Record half-yearly results Continually building long-term business value
LONDON, Aug. 27 /PRNewswire-FirstCall/ -- Tullow Oil plc ('Tullow'), the
independent oil and gas exploration and production group, announces its
half-yearly results for the six months ended 30 June 2008.
2008 Half-yearly results summary
The first half of 2008 has been outstanding for Tullow. The Group has
delivered record financial results, an excellent exploration performance and
material progress towards first oil from both the Jubilee field in Ghana and
the EPS in Uganda.
-- Effective production management combined with very strong oil and gas
pricing and profitable portfolio management generated record first half
revenue, cash flow and profits;
-- Exploration and appraisal success in Ghana and Uganda will materially
increase the Group's resource base and has de-risked the significant upside
potential of these major projects;
-- First gas was achieved from the Wissey field on 22 August and the field
is now producing at approximately 70 mmscfd; and
-- Sale agreements have been reached for the disposal of the Group's
interests in the M'Boundi field in Congo (Brazzaville) and the Hewett-Bacton
assets in the UK for a total cash consideration of 428 million pounds, with a
profit on disposal in the order of 370 million pounds expected in fiscal 2008.
1H 20081H 2007Change
Production (boepd, working
interest basis) 70,550 69,700 +1%
Realised oil price per bbl (US$) 80.11 56.09 +43%
Realised gas price (pence per therm) 51.71 36.86 +40%
Sales revenue (pounds m) 378.0 284.9 +33%
Operating profit (pounds m) 201.3 111.0 +81%
Profit before tax (pounds m) 187.3 66.6 +181%
Basic earnings per share (pence) 17.23 5.12 +237%
Interim dividend per share (pence) 2.00 2.00 Unchanged
Operating cash flow before
working capital (pounds m) 295.3 201.8 +46%
2008 Outlook
-- In Ghana, Phase 1 of the Jubilee development will commercialise
approximately 300 to 350 mmbo of reserves and is on track for first oil in the
second half of 2010. MODEC has been selected to supply and operate the
Floating Production Storage and Offloading (FPSO) vessel. Selection of the
main subsea contractors is planned for September and project sanction is
anticipated in late 2008;
-- Four deepwater rigs contracted for an integrated Ghana exploration,
appraisal and development drilling campaign, which will re-commence in the
third quarter;
-- In Uganda, the discovery of Kasamene and the appraisal of Kingfisher
have identified substantial upside potential. Exploration and appraisal
drilling in both of these regions is ongoing; and
-- 2008 average working interest production is now expected to be between
68,000 and 70,000 boepd.
Commenting today, Aidan Heavey, Chief Executive, said:
"Tullow continues to make superb progress and I am delighted to report
today's record results. Our Exploration, Production and Development teams
delivered another excellent performance during the first half of the year,
while successful portfolio management has strengthened our financial position.
The next six months promise to be very exciting as our high impact exploration
and appraisal campaigns in Ghana and Uganda gather momentum and we continue to
build the long-term value of our business."
Presentation, Webcast and Conference Calls: In conjunction with these
results, Tullow will conduct a presentation in London and a number of events
for the financial community. Details are available at the end of this
announcement and in the Results Centre on the Group's website at
www.tullowoil.com.
Interim management report
Operations review
During the first half of 2008, strong progress has been made throughout
the Group with record oil production, important and successful exploration and
appraisal wells drilled in Ghana and Uganda and effective portfolio management
to secure financial and operational flexibility. While recent production from
our UK Gas business has been slightly behind expectations, a number of
development activities have the potential to increase production levels.
Overall production for 2008 is now expected to be within the range 68-70,000
boepd.
Operatorship of the Jubilee field in Ghana and the ongoing process of
commercialisation of the Lake Albert Rift Basin will create a step change in
Tullow's business over the coming years and the continued successful
stewardship of these major projects are central to the longer-term growth and
development of the Group.
AFRICA: Preparing for the next phase of growth
2008 Half-yearly results highlights
Total Total reserves 1H 2008
production and resources Sales revenueinvestment
41,580 boepd 456.8 mmboe261.2 million pounds 140.1 million pounds
-- 1H 2008 production averaged 41,580 boepd, 6% above 1H 2007 levels;
-- Mahogany-2 appraisal well upgrades Jubilee field resource potential to
over 1 billion barrels;
-- Jubilee project on track for first oil in the second half of 2010 with
key contractors selected;
-- Kasamene and Ngege open up new Victoria Nile delta play with
significant potential in Uganda;
-- Kingfisher-2 well in Uganda confirms material discovery with further
upside potential; and
-- Early Production System in Uganda on track for sanction in the fourth
quarter of 2008.
Ghana
Following the discovery of the Jubilee field offshore Ghana in 2007,
Tullow has had further exploration and appraisal success in the first half of
2008.
Jubilee field appraisal programme
Appraisal of the Jubilee field continued with the successful Mahogany-2
well. This well demonstrated that the field is a continuous stratigraphic
accumulation stretching more than 11 km across both the Deepwater Tano and
West Cape Three Points licences with reserves potential in excess of 1 billion
barrels. Drill Stem Tests carried out on this well, although constrained by
facilities, have demonstrated the capacity of these reservoirs to produce at
commercial flow rates.
Rig capacity
The Blackford Dolphin and Eirik Raude drilling rigs will arrive in
September and November 2008 respectively, followed by the Aban Abraham and the
Atwood Hunter in early 2009. These rigs will undertake an integrated programme
of appraisal and development drilling on the Jubilee field and high-impact
exploration and appraisal drilling within the greater West Cape Three Points
and Deepwater Tano licences.
Jubilee field development
The development plans for Jubilee are progressing rapidly, facilitated by
the active participation and support of joint venture partners and the
Government of Ghana. A fast-track first phase development of the core field
area is expected to be sanctioned in late 2008 and Tullow, as Unit Operator of
the field, recently issued a number of Letters of Intent following a rigorous
tender evaluation process. These include arrangements with MODEC Inc. agreed
in July 2008 for the supply and operation of a FPSO vessel. A Letter of Intent
for the supply and installation of the main subsea systems is expected to be
issued imminently. Both are major components of the overall project and are
key to achieving the objective of first production in 2010. The facilities for
this first phase of development will be capable of processing more than
120,000 bopd and 160 mmscfd of produced gas, and injecting more than 230,000
bwpd via the initial 17 production and injection wells.
