Report for the nine months ended 30 September 2021 (regulatory)

Q3

Report for the

NINE MONTHS

ended 30 September 2021

Lundin Energy AB (publ)

company registration number 556610-8055

Highlights

• Quarterly revenue of USD 1.5 billion with a realised oil price of USD 72 per barrel for the third quarter

• Record free cash flow generation of USD 1.6 billion for the first nine months, operating costs below guidance at USD 2.9 per boe and net debt reduced to USD 2.6 billion

• Board of Directors anticipates to propose to the Annual General Meeting 2022, a 2021 dividend of USD 2.25 per share, corresponding to MUSD 640, an increase of 25 percent from 2020 dividend
• Record production of 194 Mboepd for third quarter and full year production anticipated towards the upper end of the guidance range of 180 to 195 Mboepd

• Key projects on track and first oil achieved at the Rolvsnes and Solveig projects, on schedule and below budget

• Strategic acquisition of 25 percent working interest from OMV in the high quality Wisting oil development, taking the Company's interest to 35 percent and adding 130 MMboe fully appraised net contingent resources for USD 2.5 per boe
• Further acceleration of decarbonisation plans to achieve carbon neutrality by 2023 from operational emissions

Financial summary

	1 Jan 2021-	1 Jul 2021-	1 Jan 2020-	1 Jul 2020-	1 Jan 2020-
	30 Sep 2021	30 Sep 2021	30 Sep 2020	30 Sep 2020	31 Dec 2020
	9 months	3 months	9 months	3 months	12 months
Production in Mboepd	188.8	193.6	157.6	157.5	164.5
Revenue and other income in MUSD	3,862.9	1,478.2	1,784.7	687.0	2,564.4
CFFO in MUSD	2,499.9	1,012.0	1,251.3	353.2	1,528.0
Per share in USD	8.79	3.56	4.40	1.24	5.38
EBITDAX in MUSD	3,360.6	1,282.6	1,431.8	515.6	2,140.2
Per share in USD	11.82	4.51	5.04	1.81	7.53
Free cash flow in MUSD	1,622.9	673.8	545.7	164.2	448.2
Per share in USD	5.71	2.37	1.92	0.58	1.58
Net result in MUSD	372.1	137.5	80.5	212.3	384.2
Per share in USD	1.31	0.48	0.28	0.74	1.35
Adjusted net result in MUSD	542.4	234.0	193.1	75.8	280.0
Per share in USD	1.91	0.83	0.68	0.27	0.99
Net debt in MUSD	2,646.9	2,646.9	3,706.8	3,706.8	3,911.5

Comment from Nick Walker, President and CEO of Lundin Energy:

"I'm pleased to report another set of record production and financial results in the third quarter, underpinned by continued strong operational performance and further strengthening of oil and gas prices. Whilst certain challenges of the COVID-19 crisis remain, we've normalised the management of these and continue to deliver on our key business priorities.

"Our world class producing assets keep on outperforming, with excellent production efficiency and industry leading low operating costs, delivering record production in the third quarter. Full year production is anticipated to be towards the upper end of our guidance range.

"Johan Sverdrup continues to consistently perform at a high level and Phase 2 of the project, which will boost gross production to 755 Mbopd, is making great progress and remains firmly on track for first oil in the fourth quarter of 2022.

"At the Greater Edvard Grieg Area we're delivering on our projects that support the long term plateau extension, with excellent results from the completed Edvard Grieg infill well programme, and first oil achieved at the Rolvsnes and Solveig projects; all these projects delivered on schedule and below budget. We are set to see reserves increases at year end due to the continued strong Edvard Grieg performance and the excellent drilling results at Solveig. There's lots more upside in the area and we're working hard to bring forward a number of new projects.

"I'm pleased to announce the purchase of a further 25 percent interest in the Wisting oil development, which adds resources of almost two times our 2021 production volumes. The deal takes the Company's interest to 35 percent in this high quality, 500 MMbo development, which has strong economics and will be powered from shore. This strategic deal, done at a purchase price of USD 2.5 per boe, is very value accretive and fits with our ambition to sustain the business long term with low carbon emission barrels.

"We delivered free cash flow of USD 1.6 billion for the first nine months, enabling net debt to be reduced to USD 2.6 billion. Due to the strong financial outlook for the business, I'm pleased to note that the Board of Directors anticipates to propose to the AGM 2022, a 25 percent increased dividend for 2021 of USD 2.25 per share (in total MUSD 640), clearly demonstrating our commitment to grow shareholder returns.

