Swedish oil firm rallies in Stockholm trading after upbeat outlook.

Ian H. Lundin, Chairman of the Board at Lundin Petroleum

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Swedish oil company Lundin Petroleum posted a slightly smaller-than-expected second quarter profit but said it expected output to increase at its wells off Norway.

The company’s shares were up almost 5 percent in Wednesday morning trading after gaining more than 25 percent during last month.

"It was a good underlying report with better production than consensus," an analyst told Reuters. "If you look at the underlying operations they were good (and) they also raised their forecast for the full year."

Lundin Petroleum, with oil and gas assets in Europe, Russia, South East Asia and Africa, said it was now forecasting production of 31,000 to 34,000 barrels of oil equivalent per day (boepd) versus its previous guidance of 29,000 to 33,000 boepd.

The oil firm posted a net profit of 365.6 million dollar, missing a mean forecast of 374 million dollars in a Reuters poll. The same period last year the company made a 7.5 million dollar profit. The profit was boosted by a 357 million dollar capital gain on a sale of North Sea assets.

Sweden's international prosecutor said in June it will probe whether Lundin Petrolium with connections to Foreign Minister Carl Bildt had any role in war crimes committed in Sudan. Lundin Petroleum, previously called Lundin Oil, denied the allegations.

Oil prices fell in Asian trade on Wednesday but remained above 82 dollars as traders took profit on the heels of strong rallies in the crude markets, analysts said.