The field contains significant gas reserves and utilisation of this gas is
an integral part of the long-term field development and regional energy
planning. As part of Phase 1, it is anticipated that the gas will initially be
split between re-injection, to enhance overall oil recovery, and export to
shore for use in local power generation.
The overall objective of Phase 1 of the development is to commercialise a
reserve of approximately 300 to 350 mmbo within the core field area. While
contractual arrangements and a detailed scope of the development remain
subject to finalisation, it is anticipated that the overall capital
expenditure for this phase of the project will be of the order of US$3.1
billion, excluding the cost of leasing the FPSO. Further phases of the
development are planned based on the positive outcome of drilling to date.
Tullow is building significant capability within Ghana to manage both the
development and production phases of the Jubilee Field. This includes
expansion of both management and operational teams and significant
infrastructure upgrades at the Port of Takoradi.
Exploration activity
The Odum-1 well was drilled in February 2008 in the West Cape Three Points
Block and resulted in a new oil discovery in the Campanian geological play.
Both the Campanian play and the Turonian play, established by the Jubilee
discovery, are excellent targets across Tullow's acreage in Ghana and Cote
d'Ivoire. Appraisal of this discovery and neighbouring prospects will begin in
September 2008 with the acquisition of 3D seismic.
Tullow's deepwater acreage in the West Africa Transform Margin contains a
number of potentially material exploration opportunities whose prospectivity
has been enhanced by recent results. Tweneboa, a large fan system in the
Deepwater Tano block, will be drilled in early 2009 and will be followed by
the Teak prospect in the West Cape Three Points block.
In the Shallow Water Tano block, the Ebony prospect is expected to be
drilled in the third quarter of 2008.
Uganda and Congo (DRC)
Tullow's exploration campaigns in Uganda over the last three years have
resulted in the discovery of a major petroleum province in the Lake Albert
Rift Basin. To date Tullow has drilled 14 wells and discovered substantial
resources in three core onshore areas. Exploration is continuing in these
areas and there are plans to expand operations offshore in 2009. In parallel,
Tullow is working closely with the Ugandan government to develop part of the
discovered reserves through an Early Production System (EPS) targeting first
oil in 2009.
Blocks 1 and 2
During the first half of 2008, exploration activity in Block 2 has focused
on the Butiaba region, in the north of the block, where a major drilling
campaign commenced in April. Oil has been encountered in all four of the wells
drilled to date and the Ngege-1 and Kasamene-1 discoveries have opened up a
new play fairway within the basin. The Kasamene-1 well encountered over 31
metres of net oil pay in high quality sandstones, with further potential up-
dip. A number of analogous structures in Blocks 1 and 2 have been
substantially de-risked by this important result and the latest well in the
campaign, on the Kigogole-1 prospect, commenced on 25 August. On completion
the rig will move to Block 1 to drill three further wells on trend with the
Kasamene discovery before returning to Block 2.
The results of the 2007 Kaiso-Tonya appraisal drilling campaign and the
new 3D seismic data have now been incorporated into an integrated 3D reservoir
model. The Field Development Plan for the EPS, which will include a 4,000 bopd
production facility with associated topping unit and power generation
facilities, is now complete and the FEED contract has been awarded to Wood
Group. Sanction of the project, which is pending finalisation of commercial
terms and environmental approval, is expected by year end with first oil
targeted for fourth quarter 2009.
Near-shore drilling activity re-commenced in early 2008 with the drilling
of the high impact Ngassa-1 well using the Nabors 221 rig. The primary
objective of the well was not reached due to borehole instability and the well
was suspended after discovering gas in the shallower horizons. Ngassa-2 is
expected to be drilled with the same rig from an alternative onshore location
later this year or in early 2009 after Kingfisher-3.
Block 3A
The second well in the Nabors 221 rig programme was Kingfisher-2 in Block
3A. This deviated near-shore appraisal well was drilled to a total depth of
3,906 metres to help delineate the accumulation discovered by Kingfisher-1 in
early 2007 and to test potentially significant deeper prospectivity. The
appraisal of the Kingfisher Lower Pliocene and Upper Miocene age oil
reservoirs was successful and three zones are currently being production
tested. Further evaluation of this discovery has suggested the potential for
material increases to current resource estimates and planning has commenced
for the Kingfisher-3 appraisal well, which will assess this potential from an
optimal onshore location.
In the targeted deeper section the well penetrated the anticipated basal
sands comprising approximately 30 metres of reservoir overlain by a good shale
top-seal. No hydrocarbons were present in the basal sands at this location
which is likely to be due to a lack of charge. Based on preliminary analysis
of this result the lowermost reservoirs at the Kingfisher deep location are
interpreted to underlie the source rocks; Ngassa and other offshore prospects
are unlikely to be similarly impacted due to the unique geological setting of
Kingfisher within the basin.
Congo (DRC)
The validity of Tullow's two licences on the Congo (DRC) side of the Lake
Albert Rift Basin are currently being disputed. Tullow is confident of its
title and will continue to pursue all legal and governmental options to
finalise the award.
Congo (Brazzaville)
Gross production from the M'Boundi field averaged 41,000 bopd in the first
half of 2008 and following good reservoir management has stabilised at that
rate. In January 2008, Tullow announced the sale of its 11% interest in the
field to the Korea National Oil Company for a total cash consideration of
US$435 million (218 million pounds). The deal is expected to complete later in
2008.
Equatorial Guinea
During the first half of 2008, both the Ceiba and Okume Complex fields
performed above expectations with combined gross field production averaging
108,000 bopd. Strong reservoir and well performance, particularly from the
Elon and Oveng fields in the Okume Complex, were combined with good facilities
uptime. Production is expected to average over 100,000 bopd for 2008.
Cote d'Ivoire
Production performance from the East and West Espoir fields has been in
line with expectations year to date. Gross field production, to the end of
July, averaged 30,400 boepd and is expected to average approximately 29,000
boepd for 2008. Production rates are currently restricted by facilities
constraints, however an FPSO upgrade project will address this issue and will
increase capacity to 70,000 bfpd and 80 mmscfd. The upgrade project is on
track for completion in the second half of 2009 and will assist in sustaining
oil production from the field.
Mauritania
Gross production from the Chinguetti field averaged approximately 10,000
bopd during the first half of 2008, lower than our original expectation.
During the period, three wells underwent remedial intervention work and C19,
the first of two infill wells, was drilled. This well is about to come on
stream and the rig will now drill the C20 well which is expected to be
completed in October.
