Lundin Tests Positive at Morskaya-1, 'World Class' Oil Discovery

Lundin Petroleum AB announced that the Morskaya-1 exploration well in the Lagansky block, situated in the northern Caspian Sea was successfully tested at a combined flow rate of 2,500 barrels of oil per day of 32 API oil.

Two drill stem tests were conducted using the Marine Drilling Complex. The Neocomian formation was perforated over a 7 meter interval and tested at a stabilised rate of 1700 barrels of oil per day at a 56/64 inch choke. The Aptian formation was perforated over 21 meter interval and tested at a stabilised rate of 800 barrels of oil per day at a 36/64 inch choke. Due to time constraints associated with the North Caspian Drilling season, the shallower gas bearing Albian reservoir will be tested in future appraisal wells. The flow rates were severely constrained by facilities and larger rates will be possible during development.

The Morskaya discovery, within the Lagansky block is on trend with several major oil and gas discoveries made by Lukoil in the Russian sector of the Caspian Sea. The block contains significant additional prospectivity on trend.

The Morskaya-1 well was drilled using the Marine Drilling Complex (MDC). Following testing the MDC will be transported to the Laganskaya-1 well location which is expected to commence drilling at the end of September. Lundin Petroleum plans to drill another two wells in 2009. Petrovskaya-1 will be targeting a large anticline to the north-west and on trend with the Morskaya discovery and the second well will most likely be an appraisal well of the Morskaya discovery.

Lundin Petroleum currently has a 70% interest in the Lagansky block. Gazprom has a call option to acquire a 50% plus one share in the Lagansky block. Lundin Petroleum has a call option to acquire an additional 30% from minority shareholders. If both options are exercised Lundin Petroleum will retain 50% minus one share in the Lagansky block and Gazprom will hold a 50% plus one share in the Lagansky block.

Ashley Heppenstall, President and CEO of Lundin Petroleum, commented, "The testing of the Morskaya-1 well has confirmed that this is a world class oil discovery. We will provide preliminary estimates of likely recoverable reserves from the Morskaya discovery after we have analysed the results of the drilling and testing program.

"The Russian sector of the Northern Caspian will over forthcoming years become a major production area. Lundin Petroleum has a material position in the Lagansky block and with this discovery coupled with significant further exploration potential is well positioned to take advantage of the development of this area."