LONDON, March 29 /PRNewswire-FirstCall/ -- Tullow Oil plc ("Tullow")
(LSE: TLW), the independent oil and gas, exploration and production Group,
announces its results for the year ended December 31, 2005. These results
have been prepared in accordance with the Group's policies under International
Financial Reporting Standards (IFRS).
Tullow had a strong 2005, delivering record results. The Group achieved
exceptional asset performance and consistent organic production growth against
a background of increasing global oil and gas prices. This performance,
coupled with financing initiatives undertaken in 2005, has allowed Tullow to
reinvest at record levels while maintaining a progressive dividend policy and
modest levels of gearing.
Results Highlights
2005 2004 Change
GBP millions GBP millions
Sales Revenue 445.2 225.3 Up 98%
Operating Profit 198.6 56.8 Up 250%
Profit Before Tax 178.6 46.8 Up 282%
Operating Cash Flow before
Working Capital 288.1 139.5 Up 106%
Stg p Stg p
Basic Earnings per Share 17.50 5.88 Up 198%
Final Dividend per Share 3.00 1.25 Up 140%
* 44% increase in average annual production to 58,450 boepd
* Organic reserves replacement of 118%; total reserves increased by 53
mmboe to 358 mmboe
* Current production is 69,000 boepd and is expected to reach 75,000 boepd
by year end
* Three discoveries close to Tullow infrastructure in the UK and Gabon
* Completion of pounds Sterling 200 million Schooner and Ketch acquisition
and major redevelopment under way Steady progress in development of the
giant Kudu gas project offshore Namibia
* Good progress on the key Okume Complex and West Espoir developments
* Year-to-date exploration: two oil discoveries in Uganda, one UK gas
discovery, two dry holes in Gabon
Commenting today, Pat Plunkett, Chairman, said:
"2005 was a year of many achievements for Tullow which included our first
operated UK offshore development, the largest refinancing ever undertaken by a
UK oil and gas independent and a record level of development, exploration and
new venture activity across the Group's three core areas. Today's record
results demonstrate the quality and depth of Tullow's portfolio. We are
reaping the benefits of the scale achieved through our major acquisition and
investment program of recent years and we look forward to the many exciting
opportunities for further development and growth in 2006 and beyond."
Aidan Heavey, Chief Executive, said:
"Our production is growing strongly and is expected to reach 75,000 boepd
by the end of the year. On the exploration front we plan to drill over 20
wells, including further wells in Uganda, where we have scheduled an extensive
exploration and appraisal program to build on the recent M'Puta and Waraga
discoveries. The outlook for Tullow is very positive. Oil and gas prices are
strong and forecast to remain so. Our existing assets and work programs are
expected to deliver robust organic growth and our new ventures program and
other development opportunities offer compelling upside potential."
Presentation, Webcast and Conference Calls
In conjunction with these results Tullow is conducting a presentation in
London and a number of events for the financial community. Details are
available in the 2005 Results Center on the Group's website at
http://www.tullowoil.com.
2005 Results
For the year ended December 31, 2005
2005 was an excellent year for Tullow, with many new achievements in
operations and a record financial performance. These results illustrate the
benefits of the Group's increased scale and deliver on the significant
investments made over the past five years, during which period the Group has
been transformed through a mixture of organic and acquisition-led expansion.
Record Financial Performance
Sales revenue increased 98% to pounds 445.2 million (2004: pounds 225.3
million), reflecting a full year contribution from the Energy Africa assets,
nine months contribution from the Schooner and Ketch fields and oil and gas
prices significantly higher than in 2004.
Operating profit increased 250% to pounds 198.6 million (2004: pounds 56.8
million) and profit before tax increased 282% to pounds 178.6 million (2004:
pounds 46.8 million), including the profit of pounds 36.1 million on the
disposal of non-core oil assets in the UK and offshore Congo and the sale of
equity in the Horne & Wren development.
Basic earnings per share amounted to 17.50 pence, an increase of 198%
compared to 5.88 pence in 2004. Operating cash flow before movements in
working capital amounted to pounds 288.1 million, an increase of 106% over
2004, reflecting the quality of the Group's producing asset base and allowing
record levels of reinvestment in the business.
