PetroFalcon Signs Definitive Agreement for Lundin Transaction

PetroFalcon and Lundin Petroleum have executed the definitive share purchase agreement for the acquisition of 100% of the issued and outstanding shares of Lundin Latina de Petroleos, S.A. ("Lundin Venezuela") and a private placement of PetroFalcon units (collectively, the "Transaction").

As previously announced on July 18, 2007, PetroFalcon will issue to Lundin BV pursuant to the Transaction approximately 64 million shares at CDN$0.80 per share and 5 million warrants with an exercise price of CDN$1.20 per share expiring 2 years after issue. As a result, PetroFalcon will acquire all of Lundin Venezuela's interest in the Baripetrol joint venture and receive approximately $27 million in cash. After completing the Transaction, Lundin Petroleum will indirectly own approximately 40% of the Corporation and will nominate two representatives to join the Board of Directors of PetroFalcon.

PetroFalcon and Lundin Petroleum have notified the Venezuelan Ministry of Energy and Petroleum ("MEP") of the pending acquisition and private placement and are waiting for formal approval to close the Transaction. The Transaction is subject to all required regulatory approvals, including without limitation, the approval of the Toronto Stock Exchange and a majority of PetroFalcon shareholders.

Lundin Petroleum is a Swedish independent oil and gas exploration and production company with a well balanced portfolio of world-class assets in Europe, Africa, Russia and the Far East. Lundin Petroleum is listed on the Nordic Exchange in Sweden (ticker symbol "LUPE") and has existing proven and probable reserves of 176 million barrels of oil equivalent (mmboe) as of January 1, 2007.