Annual Report 2011

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Malaysia The 2009 3D seismic data programme identified numerous drilling targets for the 2011/2012 drilling campaign. Five exploration and appraisal wells were drilled in 2011. The Tarap exploration well drilled in Block SB303 (WI 75%), offshore Sabah, east Malaysia was completed in July 2011 as a gas discovery. The well encountered gas in each of the five independently sealed Miocene sands targeted finding gross vertical pay of approximately 150 metres. The gross contingent resources of the Tarap discovery are 171 bcf. The Cempulut exploration well also in Block SB303 was also completed as a gas discovery. The well encountered a Miocene reef with 50 metres of gross vertical pay. There is a third discovery named Titik Terang in the Block SB303 contract area. The three discoveries are in close proximity to one another and have an estimated gross contingent resource (best estimate) of more than 250 bcf. Lundin Petroleum is now evaluating the potential for a cluster development. There are various options for the commercialisation of gas in the Sabah area. The first exploration well Batu Hitam-1 drilled in Block PM308A (WI 35%), offshore peninsular Malaysia was plugged and abandoned as a dry hole after encountering good reservoir but with high concentrations of carbon dioxide. The second exploration well in Block PM308A Janglau-1 completed in November 2011 was an oil discovery proving up a new play concept in Oligocene intra-rift sands. The discovery will require further appraisal drilling to determine commerciality. In June 2011, Lundin Petroleum acquired a 75 percent working interest in Block PM307 offshore Peninsula Malaysia. A 2,100 km2 3D seismic acquisition programme was completed in 2011. In January 2012, the Bertam-2 appraisal well was successfully completed proving the continuity and quality of the K10 oil reservoir sandstone. Bertam is likely a commercial oil field and studies are now progressing to review potential development concepts. A further five exploration and/or appraisal wells will be drilled in Malaysia in 2012 offshore Sabah and offshore peninsular Malaysia. Drilling is expected to commence mid-year. FINANCIAL REVIEW FINANCIAL RESULT Result The net result from continuing operations for the financial year ended 2011 (reporting period) amounted to MUSD 155.2 (MUSD 129.5). The net result attributable to shareholders of the Parent Company from continuing operations for the reporting period amounted to MUSD 160.1 (MUSD 142.9) representing earnings per share on a fully diluted basis of USD 0.51 (USD 0.46). Earnings before interest, tax, depletion and amortisation (EBITDA) for the reporting period amounted to MUSD 1,012.1 (MUSD 603.5) representing EBITDA per share on a fully diluted basis of USD 3.25 (USD 1.93). Operating cash flow for the reporting period amounted to MUSD 676.2 (MUSD 573.4) representing operating cash flow per share on a fully diluted basis of USD 2.17 (USD 1.84). Operating income Net sales of oil and gas for the reporting period amounted to MUSD 1,257.7 (MUSD 785.2) and are detailed in Note 1. Sales volumes for the reporting period were 14 percent higher and the achieved oil price was 40 percent higher than the comparative period and this has resulted in oil and gas revenues being 60 percent higher than the comparative period. The average price achieved by Lundin Petroleum for a barrel of oil equivalent amounted to USD 101.04 (USD 71.92) and is detailed in the following table. The premium over Dated Brent on Norwegian crude oil sold during the reporting period averaged USD 3.87 per barrel. The average Dated Brent price for the reporting period amounted to USD 111.26 (USD 79.50) per barrel. Sales of oil and gas for the reporting period were comprised as follows: Sales Average price per boe expressed in USD Norway – Quantity in Mboe – Average price per boe France – Quantity in Mboe – Average price per boe Netherlands – Quantity in Mboe – Average price per boe Indonesia – Quantity in Mboe – Average price per boe Russia – Quantity in Mboe – Average price per boe Tunisia – Quantity in Mboe – Average price per boe Total from continuing operations – Quantity in Mboe 12,448.0 101.04 – – 12,448.0 101.04 10,917.5 71.92 814.4 76.82 11,731.9 72.26 – Average price per boe Discontinued operations – United Kingdom – Quantity in Mboe – Average price per boe Total - Quantity in Mboe - Average price per boe 198.2 125.12 382.6 77.15 1,138.4 69.85 1,290.0 51.65 387.7 32.43 607.7 65.31 1,155.5 110.59 725.0 60.74 1,168.0 79.35 756.7 44.37 8,843.2 109.57 6,712.5 77.93 2011 2010 RUSSIA The net production to Lundin Petroleum from Russia for the year was 3.1 Mboepd. In the Lagansky Block (WI 70%) in the northern Caspian a major oil discovery was made on the Morskaya field in 2008. The discovery is deemed to be strategic, due to its offshore location, 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 appraisal and development. During 2010, 103 km2 of new 3D seismic was acquired on the Lagansky Block which has identified further exploration prospects in the Lagansky Block. AFRICA Tunisia The net production to Lundin Petroleum from the Oudna field (WI 40%) was 0.7 Mboepd for the year. Congo (Brazzaville) The drilling of the exploration wells Mindou Marine-1 on Block Marine XI (WI 18.75%) and the Makoula Marine-1 on Block Marine XIV (WI 21.55%) was completed in the fourth quarter of 2011. Both wells were plugged and abandoned as dry holes. All exploration drilling commitments have been fulfilled on the two Blocks and no further exploration drilling is forecast in 2012. 67

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