Progressive Dividend Policy
The Group's capital expenditure programs are comfortably funded from
strong operating cash flow and profit on disposals. The refinancing
initiatives undertaken during 2005 have significantly enhanced the Group's
financial flexibility over both the short and long-term. In line with the
Group's progressive dividend policy, and reflecting the cash generated by the
business and the capital investment and acquisition opportunities available,
the Board recommends a final dividend of 3.00 pence per share. This brings the
total dividend for the year to 4.00 pence per share (2004: 1.75 pence per
share). Subject to shareholder approval at the Annual General Meeting (AGM),
the dividend will be paid on June 7 to shareholders on the register at May 12.
Major investment in People and Facilities
A major investment in people and facilities has been made reflecting the
material growth of the Group in recent years. During 2005 the London team
moved to a new office at Chiswick, over 40 additional staff were recruited and
dedicated teams were put in place for the important Schooner & Ketch and Kudu
projects.
As announced in February, Adrian Nel, Tullow's Exploration Director, will
retire at the AGM in May. Since his appointment to the Board in September
2004, Adrian has made an outstanding contribution to the integration of
Tullow's exploration activities and enhanced the Group's license portfolio and
exploration strategy. Angus McCoss will join Tullow in April as General
Manager Exploration. Angus previously worked for the Shell Group in Nigeria.
Paul McDade is appointed to the Board of Tullow, with effect from today. Paul
joined the Group in 2001 and became Chief Operating Officer following the
Energy Africa Acquisition in 2004.
Continuing Positive Outlook
Tullow has steadily developed a balanced portfolio of international
exploration and production assets. The performance of these assets during 2005
and the organic growth expected in 2006 provide a solid base for further
growth. Projects such as the development of the Kudu field in Namibia and the
exploration program in Uganda provide possibilities for significant changes in
the Group's scale, while the Group's cash flow and modest gearing create the
flexibility to accelerate programs and take advantage of development and
acquisition opportunities as they arise. The outlook for Tullow is very
positive.
Operations Review
The focus of Tullow's business is to maintain a strong portfolio of assets
and a growth strategy that will allow the Group to continue its development
through all phases of the resource price cycle. Over time we have built a
balanced portfolio focused on three core areas -- North West Europe, Africa
and South Asia. We strive to maintain this balance in the various aspects of
our portfolio: between oil and gas production, between our geographical areas,
across political and currency exposures and between moderate and high-risk
exploration programs.
Growing in the UK Gas Market
Tullow has steadily increased its acreage and developed its reputation as
a technically innovative and commercially astute operator since its entry into
the UK Southern North Sea in 2001. Tullow now has over 40 licenses and a
strategic position in terms of acreage and infrastructure. During this time,
the UK has become a net importer of gas to satisfy indigenous demand. This
market change has increased pressure on pricing, resulting in sustained gas
price rises for domestic and industrial consumers. While a number of
initiatives are planned to increase national supply capability, the recent
extreme volatility in European gas markets provides further evidence that the
prospects for independent producers in the UK gas market remain very
favorable.
The Group continues to extend and enhance its position through a
combination of acquisitions, organic growth via active development,
exploration and participation in licensing rounds. 2005 activity, including
the completion of the operated Horne & Wren development, the acquisition of
the Schooner and Ketch assets and infill drilling in producing fields brought
Tullow's UK Gas production to over 200 mmscfd for the first time in December.
This production level has since increased to over 210 mmscfd with the recent
completion of the Delilah well. In addition, the first well in the Schooner
and Ketch redevelopment, Schooner-10, has successfully encountered the
reservoir and is being prepared for production in April 2006.
Exploration is an important part of the UK business and the gas
discoveries during 2005 by the Opal and K3 exploration wells, and more
recently of the Humphrey well, continue to demonstrate the prospectivity of
the region and support its long-term future. Tullow plans a further six UK
exploration wells for this year, including the Cygnus exploration well which
is currently drilling.
