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Orron Energy AB (LNDNF)

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Lundin Petroleum AB -

Business Description:
Lundin Petroleum is a Swedish independent oil and gas exploration
and production company with a well balanced portfolio of
world-class assets in Albania, France, Indonesia, Ireland,
Netherlands, Nigeria, Norway, Sudan, Tunisia, United Kingdom
and Venezuela.
The Company is listed on the O-list,
Attract 40 at Stockholm Stock Exchange,
Sweden (ticker "LUPE").

Lundin Petroleum
Hovslagargatan 5
SE - 111 48 Stockholm
Tel: +46 8 440 54 50

Lundin Petroleum
5 chemin de la Pallanterie
CH - 1222 Vésenaz
Tel: +41 22 595 10 00

2001- Lundin Petroleum AB - the beginning
Lundin Petroleum AB was formed in 2001 as a result of the takeover of Lundin Oil AB by Canadian independent Talisman Energy. With the management and corporate technical team from Lundin Oil and exploration assets in Sudan, Iran and an equity investment in Russian oil company KMOC, Lundin Petroleum was listed on the New Market in Sweden in September 2001. In October/November of the same year approximately SEK 500 million was raised in new equity capital. In addition the investment in KMOC was sold for USD 18.3 million in cash.

2002- The first major acquisition
In 2002, Lundin Petroleum acquired Coparex International from BNP Paribas for USD 172.5 million adding exploration and production assets in France, Netherlands, Tunisia, Venezuela, Indonesia and Albania to the existing portfolio. This acquisition transformed Lundin Petroleum from a pure exploration company into an important E&P player with production of approximately 16,000 boepd.

2003- The sale of Block 5A Sudan and the second major acquisition
In early 2003, Lundin Petroleum took its first step onto the Norwegian Continental shelf by acquiring 75 percent of the shareholding in OER oil, a Norwegian E&P company for NOK 30 million. In the summer of that year, Lundin Petroleum sold its working interest in Block 5A in Sudan to Petronas Carigali for USD 142.5 million. Following the sale of Sudan, the Company agreed to acquire a portfolio of producing assets in the UK, Ireland and Norway from DNO AS for USD 165 million.

2004- The consolidation
With the completion of the DNO acquisition, Lundin Petroleum doubled its reserves to 137 million boe and boosted production to an average of 28,900 boepd. In August 2004 the Broom project, a satellite field to the Heather field offshore UK, was put on stream with gross production reaching in excess of 25,000 boepd from 3 wells. Further discoveries were made in Norway, France and Indonesia. Amongst other important events the development plan for the 215 million boe Alvheim Project in Norway was approved in September 2004, with first oil planned in 2008.

In 2005 production increased to an average of 33,190 boepd and reserves were certified at 142.6 million boe which was later increased to 146.1 million boe in 2006. The development projects Alvheim, offshore Norway and Oudna, offshore Tunisia progressed according to plan and budget. The Oudna field was successfully completed and came on stream in November 2006. The total production by year end reached 40,000 boepd. A number of exploration licences were awarded in the UK and Norwegian licencing rounds.

Average production for 2007 was 34,000 boepd and reserves increased to 176.4 million boe. The Luno discovery was made offshore Norway with gross resources estimated to be between 65 and 190 million boe with further potential to be appraised in 2008/2009.

Pre Lundin Petroleum
The Lundin Group of companies which includes Lundin Petroleum AB, has been involved in Exploration, Development and Production operations in a number of the major oil and gas provinces of the world for almost 30 years. Throughout its existence the Lundin Group has been active in Qatar, United Arab Emirates, Oman, Papua New Guinea, Malaysia, Vietnam, United Kingdom, Libya, Sudan, Albania, Somalia and Russia to name but some of the countries in which the companies have had operations. The group has historically operated the assets it has been involved in and this continues to be the strategy and strength of Lundin Petroleum AB. It's operating experience and capability has been gained in exploration, development and production phases of assets.

