April 2009

Dear fellow shareholders,

It is often stated in dealing with life’s problems that what does not kill you makes you stronger. That couldn’t be more true in respect of the current problems facing the world economy.

2008 marked the beginning of a global economic meltdown not witnessed since the Great Depression of the 1930’s. The price of commodities and crude oil are closely linked to economic growth. Economic slowdown means lower commodity prices, and a steep economic downturn results in dramatically reduced commodity prices. That in a nutshell explains what has happened to the price of oil. I will not go into the reasons for the economic woes other than to say that the impact of leverage and people spending beyond their means is in my opinion at the root of the problem. So while the global economy recovers from the hangover that was created by years of excess and easy credit, only the strong companies will survive, or as Warren Buffett said; “those without bathing suits will be left exposed as the tide goes down”. Sound financial management is always important but it is the very key to survival in difficult times. It is also crucial to stick to core competencies and focus on the areas where we have competitive advantages.

By sticking to these principles Lundin Petroleum has managed to keep building its reserves and production base in good times and bad. Although the start-up of the Alvheim field in Norway was delayed to June 2008, it is now on stream and a major contributor to our production and cash flow. Norway became the company’s single largest producing unit as a result of Alvheim reaching its plateau in the fourth quarter of 2008. We expect to see the production in Norway to continue to grow in 2009 with Alvheim operating at plateau rates and the Volund field coming on stream later in the year.

The discovery of the Luno field on PL338, offshore Norway further highlights the strength of Lundin Petroleum in Norway. This is a major new discovery with significant upside in the adjoining blocks which our team has generated internally. While Norway will be the back bone of future production growth for the Company, there are some very valuable assets with established reserves in other parts of the world such as in United Kingdom, France and Russia which provide Lundin Petroleum with a very solid foundation for additional growth. In the north Caspian, offshore Russia we have demonstrated that we can operate in a challenging regulatory system and environmentally sensitive region.

So, am I worried about a prolonged period of global economic turmoil? YES.

Will fossil fuels continue to dominate the global energy scene when the economy recovers? YES.

Do we have what it takes to survive the economic downturn and come out stronger as a result? YES.

Our business model is predicated on building our production while not only replacing our reserves base but actually increasing it.

Our reserves increased again last year by 26 percent prolonging a five year period of continuous increases. In the long-term our survival will be based on our ability to find new fields. We have a proven track record in that regard in both Russia and Norway, but we have also built up a very interesting exploration portfolio in South East Asia over the last two to three years. Although this portfolio is a result of a recent push into that part of the world, it is not the first time that the management of Lundin Petroleum has operated in the area. Our predecessor company Lundin Oil was bought by Talisman Energy in 2001 in order for Talisman to get access to our Malaysian/Vietnamese assets. This is one of Talisman’s most important producing areas today. I believe we can repeat such successes not only by making the initial discoveries but by seeing them through to production, a process which can take more than ten years and requires both financial and emotional strength. Although the ultimate payout for the shareholders will come by way of an acquisition of the company, our objective is to continue to build Lundin Petroleum into a significant force in the upstream sector of the oil and gas industry. Our management and staff are driven not only by financial rewards but by the ability to make a difference. I know our senior management share my drive to build a successful independent company and are ready to accept the challenge despite the current tough environment. This will not be possible without your, fellow shareholders, continued support.

Yours sincerely,

Ian H. Lundin
Chairman of the Board