African Reserve and Production Growth
Tullow believes there is an outstanding opportunity over the coming years
for the Group to continue to build a truly pan-African oil and gas business.
During 2005 we invested over pounds 139 million in our African business, with
exceptional results:
* In Gabon, infill drilling and exploration programs have more than
doubled reserves over the last two years and allowed us to maintain net
production to Tullow in excess of 17,000 boepd;
* In Equatorial Guinea, ongoing infill drilling and careful management of
the Ceiba field have enabled it to attain production levels not seen
since 2002, while the Okume project remains within budget and on
schedule for first oil by the end of 2006;
* In Congo, the M'Boundi field delineation is almost complete. In 2005 the
field delivered further significant increases in production and reserves
and improved sales prices;
* In Cote d'Ivoire, infill drilling on Espoir has brought production
increases of over 20% in recent months, while first oil from the West
Espoir development project is expected before year end;
* Current African oil production exceeds 34,000 bopd, with further
increases anticipated over the remainder of the year.
In Namibia, Tullow continues to make steady progress in the development of
the Kudu gas field. This is a strategic project, with the potential to
transform the Namibian energy market and contribute significantly to its
future energy requirements. 2006 will be an important year both for the gas
sales negotiations for the gas-to-power development and for the preparation
for two appraisal wells scheduled for the first quarter of 2007. These wells
will assist in determining the potential of the significant reserves upside of
the field.
Africa is a region of high exploration potential. During 2005 Tullow
drilled a total of six wells, recording a discovery in Gabon and providing
significant support for future work in Mauritania. Three wells were drilled in
Angola and while results were disappointing, a number of further opportunities
have been identified. The 2006 drilling program has already brought very
encouraging results. High impact exploration projects in Uganda produced two
discoveries, M'puta and Waraga and could mark the first stage in the
development of a material new hydrocarbon province. Tullow and its partners
plan a minimum of four further onshore wells in 2006 and two additional wells
in Lake Albert in 2007 as part of an extensive exploration and appraisal
program across its Albertine Basin acreage. Neither of two wells in early 2006
on the Akoum West and Soulandaka prospects in Gabon discovered commercial
hydrocarbons and the rig will now move to drill the Dogbolter prospect in the
Gryphon Marin license.
Tullow continues to seek new ventures in Africa and in March 2006, the
Government of Madagascar approved Tullow's participation in the onshore Block
3109. Further exploration and development opportunities are currently in the
final stages of negotiation and should include entry into at least one
additional country.
Renewing the South Asia Business
While Tullow's production in South Asia has been modest, an extensive work
program in 2005 covering a number of important exploration and development
projects has the potential to transform the Group's business in the area.
In Bangladesh, Tullow submitted an Appraisal Program to Petrobangla for
the Bangora and Lalmai discoveries in Block 9. The program includes extensive
3D seismic, appraisal drilling and the initiation of production on a long-term
test basis to help supply much needed gas to the Dhaka region. The seismic has
been completed and provided key information and encouragement for the
appraisal drilling, which will start in April 2006, as will first gas from the
long-term test. The introduction of Total as a partner in offshore Blocks
17&18 brought a renewal of activity with the recent commencement of an
offshore seismic survey.
In Pakistan, work on the development of Chachar field continues, with
first gas forecast for the final quarter of 2006. Drilling has commenced on
the Shahpur Chakar well in the Nawabshah block. We also added a number of
potentially high impact exploration blocks to our portfolio in Pakistan
including Kohat, where a seismic survey is under way and drilling is likely to
begin early in 2007.
In India, we recently commenced a 1,152 km 2D seismic program in Block
CB-ON/1. In parallel, the joint venture is integrating information from
significant regional discoveries to the South and the North, and we anticipate
a multi-well drilling program in 2007.
Rigorous Operational Risk Management
Risk management is central to our business, particularly in light of the
international spread of our activities and the dynamic nature of our industry.
The Group gives regular consideration to the key risks facing the business,
with particular reference to those concerning the overall safety of our
operations, the geographical balance of our activities and the characteristics
of our individual assets and joint ventures.