An appraisal well in the western part of the Banda discovery was drilled
in April. The results of this well provided encouraging new information about
the distribution and quality of reservoir sands in this oil and gas
accumulation. Possibilities currently under review include a further appraisal
well in the eastern part of the field and conceptual development options which
include compressed natural gas.
Recent exploration activity in Mauritania has largely focused on
developing a comprehensive understanding of the best geological plays whilst
continuing to expose Tullow to high impact prospects. Tullow's technical
evaluation work is currently highlighting the exploration potential of the
under-explored Cretaceous section which contains a range of plays with an
overall resource potential of up to 1 billion barrels. The Khop-1 exploration
well was drilled in Block 6 in February and whilst only minor shows were
encountered, the well drilled an extensive Cretaceous section, the
interpretation of which will prove invaluable as the Group develops its
geological understanding of the area. A significant exploration campaign is
expected to commence in late 2009.
Gabon
Net production from Tullow's Gabon assets averaged 13,100 bopd in the
first half of 2008 and is currently stable at approximately 13,000 bopd. The
outlook for the remainder of the year is positive with solid production from
the key contributors, Niungo and Tchatamba, and ongoing development drilling
on the Ebouri, Tsiengui, Obangue and Onal fields where over 35 further wells
are scheduled in 2008.
On the exploration front, active portfolio management during the first
half of 2008 resulted in a 4-year extension to the onshore Nziembou
exploration licence, the agreed disposal of the Group's 18.75% interest in the
offshore Gryphon Block and relinquishment of its interest in the Akoum
licence. Exploration drilling is planned in the latter part of this year in
the Etame Block in which Tullow has a 7.5% back-in right.
Namibia
Following delays in concluding commercial arrangements on a major gas to
power development for the Kudu gas field, alternative options are also being
considered. One such option involves the possibility of developing the field
as a marine Compressed Natural Gas project to supply gas into the regional
industrial and transport markets as a replacement for diesel, HFO and LPG.
Further studies will be undertaken to assess the commercial attractiveness of
such a project in the context of forecast regional energy demand and current
technology.
EUROPE: Development growth and prudent portfolio management
2008 Half-yearly results highlights
Total Total reserves
production and resources Sales revenue 1H 2008 investment
23,580 boepd60.3 mmboe111.5 million pounds27.3 million pounds
-- 1H 2008 production averaged 137 mmscfd, and revenue increased to 111.5
million pounds driven by record gas prices;
-- Effective portfolio management is expected to deliver 245 million
pounds of asset disposal proceeds from the mature Hewett-Bacton interests and
non-core CMS exploration and development interests;
-- Strong UK gas pricing has refocused capital investment towards selected
development assets;
-- First gas achieved from the Wissey development on 22 August 2008; and
-- Attractive exploration acreage position secured offshore Netherlands.
Thames-Hewett Area
Production from the Thames-Hewett Area averaged 51 mmscfd in the first
half of 2008, 27% lower than in the first half of 2007, due to a combination
of natural field decline, most notably from the Orwell and Thurne fields, and
poor weather impacting on production efficiency.
In the Thames Area, first gas was achieved from the Tullow-operated Wissey
development on 22 August 2008 and the field is now producing at a rate of
approximately 70 mmscfd. A development well is planned on the Bure field and a
rig has been secured to pursue this opportunity in the first quarter of 2009.
In the first half of 2008 Tullow continued to pursue opportunities to
extend the economic life of the mature Hewett facilities. The project to fully
de-man the Hewett Complex was completed yielding significant cost savings and
an appraisal-development well, targeting a deep Rotliegendes reservoir in the
Hewett main field, is scheduled to spud in September 2008.
As part of these initiatives Tullow completed a major technical and
commercial study, on behalf of the joint venture, to investigate the viability
of using Hewett as a gas storage hub. Subsequent to this, Tullow has signed a
Sale and Purchase Agreement with Eni for the sale of its entire 51.68%
interest in the Hewett-Bacton Complex, including the substantial abandonment
liability, for a consideration of 210 million pounds. The sale is expected to
complete by year end.
The Doris exploration well was drilled in early 2008. Whilst gas was
found, pressure data indicated that the reservoir was depleted and the well
was abandoned.
CMS Area
Production from the CMS Area averaged 86 mmscfd in the first half of 2008.
This was 6% lower than for the same period in 2007, reflecting the impact of
lower capital allocation to our Southern North Sea gas business. However,
recent material rises in gas prices have increased the attractiveness of new
projects and Tullow is well placed to continue to invest in the long-term
development of the area.
The Schooner and Ketch fields continue to produce strongly and a further
development well in the Ketch field is planned for the second quarter of 2009.
Infill wells have also been approved for the Murdoch and Boulton fields and
the Operator is pursuing a rig programme to drill these in early 2009.
While most fields have performed in line with expectations, the
performance of the Kelvin field has shown a more rapid decline than predicted.
Further data gathering will be carried out on this field in the September
maintenance shutdown with the objective of developing a remedial action plan.
UK exploration activity is centred on the core CMS Area and Tullow
continues to seek viable opportunities in the Carboniferous play. Other
projects under review include the appraisal potential of the 2006 K4 discovery
and development options for the 2007 Harrison discovery.
During the period, Tullow has also completed the sale of non-core CMS
exploration and development assets to Venture Production Plc for a
consideration of 35 million pounds.
Netherlands
Tullow now has a strong exploration position in the offshore Carboniferous
province following the award of five further blocks in the Carboniferous
fairway to complement the two blocks awarded in 2007. The Group now plans to
apply the extensive knowledge gained from successful exploration campaigns in
the CMS Area over the last six years and is currently reprocessing over 1,000
sq km of 3D seismic data and conducting a detailed analysis of all wells in
our Netherlands acreage. These projects will help refine the current prospect
inventory ahead of potential drilling and seismic campaigns in 2009 and 2010.
Portugal
The principal project in 2008 is the acquisition of 3,500 km of 2D seismic
data across Tullow's offshore acreage. The programme commenced in August, and
should complete by mid-September. The survey is focusing on a central fairway,
where several stratigraphic trap leads have been identified, as well as
providing infill coverage.
SOUTH ASIA: Continued production growth and high impact exploration
potential
2008 Half-yearly results highlights
Total Total reserves
productionand resourcesSales revenue 1H 2008 investment
5,390 boepd 19.4 mmboe5.4 million pounds 4.0 million pounds
-- Production averaged 5,390 boepd, 57% above 2007 levels;
-- Multi-well exploration campaign in India commenced in June 2008; and
-- Bangora development work nearing completion to increase production
capacity to 120 mmscfd.