"We continue to be firmly positioned as an industry leader on carbon emissions and during the third quarter we further accelerated our decarbonisation plans to become carbon neutral by 2023 from operational emissions. With around 60 percent of our production today produced as carbon neutral and with a clear deliverable pathway to carbon neutrality, I see this as a key value differentiator for Lundin Energy.

"The Company has again delivered excellent results, all our key business priorities are on track and we've made a strategic value accretive acquisition, which together positions us to keep delivering resilient sustainable growth."

Lundin Energy is an experienced Nordic oil and gas company that explores for, develops and produces resources economically, efficiently and responsibly. We focus on value creation for our shareholders and wider stakeholders through three strategic pillars: Resilience, Sustainability and Growth. Our high quality, low cost assets mean we are resilient to oil price volatility, and our organic growth strategy, combined with our sustainable approach and commitment to decarbonisation, firmly establishes our leadership role in a lower carbon energy future. (Nasdaq Stockholm: LUNE). For more information, please visit us at www.lundin-energy.com or download our App www.myirapp.com/lundin

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OPERATIONAL REVIEW

All the reported numbers and updates in the operational review relate to the nine month period ending 30 September 2021 (reporting period) unless otherwise specified.

Ongoing COVID-19 Crisis

Lundin Energy has maintained a proactive approach in safeguarding the wellbeing of the Company's employees and contractors and ensuring the virus has minimal impact on its operations. To date there have been no disruptions to production due to the COVID-19 situation and while certain project activities have been affected, the disruptions have been successfully managed to avoid any negative impact on the production outlook.

Production Guidance

Production guidance for the full year 2021 is 180 to 195 thousand barrels of oil equivalent per day (Mboepd), which was increased in June 2021, from the original guidance of 170 to 190 Mboepd.

2021 guidance	Previous	Current
Production	180 to 195 Mboepd	180 to 195 Mboepd
Operating Cost	USD 3.00 per boe	USD 3.00 per boe
Development expenditure	MUSD 850	MUSD 770
Exploration and Appraisal expenditure	MUSD 260	MUSD 3251
Decommissioning expenditure	MUSD 20	MUSD 15
Renewables Investments	MUSD 100	MUSD 100

1 Including the additional 25 percent working interest in Wisting, effective from 1 January 2021.

Production

Production in the third quarter of 2021 was 194 Mboepd, a record quarterly production rate for the Company and ahead of the revised guidance, due to continued high production efficiency across all assets and additional facilities capacity available at Edvard Grieg due to the Ivar Aasen field not utilizing its contractual capacity.

Operating costs, net of tariff income, were USD 2.90 per boe, which was below guidance for the reporting period. Full year operating cost guidance remains USD 3.00 per boe.

		1 Jan 2021-	1 Jul 2021-	1 Jan 2020-	1 Jul 2020-	1 Jan 2020-
Production		30 Sep 2021	30 Sep 2021	30 Sep 2020	30 Sep 2020	31 Dec 2020
in Mboepd		9 months	3 months	9 months	3 months	12 months
Crude oil		176.3	179.6	146.3	147.0	152.7
Gas		12.5	14.0	11.3	10.5	11.8
Total production		188.8	193.6	157.6	157.5	164.5
		1 Jan 2021-	1 Jul 2021-	1 Jan 2020-	1 Jul 2020-	1 Jan 2020-
Production	WI1	30 Sep 2021	30 Sep 2021	30 Sep 2020	30 Sep 2020	31 Dec 2020
in Mboepd		9 months	3 months	9 months	3 months	12 months
Johan Sverdrup	20%	106.1	107.0	83.3	89.8	87.6
Greater Edvard Grieg Area2	65% - 80%	71.3	75.7	60.7	56.1	63.6
Ivar Aasen	1.385%	0.7	0.6	0.8	0.7	0.8
Alvheim Area	15% - 35%	10.7	10.3	12.8	11.0	12.5
		188.8	193.6	157.6	157.5	164.5

1. Lundin Energy's working interest (WI)
2. Consisting - Edvard Grieg, Solveig and Rolvsnes EWT

Production from Johan Sverdrup Phase 1 was slightly above the updated production guidance with a production efficiency of 98 percent. In May 2021, the Phase 1 processing capacity was increased from 500 thousand barrels of oil per day (Mbopd) gross to 535 Mbopd, following upgrade of the water injection system, which were required to support the higher offtake rates. This represents a gross increase of 95 Mbopd since first oil in late 2019. Reservoir performance continues to be strong with high well productivities and excellent communication across the field. One production well was completed in the reporting period, with results in line with expectations and the field is currently producing from 14 wells. Johan Sverdrup is being operated with power supplied from shore and is one of the lowest CO2 emitting offshore fields in the world, with CO2 emissions of less than 0.1 kg per boe for the reporting period. Operating costs were USD 1.66 per boe.