Finance Review
Tullow had a very strong 2005, achieving record profits, earnings and cash
flow from operations.
Compliance with IFRS
The results for 2005 have been prepared in accordance with the Group's
policies under IFRS. Tullow adopted IFRS with effect from January 1, 2004,
with the exception of IAS 39 in respect of derivative financial instruments,
which has been adopted with effect from January 1, 2005. The 2004 financial
statements have been restated under IFRS and were published on August 22, 2005
with full details of the accounting policies adopted and are published on the
Group's website at http://www.tullowoil.com.
Strong Results across Key Performance Indicators
The Group's financial performance was complemented by strong results
across key performance indicators.
Key Performance Indicators 2005 2004 Change
Lost Time Incident Frequency
Rate(1) 0.82 1.96 Down 58%
Production (boepd) 58,450 40,600 Up 44%
Operating Cash flow before
working capital per
boe (pounds) 13.50 9.45 Up 43%
Cash Operating Costs per
boe (pounds)(2) 4.84 4.40 Up 10%
Gearing (%)(3) 36% 17% Up 19%
Reserve Replacement (%) 118% 83% Up 35%
Realized Oil Price per bbl ($) 43.05 34.13 Up 26%
Realized Gas Price
(pence per therm) 33.85 22.89 Up 47%
(1) Lost Time Incidents per million man hours worked
(2) Cash operating costs are cost of sales excluding depletion and
amortization and under/over lift movements
(3) Gearing is net debt divided by net assets
Excellent Operating Performance
Working interest production averaged 58,450 boepd, while sales volumes
averaged 53,350 boepd. These production figures are 44% ahead of 2004,
principally as a result of a full year contribution from the Energy Africa
assets and a nine-month contribution from the Schooner and Ketch acquisition,
completed in March. During the year the Group disposed of the Alba and
Caledonia assets in June and the offshore Congo (Brazzaville) interests in
August.
Average prices realized during the year were significantly higher than in
2004. Oil was US$43.05/bbl (2004: US$34.13/bbl) and UK gas was 33.85p/therm
(2004: 22.89p/therm). Tullow's oil production sold at an average discount of
13% to Brent during the year. This discount is expected to reduce to between
8% and 9% during 2006. The Group also received tariff income of pounds 14.7
million (2004: pounds 9.4 million) from use of its UK infrastructure.
The combination of the higher prices and increased volumes meant that
revenue increased 98% to pounds 445.2 million (2004: pounds 225.3 million).
Revenue analyzed by
Core Area Oil Gas Total
GBP millions GBP millions GBP millions % of Total
NW Europe (UK) 17.6 161.9 179.5 40%
Africa 264.9 - 264.9 60%
South Asia - 0.8 0.8 -
Total 282.5 162.7 445.2
% of Total 63% 37%
Operating profit before exploration activities amounted to pounds 224.4
million (2004: pounds 74.7 million), up 200%, reflecting the strong growth in
Group production, profit on disposals and realized oil and gas prices.
Underlying cash operating costs, which exclude depletion and amortization
and movements on under/over lift, amounted to pounds 102.2 million (pounds
4.84/boe). These costs were marginally above expectations and reflected, in
particular, oil price linked royalty payments on Gabonese production.
Reported operating costs before depletion and amortization for the year of
pounds 123.5 million (2004: pounds 60.1 million) are also impacted by the
inclusion at market value of pounds 8.2 million associated with overlifted
volumes at December 31, pounds 5.5 million of overlift associated with the
disposal of Alba and Caledonia and pounds 7.6 million of overlift associated
with the sale of the Group's offshore Congo interests, completed in August
2005.
Depreciation, depletion and amortization for the year amounted to pounds
119.7 million (pounds 5.67/boe). Depreciation includes a total of pounds 2.4
million of impairment costs associated with Tullow's producing interests in
Pakistan.
Higher Exploration Write-off reflecting Increased Activity
Exploration costs written off were pounds 25.8 million (2004: pounds 18.0
million), in accordance with the Group's "successful efforts" accounting
policy, which requires that all costs associated with unsuccessful exploration
are written off to the Income Statement. The Group drilled 10 wells in 2005,
achieved four discoveries, and is planning to drill 20 wells in 2006.
