Lundin Petroleum : Report for the three months ended 31 March 2019 (regulatory)

Q1

Report for the

THREE MONTHS

ended 31 March 2019

Lundin Petroleum AB (publ)

company registration number 556610-8055

Highlights

•Strong production performance of 78.8 Mboepd, at the upper end of the guidance range for the quarter

•Robust EBITDA and free cash flow generation

•Operating cost below forecast at USD 4.51 per barrel for the quarter and full year guidance remains at USD 4.25 per barrel

•Offshore installation of Johan Sverdrup Phase 1 completed, project firmly on schedule for expected first oil in November 2019

•New projects - Solveig Phase 1, Rolvsnes Extended Well Test and Frosk test production sanctioned and Edvard Grieg infill drilling committed

•2019 exploration programme expanded to 17 wells from 15

•Dividend of USD 500 million for the financial year 2018 approved by the 2019 AGM

Financial summary

	1 Jan 2019-	1 Jan 2018-	1 Jan 2018-
	31 Mar 2019	31 Mar 2018	31 Dec 2018
	3 months	3 months	12 months
Production in Mboepd	78.8	83.1	81.1
Revenue and other income in MUSD	491.6	692.9	2,617.4
Operating cash flow in MUSD	385.0	461.8	1,847.8
EBITDA in MUSD	406.0	456.5	1,916.2
Free cash flow in MUSD	95.8	171.8	663.0
Net result in MUSD	54.9	228.8	222.1
Earnings/share in USD	0.16	0.68	0.66
Net debt	3,303.7	3,724.4	3,398.2

Comment from Alex Schneiter, President and CEO of Lundin Petroleum:

"I am pleased to announce another strong quarterly performance across the business. Our Edvard Grieg and Alvheim fields have yet again delivered excellent production efficiency, along with a strong HSE track record, which has driven our production for the quarter to the upper end of expectations, whilst also maintaining our industry leading low operating costs. Also, the trend of industry leading low carbon operations continued at the Edvard Grieg field, coming in at a quarter of the world average.

"At Johan Sverdrup, a significant milestone has been reached with the offshore installation of all the topsides and bridges completed at the end of March, meaning commissioning and hook up has begun in earnest, alongside the tie-back of the eight pre-drilled production wells. With the majority of commissioning for these facilities having taken place onshore and the ability to perform single lift installation using the Pioneering Spirit vessel, I am confident in the expected November 2019 start-up of this world class asset.

"At our Capital Markets Day in January, I outlined the seven potential projects which we have in the pipeline and I am pleased to say that four of these are now underway. With the sanction of the Solveig Phase 1 development and Rolvsnes well test, as well as the commitment to the infill well programme on Edvard Grieg; the production plateau profile at the Greater Edvard Grieg Area will be extended further and this is a clear example of how an organic growth strategy can sustainably deliver significant value creation.

"During the quarter we also added a further two wells to the 2019 exploration programme, bringing the total to 17 wells, our busiest ever. The year has started well in this respect with success at the Froskelår Main well near Alvheim and the remaining programme is targeting net unrisked resources of over 400 MMboe, which ensures a significant, continuous exploration programme throughout the year.

"We have had a strong start to the year and with the completion of the installation of the Johan Sverdrup topsides, the continuing, high impact exploration programme, strong production with industry leading low operating costs and excellent HSE track record; I remain confident in Lundin Petroleum's ability to continue to realise financial and organic growth."

Lundin Petroleum is one of Europe's leading independent oil and gas exploration and production companies with operations

focused on Norway and listed on NASDAQ Stockholm (ticker "LUPE"). Read more about Lundin Petroleum's business and operations

at www.lundin-petroleum.com

For definitions and abbreviations, see pages 29 and 30.

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OPERATIONAL REVIEW

All the reported numbers and updates in the operational review relate to the three month period ending 31 March 2019 (reporting period) unless otherwise specified.

Norway

Production

Production was 78.8 thousand barrels of oil equivalent per day (Mboepd) which was 3 percent above mid-point of the production guidance for the quarter and towards the upper end of the guidance range. This result is due to facilities and reservoir performance at the Edvard Grieg field. Production guidance for the full year remains between 75 and 95 Mboepd, reflecting a range around the expected start-up of the Johan Sverdrup field in November 2019.