The Lundin Group of companies are publicly listed vehicles with a material shareholding owned by the Lundin family. The flagship oil and gas company was Lundin Oil AB which was sold in 2001 to Talisman Energy, the Canadian company, in a US$ 400 million deal. As part of this deal Lundin Oil AB shareholders received cash plus one share in Lundin Petroleum AB.

Past projects
To provide some background, we have outlined an overview of some of the successful projects and transactions the company has concluded in recent years.

1992- Bukha field, offshore Oman
In July 1992 the company, as field operator, received approval to develop the Bukha field, the first offshore field in Oman. Facilities included the installation of an offshore platform and a 35 kilometre pipeline to the RAKGAS processing plant. The project was successfully completed in April 1994.

1992- PM-3 Block, offshore Malaysia
In 1992 the PM-3 block, offshore Malaysia, was declared a commercial arrangement area. This resulted in the commencement of an aggressive seismic and drilling exploration programme operated by the Lundin Oil AB. As a result of a successful programme, Phase 1 development project was initialised in 1996 with first oil at 15,000 bopd in 1997. Phase 1 consisted of an unmanned early production system supported by a floating production, storage and offloading vessel with a 350,000 barrel capacity producing at in excess of 15,000 bpd. The subsequent drilling of further appraisal wells, signing of a gas sales agreement and unitisation agreement, facilitated the progress of Phase 2. Facilities included 5 offshore platforms and a floating storage and offloading vessel. Reserves were estimated to be approximately 145 mmbbls of oil and 1,600 bcf of gas.

1993- Welton field, onshore United Kingdom
In 1993 the company acquired an interest in the Welton field onshore United Kingdom. The company operated its 100 percent ownership in the Welton oil field and satellite fields together with the processing facilities. The Welton field was the second largest onshore field in the United Kingdom and the company successfully implemented a well optimisation programme which resulted in a significant increase in production levels.

1995- United Kingdom offshore oil and gas interests
The Lundin Group of companies acquired Neste Oy's United Kingdom offshore oil and gas interests in October 1995. The acquisition included 8 producing assets, 1 field development and a number of exploration licences together with infrastructure ownership. Reserves were initially estimated to be 21 mmboe with production of approximately 9,000 bopd however through an aggressive drilling, well optimisation and cost cutting programme, reserves and production increased. The acquisition was supported by a revolving credit facility through a syndicate of banks lead by Barclays Capital. The Lundin Group subsequently acquired a 20 percent equity in the Sedgwick field from Texaco.

1998- En Naga field, onshore Libya
In 1998 the company discovered the En Naga North and West field in southern part of the Sirte Basin, Libya. After a successful appraisal programme in 1998 and 1999 the field was declared the commercial and development programme commenced. The full development included the construction of a central production facility, 100 kilometre pipeline together with the drilling of 20 production, 15 injector and 15 water supply wells. Recoverable reserves were estimated to be approximately 100 mmbbls.

2001- Talisman takeover
The historic success culminated in the takeover of Lundin Oil AB by Talisman Energy in a deal valued at US$ 400 million and a new era began with the formation of Lundin Petroleum AB.

Our Business Model
Lundin Petroleum's business model is to generate shareholder value through the exploitation of hydrocarbons. Lundin Petroleum's strategy of organic growth involves identifying core areas of focus and then establishing a team of professional technical staff with experience in that area to use the latest technologies to explore for oil and gas. Commercial discoveries will be appraised and then, where they are deemed to be economic, progressed through to the production stage. The cashflow generated from production will be reinvested in the exploration and development stages. Lundin Petroleum believes that it is the development of this business model that has achieved success in the past and will continue to deliver results in the future.

Business Model

Our Vision
As an international oil and gas exploration and production company operating globally, our aim is to explore for and produce oil and gas in the most economically efficient, socially responsible and environmentally acceptable way, for the benefit of shareholders, employees and co-ventures.