India
A multi-well drilling programme commenced on block CB-ON/1 in June 2008
following completion of an extensive seismic programme the previous year. The
first well, C1, was drilled in a basin margin location in the east of the
block to a target depth (TD) of 1,916 metres. Logging determined that the
target sands were water bearing and the well was plugged and abandoned. The
second well in the drilling programme is on the G1 prospect which is targeting
a separate geological play in the northern part of the block. This well
commenced drilling on 13 August and is expected to take 30 days to reach TD.
Bangladesh
Production from the Bangora field has been steady at 70 mmscfd during 2008
to date. The second phase of development to increase production capacity to
120 mmscfd and to tie-back the Bangora-3 well is expected to be completed in
September 2008. Average production is then expected to increase to over 100
mmscfd.
Tullow participated in the recent Bangladesh offshore bid round and
currently awaits notification from Petrobangla on its application for Block
SS-08-05.
Pakistan
Production in Pakistan is from the Chachar and Sara/Suri fields and in the
first half of 2008 was 11 mmscfd net to Tullow. Plans are under way to drill
the Kohat East well in the fourth quarter of 2008.
SOUTH AMERICA: Prolific but underexplored oil and gas province
2008 Half-yearly results highlights
In South America Tullow has interests in, or applications under
consideration, in respect of five licences across French Guiana, Suriname, and
Trinidad & Tobago. Negotiations are also in progress in relation to a number
of number of potentially attractive new venture opportunities in the region.
French Guiana
In French Guiana Tullow has a 97.5% interest in the Guyane Maritime
licence which contains the high impact but high risk Matamata prospect and
other potential stratigraphic traps similar to the Jubilee field in Ghana.
Tullow are currently in the process of seeking an additional partner and
securing a rig to allow the exciting prospects within the block to be drilled.
Suriname
In Suriname, a second phase of exploration on near-infrastructure plays is
scheduled to commence in the third quarter with five wells in the Uitkijk
block followed by five wells on the adjacent Coronie permit.
Trinidad & Tobago
In Trinidad &Tobago, Tullow were the successful bidder in two key blocks
in 2007. The Production Sharing Contract for Block 2ab was initialled on 15
May 2008 and the final contract is expected to be signed in the third quarter.
Negotiations to conclude agreements in respect of the Guayaguayare licence are
ongoing.
Finance review
Tullow has recorded record half-yearly results driven by strong
operational performance, increased oil and gas pricing and profitable
portfolio management. Production grew 1% to over 70,550 boepd and average
price realisations increased by over 40%. As a result basic earnings per share
increased 237% to 17.2 pence.
Our financial strategy is to maintain flexibility to support the Group's
significant appraisal and development programmes in Ghana and Uganda and
effectively allocate capital across the remainder of our business. This
financial flexibility has been materially enhanced by portfolio management
transactions which will provide proceeds of approximately US$1 billion (501
million pounds) to the Group during 2008. This flexibility, allied to a debt
refinancing planned for the second half, leaves Tullow in an exceptionally
strong financial position as it enters a major phase of investment for future
growth.
Key financial metrics 1H 2008 1H 2007 Change
Production (boepd, working
interest basis) 70,550 69,700+1%
Sales volume (boepd) 60,000 61,500-2%
Realised oil price per bbl (US$) 80.1156.09 +43%
Realised gas price (pence per therm) 51.7136.86 +40%
Cash operating costs per
boe (pounds)(1) 5.61 5.05 +11%
Operating cash flow before working
capital per boe (pounds) 23.0016.01 +44%
Net debt(2)(pounds million) 417.3514.3 -19%
Interest cover(3) 15.2 8.9 Up 6.3 times
Gearing (%)(4) 71 66+5%
(1) Cash operating costs are cost of sales excluding depletion,
depreciation and amortisation and under/over lift movements
(2) Net debt is cash and cash equivalents less financial liabilities net
of unamortised arrangement fees
(3) Interest cover is earnings before interest and depreciation charges
divided by net finance costs
(4) Gearing is net debt divided by net assets
Operating performance
Working interest production averaged 70,550 boepd, 1% ahead of the
corresponding period in 2007 and sales volumes averaged 60,000 boepd,
representing a decrease of 2%, driven by changes in the proportion of sales
arising from production sharing regimes.
Commodity prices during the first half of 2008 continued to be
exceptionally strong. Realised oil price was US$80.1/bbl (1H2007:
US$56.1/bbl), an increase of 43% and realised gas price was 51.7p/therm
(1H2007: 36.9p/therm), an increase of 40%. Tullow's oil production continued
to be sold at a discount of 3% to Brent during the period (1H2007: 3%
discount).
The higher commodity prices, partly offset by the marginally lower sales
volumes, meant that revenue increased by 33% to 378.0 million pounds (1H2007:
284.9 million pounds).
2008 Half-yearly revenue by Core Area
% of
Oil Gas Total Total
pounds pounds pounds
million millionmillion
Africa261.2- 261.2 69%
Europe-111.4 111.4 30%
South Asia- 5.45.41%
Total 261.2116.8 378.0
% contribution to the Group 69% 31%
Operating profit before exploration activities amounted to 224.9 million
pounds (1H2007: 124.2 million pounds), an increase of 81%, principally due to
the higher commodity prices realised during the period.
Underlying cash operating costs, which exclude depletion and amortisation
and movements on under/overlift, amounted to 72.1 million pounds (5.61
pounds/boe) (1H2007: 5.05 pounds/boe). These costs were 11% above 2007 levels,
principally due to upward cost pressures in oil and gas services and an
increase to Gabon royalty payments which are directly linked to oil prices.
Depreciation, depletion and amortisation charges for the period amounted
to 96.2 million pounds (7.49 pounds/boe) (1H2007: 6.27 pounds/boe). The
depreciation rate for the first half of 2008 is in line with the 2007 full
year rate (2007: 7.61 pounds/boe) which reflected a 2007 writedown in reserves
attributable to the Chinguetti asset.
Administrative expenses of 15.5 million pounds (1H2007: 14.5 million
pounds) include an amount of 3.2 million pounds (1H2007: 2.5 million pounds)
associated with share-based payments under IFRS 2.