Hedging reflected in Income Statement under IFRS
At December 31, 2005 the Group's derivative instruments had a negative
mark to market value of pounds 147.8 million. Of this amount, pounds 97.2
million (66%) relates to contracts acquired as part of the acquisition of
Energy Africa in 2004. While the bulk of these arrangements qualify for hedge
accounting and will consequently be largely reflected in the Income Statement
as the related contracts mature, the variations in crude oil discounts and gas
production patterns for Tullow inevitably led to a degree of hedge
ineffectiveness which is accordingly included in the charge of pounds 0.2
million recognized in the Income Statement for the year. The charge also
reflects the effect of time value on the mark to market value of the Group's
derivative instruments. The Group's hedge position as at March 22, 2006 can
be summarized as follows:
Hedge Position H1 2006 H2 2006 2007
Oil
Volume - bopd 10,242 11,217 7,000
Current Price Hedge -
US$/bbl 39.99 42.90 45.06
Gas Hedges
Volume - mmscfd 91.67 50.00 15.00
Current Price Hedge - p/therm 58.70 42.61 58.68
Healthy Interest Cover
The net interest charge for the year was pounds 19.8 million (2004: pounds
10.0 million). The increase reflects higher levels of net debt arising from
acquisitions and a one-off non-cash charge of pounds 4.1 million representing
accelerated amortization of financing fees associated with facilities
cancelled during the year as part of the Group's refinancing. Excluding these
items, and eliminating gains from asset disposals, interest was covered over
15.5 times (2004: 15.9 times).
Taxation
The tax charge of pounds 65.4 million (2004: pounds 15.5 million) relates
to the Group's enlarged North Sea and Gabonese activities and represents 37%
of the Group's profit before tax (2004: 33%). After adjusting for exploration
costs and non-recurring items associated with the profit on asset disposals,
the Group's underlying effective tax rate for the year is 35% (2004: 25%).
While Tullow's UK business has prospered, the Government's decision to
raise the supplemental corporation tax rate for the industry is difficult to
understand at a time when the UK, as a net importer of gas, is seeking to
promote investment in exploration and maximize recovery of indigenous
reserves.
Acquisitions and Portfolio Management
During the year Tullow completed the acquisition of the Schooner and Ketch
assets for a net cash payment on completion of pounds 189.3 million. A
purchase price allocation exercise has been undertaken on these assets
incorporating the fair value of all reserves, costs and contractual
arrangements acquired, resulting in a total allocation to oil and gas assets
of pounds 218.0 million. A creditor of pounds 31.3 million in respect of the
gas contracts which were out-of-the-money as at March 31, 2005 has also been
recognized; the majority of these contracts expire in late 2007.
The Group completed the disposal of the Alba and Caledonia offshore assets
in the UK and the offshore Congo (Brazzaville) assets in June and August 2005
respectively. In addition, final income has been recognized in relation to
incremental consideration received based on reserves and performance of the
Horne & Wren fields. The profit on disposals amounts to pounds 36.1 million
(inclusive of the pounds 5.5 million of overlift outlined above).
Record Operating Cash Flow and Strong Balance Sheet
The strong pricing environment, allied to increasing production and
effective control of underlying operating costs, led to record operating cash
flow before working capital movements of pounds 288.1 million, 106% ahead of
2004. This cash flow enabled the Group to maintain modest gearing of 36% at
year end, to increase dividends to shareholders in respect of the period by
129% and to invest pounds 193.0 million in exploration and development
activities in the year.
Over 80% of Group capital expenditure was associated with ongoing
development and production enhancement projects in the UK, Gabon, Congo
(Brazzaville), Equatorial Guinea and Cote d'Ivoire. The programs associated
with this expenditure have allowed Tullow to achieve organic reserve
replacement of 118% over the period. Tullow has approved total 2006 capital
expenditure of pounds 280 million across all assets, driving group production
to a target of over 75,000 boepd by year end.
