Annual Report 2010

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DIRECTORS’ REPORT Rangkas (Java) A 474 km 2D seismic acquisition programme on the Rangkas block (WI 51%) commenced in 2010 and was completed in the ﬁrst quarter of 2011. Baronang/Cakalang (Natuna Sea) A 975 km2 3D seismic acquisition programme on the Baronang and Cakalang blocks (WI 100%) was completed in April 2010 and interpretation is ongoing. In addition, a 1,500 km 2D seismic acquisition programme is planned to be completed on Cakalang in 2011. South Sokang (Natuna Sea) A new Production Sharing Contract for the South Sokang block was signed in December 2010 (WI 60%). Malaysia A total of 2,150 km2 of 3D seismic acquisition on Blocks PM308A (WI 35%), PM308B (WI 75%) and SB303 (WI 75%) was completed in 2009. The seismic data processing and interpretation work has identiﬁed numerous drilling targets for the 2011/2012 drilling campaign. Five exploration wells are expected to be drilled this year commencing in April 2011 and a jack up rig has been secured for this programme. In 2010, Lundin Petroleum signed a new Production Sharing Contract encompassing blocks SB307 and SB308 (WI 42.5%) oﬀshore Sabah. A 330 km2 3D acquisition programme on blocks SB307 and SB308 was completed during the second quarter of 2010. Vietnam Exploration wells on the Hoa-Hong-X1 and Hoa Dao High prospects in Block 06/94 (WI 33.33%) were completed in 2010. Both wells were plugged and abandoned after either being dry or encountering uncommercial quantities of gas. FINANCIAL REVIEW FINANCIAL RESULT Result The net result including discontinued operations for the ﬁnancial year ended 31 December 2010 (reporting period) amounted to MUSD 498.5 (MUSD -537.1). The net result attributable to shareholders of the Parent Company including discontinued operations for the reporting period amounted to MUSD 511.9 (MUSD -411.3) representing earnings per share on a fully diluted basis of USD 1.64 (USD -1.31). Lundin Petroleum reports a net result from continuing operations for the reporting period of MUSD 129.5 (MUSD -545.8). The net result attributable to shareholders of the Parent Company from continuing operations amounted to MUSD 142.9 (MUSD -420.0) representing earnings per share on a fully diluted basis of USD 0.46 (USD -1.34). Operating cash ﬂow including discontinued operations for the reporting period amounted to MUSD 598.6 (MUSD 471.9) representing operating cash ﬂow per share on a fully diluted basis of USD 1.92 (USD 1.51). Earnings before interest, tax, depletion and amortisation (EBITDA) including discontinued operations for the reporting period amounted to MUSD 635.6 (MUSD 486.2) representing EBITDA per share on a fully diluted basis of USD 2.04 (USD 1.55). Production Production including discontinued operations for the reporting period amounted to 11,940.0 (13,931.7) thousand barrels of oil equivalent (Mboe) representing 32.7 Mboe per day (Mboepd) (38.2 Mboepd) and was comprised as follows: Production Norway - Quantity in Mboe - Quantity in Mboepd France - Quantity in Mboe - Quantity in Mboepd Netherlands - Quantity in Mboe - Quantity in Mboepd Indonesia - Quantity in Mboe - Quantity in Mboepd Russia - Quantity in Mboe 1,321.2 3.6 372.2 1.0 11,127.8 30.5 – – 1,890.0 5.2 494.9 1.4 10,350.6 28.4 162.2 0.4 - Quantity in Mboepd Tunisia - Quantity in Mboe - Quantity in Mboepd Total from continuing operations - Quantity in Mboe - Quantity in Mboepd Non-controlling interest in Russia - Quantity in Mboe - Quantity in Mboepd Total from continuing operations excluding non-controlling interest - Quantity in Mboe - Quantity in Mboepd Discontinued operations - United Kingdom - Quantity in Mboe - Quantity in Mboepd Total excluding non-controlling interest - Quantity in Mboe - Quantity in Mboepd 11,940.0 32.7 13,931.7 38.2 812.2 2.2 3,743.3 10.2 11,127.8 30.5 10,188.4 28.0 887.1 2.4 896.3 2.4 756.7 2.1 759.3 2.1 1,160.8 3.2 1,249.2 3.4 6,629.8 18.2 5,060.9 13.9 2010 2009 RUSSIA The net production to Lundin Petroleum from Russia for the period was 3,600 boepd. In the Lagansky Block (WI 70%) in the northern Caspian a major oil discovery was made on the Morskaya ﬁeld in 2008. The discovery due to its oﬀshore location is deemed to be strategic by the Russian Government under the Foreign Strategic Investment Law. As a result a 50 percent ownership by a state owned company is required prior to development. During 2010, 103 km2 of new 3D seismic was acquired on the Lagansky block which will target new exploration drilling locations. AFRICA Tunisia The net production to Lundin Petroleum from the Oudna ﬁeld (WI 40%) was 1,000 boepd for the reporting period. The Oudna ﬁeld production continues to outperform expectations. Congo (Brazzaville) Exploration drilling is expected to resume in 2011 with one well on Block Marine XIV (WI 21.55%) and a further well on Block Marine XI (WI 18.75%). 59

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