Operating cost, including netting off tariff income, was USD 4.51 per barrel, which is 5 percent below guidance for the quarter. Full year operating cost guidance remains USD 4.25 per barrel.

			1 Jan 2019-	1 Jan 2018-	1 Jan 2018-
Production			31 Mar 2019	31 Mar 2018	31 Dec 2018
in Mboepd			3 months	3 months	12 months
Norway
Crude oil			70.1	73.6	71.9
Gas			8.7	9.5	9.2
Total production			78.8	83.1	81.1
			1 Jan 2019-	1 Jan 2018-	1 Jan 2018-
Production	WI1	31 Mar 2019	31 Mar 2018	31 Dec 2018
in Mboepd	3 months	3 months	12 months
Edvard Grieg	65%		63.3	63.9	63.6
Ivar Aasen	1.385%		0.9	0.9	0.9
Alvheim	15%		10.0	8.9	9.3
Volund	35%		4.2	8.2	6.5
Bøyla	15%		0.4	1.0	0.7
Brynhild	51%		-	0.1	-
Gaupe	40%		-	0.1	0.1
			78.8	83.1	81.1

1Lundin Petroleum's working interest (WI).

Production from the Edvard Grieg field was above forecast, supported by strong production efficiency ahead of guidance at 99 percent. Reservoir performance continues to exceed expectations; with limited water production and total well potential significantly higher than available facilities capacity. An infill drilling programme is planned at the Edvard Grieg field commencing in 2020, which is targeting 16 MMboe of gross contingent resources based on a three well programme. The Rowan Viking jack-up rig, used to drill all the existing development wells at the Edvard Grieg field, has been contracted for the infill programme on the basis of three firm well slots plus a number of optional slots. Operating cost for the Edvard Grieg field, including netting off tariff income, was USD 4.41 per barrel.

Production from the Ivar Aasen field was in line with forecast. During April 2019, the drilling of two infill production wells commenced and are expected to come on stream in the third quarter of 2019.

Production from the Alvheim area, consisting of the Alvheim, Volund and the Bøyla fields, was in line with forecast. Production efficiency for the Alvheim FPSO was ahead of expectations at 97 percent. During April 2019, the drilling of a sidetrack infill production well was completed at the Volund field and is expected to come on stream in the second quarter 2019. The Frosk test production well is currently drilling and is expected to come on stream in the third quarter of 2019. The Frosk well will be produced through the Bøyla facilities and is planned as a two branch producer also including two pilot holes, one of which is targeting the Froskelår North East prospect. Operating cost for the Alvheim area was USD 5.79 per barrel.

Development
			Estimated gross	Production start	Expected gross plateau
Field	WI	Operator	reserves	expected	production
Johan Sverdrup	22.6%	Equinor	2.2 - 3.2 Bn boe	November 2019	660 Mbopd
Solveig Phase 1	65%	Lundin Norway	57 MMboe	Q1 2021	30 Mboepd
Rolvsnes EWT	50%1	Lundin Norway	-	Q2 2021	3 Mboepd

1Lundin's working interest will increase to 80% on completion of the Lime Petroleum transaction

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Johan Sverdrup

Phase 1 of the Johan Sverdrup project continues to progress according to schedule and is now over 85 percent complete. A major milestone was achieved in March 2019 with the successful installation of the processing platform topsides and the living quarters topsides using the Pioneering Spirit installation vessel. Two connecting bridges were also successfully installed. This operation concludes the main installation activities for Phase 1 of the project, which consists of four jackets and topsides, three subsea water injection templates, oil and gas export pipelines and power supply from shore. Hook-up and commissioning of the field centre will now take place, alongside the tie-back of the eight pre-drilled production wells. Two accommodation units are located offshore, which together with the newly installed living quarters will at peak allow for approximately 1,000 personnel working on the hook-up and commissioning of the facilities. With the successful installation of the remaining facilities, the project is firmly on track to achieve expected first oil in November 2019. The gross production capacity of Phase 1 is estimated at 440 Mbopd, with ramp-up to plateau production levels expected to take until summer 2020.