Exploration write-off
Exploration costs written-off were 23.6 million pounds (1H2007: 13.2
million pounds), in accordance with the Group's 'successful efforts'
accounting policy, which requires all costs associated with unsuccessful
exploration are written-off to the Income Statement. This
write-off is principally associated with drilling in the UK and Mauritania,
new ventures activity and licence relinquishments.
Derivative instruments
Tullow continues to undertake hedging activities as part of the ongoing
management of its business risk and to protect the availability of cash flow
for reinvestment in capital programmes which are driving business growth. In
aggregate hedged volumes represented less than 3% of the Groups overall
commercial reserves and contingent resources as at 30 June 2008.
At 30 June 2008, the Group's derivative instruments had a negative mark to
market value of 434.6 million pounds (1H2007: 56.6 million pounds). The
substantial increase in the mark to market position reflects the unprecedented
rate of increase in commodity prices during the first half of 2008.
While all of the Group's commodity derivative instruments currently
qualify for hedge accounting, a credit of 7.2 million pounds (1H2007: charge
of 21.2 million pounds) has been recognised in the income statement for the
first half of 2008. The IAS 39 credit comprises 9.6 million pounds relating to
the movement in the non-intrinsic (or time value) component of both oil and
gas hedges, partially offset by a charge of 2.4 million pounds relating to the
ineffectiveness of both oil and gas hedges. The favourable movement in the
time value element is largely due to movements in the oil and gas forward
curves since the beginning of the year. Brent forward oil prices and natural
gas prices in the UK have risen considerably and with prices now trading
significantly above the strike prices of the hedges less time value is
associated with the mark to market value.
The Group's hedge position as at 21 August 2008 can be summarised as
follows:
Hedge position 2H2008 2009 2010 2011
Oil
Volume - bopd 18,00011,5005,000 -
Current Price Hedge - US$/bbl70.85 66.28 112.65 -
Gas Hedges
Volume - mmscfd 65.2 44.9 16.63.1
Current Price Hedge - p/therm 55.4 55.9 60.7 71.0
Gearing, financing costs and interest cover
The net interest charge for the period was 21.2 million pounds (1H2007:
23.2 million pounds) and reflects the reduction in net debt levels during the
first half of 2008 due to record levels of operating cash flow and completion
of portfolio management transactions. At 30 June 2008, Tullow had net debt of
417.3 million pounds (1H2007: 514.3 million pounds), while unutilised debt
capacity was in excess of 200 million pounds. The Group's gearing is 72%
(1H2007: 66%) and interest cover has increased to 15.2 times (1H2007: 8.9
times). Group gearing is expected to be materially reduced in the second half
of the year upon completion of the portfolio management transactions.
Taxation
The tax charge of 61.2 million pounds (1H2007: 30.0 million pounds)
relates to the Group's North Sea, Gabon, Equatorial Guinea and Mauritanian
activities and represents 33% of the Group's profit before tax (1H2007: 45%).
After adjusting for exploration costs and profit on disposal of oil and gas
assets, the Group's underlying effective tax rate is 34% (1H2007: 36%).
Dividend
Due to the outstanding successes achieved in Ghana and Uganda and the
ongoing requirement for significant capital investment in the planned work
programmes, the Board feels that it is appropriate to maintain the interim
dividend at the 2007 level. Consequently the Board has declared an interim
dividend of 2.0 pence per share (1H2007: 2.0 pence per share). The dividend
will be paid on 6 November 2008 to shareholders on the register on 3 October
2008.
Operating cash flow and capital expenditure
Increased commodity prices led to record operating cash flows before
working capital movements of 295.3 million pounds (1H2007: 201.8 million
pounds). This cash flow facilitated investment of 187 million pounds in
exploration and development activities, payment of an increased final
dividend, servicing of the debt facilities and a reduction of over 60 million
pounds in net debt.
Tullow currently anticipates a total 2008 capital expenditure of
approximately 480 million pounds. Investment will be split 45% on production
and development and the remainder on exploration and appraisal. Tullow's
activities in Africa will comprise 75% of the anticipated capital outlay, with
the principal expenditures being in Ghana and Uganda.
Portfolio management and long-term funding
During the first half of 2008 Tullow announced the planned disposal of a
number of non-core assets for a combined consideration of approximately US$1
billion (501 million pounds). The effect of this disposal programme will be to
significantly reduce Tullow's net debt and provide optimal financial
flexibility for future investment.
In Africa, Tullow announced the sale of its 11% interest in the M'Boundi
field to the Korea National Oil Company (KNOC) for a total cash consideration
of US$435 million. The sale is subject to government approval and is expected
to complete in late 2008. On 2 July 2008 Tullow completed the sale of its 40%
interest in the Ngosso licence, offshore Cameroon, to MOL. Although the
proceeds of the sale were not received until July, the risks and rewards of
ownership transferred to the buyer in June 2008, and consequently the profit
on disposal is recognised in the first half of 2008.
In Europe, the sale of non-core CMS assets to Venture Production for a
consideration of 35 million pounds completed on 23 June 2008. Also in June,
Tullow announced the proposed sale of its 51.68% interest in the Hewett-Bacton
Complex to Eni for a cash consideration of 210 million pounds. This
transaction, which is expected to complete in late 2008, will also involve the
assumption by Eni of approximately 45 million pounds of abandonment
liabilities.
A profit on disposal of 28.9 million pounds was recognised in the first
half of 2008 on the sale of the CMS assets and the Ngosso licence.
As Tullow enters a period of significant investment in new development
projects, the Group will look to refinance its existing debt facilities in the
second half of 2008. The refinancing combined with the successful completion
of portfolio management efforts announced year to date is expected to allow
the Group to ensure that sufficient funds are allocated to our growth assets,
continue to conduct an active exploration programme, and maintain an
appropriate level of gearing over the long term.
Risk factors
Tullow is exposed to a variety of risks and uncertainties which may have
an impact on the Group. Effective risk management is a critical part of our
strategy, business objectives and day-to-day activities. The principal risks
and uncertainties facing the Group at the year end, their potential impact and
the mitigation strategies developed were detailed in the Annual Report and
Accounts 2007 (available on our website www.tullowoil.com). All the risk and
uncertainties which were identified at the year end have not changed and still
remain appropriate for the second half of 2008. Key risks relating to the
following were identified:
-- Strategic risks - ineffective mix of oil and gas assets, insufficient
portfolio balance, organic and acquisition-led growth, inefficient capital
allocation, ineffective management processes and loss of key staff/succession
planning;
-- Financial risks - excessive or inappropriate debt, inadequate or
excessive hedging, underperforming assets, industry cost inflation, mis-priced
corporate acquisitions, uninsured events;
-- Operational risk - EHS incident, security incident, key development
failure, failure to secure equipment, services and resources, corruption or
reputation risk, corporate and social responsibility, sustained exploration
failure, hostile acquisition; and
-- External risks - political and fiscal change, lack of control of key
assets, corporate governance failings, shareholder sentiment and oil and gas
price volatility.
