Lundin Petroleum has created a strategic portfolio of assets on the Norwegian Continental Shelf (NCS). The Alvheim field produced first oil in 2008 and the Volund field produced first oil in September 2009. The Luno field was assigned gross 2P reserves of 95 MMboe by an independent reserve auditor. Further exploration wells will be drilled in the Greater Luno Area during 2009 and 2010 to test the potential. Additional exploration drilling will take place on other parts of the portfolio.

Production
The Alvheim field came on stream during the second quarter 2008 and has been producing above expectations. Alvheim field consists of excellent quality Paleocene sandstone reservoirs. Oil and gas have been found in a group of oil, and oil / gas accumulations, of which the main three accumulations are currently under development (Kneler, Kameleon and Boa). Additional smaller discoveries within the complex may be incorporated into the development later in field life. The field is producing via an FPSO, with oil exported by shuttle tanker and gas by pipeline to the UK. The field is ideally located to act as a hub for satellite production. To date, both the Norsk Hydro Vilje oil field and Volund (Marathon/Lundin Petroleum) with net remaining reserves 17.3 MMboe, oil and gas find have been sanctioned for development. Vilje was part of the initial production stream, and Volund produced first oil in September 2009. As a result of the performance of the Alvheim field there is currently no spare capacity on the Alvheim FPSO. Volund will be produced should capacity become available and in any case by mid 2010 when the Volund field has secured guaranteed production capacity of 25,000 bopd (8,750 bopd net to Lundin Petroleum).

Development - Contingent Resources
• Alvheim area – the Kobra, Gekko and Viper (Q4 2009) discoveries all represent potential additions to the Alvheim field development and will be further assessed as the development continues.

• PL088, Peik field – Lundin Petroleum has an interest in both the UK and Norway blocks that contain the Peik gas condensate field. Development studies and economic analysis are ongoing.

• PL148, Nemo – located in Block 7/7-2, this oil discovery was successfully appraised in 2008 confirming the extension of the Nemo field. Conceptual development studies including a potential host platform decision are ongoing.

• PL301, Krabbe – In March 2009 Lundin Petroleum acquired Talisman Energy’s 40% interest in PL301 which holds the undeveloped discovery, Krabbe. Lundin Petroleum has an active focus in the area with the ongoing field development work on the nearby Nemo discovery in PL148. The two discoveries are of similar type and size and are both likely subsea development projects. Coordination of these two developments will, with the larger subsea development and drilling scope, provide potential for improved efficiency and lower development costs. Both fields are regarded as likely tie-in candidates to existing infrastructure. However, additional potential for a common processing and export solution will be evaluated as an alternative for the area.

• PL292, Pi – the potential of this oil and gas discovery, located close to BG’s UK Armada field complex, was further enhanced by the discovery of Pi North in May 2008. The Pi North and South structures have estimated recoverable reserves of 19–32 mmboe. The plan forward is the submission of a PDO.

• PL006c South East Tor – appraisal drilling of this 1970’s chalk discovery has been postponed pending further technical and economic analysis.

Luno Oil Field
The Luno oil discovery was made in October 2007 in PL338. Light oil was discovered in a clastic Jurassic reservoir. The Luno appraisal well completed in January 2009 confirmed the extension of the Luno field to the north-east. The well tested at a flow rate of 4,000 bopd. In July 2009 Gaffney, Cline and Associates, an independent reserves auditor, assigned 95 MMboe of gross 2P reserves to the Luno field.The reserves have been evaluated based on the results of the discovery well 16/1-8, the appraisal well 16/1-10 and the initial interpretation of the ocean bottom cable seismic survey acquired in 2008. The 2P reserves have been calculated using an oil in place (STOIIP) of 365 MMboe and applying a recovery factor of 26 percent for a waterflood development.

In October 2009 Lundin Petroleum successfully completed production testing of the Luno field discovery well 16/1-8. The well was re-entered, perforated and tested in two intervals with flow rate up to approximately 5,700 barrels of oil per day through a one inch (64/64”) choke. A further appraisal well, 16/1-13 was successfully completed and will be used to optimise the development plan and potentially increase Luno recoverable reserves.

Technical analysis has identified additional potential in extensions of the Luno discovery located up-dip of the Luno discovery which contain significant additional reserve potential. In September 2009 Lundin Petroleum made an oil discovery in the exploration well 16/1-12 on the Luno South prospect (formerly Luno Extension prospect). The exploration well was targeting the hydrocarbon potential south of the Luno discovery but did not encounter the pre Cretaceous reservoir expected but a complex reservoir of fractured basement. Further work will be required to determine the resource potential and commerciality of this discovery. An extensive data acquisition programme was carried out on the well, including coring and several mini drill stem tests (DSTs) with the successful recovery of hydrocarbon samples. Preliminary analysis confirms a gross oil bearing column of approximately 40 meters and good flow characteristics.

Further exploration wells will be drilled to further test the potential in the Greater Luno Area during 2010, which includes PL359, PL410, PL501, PL409.

In April 2009 Lundin Petroleum signed a farmout agreement with StatoilHydro in the Greater Luno Area. The agreement covers licences PL359, PL410 and PL409.

In December 2009 Lundin Petroleum acquired Talisman's 10% interest in PL265 which contains the Ragnarrock oil and gas discovery located close to the Luno discovery in PL338.

Exploration - Prospective Resources
Lundin Petroleum has a licence portfolio now comprising some 32 exploration licences. Most of the licences are Lundin Petroleum operated. The majority of the licences are located in the North Sea area of the Norwegian sector from Quadrant 25 in the north (Alvheim area) to Quadrant 3 in the south (adjacent to the Danish border). Offshore northern Norway, licences are held in the Norwegian Sea and the Barents Sea.

In October 2009 Lundin Petroleum successfully completed an exploration well on the Marihøne prospect in PL340. The well, 24/9-9, and two further sidetracks were all oil discoveries. The objective of the wells was to prove petroleum in the Hermod Formation in Paleocene age reservoir rocks. All wells encountered oil columns in the Hermod sandstone. The two sidetrack wells were both drilled 1.5 kms from the discovery well. All three wells were drilled to a depth of approximately 2,200 metres. Communication probably exists between the oil zones in the three wells, and extensive data acquisition and sampling have been carried out. The size of the discovery is between 20 and 30 MMboe gross recoverable reserves. The most likely development of the Marihøne discovery is a tieback to the Alvheim FPSO.

An extensive exploration drilling programme is planned in the Norwegian sector during 2010 including:

• PL340 – Marihøne (Marathon operator,Lundin 15%)
• PL359 – Luno High (Lundin operator, 70%)
• PL400 – Barchan (Lundin operator, 50%)
• PL409 – Norall (Lundin operator, 70%)
• PL410 – Luno 3 (Lundin operator, 700%)
• PL476 – Frusalen (DNO operator, Lundin 30%)
• PL501 – Avaldsness (Lundin operator, 40%)
• PL505 – Earb (Marathon operator,Lundin 30%)

Lundin Petroleum was awarded seven new exploration licences in the 2009 APA licensing round. Four of these licenses will be operated by Lundin Petroleum.