The capital expenditure estimate for Phase 1 as at August 2018 is gross NOK 86 billion (nominal) compared to the Phase 1 PDO estimate in 2015 of gross NOK 123 billion (nominal), representing a saving of over 30 percent, excluding additional foreign exchange rate savings in US dollar terms.

The Phase 2 PDO was submitted to the Norwegian Ministry of Petroleum and Energy in August 2018 and is expected to be approved during the second quarter of 2019. Phase 2 involves a second processing platform bridge linked to the Phase 1 field centre, subsea facilities to allow for tie-in of additional wells to access the Avaldsnes, Kvitsøy and Geitungen satellite areas of the field and implementation of full field water alternating gas injection (WAG) for enhanced recovery. 28 new wells are planned to be drilled in connection with the Phase 2 development. Phase 2 first oil is scheduled in the fourth quarter 2022 and will take the gross plateau production capacity to 660 Mbopd. Full field breakeven oil price is estimated at below 20 USD per barrel.

The Phase 2 capital expenditure is estimated at gross NOK 41 billion (nominal), which is unchanged from the Phase 2 PDO estimate and over a 50 percent saving from the original estimate in the Phase 1 PDO. Phase 2 of the project is progressing to plan and the major topsides contracts and the jacket contract for the Phase 2 facilities, as well as the contract for the Subsea Production System, have been awarded. Detailed engineering is progressing on schedule and construction of the second processing platform has started with first steel cut at Aibel's construction yard in Thailand in March 2019.

Greater Edvard Grieg Area Tie-Back Projects

The PDO for the Solveig Phase 1 project was submitted to the Norwegian Ministry of Petroleum and Energy in March 2019 and is anticipated to be approved during the second quarter of 2019. Solveig is the first Edvard Grieg subsea tie-back development and will contribute to keeping the Edvard Grieg platform filled to capacity for an extended time period. Phase 1 will be developed with three oil production wells and two water injection wells and will achieve gross peak production of 30 Mboepd, with first oil scheduled in the first quarter 2021.

Solveig Phase 1 gross proved plus probable reserves are estimated at 57 MMboe. The capital cost of the development is estimated at MUSD 810 gross with a breakeven oil price of below 30 USD per barrel. The potential for further phases of development, which will capture the upside potential in the discovered resources, will be derisked by production performance from Phase 1.

The Solveig Phase 1 project is progressing to plan. All of the key contracts have been awarded and modifications at the Edvard Grieg platform will commence during the second quarter 2019.

The production application for the Rolvsnes Extended Well Test (EWT) was submitted in April 2019. The Rolvsnes EWT project will be conducted through a 3 km subsea tie-back of the existing Rolvsnes horizontal well to the Edvard Grieg platform. The project is being implemented together with the Solveig project to take advantage of contracting and implementation synergies, with first oil scheduled in the second quarter 2021. The on-trend Goddo prospect is planned to be drilled in the second quarter 2019, with the combined Rolvsnes and Goddo prospective area estimated to contain gross potential resources of more than 250 MMboe.

Appraisal
2019 appraisal well programme
Licence	Operator	WI	Well	Spud Date	Status
PL167	Equinor	20%	Lille Prinsen	Second Quarter 2019

The appraisal well that was planned on Alta/Gohta in 2019 has been deferred to 2020 to allow additional time to complete the technical work required to assess the forward appraisal strategy. Lundin has a flexible contract for the Leiv Eiriksson drilling rig with sufficient optional slots to meet the Company's operated 2019 drilling programme. The deferral of the Alta/Gohta appraisal well has allowed the Leiv Eiriksson rig to be utilised by ConocoPhillips to accelerate into 2019 the drilling of two exploration wells in PL917 in which Lundin Petroleum has an interest.