2008 Outlook
Tullow's business has performed strongly in the first half and the outlook
for the remainder of the year is extremely positive.
In Ghana, the anticipated sanction of Phase 1 of the Jubilee development
represents a critical project milestone and will initiate a detailed programme
of appraisal and development drilling aimed at achieving first oil in 2010. In
addition, the potentially significant Tweneboa and Teak exploration prospects
will be drilled over the next 9 months; success in either could further
transform Tullow's business.
In Uganda, the Butiaba Campaign will continue with particular focus on
expanding the potential of the Victoria Nile delta play. Elsewhere, appraisal
of the Kingfisher discovery and the drilling of Ngassa each provide an
opportunity for the discovery of material new oil reserves, while the expected
sanction of the EPS will be a major step towards Uganda's first oil
production.
The Group's production business is performing well and, combined with the
current strength in global oil and gas pricing, provides important financial
support for the Group's ongoing investment activities. Overall, Tullow's asset
portfolio has the ability to contribute to materially increased reserves,
production and business value over the coming years.
Responsibility statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared in
accordance with lAS 34 'Interim Financial Reporting';
b) the Half-year financial report includes a fair review of the
information required by DTR 4.2.7R (indication of important events during the
first six months and description of principal risks and uncertainties for the
remaining six months of the year); and
c) the Half-year financial report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
Aidan Heavey Tom Hickey
Chief Executive Officer Chief Financial Officer
26 August 2008 26 August 2008
Disclaimer
This statement contains certain forward-looking statements that are
subject to the usual risk factors and uncertainties associated with the oil
and gas exploration and production business. Whilst the Group believes the
expectations reflected herein to be reasonable in light of the information
available to them at this time, the actual outcome may be materially different
owing to factors beyond the Group's control or within the Group's control
where, for example, the Group decides on a change of plan or strategy.
Accordingly no reliance may be placed on the figures contained in such
forward-looking statements.
Independent review report to Tullow Oil plc
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report for the six months
ended 30 June 2008 which comprises the condensed consolidated income
statement, the condensed consolidated balance sheet, the condensed
consolidated statement of recognised income and expense, the condensed
consolidated cash flow statement and related notes 1 to 10. We have read the
other information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International
Standard on Review Engagements 2410 issued by the Auditing Practices Board.
Our work has been undertaken so that we might state to the company those
matters we are required to state to them in an independent review report and
for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial report
based on our review.
Scope of review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity' issued by the
Auditing Practices Board for use in the United Kingdom. A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2008 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
26 August 2008
London, United Kingdom
Condensed Consolidated Income Statement
Six Months ended 30 June 2008
6 months6 monthsYear
ended ended ended
30.06.0830.06.0731.12.07
Unaudited Unaudited Audited
Note '000 Pounds '000 Pounds '000 Pounds
Group revenue 5 378,042 284,939 639,203
Cost of sales(166,554) (145,608) (353,695)
Gross profit 211,488 139,331 285,508
Administrative expenses (15,538)(14,540)(31,628)
Disposal of subsidiaries-(597) (597)
Profit on disposal of oil and gas 28,916 - -
assets
Exploration costs written off (23,571)(13,241)(64,235)
Operating Profit 201,295 110,953 189,048
Gain/(loss) on hedging
instruments7,174 (21,158)(29,267)
Finance revenue 2,232 1,758 3,095
Finance costs (23,405)(24,967)(48,673)
Profit from Continuing Activities 187,296 66,586 114,203
before Tax
Income tax expense7 (61,282)(30,027)(61,609)
Profit for the Period from
Continuing 126,014 36,559 52,594
Activities
Attributable to:
Equity holders of the parent 124,017 36,559 50,887
Minority interest 1,997 - 1,707
126,014 36,559 52,594
Earnings per Ordinary Share Stg p Stg p Stg p
- Basic 2 17.235.127.10
- Diluted 2 16.985.036.96
Condensed Consolidated Statement of Recognised Income and Expense
Six Months ended 30 June 2008
6 months6 months Year
ended ended ended
30.06.0830.06.07 31.12.07
Unaudited Unaudited Audited
'000 Pounds '000 Pounds '000 Pounds
Profit for the period 126,014 36,55952,594
Currency translation adjustments(6,776) (5,604) (5,321)
Hedge movement(223,111) (6,551) (79,780)
(229,887)(12,155) (85,101)
Total recognised income and (103,873) 24,404 (32,507)
expense for the period
Attributable to:
Equity holders of the (105,870) 24,404 (34,214)
parent
Minority interest1,997 - 1,707
(103,873) 24,404 (32,507)
Condensed Consolidated Balance Sheet
As at 30 June 2008
30.06.08 30.06.07 31.12.07
UnauditedUnaudited Audited
'000 Pounds '000 Pounds '000 Pounds
ASSETS
Non-current assets
Intangible exploration and
evaluation assets1,028,599 854,497 956,580
Property, plant and equipment 785,482 969,719 832,111
Investments 447 447 447
1,814,5281,824,6631,789,138
Current assets
Inventories 25,961 15,940 24,897
Trade receivables98,864 82,730 87,746
Other current assets 76,235 25,466 33,351
Cash and cash equivalents 131,289 57,181 82,224
Assets held for sale112,277- 73,846
444,626 181,317 302,064
Total Assets 2,259,1542,005,9802,091,202
LIABILITIES
Current liabilities
Trade and other payables (203,844)(159,892)(177,397)
Other financial liabilities(211,864) (11,257) (9,793)
Current tax liabilities (65,731) (18,558) (31,457)
Derivative financial instruments (277,407) (12,840) (89,509)
Liabilities directly associated
with assets(48,612) - (4,756)
classified as held for sale
(807,458)(202,547)(312,912)
Non-current liabilities
Trade and other payables(15,290) (7,541) (15,586)
Other financial liabilities(340,093)(549,416)(540,272)
Deferred tax liabilities (254,008)(320,768)(307,615)
Provisions (100,077)(120,595)(133,612)
Derivative financial instruments (157,242) (43,797) (68,535)
(866,710) (1,042,117) (1,065,620)
Total liabilities(1,674,168) (1,244,664) (1,378,532)
Net assets 584,986 761,316 712,670
EQUITY
Called up share capital 72,477 71,877 71,961
Share premium 132,850 127,621 128,465
Other reserves (15,387) 283,035 210,089