Net assets at December 31, 2005 amounted to pounds 389.0 million (2004:
pounds 375.5 million). Net assets were reduced by pounds 120.4 million in the
year due to the recognition of a hedge reserve in accordance with IAS 39
(adopted January 1, 2005). An increase in net assets (foreign currency
translation reserve) of pounds 32.4 million resulted from the strengthening of
the US Dollar against Sterling from US$1.93 to US$1.72 in the year.
Successful major Refinancing
Over the last five years Tullow has undertaken a range of acquisitions and
field developments, all of which have been wholly or partly debt financed.
During 2005 the Group completed a US$850 million refinancing, the largest such
facility ever negotiated by a UK independent oil company. This has allowed
Tullow to consolidate existing borrowings into a single facility, to halve its
collateralization obligations and to maintain financial flexibility for future
growth. The Group currently has over US$400 million of unutilized debt
capacity in addition to its cash balances.
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.
Group Income Statement
Year Ended December 31, 2005
2004
2005 *Restated
GBP '000 GBP '000
Sales Revenue 445,232 225,256
Cost of Sales (243,149) (141,228)
Gross Profit 202,083 84,028
Administrative Expenses (13,793) (11,573)
Disposal of Subsidiaries 30,537 -
Profit on Sale of Oil and Gas Assets 5,524 2,292
Exploration Costs Written Off (25,783) (17,961)
Operating Profit 198,568 56,786
Loss on Hedging Instruments (159) -
Finance Revenue 4,367 3,458
Finance Costs (24,197) (13,449)
Profit from Continuing Activities before Tax 178,579 46,795
Income Tax Expense (65,443) (15,460)
Profit for the Year from Continuing Activities 113,136 31,335
Earnings per Ordinary Share Stg p Stg p
- Basic 17.50 5.88
- Diluted 17.15 5.81
Group Statement of Recognized Income and Expense
Year Ended December 31, 2005
2004
2005 *Restated
GBP '000 GBP '000
Profit for the Financial Year 113,136 31,335
Currency Translation Adjustments 32,447 (19,338)
Hedge Movement (120,449) -
Total Recognized Income and Expense
for the Year 25,134 11,997
*Restated for the effect of adopting IFRS
Group Balance Sheet
As at December 31, 2005
2004
2005 *Restated
GBP '000 GBP '000
ASSETS
Non-Current Assets
Intangible Exploration and Evaluation Assets 160,543 103,944
Property, Plant and Equipment 736,563 545,527
Investments 496 496
897,602 649,967
Current Assets
Inventories 5,141 3,392
Trade Receivables 66,441 37,156
Other Current Assets 26,851 17,051
Cash and Cash Equivalents 65,386 85,070
163,819 142,669
Total Assets 1,061,421 792,636
LIABILITIES
Current Liabilities
Trade and Other Payables (139,415) (102,614)
Other Financial Liabilities - (5,302)
Income Tax Payable (25,038) (13,359)
Derivative Financial Instruments (70,639) -
Total Current Liabilities (235,092) (121,275)
Non-Current Liabilities
Trade and Other Payables (19,118) (13,014)
Other Financial Liabilities (198,372) (143,398)
Deferred Tax Liabilities (51,473) (68,803)
Provisions (91,139) (70,679)
Derivative Financial Instruments (77,208) -
Total Non-Current Liabilities (437,310) (295,894)
Total Liabilities (672,402) (417,169)
Net Assets 389,019 375,467
EQUITY
Equity attributable to Equity Holders
of the Parent
Called up Share Capital 64,744 64,537
Share Premium 123,019 121,656
Other Reserves 60,589 148,591
Retained Earnings 140,667 40,683
Total Equity 389,019 375,467
*Restated for the effect of adopting IFRS
Group Cash Flow Statement
Year Ended December 31, 2005
2004
2005 *Restated
GBP '000 GBP '000
Cash Flows from Operating Activities
Cash Generated from Operations 273,840 154,307
Income Taxes Paid (25,360) (14,497)
Net Cash from Operating Activities 248,480 139,810
Cash Flows from Investing Activities
Acquisition of Subsidiary, Energy
Africa, Net of Cash Acquired - (166,055)
Disposal of Subsidiary 57,227 -
Disposal of Oil and Gas Assets 31,769 4,730
Purchase of Intangible Exploration &