Production from the Edvard Grieg field was slightly above the updated production guidance, with a production efficiency of 98 percent. The infill drilling programme at Edvard Grieg commenced in January 2021, using the Rowan Viking jack-up rig, and has progressed according to plan. The first infill well came on stream in June 2021, equipped with the innovative 'Fishbones' completion which has contributed to well productivity around 10 times greater than the original prognosis. The second and third infill wells have now been completed, with results in line with expectations, with production start-up from both wells expected in fourth quarter 2021. Reservoir performance from Edvard Grieg throughout 2021 has been above expectation and the Company expects to increase reserves at year end. Operating costs, net of tariff income, were USD 3.87 per boe.

Power from shore at Edvard Grieg is expected to be online in late 2022, with the project progressing on schedule. The power cable has been installed on Edvard Grieg and laid on the seabed at Johan Sverdrup, awaiting arrival of the Phase 2 processing platform in 2022. The retirement of the existing gas turbine power generation system on the platform and installation of electric boilers to provide process heat, is on schedule and is expected to be operational in late 2022. It is also estimated that the Company will benefit from approximately a 10 percent increase in gas sales from Edvard Grieg compared to the reporting period, due to the removal of the power generation turbines.

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Production from the Ivar Aasen field was in line with the updated forecast. The field water production rate continues to increase, which has resulted in accelerated oil production decline. Three infill wells were completed in the reporting period, with results below expectations.

Production from the Alvheim Area was slightly above guidance with a production efficiency of 95 percent. The first of two planned infill wells for the second half of 2021, have been completed with results in line with expectations. First oil from the well is expected in November 2021. Operating costs were USD 7.41 per boe.

Development

The development expenditure guidance for 2021 has been reduced to MUSD 770, from the original guidance of MUSD 850. The reduction is due to better than expected drilling performance at Edvard Grieg and Solveig, as well as re-phasing of Johan Sverdrup costs into 2022.

Project	WI	Operator	Estimated gross	Production	Expected gross plateau
reserves	start	production
Johan Sverdrup Phase 2	20%	Equinor	2.2 - 3.2 Bn boe1	Q4 2022	755 Mbopd1
Solveig Phase 1	65%	Lundin Energy	57 MMboe	Sept 2021	30 Mboepd
Rolvsnes EWT2	80%	Lundin Energy	-	Aug 2021	3 Mboepd
Kobra East/Gekko (KEG)	15%	AkerBP	39 MMboe	Q1 2024	28 Mboepd
Frosk	15%	AkerBP	9 MMboe	Q2 2023	13 Mboepd
Wisting	35%3	Equinor	500 MMboe	Q2 2028	150 Mboepd

1. Johan Sverdrup full field
2. Extended Well Test
3. Increase to 35 percent is subject to Norwegian regulatory approvals and is expected to complete in the fourth quarter 2021

Johan Sverdrup Phase 2

The Johan Sverdrup Phase 2 development project involves a second processing platform bridge linked to the Phase 1 field centre, subsea facilities to access the Avaldsnes, Kvitsøy and Geitungen satellite areas of the field, implementation of full field water alternating gas injection (WAG) for enhanced recovery and the drilling of 28 additional wells. The Johan Sverdrup gross field reserves are in the range of

2.2 to 3.2 billion boe and the ambition of the partners in the field, is to achieve a recovery factor of more than 70 percent. In June 2021, the Company announced that the full field gross processing capacity will be increased to 755 Mbopd once Phase 2 comes on stream. The increase is a result of debottlenecking work on the Phase 2 topsides and studies to optimise the full field integrated processing and export capacity. The full field breakeven oil price for Johan Sverdrup, including past investments, is less than USD 15 per boe.

The Phase 2 capital expenditure is estimated at gross NOK 41 billion (nominal), which is unchanged from the Phase 2 PDO estimate in 2019. The three modules that constitute the second processing platform topsides were successfully assembled in May 2021, the jacket for the second processing platform was successfully installed offshore in June 2021 and the new module on the existing riser platform was successfully installed offshore in July 2021. The operation to install the second processing platform topsides on the jacket is planned for the spring of 2022. The subsea facilities and flowlines installation work is progressing as per schedule and will be completed during 2021, allowing for drilling operations on the subsea wells to commence early 2022. The disruptions to project activities due to COVID-19 have been effectively managed and first oil remains on schedule for the fourth quarter of 2022, with progress now approximately 65 percent complete.

