Lundin Petroleum Reports 'Strong Profitability' in 2Q

Lundin Petroleum generated strong profitability during the period driven by the profit from the sale of our UK business. Lundin Petroleum also generated strong operating cash flow of $281.5 million during the six month period ended June 30, 2010. For each barrel produced from continuing operations, over $49.50 per barrel of operating cash flow was generated.

The net result including discontinued operations for the six month period ended June 30, 2010 amounted to MUSD 390.1 (MUSD 18.9). The net result attributable to shareholders of the Parent Company including discontinued operations for the six month period ended 30 June 2010 amounted to MUSD 395.2 (MUSD 23.4).

Operating cash flow including discontinued operations for the six month period ended June 30, 2010 amounted to MUSD 281.5 (MUSD 223.8). Earnings before interest, tax, depletion and amortization (EBITDA) including discontinued operations for the six month period ended 30 June 2010 amounted to MUSD 290.7 (MUSD 216.9).

Net sales of oil and gas including discontinued operations for the six month period ended June 30, 2010 amounted to MUSD 416.9 (MUSD 340.6). The average price achieved by Lundin Petroleum for a barrel of oil amounted to USD 70.22 (USD 49.35). Production including discontinued operations for the six month period ended 30 June 2010 amounted to 5,988.1 (7,050.5) thousand barrels of oil equivalent (Mboe) representing 33.1 Mboe per day (Mboepd) (39.0 Mboepd).

On April 9, 2010 Lundin Petroleum made a distribution of the EnQuest shares received in consideration for the sale of the UK business in a ratio of 1.3473 shares in EnQuest for each Lundin Petroleum share held. The distribution was valued at the market price of the shares at the time of the distribution and amounted to MUSD 656.3.

Comments from C. Ashley Heppenstall, President and CEO

I am pleased that during the second quarter of 2010 we generated a profit after tax of over $365 million. This was predominantly attributable to the successfully completed spin off of our United Kingdom (UK) business into a new independent oil company, EnQuest plc which was completed during the second quarter. The Lundin family remain the largest shareholder in EnQuest which will be primarily focused on the UK North Sea and whilst the company is independent of Lundin Petroleum we remain confident that it will grow from its current base and create further value for its shareholders.

I am also confident about the future for Lundin Petroleum and we have made good progress with the rest of our asset portfolio during the second quarter of 2010. Production continues to outperform forecasts driven by strong performance from the Alvheim and Volund fields, offshore Norway. We will again deliver healthy reserve replacement ratios this year as a result of likely reserve increases from the Luno field following the appraisal well completed earlier this year. Indeed we are progressing development planning for the Luno field and we expect to firm up our plans with a concept selection decision later this year. We remain very focused on increasing our reserves through exploration drilling. Our exploration programme in the second half of this year is very active with eight exploration wells planned targeting net resource potential of over 200 million barrels of oil equivalent (MMboe).

During the second quarter of 2010 production averaged over 30,000 boepd. Excluding the UK, production increased by 13 percent over the first quarter of 2010 as a result of first production from the Volund field, offshore Norway, which came onstream in April 2010. We expect that production will increase further during the second half of the year when Volund reaches its plateau production. As a result of this performance I am pleased that we are able to increase our guidance range for 2010 production from 29 - 33,000 boepd to 31 - 34,000 boepd.

During the last quarter the economic sentiment has been more negative following the strong recoveries after the world financial crisis. There is clearly uncertainty associated with the sustainability of economic recovery in developed countries as the various financial stimuli are removed.

Nevertheless the world's emerging economies such as China and India continue to grow and will be the main driver of commodity demand growth going forward. As a result whilst short term oil prices will remain volatile the long term demand for hydrocarbons will remain strong and this coupled with uncertain supply will lead to higher oil prices.

This is clearly positive for Lundin Petroleum. Our reserves and production growth remains strong. We have exposure to exploration with the potential to materially increase our resource base. This will ultimately increase shareholder value which is the key objective for myself and our management team.

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