Lundin Petroleum applies the same standards to all activities worldwide to satisfy both the commercial, ethical and local requirements. Lundin Petroleum strives to continuously improve its performance and to act in accordance with good oilfield practice and high standards of corporate citizenship.

Our Strategy
Lundin Petroleum is pursuing the following strategy:


Proactively investing in exploration to organically grow its reserve base. Lundin Petroleum has an inventory of drillable prospects with large upside potential and continues to actively pursue new exploration acreage around the world.

Exploiting its existing asset base with a proactive subsurface strategy to enhance ultimate hydrocarbon recovery.

Acquiring new hydrocarbon reserves, resources and exploration acreage where opportunities exist to enhance value.

As of end 2010, Lundin Petroleum had 186.7 million barrels of oil equivalent (MMboe) of proven and probable (2P) oil and gas reserves. This is an increase of 18 percent when compared to last year, taking into account production of 11.9 MMboe in 2009 and the sales of 85.5 MMboe of reserves related to UK assets which were spun off into EnQuest PLC and the Salawati assets in Indonesia which were sold to RH Petrogas. The reserves replacement ratio, which is calculated by dividing the increase in reserves during 2010 by the production in 2010 is 237 percent. Of the 186.7 MMboe of 2P reserves, 84 percent is related to oil reserves and 98 percent of the total 2P reserves are situated in tax-royalty regimes. Lundin Petroleum is quoting all of its reserves in working interest barrels of oil equivalent. All reserves are externally audited by Gaffney, Cline and Associates.

Following two years of reporting a reserves replacement ratio of close to 400 percent, Lundin Petroleum has had another year with a strong reserves replacement of 237 percent. In other words, every barrel produced in 2010 has been replaced by almost 2.4 barrels of 2P reserves, giving a strong reserves base for future production growth.

In Norway, Lundin Petroleum's reserves increased from 120.9 MMboe to 139.2 MMboe, despite production of 6.6 MMboe. This is mainly as a result of the appraisal well drilled in the Luno field early 2010, which resulted in an increase in the Luno reserves from 47.5 MMboe to 74 MMboe. Furthermore, reserves increases were achieved for the Alvheim, Gaupe and Nemo fields. This was offset by moving 8.7 MMboe of Peik reserves to contingent resources pending the decision to develop this field.

Small reserves increases were booked in Tunisia, Netherlands and France, all more than replacing the 2010 production.

Proven and Probable Reserves

Contingent Resources
In addition to its certified reserves, Lundin Petroleum has a number of discovered oil and gas resources which classify as contingent resources. All contingent resource estimates have been audited by Gaffney, Cline and Associates.

At end 2010 Lundin Petroleum has 259.2 MMboe of contingent resources. This compares to 285 MMboe at end 2009. Major changes are related to the removal of 54.3 MMboe of UK related contingent resources and a 53.2 MMboe downgrade of the contingent resources in the Morskaya field following the results of the interpretation of 3D seismic. This reduction was offset by the inclusion of 97.6 MMboe contingent resources for the Avaldsnes and Apollo fields in Norway, which were discovered in 2010.

Morskaya contingent resources net to Lundin Petroleum are based on the current working interest of 70 percent. To comply with Russia's foreign strategic investment law, Lundin Petroleum is in discussions with Russian state owned entities to participate with a 51 percent interest in Morskaya.

Lundin Petroleum has an active work programme to mature contingent resources into reserves. Two appraisal wells are scheduled for 2011 to apprise the Avaldsnes discovery following which conceptual field development work will start. The Apollo discovery will likely be appraised in 2012.

Contingent Resources

Prospective resources
Lundin Petroleum has a substantial portfolio of exploration licences. In 2011 Lundin Petroleum is planning to drill (operated and non-operated) 20 exploration and appraisal wells targeting in total 483 MMboe of net unrisked prospective resources. Ten of these exploration and appraisal wells are expected to be drilled in Norway and five are planned to be drilled as part of a new drilling campaign in Malaysia. The other wells are planned to be drilled in the Netherlands and Congo (Brazzaville).