Greater Edvard Grieg Area Tie-Back Projects

Solveig Phase 1 came on stream in September 2021 on schedule and is the first Edvard Grieg subsea tie-back development, significantly contributing to keeping the Edvard Grieg platform on plateau production until the end of 2023. Initial production performance is in line with expectations. Phase 1 gross proved plus probable (2P) reserves are estimated at 57 MMboe and are being developed with three oil production wells and two water injection wells, achieving gross peak production of 30 Mboepd. The PDO for Solveig Phase 1 was approved in June 2019. The capital cost for the development is below the PDO estimate of MUSD 810 gross, with a breakeven oil price below 20 USD per boe. Development drilling of the two first production wells have been completed with results above expectations, indicating an increase in reserves at year end 2021, and completion of the drilling programme is expected in the second quarter 2022.

The Rolvsnes EWT project, which was approved by the authorities in July 2019, has been developed through a 3km subsea tie-back of the existing Rolvsnes horizontal well to the Edvard Grieg platform. The EWT will provide important reservoir data to support a decision on the potential Rolvsnes full field development. The project has been developed in conjunction with the Solveig project, to take advantage of contracting and implementation synergies. The project achieved first oil, on schedule and below budget, in August 2021 with performance in line with expectations.

Kobra East/Gekko (KEG)

In June 2021, the PDO for the joint development of the two discoveries Kobra East and Gekko was submitted to the Norwegian Ministry of Petroleum and Energy. The development will be conducted as a subsea tie-back to the Alvheim FPSO and phase one of the development will include four tri-lateral production wells targeting the oil zones of the two discoveries. Phase two of the development consists of a gas production well targeting the gas cap at Gekko, which will be drilled at a later stage once gas processing capacity is available on the Alvheim FPSO. Drilling operations are expected to commence in early 2023, with first oil planned in the first quarter of 2024. Total gross 2P reserves for the project amount to 39 MMboe and the development will provide gross peak production of approximately 28 Mboepd. This project will be developed under the Norwegian temporary tax regime and has a breakeven oil price of less than USD 30 per boe.

Frosk

In September 2021, the PDO for the development of the Frosk discovery was submitted to the Norwegian Ministry of Petroleum and Energy. The development will be conducted as a subsea tie-back to the Alvheim FPSO through the existing Bøyla manifold. The development includes the drilling of two new wells. Drilling operations are expected to commence in 2022, with first oil planned in the first half of 2023. Total gross reserves for the project amount to approximately 9 MMboe and the development will provide gross peak production of approximately 13 Mboepd, with a breakeven oil price of less than USD 25 per boe.

Wisting

The Wisting project is scheduled to be one of the next Barents Sea production hubs and will be a significant contributor to sustaining the Company's long term production profile. With the acquisition of a further 25 percent working interest announced on 28 October 2021, the Company's working interest in the project will rise to 35 percent and will add material pre-development resources in a strategic core area for the Company, with significant surrounding prospectivity. Production is expected to start up in 2028 and Equinor, the operator of Wisting in the development phase, is targeting a PDO by end 2022 in order that the project will benefit from the temporary tax incentives established

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by the Norwegian Government in June 2020. The concept select milestone is expected to be taken in Q4 2021 with contract awards for the engineering phase placed shortly thereafter. With strong economics, the development is also aligned with Lundin Energy's decarbonisation strategy, with a power from shore solution being matured as part of the PDO.

Exploration and Appraisal

The 2021 exploration and appraisal programme consists of eight wells, seven of which have been drilled, yielding oil discoveries at Segment D and Lille Prinsen. One well remains in the 2021 exploration and appraisal programme (Lyderhorn) which is expected to commence drilling in the fourth quarter 2021. The exploration and appraisal expenditure guidance for 2021 has been increased to MUSD 325 from the original guidance of MUSD 260, due to increased scope at the Segment D, Iving, Lille Prinsen wells and the additional 25 percent working interest in Wisting, effective from 1 January 2021.

