Annual Report 2011

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The costs associated with the Unit Bonus Plans are as given in the following table. Unit Bonus Plan TUSD 2008 2009 2010 2011 2011 786 3,851 7,379 4,350 16,366 2010 1,625 2,901 3,070 – 7,596 NOTE 36 – REMUNERATION TO THE GROUP’S AUDITORS TUSD PricewaterhouseCoopers Audit fees Audit related Tax advisory services Other fees Total Remuneration to other auditors than PricewaterhouseCoopers Total 1,065 75 179 26 1,345 305 1,650 995 82 – 36 1,113 213 1,326 2011 2010 The costs for 2010 also included an amount of TUSD 218 relating to employees of the UK operations that were shown as discontinued items. Phantom Option Plan At the AGM on 13 May 2009, the shareholders of Lundin Petroleum approved the implementation of an LTIP for Executive Management (being the President and Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and the Senior Vice President Operations) consisting of a grant of phantom options exercisable after five years from the date of grant. The exercise of these options entitles the recipient to receive a cash payment based on the appreciation of the market value of the Lundin Petroleum share. Payment of the award under these phantom options will occur in two equal instalments: (i) first on the date immediately following the fifth anniversary of the date of grant and (ii) second on the date which is one year following the date of the first payment. The LTIP for Executive Management includes 5,500,928 phantom options with an exercise price of SEK 52.91 (rebased from 4,000,000 phantom options and SEK 72.76 respectively following the distribution of the shares of EnQuest Plc and Etrion Corporation, made in 2010). The phantom options will vest in May 2014 being the fifth anniversary of the date of grant. The recipients will be entitled to receive a cash payment equal to the average closing price of the Company’s shares during the fifth year following grant, less the exercise price, multiplied by the number of phantom options. The participants of the phantom option plan are not entitled to receive new awards under the Unit Bonus Plan whilst the phantom options are still outstanding. Lundin Petroleum holds 6,882,638 of its own shares acquired at an average cost of SEK 46.51 per share which mitigates the exposure of the LTIP. The Lundin Petroleum share price at 31 December 2011 was SEK 169.20. The provision for LTIP amounted to MUSD 70.3 as at 31 December 2011 and the market value of the shares held at 31 December 2011 was MUSD 169.1. The gain in the value of the own shares held can not be offset against the cost for the LTIP in accordance with accounting rules. The cost for the 2009 LTIP for Executive Management amounted to TUSD 41,604 (TUSD 8,894) for the financial year ended 31 December 2011. For further details regarding the Phantom Option Plan, please see the pages 50–51 of the Corporate Governance report. Audit fees include the review of the 2011 half year report. Audit related costs include special assignments such as licence audits, PSC audits and internal control audits. NOTE 37 – SUBSEQUENT EVENTS Lundin Petroleum owns 50 million shares in ShaMaran Petroleum which it acquired in 2009 in a non-cash transaction. The investment was booked at the fair value of the shares at the date of acquisition and under accounting rules, any subsequent movement in the fair value of the shares is being recorded in the consolidated statement of comprehensive income. In January 2012, ShaMaran Petroleum announced that it had relinquished its working interests in its operated Production Sharing Contract licences and, as such, there has been a permanent diminution in the fair value of the shares of ShaMaran Petroleum. The cumulative loss recognised in other comprehensive income will be reclassified from equity and recognised in the income statement in the first quarter of 2012. The accounting loss in value is estimated to amount to MUSD 19. In the first quarter of 2012, Talisman Energy exercised their option to sell Lundin Petroleum a 30% working interest in PL148 Brynhild, Norway, subject to applicable government approvals. 95

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