Lundin Completes Valkyries Acquisition

Lundin Petroleum AB has completed its acquisition of Valkyries Petroleum Corp. The merger was announced on May 29, 2006.

Upon submission of their Valkyries common shares together with the required letter of transmittal, the former shareholders of Valkyries will receive one Lundin share for each Valkyries common share held in this all-share transaction.

Lundin will issue approximately 55.8 million new shares to the former shareholders of Valkyries. In addition, a further approximately 1.8 million Lundin Petroleum shares have been reserved for issuance as follows:

--1 million Lundin Petroleum shares to be issued to the previous holder of Valkyries' interest in the Caspian Field, upon the Caspian Field producing 2,500 barrels of oil per day (bopd) for a continuous period of thirty days
--approximately 800,000 Lundin Petroleum shares to be issued upon exercise of incentive stock options previously granted by Valkyries.

The closing price of Lundin Petroleum on July 31, 2006, was SEK 88.50 (approximately CAD 13.85).

Registered shareholders of Valkyries are encouraged to complete the letter of transmittal as soon as possible and to deliver the letter in accordance with the instructions provided.

The acquired assets include a growth-oriented production, development, and exploration portfolio of oil and gas projects in Russia. Key projects include a 50% interest in the producing Sotchemyu-Talyu and North Irael Fields in the Komi Republic; a 51% interest in the producing Caspian Field in the Kalmykia Republic; a 50% interest in the producing Ashirovskoye field in Orenburg; and a 70% interest in the highly prospective Lagansky exploration block offshore in the Caspian Sea. Preparations are underway for the drilling of the Morskoye #1 exploration well in the Lagansky Block and drilling operations are expected to commence in the third quarter.

"This transaction creates a new core area for Lundin Petroleum in Russia," said Ashley Heppenstall, Lundin's president and CEO. "Valkyries has developed a management team which has built a good portfolio of producing, development and exploration assets as well as a number of new business opportunities through its local network. We intend to complement the existing Valkyries team with Lundin Petroleum's technical and financial capacity to grow the Russian business. Russia is one of the few remaining countries in the world with the access to significant reserves and production which we believe is key in continuing to grow our business in future years."

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of world-class assets in Albania, France, Indonesia, Ireland, Netherlands, Nigeria, Norway, Sudan, Tunisia, United Kingdom, and Venezuela.

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