2021 Exploration and Appraisal Well Programme

Licence	Operator	WI	Well	Spud Date	Status
PL359	Lundin Energy	40%	Segment D	February 2021	Oil discovery
PL722	Equinor	20%	Shenzhou	April 2021	Dry
PL820S	MOL	41%	Iving (2 wells)	May 2021	Completed - evaluation ongoing
PL167	Equinor/Lundin Energy	40%	Lille Prinsen	July 2021	Oil discovery
PL981	Lundin Energy	60%	Merckx	September 2021	Dry
PL976	Lundin Energy	40%	Dovregubben	October 2021	Dry
PL1041	AkerBP	15%	Lyderhorn	Fourth Quarter 2021

In March 2021, the Segment D prospect, located north of the Solveig field on the Utsira High in the Norwegian North Sea in PL359, was drilled yielding an oil discovery. A 10 metre oil column was encountered in Triassic reservoir sandstones and the discovery is estimated to hold gross recoverable resources of 3 to 9 MMboe. A development will be evaluated in parallel with a potential future phase development at Solveig.

In July 2021, a two-well appraisal drilling campaign was completed on the Iving discovery located in the Central North Sea close to the Balder and Ringhorne fields. The results were below expectation and the feasibility of a commercial discovery is currently undergoing evaluation.

In September 2021, the exploration and appraisal programme was successfully completed on Lille Prinsen on the Utsira High in the Norwegian North Sea in PL167. The wells confirmed a combined gross resource range of 12 to 60 MMboe. A development solution is currently being matured, aiming for project sanction in 2022.

In 2020, the Norwegian Government introduced temporary tax incentives aiming to increase activity on the Norwegian Continental Shelf, which applies to projects with PDO's submitted before the end of 2022. These tax incentives significantly improve project economics and the Company has taken steps to accelerate activities for the potential projects, which could benefit from this opportunity. Further projects to be de-risked include Solveig Phase 2 (incorporating the Segment D discovery) and Rolvsnes Full Field, both of which require production experience to mature development solutions. At both Lille Prinsen and Trell and Trine, the field development and concept select studies are progressing well with possible project sanction before the end of 2022.

Decarbonisation

Decarbonisation is a key strategic pillar for Lundin Energy and a significant differentiator for the business. The decarbonisation plan is composed of four pillars - reducing operational emissions, powering key assets from shore, investing in renewable power to replace net electricity usage and investments in nature-based carbon capture projects to neutralise residual emissions. A critical step towards carbon neutrality will be the electrification of the Edvard Grieg platform, which will be executed in parallel with the Johan Sverdrup Phase 2 development and will be operational in late 2022. Carbon emissions were 2.9 kg of CO2 per boe in the reporting period, which is well within the Company's 2021 target of less than 4 kg of CO2 per boe. On completion of the electrification of Edvard Grieg, the Company's average net carbon intensity is expected to be approximately 1 kg CO2 per boe, over fifteen times lower than the industry average. In light of this, in September 2021, the decision was taken to accelerate decarbonisation by two years to achieve carbon neutrality for operational emissions from 2023.

In April 2021, the Company completed a transaction with OX2 AB (OX2) to acquire a 100 percent interest in the Karskruv onshore wind farm project in southern Sweden. The wind farm will become operational in late 2023 and will produce an estimated 290 GWh per annum, from 20 onshore wind turbines. The total investment in Karskruv, including the acquisition cost, will amount to MEUR 130 with the majority of the spend occurring in 2022 and 2023 and the project will be cash flow positive from 2024. Construction and commissioning of the second phase of the Leikanger hydropower project in Norway was completed in March 2021, and is now operational at full capacity. Power is being generated from the first turbine at the Metsälamminkangas (MLK) wind farm in Finland and construction and commissioning works on the remaining turbines are progressing well with commercial handover to the Company planned for late Q4 2021. The Company has now committed to three renewable projects, with a combined net power generation capacity of around 600 GWh per annum from late 2023, which will cover all of the Company's expected net electricity usage for the offshore producing assets, including the increased working interest in the Wisting development. This means that from end 2023 over 95 percent of the Company's oil production will be powered by its own generated renewable energy. Renewable energy expenditure guidance for 2021 remains MUSD 100.

In January 2021, the Company signed a partnership with Land Life Company B.V., to invest MUSD 35 in high quality re-forestation projects to plant approximately eight million trees between 2021 and 2025, capturing approximately 2.6 million tonnes of CO2. During the reporting period, approximately 450,000 trees were planted in Spain and Ghana.

In September 2021, Lundin Energy signed a partnership with EcoPlanet Bamboo WA ll. The Company will invest MUSD 9 in sustainable bamboo plantations where over 1 million bamboo clumps will be planted on degraded land between 2022-2024, capturing approximately 1.7 million tonnes of CO2 over 10 years.

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