Evaluation Assets (69,766) (23,912)
Purchase of Property, Plant and Equipment (298,320) (71,193)
Interest Received 4,359 3,436
Net Cash used in Investing Activities (274,731) (252,994)
Cash Flows from Financing Activities
Net Proceeds from Issue of Share Capital 1,570 120,913
Debt Arrangement Fees (10,481) (3,050)
Repayment of Bank Loans (351,637) (67,261)
Drawdown of Bank Loan 390,515 98,620
Interest Paid (21,483) (9,494)
Dividends Paid (14,555) (6,995)
Net Cash Used in Financing Activities (6,071) 132,733
Net (Decrease)/Increase in Cash and Cash
Equivalents (32,322) 19,549
Cash and Cash Equivalents at Beginning of
Period 85,070 65,631
Translation Difference 12,638 (110)
Cash and Cash Equivalents at end of Period 65,386 85,070
*Restated for the effect of adopting IFRS
Notes to the Preliminary Accounts
Year Ended December 31, 2005
1. Basis of Accounting and Presentation of Financial Information
The financial information contained in this announcement does not
constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. However, the financial statements contained in this
announcement are extracted from the audited statutory accounts for the
financial year ended December 31, 2005. Statutory accounts for 2004
prepared under UK GAAP have been delivered to the Registrar of
Companies and those for 2005 prepared under IFRS will be delivered
following the Company's AGM. The auditors have reported on those
accounts; their reports were unqualified and did not contain statements
under s.237(2) or (3) Companies Act 1985.
Whilst the financial information included in this preliminary
announcement has been complied in accordance with IFRS, this
announcement does not itself contain sufficient information to comply
with IFRS.
This is the first year in which the Group has prepared its financial
statements under IFRS and the comparatives have been restated from UK
Generally Accepted Accounting Practice (UK GAAP) to comply with IFRS.
The Group issued a press release in August 2005 incorporating its
preliminary IFRS financial statements for 2004 and revised accounting
policies, which are unchanged in these financial statements, and the
reconciliations to IFRS from the previously published UK GAAP financial
statements. This information is available on our website
(http://www.tullowoil.com).
2. Earnings per Share
The calculation of basic earnings per share is based on the profit for
the year after taxation of pounds 113,136,158 (2004 - pounds
31,335,220) and 646,637,815 (2004 - 532,980,261) ordinary shares, being
the weighted average number of shares in issue for the year.
The calculation of diluted earnings per share is based on the profit
for the year after taxation as for basic earnings per share. The number
of shares outstanding, however, is adjusted to show the potential
dilution if employee and other share options are converted into
ordinary shares. The weighted average number of ordinary shares is
increased by 13,214,424 (2004: 6,042,545) in respect of the share
option scheme, resulting in a diluted weighted average number of shares
of 659,852,239 (2004: 539,022,806).
3. Dividends Paid and Proposed
During the year the Company paid a final 2004 dividend of 1.25 pence
per share and an interim 2005 dividend of 1 pence per share, a total
dividend of 2.25 pence per share (2004: 1.5 pence per share). The
Directors intend to recommend a final 2005 dividend of 3 pence per
share, which, if approved at the AGM, will be paid on June 7 to
shareholders on the register at May 12.
4. 2005 Annual Report and Accounts
The Annual Report and Accounts will be posted to all shareholders on
May 2, 2006, save those who have elected to receive these
electronically. Investors willing to avail themselves of this facility
should visit our website (http://www.tullowoil.com) and follow the
appropriate links.
5. The Annual General Meeting is due to be held at Haberdashers' Hall, 18
West Smithfield, London, EC1 on Wednesday, May 31 at 12 noon.