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Exploration
2019 exploration well programme
Licence	Operator	WI	Well	Spud Date	Result
PL857	Equinor	20%	Gjøkåsen Shallow	December 2018	Dry
PL767	Lundin Norway	50%	Pointer/Setter	January 2019	Dry
PL869	AkerBP	20%	Froskelår Main	January 2019	Oil & Gas Discovery
PL857	Equinor	20%	Gjøkåsen Deep	February 2019	Dry
PL338	Lundin Norway	65%	Jorvik/Tellus East	March 2019	Ongoing
PL869	AkerBP	20%	Froskelår North East	March 2019	Ongoing
PL539	MOL	20%	Vinstra/Otta	April 2019	Ongoing
PL916	AkerBP	20%	JK	April 2019	Ongoing
PL859	Equinor	15%	Korpfjell Deep	Second Quarter 2019
PL8151	Lundin Norway	40%	Goddo	Second Quarter 2019
PL758	Capricorn	20%	Lynghaug	Second Quarter 2019
PL869	AkerBP	20%	Rumpetroll	Third Quarter 2019
PL820S	MOL	30%	Evra/Iving	Third Quarter 2019
PL896	DEA	20%	Toutatis	Third Quarter 2019
PL921	Equinor	15%	Gladsheim	Fourth Quarter 2019
PL917	ConocoPhillips	20%	Enniberg	Fourth Quarter 2019
PL917	ConocoPhillips	20%	Hasselbaink	Fourth Quarter 2019

1Lundin's working interest will increase to 60% on closing of the Lime Petroleum transaction

Due to changing priorities, the 2019 exploration drilling programme has been increased to 17 wells, of which four have been completed yielding one oil discovery. The remaining programme is targeting net unrisked resources of over 400 MMboe. The appraisal and exploration spend guidance for 2019 is being maintained at MUSD 300.

In February 2019, the Gjøkåsen Shallow prospect in PL857 in the southeastern Barents Sea was drilled and was dry.

In February 2019, the Pointer/Setter dual target prospect in PL767 located in the southern Barents Sea was drilled and was dry.

In March 2019, the Froskelår Main prospect in PL869 in the Alvheim area proved an oil and gas discovery. The discovery is estimated to contain gross resources of between 60 and 130 MMboe with part of the discovery potentially extending into the UK. Froskelår Main will be evaluated as part of a potential joint development with the Frosk discovery.

In March 2019, drilling commenced on a dual branch well targeting the Jorvik and Tellus East prospects on the eastern side of the Edvard Grieg field in PL338. The well is targeting extensions of the same reservoirs found at Edvard Grieg; conglomerates/pebbly sandstones in the Jorvik prospect and weathered and fractured basement potentially draped by sandstones in the Tellus East prospect. The two prospects combined are estimated to contain gross unrisked prospective resources of 23 MMboe and if successful can be developed with wells drilled from the Edvard Grieg platform.

In April 2019, the Gjøkåsen Deep prospect in PL857 in the southeastern Barents Sea was drilled and was dry.

In April 2019, drilling commenced on the dual target Vinstra/Otta prospect in PL539 located in the Mandal High area of the North Sea. Vinstra is targeting Permian Rotliegendes sandstones and Otta is a Jurassic sandstone target, with combined gross unrisked prospective resources of 555 MMboe.

In April 2019, drilling commenced on the JK prospect in PL916 located in the north of the Utsira High area of the North Sea. The main target of the well is Jurassic Statfjord sandstones with gross unrisked prospective resources of 243 MMboe.

Decommissioning

Preparation of the decommissioning plan for the Brynhild field is ongoing with operations anticipated to be conducted during 2020/2021. The Rowan Viking jack-up drilling rig has been secured to plug and abandon the four Brynhild development wells.

The Gaupe field ceased production during the fourth quarter of 2018 and preparation of the decommissioning plan for the field is also ongoing.

Licence awards and transactions

In January 2019, Lundin Petroleum was awarded 15 licences in the 2018 APA licensing round, of which nine are as operator.

In January 2019, Lundin Petroleum entered into a sales and purchase agreement involving the acquisition of Lime Petroleum's 30 percent working interest in each of PL338C and PL338E and 20 percent working interest in PL815, which contain the Rolvsnes oil discovery and Goddo prospect. The transaction will increase the Company's working interest in each of PL338C and PL338E to 80 percent and in PL815 to 60 percent. The transaction involves a cash consideration payable to Lime Petroleum and is subject to customary government approvals. The transaction is expected to complete in mid 2019, with economic effect from 1 January 2019.

Lundin Petroleum has applied for a possible extension area of the Mandal High prospectivity into Denmark in the 8th Danish licensing round where confirmation of awards are expected during the second quarter of 2019.

Currently the Company holds 80 licences in Norway, which is an increase of approximately 65 percent from the beginning of 2018.

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