Annual Report 2009

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NOTES TO THE FINANCIAL STATEMENTS OF THE GROUP Movements in the number of outstanding Etrion stock options and their related weighted average exercise price are as follows: 2009 Average weighted exercise price in CAD per share At 1 January Granted Exercised Lapsed At 31 December 1.77 0.48 – 2.20 1.17 Stock options outstanding 9,333,660 4,510,000 – -2,460,020 11,383,640 2008 Average weighted exercise price in CAD per share 1.81 1.24 0.85 1.99 1.77 Stock options outstanding 10,796,494 450,000 -330,000 -1,582,834 9,333,660 As at 31 December 2009 7,571,972 (8,883,660) options were exercisable. The related total expense accounted for during the period amounted to TSEK 1,074 (TSEK -). Etrion has entered into a shareholders agreement with the shareholder of the remaining 10% interest in the renewable energy company of which Etrion holds a 90% interest. This agreement provides for issuance of further at the money options to prevent dilution to the 10% shareholder in relation to the first MEUR 100 of value from investments by Etrion. These options are viewed as being granted, subject to a performance condition relating to future investments. It is estimated that the performance condition is likely to be met over a remaining period of 3.5 years from 31 December 2009 and therefore the company has recorded a non-cash compensation expense of TSEK 9,934 (TUSD 1,195). The total fair value of the stock options will be expensed over the vesting period, being the period from the grant date until the funds are estimated to be invested. Etrion is fully consolidated in the Lundin Petroleum accounts due to which the related equity reserve for an amount of TSEK 55,311 is included within the Group’s shareholders’ equity. Of this amount TSEK 46,848 relates to the outstanding stock options and TSEK 8,463 relates to the mentioned shareholders agreement. NOTE 44 – SUBSEQUENT EVENTS In February 2010, the exploration well 6507/11-10 targeting the Frusalen prospect in Norway licence PL476 (WI 30%) was plugged and abandoned as a dry hole. The costs associated with this well will be expensed during the first quarter of 2010. Spin-off UK business and distribution of EnQuest shares to shareholders On 6 April 2010, Lundin Petroleum announced completion of the spin-off its business in the United Kingdom (UK) into the newly formed UK company called EnQuest plc (EnQuest), in exchange for shares of EnQuest. The shares of EnQuest received by Lundin Petroleum were then distributed to Lundin Petroleum shareholders. Proposed Transaction Structure EnQuest acquired the UK oil and gas production, development and exploration assets and operations of both Lundin Petroleum and Petrofac Limited, a London Stock Exchange-listed company. EnQuest was recently incorporated for these transactions and is an independent oil and gas production and development company whose initial activities will be focussed on the United Kingdom Continental Shelf (UKCS). Lundin Petroleum received fifty-five percent (55%) of the outstanding shares of EnQuest in consideration for the sale of the UK business and proposes to distribute its EnQuest shares to Lundin Petroleum shareholders. Lundin Petroleum shareholders will continue to hold their shares of Lundin Petroleum and will also receive new shares of EnQuest. The shareholders of Petrofac will hold the remaining forty-five percent (45%) of the outstanding shares of EnQuest. It is expected that entities associated with the Lundin family will be the largest shareholder in EnQuest. EnQuest will apply for admission and primary listing on London Stock Exchange, with a secondary listing on NASDAQ OMX Stockholm. On 22 March 2010 the Extraordinary Meeting of Shareholders resolved to approve the sale of Lundin North Sea B.V. to EnQuest. Lundin North Sea B.V. is the holding company for all of Lundin Petroleum’s UK oil and gas production, development and exploration assets and operations. The transaction is expected to be completed early in the second quarter of 2010. The financial result of the spin-off of the UK business on the Group’s result is depending on the first listing price of the EnQuest shares. The following table provides a summary of the segment reporting for the Group’s UK business. 1 Jan 2009 - 31 Dec 2009 12 months Production in Mboepd, net Average crude sales price in USD /boe Average depletion cost in USD/boe Operating income in MSEK Operating profit contribution in MSEK 10.2 62.83 13.83 1,783.7 273.8 31 December 2009 Oil and gas properties in MSEK Total assets in MSEK Total liabilities in MSEK 4,190.8 4,521.2 3,527.5 1 Jan 2008 - 31 Dec 2008 12 months 10.2 96.41 16.94 2,280.8 646.0 31 December 2008 4,511.1 4,911.5 83 FINANCIALS 4,224.2

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