6. Cash Flows from Operating Activities
2004
2005 *Restated
GBP '000 GBP '000
Profit before taxation 178,579 46,795
Adjustments for:
Depletion, Depreciation and Amortization 119,697 81,098
Foreign Exchange Profit/Loss 72 (4,044)
Exploration Costs 25,783 17,961
Disposal of Subsidiaries (30,537) -
Profit on Disposal of Oil and Gas Assets (5,524) (2,292)
Operating Cash Flow before Working Capital 288,070 139,517
Increase in Trade and Other Receivables (38,538) (34,215)
Increase in Inventories (1,749) (1,721)
Increase in Trade Payables 4,665 40,179
Share Based Payment Charge 1,403 556
Hedge Ineffectiveness 159 -
Interest Receivable (4,367) (3,458)
Finance Costs Payable 24,197 (13,449)
Cash Generated from Operations 273,840 154,307
7. Group Proven and Probable Reserves Summary (Unaudited)
EUROPE AFRICA ASIA TOTAL
Oil Gas Oil Gas Oil Gas Oil Gas Petroleum
mmbbl bcf mmbbl bcf mmbbl bcf mmbbl bcf mmboe
Commercial
Jan. 1,
2005 14.60 131.95 116.07 28.00 - 96.20 130.67 256.15 173.36
Revisions - 21.09 22.04 (3.79) - (0.03) 22.04 17.27 24.92
Acquisitions/
Disposals (13.81) 250.45 (12.95) - - - (26.76) 250.45 14.97
Production (0.79) (47.31) (12.20) (0.41) - (0.91) (12.99) (48.63) (21.10)
Dec. 31,
2005 - 356.18 112.96 23.80 - 95.26 112.96 475.24 192.15
Contingent
Jan. 1,
2005 - 121.80 - 780.60 - 16.20 - 918.60 153.10
Revisions - 69.60 0.70 0.60 - - 0.70 70.20 12.40
Dec. 31,
2005 - 191.40 0.70 781.20 - 16.20 0.70 988.80 165.50
Total
Dec. 31,
2005 - 547.58 113.65 805.00 - 111.46 113.65 1,464.04 357.65
Proven and Probable Commercial Reserves are based on a Group reserves
report produced by an independent engineer. Proven and Probable Contingent
Reserves are based on both Tullow's estimates and the Group reserves report
produced by an independent engineer.
The Group provides for depletion and amortization 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
162.2 mmboe at December 31, 2005 (2004: 149.99 mmboe), calculated at $40/bbl
(2004: $30/bbl). Contingent Reserves relate to reserves 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 90 production and exploration
licenses in 15 countries and focuses on three core areas: North West Europe,
Africa and South Asia. For further information please consult the Group's
website http://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. All times
are BST.
09.30 UK/European Conference Call (and simultaneous Webcast)
To access the call please dial the appropriate number below shortly before
the call and ask for the Tullow Oil plc conference call. A replay facility
will be available from approximately noon on March 29 until April 4. The
telephone numbers and access codes are:
Live Event Replay Facility available from Noon
UK Participants 020 7138 0828 UK Participants 020 7806 1970
Irish Participants 01 655 0485 Irish Participants 01 659 8321
Other Participants +44 20 7138 0828 Other Participants +44 20 7806 1970
Access Code 9143802#
To join into the live webcast, or play the on-demand version, you will
need to have either Real Player or Windows Media Player installed on your
computer.
11:30 AM US Conference Call
To access the call please dial the appropriate number below shortly before
the call and ask for the Tullow Oil plc conference call. A replay facility
will be available from approximately 8:30 PM March 29 until April 4. The
telephone numbers and access codes are:
Live Event Replay Facility available from 8:30 PM
Domestic Toll Free 877 502 9274 Domestic Toll Free 888 203 1112
Toll +1 913 981 5584 Toll +1 719 457 0820
Access Code 4166860
Contact: Chris Perry
Tullow Oil plc
+ 44-20-8996-1002
- or -
Brian J. Rafferty
Taylor Rafferty
212-889-4350
SOURCE Tullow Oil plc
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Related links:
http://www.tullowoil.com
CONTACT:
Chris Perry of Tullow Oil plc,
+44-20-8996-1002, or Brian J. Rafferty of Taylor Rafferty,
+1-212-889-4350, for Tullow Oil plc
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