• 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 23 – TRADE RECEIVABLES (TSEK) The trade receivables relate to a number of independent customers from whom there is no recent history of default. The provisions for bad debt is therefore nil. an annual amount of TCHF 138 (TSEK 925) payable to the widow of Adolf H. Lundin, Mrs Eva Lundin, which will continue for the duration of her life. The Company may, at its option, buy out the obligation to make the pension payments through a lump sum payment in the amount of TCHF 1,800 (TSEK 12,438). Pension provision 2009 10,140 967 -925 -547 9,635 2008 9,478 -815 -833 2,310 10,140 NOTE 24 – PREPAID EXPENSES AND ACCRUED INCOME (TSEK) Prepaid expenses and accrued income comprises: Prepaid rent Joint venture balances Prepaid insurances Accrued income Other 31 December 2009 2,213 12,332 2,673 827 51,928 69,973 31 December 2008 7,797 14,250 5,377 120 50,202 77,746 1 January Fair value adjustment Instalments paid Currency translation difference 31 December NOTE 29 – OTHER PROVISIONS (TSEK) Other provisions comprises: 1 January 2009 Acquired on consolidation Disposals Additions Release Termination indemnity provision 26,987 – – 4,633 – – – -2,705 28,915 Other 28,559 777 -609 83,457 -18 -13,986 -2,098 -5,421 90,661 Total 55,546 777 -609 88,090 -18 -13,986 -2,098 -8,126 119,576 Joint venture balances included in prepaid expenses and accrued income relate only to unincorporated joint ventures. NOTE 25 – OTHER RECEIVABLES (TSEK) Other receivables comprises: Underlift VAT receivable Other receivables 31 December 2009 61,554 21,353 23,466 106,373 31 December 2008 32,236 43,875 11,602 87,713 Payments Reclassification Currency translation difference 31 December 2009 NOTE 26 – OTHER RESERVES (TSEK) Other reserves in the statement of changes in equity comprises: Balance at 1 January 2008 Total comprehensive income Balance at 31 Dec 2008 Total comprehensive income Balance at 31 Dec 2009 Availablefor-sale reserve 67,672 -12,569 55,103 -126,940 -71,837 Hedge reserve – -256,145 -256,145 205,790 -50,355 Currency translation reserve -791,162 1,508,724 717,562 -548,118 169,444 Total Other reserves -723,490 1,240,010 516,520 -469,268 47,252 The termination indemnity provision represents Lundin Petroleum’s share of the provision for employment termination costs within the Salawati joint ventures in Indonesia and the Oudna joint venture in Tunisia. The provision in relation to the Salawati joint ventures is supported in full by cash deposits held by the joint venture that are included within financial fixed assets. NOTE 30 – BANK LOANS AND SHORT-TERM DEBT (TSEK) In relation to bank loans, the following amounts were outstanding: Bank loans comprises: Current Repayment within 6 months Repayment between 6–12 months Long term Repayment within 2–5 years 3,875,822 7,848 3,900,749 4,339,769 – 4,393,662 Repayment after five years 13,877 3,202 26,947 26,946 31 December 2009 31 December 2008 NOTE 27 – PROVISION FOR SITE RESTORATION (TSEK) 2009 1 January Unwinding of discount (Note 10) Payments Changes in estimates Disposals/Disinvestments Currency translation difference 31 December 700,206 41,208 -1,531 258,698 -5,971 -48,271 944,339 2008 700,763 31,263 -1,410 46,512 -64,973 -11,949 700,206 The table above analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. Loan repayments are made based upon a net present value calculation of the assets’ future cash flows. No loan repayments are currently forecasted under this calculation. The loan repayments as shown in the table are driven by the loan reduction schedule. The interest rate on Lundin Petroleum’s credit facility was floating at LIBOR + 1.1% until 26 October 2007 and after that at LIBOR + 0.9%. In November 2009 Etrion signed a credit facility agreement for an amount of EUR 17.2 million with Centrobanca for the construction of solar power plants in southern Italy. The facility has a term of 17.5 years and bears interest at six-month EURIBOR plus a margin of 250 basis points during the first five years, 270 basis points during the second five years and 300 basis points thereafter. Fair value on bank loans as at 31 December 2009 has been estimated to book value as the loans had floating interest rate. In calculating the present value of the site restoration provision, a pre-tax discount rate of 5.5% (5.5%) was used. Based on the estimates used in calculating the site restoration provision as at 31 December 2009, 70% of the total amount is expected to settle after more than 20 years. NOTE 28 – PENSION PROVISION (TSEK) In May 2002 the Compensation Committee recommended to the Board of Directors, and the Board of Directors approved that a pension to be paid to Mr Adolf H. Lundin upon his resignation as Chairman of the Board of Directors and his appointment as Honorary Chairman. It was further agreed that upon the death of Mr Adolf H. Lundin, the monthly payments would be paid to his wife, Mrs Eva Lundin for the duration of her life. Up to October 2006 the pension amount agreed consisted of monthly payments totaling an annual amount of TCHF 206 (TSEK 1,236) and thereafter of monthly payments totalling The Group’s credit facility agreement provides that an “event of default” occurs where the Group does not comply with certain material covenants or where certain events occur as specified in the agreement, as are customary in financing agreements of this size and nature. If such an event of default occurs and subject to any applicable cure periods, the external lenders may take certain specified actions to enforce their security, including accelerating the repayment of outstanding amounts under the credit facility. The Group is not in breach of the debt covenants. As at 31 December 2009 an amount of TSEK 213,496 (TSEK -) was outstanding as short-term debt regarding the advance in relation to the agreement with Gunvor. 77 FINANCIALS

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