Lundin Progresses with Norwegian Development Projects

Stockholm-based Lundin Petroleum expects to submit in 2011 plans of development for the Luno and Nemo projects offshore Norway with conceptual planning completed for the Krabbe field and Marihøne prospects in 2011.

The company has successfully progressed development planning for the Luno field, which is located in PL338. The recoverable reserves for the Luno field have increased by over 50 percent to 149 MMboe as a result of the successful appraisal well drilled earlier this year. The Luno field is commercial on a standalone basis and conceptual development studies have been substantially completed.

"We are also working closely with Det norske oljeselskap ASA, the operator of the nearby Draupne field, to determine whether a Luno/Draupne joint development makes sense, and early indications are that this is the case. The current plan is to submit a plan of development for the Luno field either on a joint or standalone basis during 2011," said President and CEO C. Ashley Heppenstall in the company's interim report for the nine-month period ending Sept. 30, 2010.

Development planning is ongoing on the Nemo field in PL148, where Lundin holds 50 percent working interest, and the Krabbe field in PL301, in which Lundin holds 40 percent working interest.

The Marihøne discovery, announced in October 2009, is estimated to contain gross recoverable resources of 20 to 30 MMboe and will likely be developed as a subsea tieback to the Alvheim FPSO [floating production, storage and offloading vessel]. A further exploration well targeting the Caterpillar prospect in PL340BS will commence drilling late this year.

The Gaupe field, which received plan of development approval from the Norwegian government this year, is now progressing through the construction phase.

"We are investing significant amounts of capital in Norway to continue our aggressive exploration drilling program. We will continue to focus on the Greater Alvheim and Greater Luno areas where we feel our technical team have a competitive advantage," Heppenstall said.

In addition, exploration successes such as the Avaldsnes oil discovery, which Heppenstall called the highlight of Lundin's third quarter, are continuing to feed Lundin's pipeline of development projects and ensure that the company maintains its excellent historical performance of reserve replacement ratios.

Avaldsnes is estimated to hold likely recoverable resource of between 100 and 400 million barrels of oil equivalent (MMboe) in PL501, where Lundin is operator with 40 percent working interest. Lundin has already secured additional drilling rig capacity next year and will likely drill a further two appraisal wells on Avaldsnes in PL501 in 2011.

The Avaldsnes discovery has increased the exploration prospectivity of the Greater Luno Area, where Lundin is the predominant holder of acreage. The discovery has proven the migration of hydrocarbons to the eastern side of the Utsira High and, as a result, Lundin will now likely drill further exploration wells in 2011 on the Tellus prospect in PL338 and the Torvestad prospect in PL265/PL501, followed by additional wells in PL359 and PL410 in 2012.

In 2011, Lundin also plans to commence its exploration drilling program in the Barents Sea, where the company has put together a large predominantly operated license position. "We plan to drill one or two wells per year in the Barents Sea for the next three years targeting large multi-stacked prospects in this under explored area," said Heppenstall.

The company remains keen to progress the appraisal of the Morskaya oil discovery in the northern Caspian, Heppenstall said. The company s continuing discussions with potential new partners to satisfy the requirements of the Russian Government which requires 'strategic' assets to have 50 percent ownership by state owned companies prior to development.