Retained earnings 377,573 278,783 286,668
Equity attributable to equity
holders of the parent 567,513 761,316 697,183
Minority Interest17,473- 15,487
Total equity584,986 761,316 712,670
Condensed Consolidated Cash Flow Statement
Six months ended 30 June 2008
6 months 6 monthsYear
endedended ended
30.06.08 30.06.0731.12.07
UnauditedUnaudited Audited
Note '000 Pounds '000 Pounds '000 Pounds
Cash flows from operating
activities
Cash generated from operations 6 295,224 175,065 446,660
Income taxes paid(34,042) (21,909)(30,030)
Net cash from operating
activities 261,182 153,156 416,630
Cash flows from investing
activities
Acquisition of subsidiaries- (334,855) (334,954)
Disposal of subsidiaries - - (597) (597)
Disposal of oil and gas
assets -35,033- -
Purchase of intangible
exploration & evaluation assets(109,161) (44,655) (165,726)
Purchase of property, plant
and equipment (77,844)(130,252) (198,355)
Finance revenue1,6251,662 3,206
Net cash used in investing
activities (150,347)(508,697) (696,426)
Cash flows from financing
activities
Net proceeds from issue of
share capital 1,9831,734 2,661
Proceeds from issue of
subsidiary share capital to
minority interest -- 1,244
Debt arrangement fees (2,528) (6,442) (8,431)
Repayment of bank loans (125,965) (16,941)(29,474)
Drawdown of bank loan128,573 380,475 379,979
Finance costs(20,908) (23,479)(40,782)
Dividends paid (28,690) (25,051)(39,406)
Purchase of treasury shares (3,227) (3,723) (3,722)
Net cash (used in)/generated
by financing activities (50,762) 306,573 262,069
Net increase/(decrease) in cash
and cash equivalents60,073 (48,968)(17,727)
Cash and cash equivalents at
beginning of period 82,224 99,478 99,478
Translation Difference 4,1706,671 473
Cash and cash equivalents
at end of period (1)146,467 57,181 82,224
(1). Cash and cash equivalents at the end of the period include an amount
of 15,178,000 pounds classified as an 'asset held for sale' on the balance
sheet.
Notes to the Half-yearly Financial Statements
Six Months ended 30 June 2008
1. Basis of Accounting and Presentation of Financial Information
The annual financial statements of Tullow Oil plc are prepared in
accordance with IFRSs as adopted by the European Union. The condensed set of
financial statements included in this half-yearly financial report have been
prepared in accordance with International Accounting Standard 34 'Interim
Financial reporting', as adopted by the European Union. The accounting
policies and methods of computation used in the half-yearly financial
statements are consistent with those used in the Group 2007 annual report.
The financial information for the year ended 31 December 2007 does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. This information was derived from the statutory accounts for the year
ended 31 December 2007, a copy of which has been delivered to the Registrar of
Companies. The auditors' report on those accounts was not qualified and did
not contain statements under section 237(2) or (3) of the Companies Act 1985.
2. Earnings per Share
The calculation of basic earnings per share is based on the profit for the
period after taxation of 124,017,414 pounds (1H2007: 36,558,991 pounds) and a
weighted average number of shares in issue of 719,726,170 (1H2007:
714,714,367).
The calculation of diluted earnings per share is based on the profit for
the period after taxation as for basic earnings per share. The number of
shares outstanding, however, is adjusted to show the potential dilution if
employee share options are converted into ordinary shares. The weighted
average number of ordinary shares is increased by 10,507,830 (1H2007:
11,727,029) in respect of employee share options, resulting in a diluted
weighted average number of shares of 730,234,000 (1H2007: 726,441,396).
3. Dividends
The Company's shareholders approved a final dividend for the year ended 31
December 2007 of 4.0p per share at the Annual General Meeting on 14 May 2008.
This amount was paid on 21 May 2008 to shareholders on the register of members
of the Company on 18 April 2008.
The Board has declared an interim 2008 dividend of 2.0p per share in the
half year to 30 June 2008 to be paid on 6 November 2008 to shareholders on the
register on 3 October 2008 (1H2007: 2.0p per share)
4. Approval of Accounts
These half-yearly financial statements (Unaudited) were approved by the
Board of Directors on 26 August 2008.
5. Segmental Reporting
In the opinion of the Directors the operations of the Group comprise one
class of business, oil and gas exploration, development and production and the
sale of hydrocarbons and related activities. The Group also operates within
four geographical markets, Europe, Africa, Asia and South America.
The following tables present revenue, profit and certain asset and
liability information regarding the Group's business segments for the six
months ended 30 June 2008 and 2007.
South South
Europe Africa Asia America Unallocated Total
'000 '000 '000'000'000 '000
Pounds PoundsPounds Pounds Pounds Pounds
2008
Sales
revenue by
origin 111,469 261,1975,376- - 378,042
Segment result 23,796 164,750 (622) (7) - 187,917
Disposal of oil
and gas assets28,916
Unallocated
corporate
expenses (15,538)
Operating profit 201,295
Gain on hedging
instruments7,174
Finance revenue 2,232
Finance costs (23,405)
Profit before tax 187,296
Income tax expense(61,282)
Profit after tax 126,014
Total assets520,077 1,547,107 66,634 104,41820,918 2,259,154
Total
liabilities (260,302) (816,979) (10,623) (41,571) (544,693) (1,674,168)
Other segment
information
Capital
expenditure:
Property, plant
and equipment 15,34438,553 798- 2,634 57,329
Intangible fixed
assets 11,942 101,5883,213 748 - 117,491
Depletion,
depreciation and
amortisation (47,134) (44,841) (2,391) -(1,802)(96,168)
South South
Europe Africa Asia America Unallocated Total
'000 '000 '000'000'000 '000
Pounds PoundsPounds Pounds Pounds Pounds
2007
Sales
revenue by
origin119,350 162,246 3,343 - - 284,939
Segment result 41,45685,478 1,650(2,494) - 126,090
Disposal of
Subsidiaries (597)
Unallocated
corporate
expenses (14,540)
Operating profit 110,953
Loss on hedging
instruments (21,158)
Finance revenue 1,758
Finance costs (24,967)
Profit before tax 66,586
Income tax
expense (30,027)
Profit after tax 36,559
Total assets 540,955 1,269,75764,93695,72834,604 2,005,980
Total
liabilities (236,565) (411,304) (19,045) (33,369) (544,381)(1,244,664)
Other segment
information
Capital
expenditure:
Property, plant-
and equipment 76,21849,383 5,530 -131,131
Intangible fixed
assets 15,03333,326 1,958 2,529 - 52,846
Depletion,
depreciation and
amortisation (36,612) (41,149) (1,090)- (894) (79,745)
Unallocated expenditure and net liabilities include amounts of a corporate
nature and not specifically attributable to a geographic area, including tax
balances and the Group debt.
