May 2009

Dear fellow Shareholders,

Following the major turbulence in the financial markets in 2008 and early 2009, resulting in unprecedented falls in world equity and commodity markets, we have seen over the past few weeks at least some degree of stabilisation in the markets. Whilst there are some early signs of positive news, particularly from the Far Eastern economies, it is in my opinion too early to conclude that this is yet the beginning of an economic recovery. My biggest concern remains the lack of availability of credit because of the continued uncertainty surrounding the banking system.

Commodity prices have recovered over the past weeks from their lows with apparent improving Chinese demand and in the case of oil, strong OPEC quota compliance. Despite continued inventory build and reducing demand, oil prices have stabilised around USD 50 per barrel with forward oil prices still in excess of USD 70 per barrel.

We have seen a number of independent oil and gas companies in Europe facing severe liquidity issues as a result of the falling oil price and more importantly overleverage. This has resulted in the failure of companies such as Oilexco which was one of the most active independents in the United Kingdom sector of the North Sea as well as other companies being forced to sell assets to generate liquidity. The financial problems facing a number of the banks who have historically supported the oil and gas industry have further exacerbated these problems.

We continue to believe in strong long term oil prices. When the economy does start to recover, increased demand for hydrocarbons will be needed to fuel this growth. Whilst there will quite rightly be an increasing focus on renewable energy as a result of global warming concerns, the reality is that fossil fuels will remain the predominant source of the world's energy for the foreseeable future. With production from many of the worlds largest oil fields starting to decline, our industry will simply be unable to supply this increasing demand for oil. The situation will be further exacerbated by the current reduction in investment caused by lower oil prices and the financial crisis. The industry needs much higher oil prices to stimulate the investment required to meet increased demand. In addition, the major government financial stimulus packages will feed into the system and generate inflationary pressure on our economies. In my opinion, it is inevitable that oil prices will have to increase- it is not if, but when.

I am optimistic regarding the prospects for Lundin Petroleum. We continue to believe that our ongoing ability to increase our reserves and production will increase shareholder value. In this respect we are continuing to invest in the development of fields such as Volund in Norway as well as a significant exploration programme. However we maintain a close focus upon cash flow and liquidity and our investment programme is tailored to ensure that we do not require third party equity or additional debt in today's uncertain markets. We continue to generate strong operating cash flow particularly in Norway.

Financial Performance
Lundin Petroleum generated a net profit after taxes for the three months ended 31 March 2009 of MSEK 96.0 (MUSD 11.5). Despite higher production for the quarter compared to the comparative quarter of 2008 being offset by a lower oil price achieved the operating cash flow for the period was MSEK 865.0 (MUSD 103.0), a 28 percent increase over the comparative period. Earnings before interest, tax, depreciation and amortisation (EBITDA) for the period was MSEK 763.9 (MUSD 90.9) representing an increase of 5 percent over the comparative period.

Reserves
During the first quarter of 2009, we announced record reserve increases of 26 percent to 217.5 million barrels of oil equivalent (MMboe) as at 1 January 2009. We have consistently been successful in organically growing our reserve base over the past few years but 2008 was exceptional with a 394 percent reserve replacement ratio - almost four barrels of new reserves for every one produced. The reserves do not include any contribution associated with the Luno discovery which was successfully appraised earlier this year. We expect that Luno reserves will be booked during the second quarter following the incorporation of the recent well results.

Production
The net production for the first quarter of 2009 was 38,800 barrels of oil equivalent per day (boepd) and was at the high end of our guidance range for the quarter. The Alvheim field offshore Norway produced strongly during the period but I was particularly pleased with the performance from our United Kingdom fields. We have struggled with production performance in the United Kingdom over recent years due to weak facilities uptime performance. I believe that our first quarter production is a reflection upon the investments we have made in these late life fields and that performance will continue to outperform.

We maintain our production guidance of 35,000 to 42,000 boepd for 2009. However the previously anticipated reduction in Alvheim production during the third quarter will now be replaced by a planned Alvheim shutdown in the second quarter for 10 days which will negatively impact second quarter production.

Exploration
Following our exploration successes in Norway and Russia in 2008, we have a significant exploration programme in 2009.

I am particularly excited about our programme in Norway where we will be commencing an intensive three year exploration programme utilising the Songa Dee and Transocean Winner semi-sub rigs which we have secured on long term charter with Marathon and Talisman. We will be drilling seven exploration wells this year targeting 340 MMboe of net unrisked resource potential. Over the last five years we have organically built a major license position on the Norwegian Continental Shelf. Over this period we have worked up numerous drillable prospects which I hope will add to the Luno discovery which we made with our first operated well in Norway. There is a particular focus on the Greater Luno and Greater Alvheim areas where we feel we have a particular understanding of the subsurface. We are very pleased to have welcomed StatoilHydro into some of our Greater Luno licenses which I think is a strong indication of the potential of this area. This deal with StatoilHydro also gives us access to rig capacity to drill our Barents Sea acreage in the future.

We also look forward to drilling the Petrovskaya prospect in our Lagansky block, offshore Russia. This is a challenging operating environment but the resource potential is very significant and I am confident we will add further resource to the Morskaya discovery made last year.

In South East Asia we commence our drilling campaign in 2009 in Vietnam. We are encouraged by the growth of our South East Asian portfolio in Malaysia and Indonesia. As in Norway we believe that with the correct technical tools particularly 3D seismic, a strong exploration team and a corporate philosophy willing to invest exploration dollars we can replicate our Norwegian organic growth model in South East Asia.

Following our unsuccessful drilling campaign in Sudan, we have exited the country. In addition we have divested the balance of our East African portfolio in Kenya and Ethiopia. With our Tunisian production close to its economic cut-off, we are reducing our focus on Africa as our operations in Europe, Russia and South East Asia grow.

Whilst we are not being complacent I can report that our business is in good shape both technically and financially. It is important that in such economic downturns we get the balance right between maintaining investment programmes and a prudent balance sheet. I believe we are on the right track and will emerge from this downturn a stronger and more valuable company.

Best Regards,

C Ashley Heppenstall
President & CEO