Republic of Kalmykia

Lundin Petroleum has started drilling the Laganskaya-1 exploration well in the Lagansky block, situated in the northern Caspian Sea in Russia. Lundin Petroleum has currently a 70% net interest in the Lagansky block.

The well, with a planned depth of 2,000 meters, is targeting Cretaceous and Jurassic Sandstone Reservoirs. The Laganskaya structure is situated towards the southwest of the recent Morskaya discovery but on a different structural trend associated with existing onshore fields.

The company has said that the Laganskaya-1 well is the second in a four well drilling program planned for 2008 and 2009. The gross unrisked prospective resources for the Laganskaya prospect are estimated at 106 million of barrels of oil equivalents.

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, said: “The Laganskaya well will further test the exploration prospectivity of the northern Caspian following on from our major discovery on Morskaya”.