• Annual Report 2009
  • 4Letter to shareholders
  • 6Words from the Chairman
  • 8Our business, vision and strategy
  • 9Market overview
  • 12Operations
  • 13Reserves, resources and production
  • 16Core area - Europe
  • 21Core area - Russia
  • 22Core area - South East Asia
  • 23Other operations
  • 24Corporate responsibility
  • 30Corporate governance report
  • 36-Internal control and risk management
  • 38-Board of directors
  • 39-Management
  • 40-Risk factors
  • 41The share and shareholders
  • 44Five year financial summary
  • 45Director's report
  • 54Income statement
  • 55Comprehensive income
  • 56Balance sheet
  • 57Statement of cash flow
  • 58Statement of changes in equity
  • 59Key financial data
  • 60Accounting principles
  • 67Notes - Group
  • 84Parent company annual accounts
  • 88Notes - Parent company
  • 90Board assurance
  • 90Financial reporting dates
  • 91Auditor's report
  • 92Reserve quantity information
  • 93Definitions

Annual Report 2009

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NOTES TO THE FINANCIAL STATEMENTS OF THE GROUP NOTE 17 – SHARES IN JOINTLY CONTROLLED ENTITIES AND ASSOCIATED COMPANIES (TSEK) Jointly controlled entities and associated companies comprise: PetroFalcon Corp. Ikdam Production SA Oil Service 1 RF Energy Investments Ltd. - CJSC Pechoraneftegas 2 - LLC Zapolyarneftegas 2 - LLC NK Recher-Komi 2 - Geotundra BV 2 Consolidation method Equity Equity Proportional consolidation Proportional consolidation Number of shares 71,020,500 1,600 2 11,540 20,000 1 1 20,000 Share % 44.81 40.00 50.00 50.00 Direct 100.00, indirect 50.00 Direct 100.00, indirect 50.00 Direct 100.00, indirect 50.00 Direct 100.00, indirect 50.00 Book amount 31 December 2009 – 0 – – – – – – 0 Sold in November 2009. Through the proportional consolidation of RF Energy Investments Ltd. the subsidiaries of RF Energy Investments Ltd. are also proportionally consolidated in the Lundin Petroleum accounts. “Direct” refers to RF Energy’s ownership percentage, “indirect” refers to the Group’s ultimate ownership percentage. 2 1 Book amount 31 December 2008 505,721 0 – – – – – – 505,721 On 1 February 2008, following the receipt of Venezuelan Ministry of Energy and Petroleum approval, Lundin Petroleum completed the sale of its wholly owned subsidiary, Lundin Latina de Petróleos S.A., holding a 5% interest in Baripetrol SA, to PetroFalcon Corporation (“PetroFalcon”) and the acquisition of shares and warrants in PetroFalcon through a private placement. As a result of these transactions, Lundin Petroleum has become the largest shareholder in PetroFalcon with a shareholding of approximately 64 million shares of PetroFalcon, representing 42% of the issued and outstanding common shares of PetroFalcon. The fair value of the 64 million shares received amounted to TSEK 481,264 upon initial measurement resulting in a gain on sale of assets of TSEK 89,822 and a negative goodwill of TSEK 52,170. Lundin Petroleum has also acquired warrants of PetroFalcon, which may be exercised at any time during the two year period following issuance to acquire up to 5,000,000 shares of PetroFalcon at an exercise price of CDN 1.20 per share. In April 2008, PetroFalcon entered into an agreement to acquire the Venezuelan assets of Anadarko Petroleum Corporation. Lundin Petroleum agreed to guarantee certain of PetroFalcon’s obligations under that agreement and in part consideration, received 7.1 million shares of PetroFalcon, which together with Lundin Petroleum’s existing shares of PetroFalcon, represent approximately 45% of the issued and outstanding common shares of PetroFalcon. The agreement with Anadarko did not receive governmental approval and, as a result, Lundin Petroleum has no remaining guarantee outstanding. During the third quarter of 2009, PetroFalcon changed its name to Etrion Corporation (Etrion) and acquired a 90% interest in a renewable energy company which will be Etrion’s primary business focus going forward. At the same time, Lundin Petroleum gained control of the board of directors of Etrion, and this, along with the combined shareholding of Etrion by Lundin Petroleum and certain of its directors gave deemed control for accounting purposes to Lundin Petroleum. As a result of this deemed control, Lundin Petroleum is required to fully consolidate the results of Etrion into the Lundin Petroleum consolidated accounts and has done so with an effective date of 30 September 2009. Etrion Corporation is also still holding its oil and gas operations in Venezuela with existing proven and probable reserves before royalties of 30.0 million barrels of oil equivalent (MMboe) as of 1 January 2010. Etrion is listed on the Toronto Stock Exchange (ticker symbol “ETX”) . Lundin Petroleum is holding the following direct and indirect investments in Etrion: Company Etrion Corporation - Solar Resources Holding Sarl - Etrion SA - Etrion Italia Srl - SVE Srl - PetroFalcon Oil and Gas SA - PetroCumarebo SA - Baripetrol SA Country of registration Canada Luxembourg Switzerland Italy Italy Venezuela Venezuela Venezuela Percentage 44.81 90.00 100.00 100.00 100.00 100.00 40.00 5.00 The amounts included below for the jointly controlled entities and associated companies represent 100% of the reported accounts. Income statement per 31 December 2009 Revenue Operating cost Net result Etrion Corp. – – -507,378 Ikdam Productions SA 20,868 31,021 -18,139 Oil Service 1,799 -1,921 -408 RF Energy consolidated 1,006,634 -858,109 76,173 Balance Sheet per 31 December 2009 Non-current assets Current assets Total assets Equity Non-current liabilities Current liabilities Total liabilities Etrion Corp. 125,628 176,326 301,954 212,897 61,111 27,946 301,954 Ikdam Production SA 49,835 12,026 61,861 -76,603 134,547 3,917 61,861 Oil Service 4,571 1,159 5,730 1,415 704 3,611 5,730 RF Energy consolidated 916,703 147,284 1,063,987 588,199 331,913 143,875 1,063,987 NOTE 18 – OTHER SHARES AND PARTICIPATIONS (TSEK) Other shares and participation comprise: ShaMaran Petroleum Corp. Baripetrol SA PetroCumarebo SA Noorderlijke Aardgas Transportmij B.V. (NOGAT) Cofraland B.V. Island Oil and Gas plc Maison de la géologie Number of shares 50,000,000 30,026 497,080 – 31 4,000,000 2 Share % 10.01 5.00 40.00 – 7.75 3.62 1.25 Book amount 31 Dec 2009 152,482 57,644 13,521 – 3,100 3,579 30 230,356 Book amount 31 Dec 2008 – – – 112,109 3,287 6,205 33 121,634 74 Lundin Petroleum ANNUAL REPORT 2009

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