February 2009

Dear fellow Shareholders,

The theme of our recent Capital Markets Day presentation was that of "Continued Focused Growth" for Lundin Petroleum. We have been very successful over recent years in growing our reserves organically through exploration and exploitation drilling. In January 2010 we announced a reserves replacement ratio of 400 percent for the second consecutive year. This reserve growth will ultimately lead to increases in production, operating cash flow and value creation for our shareholders. Indeed our production increased by over 20 percent to 38,200 boepd in 2009 compared to the previous year with the first full year's contribution from the Alvheim field, offshore Norway. Production will further increase in 2010 with the Volund field, offshore Norway coming onstream and pushing our production close to 50,000 boepd by the end of the year. We have a portfolio of undeveloped reserves and resources which will deliver continued production growth for a number of years to come.

In addition to our large reserves portfolio we continue our strong focus on exploration with an active exploration programme in 2010 targeting unrisked potential resources of 330 million barrels of oil equivalent from eleven exploration wells. We are focusing our efforts on areas where we believe we have a competitive advantage and as such Norway, South East Asia and Russia will continue to be areas of focus for the company.

Financial Performance
In 2009, our profitability was adversely affected by a number of non-recurring and non-cash items which resulted in a net loss after taxes attributable to the shareholders of Lundin Petroleum of MSEK 2,890.5 (MUSD 411.3). The major negative impact results from our decision to write down the carrying value of our Russian Caspian assets by approximately MUSD 450. Despite the fact that we have made a major discovery at Morskaya in the northern Caspian and that the area still contains further exploration potential, we felt it was prudent, following the latest unsuccessful exploration drilling on Petrovskaya, to reduce our carrying value.

I am pleased, however, that despite lower oil prices in 2009 Lundin Petroleum still generated a strong operating cash flow during the year. Operating cash flow in 2009 was MSEK 3,597.3 (MUSD 471.9) and we fully funded our major capital expenditures programme from internally generated funds. Our balance sheet remains very strong with unutilised borrowing capacity and strong liquidity to fund our growth going forward.

Reserves
Proven and probable reserves increased by 26 percent in 2009 to 256 MMboe. We are particularly focused upon oil with over 85 percent of our reserves being liquid hydrocarbons and 95 percent of our reserves located in areas with tax/royalty fiscal regimes.

As I mentioned earlier we continue to be successful in increasing our reserve base which in 2009 was primarily driven by the addition of the Luno field offshore Norway. I am confident that our reserves will continue to increase in future years with positive results coming from our recent Luno appraisal well in addition to our major contingent resource portfolio.

Production/Development
The strong production performance from the Alvheim field, offshore Norway contributed to our 20 percent increase in production in 2009. In 2010 with the Volund field, offshore Norway, likely to come onstream mid-year and the redevelopment of the UK Thistle field, we are forecasting a production range of 38,000-44,000 boepd but exiting the year at close to 50,000 boepd. We are progressing our development studies on the Luno field with the objective to submit a plan of development in 2011. The Luno field is a world class project which we operate with a major equity position which when onstream will result in a further step change to our production levels.

Exploration
Our exploration drilling programme in 2009 delivered mixed results with a number of new discoveries particularly in Norway but also some disappointments. Our core strategy is to focus on exploration in certain targeted areas where with a mixture of access to latest 3D seismic imaging technology, an experienced regional technical workforce and a corporate philosophy to allocate risk capital we can grow our business. This will continue in 2010 with a USD 290 million exploration budget targeting unrisked reserves potential of 330 million barrels. Our major focus will be Norway where we will be targeting the Greater Luno Area with four exploration wells particularly utilising our knowledge from the Luno and Luno South discoveries.

The world's economies are slowly beginning to grow following a sustained period of recession after the impact of the world financial crisis. This crisis has had a material impact upon the finances of many of the developed western economies. There still remains a level of uncertainty as to the long term effects of this and how that may impact growth when fiscal stimuli are removed. What is clear however is that the emerging market economies particularly China power forward and will represent the future demand growth engine for energy particularly hydrocarbons. Whilst short term oil prices are difficult to predict I remain confident that longer term oil prices can only go upwards as the impacts of increased demand coupled with limited supply feed into the system.

At Lundin Petroleum we have an exciting period of growth ahead of us where increased reserves will drive future production growth, cash flow and profitability. We continue to be exposed to exploration activity which if successful will have a material impact on our company. And we continue to maintain a financial structure which will allow us to grow in a way to ensure maximum value creation for our shareholders.

I would like to thank you our shareholders for your continued support and patience, my fellow directors for their support and guidance and to all Lundin Petroleum employees for all their contributions during the year.
Best Regards,

C Ashley Heppenstall
President & CEO