Targeted Prospective Resources 2011















Year low/high (Sep 2010 - Sep 2011):

SEK 42.40/117.60

Shares outstanding:

318 million

Production guidance 2011:

31,000 - 34,000 boepd

Reserves 31 Dec 2010:

186.7 MMboe





Lundin Petroleum is an independent Swedish oil and gas exploration and production company. Production is generated from assets in Norway, France, Tunisia, Netherlands, Russia and Indonesia. In addition there is significant upside potential within these areas of operation including undeveloped oil and gas discoveries and ongoing exploration programmes. Together with the exploration assets in Malaysia, Congo (Brazzaville), Vietnam and Ireland, Lundin Petroleum has a balanced portfolio of world-class assets. Lundin Petroleum has existing proven and probable reserves of 187 million barrels of oil equivalent (MMboe) and a forecast net production range for 2011 of 31,000-34,000 barrels of oil equivalent per day (boepd).

Congo (Brazzaville)
Lundin Petroleum has interests in two exploration licences, Marine XI and XIV, offshore Congo. An exploration programme is currently ongoing on the blocks.

With 9 production licences the Paris Basin has proven and probable reserves of nearly 18.2 MMboe. Lundin Petroleum also holds 5 exploration licences in the Paris Basin. The Aquitaine Basin assets consist of 1 exploration licence and 5 producing fields. Proven and probable reserves are 4.1 MMboe. The operator is Vermillion.

Lundin Petroleum has an interest in the Singa gas field development which came onstream in 2010. 2P net reserves are 4.3 MMboe. With the signing of a new exploration licence in the Natuna Sea in March 2011, Lundin Petroleum now has interests in six exploration licences.

Lundin Petroleum has one exploration licence located offshore Ireland.

Lundin Petroleum has signed Production Sharing Contracts (PSCs) for the exploration and production of oil and gas in two licences located offshore Peninsular Malaysia and two offshore Sabah. Exploration drilling has commenced and the first two wells resulted in gas discoveries. 3 wells remain to be drilled in 2011.

The Netherlands is a mature gas region with stable offshore and onshore production offering attractive fiscal terms. Lundin Petroleum has proven and probable reserves of 3.6 MMboe.

Lundin Petroleum has a portfolio of exploration, production and development licences on the Norwegian Continental shelf including the Barents Sea. The 2P net reserves are 139.2 MMboe. Lundin Petroleum has a 15% interest in the Alvheim field which came on stream in 2008 and is producing above expectations. The Volund field came on stream in 2010 through a tie-back to the Alvheim FPSO. The PDO for the development of the Gaupe field was approved in June 2010 and is expected to come on stream in the end of 2011. The PDO for the Brynhild development was submitted in August 2011 and first oil is expected in the end of 2013. The Luno discovery made in 2007, has proven and probable reserves of 74 MMboe, net. The PDO is expected to be submitted in the end of 2011. A major oil discovery has been made on the Avaldsnes/Aldous prospect which is estimated to contain between 1.2 and 2.6 billion boe of gross recoverable resources. Appraisal and exploration activities during 2011/2012 will further prove up the Avaldsnes/Aldous area. Further discoveries have been made in Norway on the Apollo, Caterpillar,Tellus, Skalle and Earb South prospects.

Lundin Petroleum has an 70% interest in the Lagansky exploration block in the Caspian Sea. The first exploration well, Morskaya-1, resulted in a major oil discovery and tested a combined flow rate of 2,500 bopd. Other assets in Russia include an interest in the producing Sotchemyu-Talyu and North Irael Fields in the Komi Republic. Proved and probable reserves in Russia are 16.7 MMboe.

Lundin Petroleum has been producing from the Oudna field via an FPSO since 2006. Despite late life the field continues to produce at relatively stable rates. Proved and probable reserves in Tunisia are 0.5 MMboe.

Lundin Petroleum has an interest in Block 06/94 exploration licence in the Nam Con Son Basin, offshore southern Vietnam.

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