6. Cash Flows from Operating Activities
6 months6 months Year
ended endedended
30.06.0830.06.07 31.12.07
Unaudited Unaudited Audited
'000 Pounds '000 Pounds '000 Pounds
Profit before taxation 187,296 66,586 114,203
Adjustments for:
Depletion, depreciation and 96,168 79,745 205,805
amortisation
Impairment loss - - 13,834
Net foreign exchange -(179) -
(gains)/losses
Exploration costs written off23,571 13,241 64,235
Disposal of subsidiaries - 597 597
Disposal of oil and gas assets (28,916) --
Decommissioning expenditure - (5,053) (5,065)
Share based payment charge3,231 2,5235,388
(Gain)/loss on hedging instruments (7,174) 21,158 29,267
Finance revenue (2,232) (1,758) (3,095)
Finance costs23,405 24,967 48,673
Operating cash flow before
working capital movements 295,349 201,827 473,842
Increase in trade and other
receivables(53,524) (4,623) (20,472)
Increase in inventories (3,053) (2,205) (11,162)
Increase/(decrease) in trade payables56,452 (19,934) 4,452
Cash generated from operations 295,224 175,065 446,660
7. Taxation
Income tax for the six month period is accrued based on the estimated
annual effective rate of 33% (1H2007: 45%).
8. Disposal of oil and gas assets
On 5 November 2007 and 2 April 2008 the Group entered into sale agreements
to dispose of its 40% interest in the Ngosso Permit in Cameroon and certain
non-core CMS assets in the UK respectively. The disposals were completed in
June 2008, although the disposal proceeds relating to the non-core CMS assets
was received in July 2008. The gain on disposal of oil and gas assets amounted
to 28,916,000 pounds and total consideration received in the period amounted
to 35,033,000 pounds.
9. Assets held for sale
On 31 January 2008 and 31 July 2008, the Group entered into sale
agreements to dispose of Tullow Congo Ltd and Tullow Oil UK Ltd respectively.
The disposals were part of the Group's active asset management programme, and
provide financial flexibility for its development programmes.
These transactions are subject to final completion and both are expected
to be completed within 12 months. The related net assets have been classified
as assets held for sale and the related net liabilities have been classified
as liabilities directly associated with assets classified as held for sale and
have been presented separately in the balance sheet.
10. Called up equity share capital
In the six months ended 30 June 2008, the Group issued 5,157,816 (30 June
2007: 1,798,062) new shares in respect of employee share options.
As at 30 June 2008 the Group had in issue 724,768,338 allotted and fully
paid ordinary shares of Stg10 pence each (30 June 2007: 718,697,177).
11. Commercial Reserves and Contingent Resources Summary (Not reviewed by
Auditors) working interest basis
EUROPE AFRICA SOUTH ASIA TOTAL
Oil GasOil Gas Oil Gas OilGasPetroleum
mmbbl bcf mmbbl bcfmmbbl bcfmmbbl bcf mmboe
Commercial
Reserves
1 Jan 2008 2.0 258.7 131.1 20.1- 105.9 133.1 384.7 197.2
Revisions- 0.2 (0.1) -- -(0.1) 0.2 (0.1)
Production (0.1) (24.9) (7.5) (0.7) -(5.9) (7.6) (31.5)(12.9)
30 June
2008 1.9 234.0 123.5 19.4- 100.0 125.4 353.4 184.2
Contingent
Resources
1 Jan 2008 - 129.3 160.9 1,014.5 -16.2 160.9 1,160.0354.2
Revisions- - - - - - - - -
Disposals- (12.7) - - - - -(12.7)(2.1)
30 June 2008 - 116.6 160.9 1,014.5 -16.2 160.9 1,147.3352.1
Total
30 June
2008 1.9 350.6 284.4 1,033.9 - 116.2 286.3 1,500.7536.3
1. Proven and Probable Commercial Reserves are based on a Group reserves
report produced by an independent engineer. Reserves estimates for each field
are reviewed by the independent engineer based on significant new data or a
material change with a review of each field undertaken at least every two
years.
2. Proven and Probable Contingent Resources are based on both Tullow's
estimates and the Group reserves report produced by an independent engineer.
3. Tullow has classified the Ugandan discoveries Mputa and Nzizi as
Commercial Reserves.
4. Africa Contingent Resources include the hydrocarbons associated with
the Jubilee field discovery wells Hyedua-1 and Mahogany-1 in Ghana and a
limited area around the Kingfisher-1 well in Uganda.
The Group provides for depletion and amortisation of tangible fixed assets
on a net entitlements basis, which reflects the terms of the Production
Sharing Contracts related to each field. Total net entitlement reserves were
126.6 mmboe at 30 June 2008 (31 December 2007: 128.1 mmboe).
Contingent Resources relate to resources in respect of which development
plans are in the course of preparation or further evaluation is under way with
a view to development within the foreseeable future.
About Tullow Oil plc
Tullow Oil plc is a leading independent oil and gas, exploration and
production group and is quoted on the London and Irish Stock Exchanges
(symbol: TLW.L). The Group has interests in over 100 production and
exploration licences in 22 countries and focuses on four core areas: Europe,
Africa, South Asia and South America. For further information please consult
the Group's website www.tullowoil.com.
Events on results day
In conjunction with these results Tullow is conducting a London
Presentation and a number of events for the financial community.
09.30 BST - UK/European conference call (and simultaneous Webcast)
To access the call please dial the appropriate number below shortly before the
c
