANCE SHEET CONSOLIDATED AND PARE
Page 51 and 52: STATEMENT OF CHANGES IN EQUITY CONS
Page 53 and 54: ACCOUNTING PRINCIPLES Introduction
Page 55 and 56: ACCOUNTING PRINCIPLES ACCOUNTING PR
Page 57: ACCOUNTING PRINCIPLES The Group cat
Page 61 and 62: NOTES 2005 SEK Average crude sales
Page 63 and 64: NOTES NOTE 4 - WRITE-OFF OF OIL AND
Page 65 and 66: NOTES The tax on the Group’s prof
Page 67 and 68: NOTES 2005 Production cost pools UK
Page 69 and 70: NOTES Venezuela In November 2002, L
Page 71 and 72: NOTES NOTE 12 - SHARES IN ASSOCIATE
Page 73 and 74: NOTES The Group has entered into th
Page 75 and 76: NOTES life. It was further agreed t
Page 77 and 78: NOTES NOTE 33 - EARNINGS PER SHARE
Page 79 and 80: NOTES Salaries, other remuneration
Page 81 and 82: NOTES NOTE 39 - INCENTIVE WARRANTS
Page 83 and 84: SUPPLEMENTAL INFORMATION - RESERVE
Page 85: Corporate Head Offi ce Lundin Petro
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Annual Report 2005 (6 MB) - Lundin Petroleum

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