Final Results

Tullow Oil PLC 23 March 2001 Tullow Oil plc Preliminary Results for the year ended 31 December 2000 HIGHLIGHTS Tullow Oil plc is an independent oil and gas exploration, development and production company with interests in the North Sea, Onshore UK, Pakistan, Bangladesh, India, Cote d'Ivoire, Romania and Egypt. Financial Position Strengthens - Turnover up 50% to EUR12.5m (1999: EUR8.35m) - Operating Profit Before Exploration costs increased by 125% to EUR2.12m (1999: EUR944,622) - Cash on hand at year end of EUR57 million - No Turnover or profit contribution from UK Acquisition A Transforming Acquisition - £201m purchase of BP Amoco southern North Sea assets near completion - Murdoch package already completed/completion of Thames/Hewett package due by end March - Proven & probable reserves increased by over 30% - Production increased to nearly 25,000 boepd - First North Sea drilling success on 'K' well in Murdoch acreage - Scope for further low-risk development of reserves Success on Onshore UK & International Operations - Full year of production in Pakistan - Cote d'Ivoire development progressing, on target for first oil before end 2001 - Bangladesh, Block 9 signing scheduled for early April - Successful appraisal/development well in North Yorkshire Other Developments - Appointment of John Lander to the Board of Tullow - Re-domicile of Tullow to the UK completed - entered All-Share Index 19 March 2001 Commenting on the results, Aidan Heavey, Managing Director, said: 'In the year 2000, Tullow took a significant step forward in achieving its goal of becoming a fully integrated oil and gas exploration and production business with a focus on active exploration. Several major investments made by the Company in recent years are coming to fruition and substantial increases in turnover and profitability can be expected in 2001. In addition, the North Sea acquisition has given the company the critical mass and cash flow it needs to go forward and achieve its strategic objectives and we look forward to the many opportunities that lie ahead of us.' Enquiries: Aidan Heavey, Managing Director Tel: 020 7389 0300 Tullow Oil plc Tom Hickey, Finance Director Tel: 020 7389 0300 Tullow Oil plc Graham Martin, Legal & Commercial Director Tel: 020 7389 0300 Tullow Oil plc Peter Binns/Simon Ellis/Emma McCaffrey Tel: 020 7786 9600 Binns & Co. PR Limited Judith Parry/Simon Rothschild Tel: 020 7256 5756 Millham Communications 23 March 2001 Chairman's Statement Introduction I am pleased to announce the results for 2000 and to report to you on major advances made by Tullow during that period. On the operating front, I am pleased to report significant improvement in turnover and operating profit for 2000. The other key event occurred in July, when Tullow announced the acquisition of a portfolio of southern North Sea assets from BP Amoco ARCO for £201 million - a company-transforming acquisition. The purchase did not impact on production revenues for 2000 but will be a very significant contributor to revenue and profitability in the current year. The success of the K well, which was announced earlier today, demonstrates the potential for extending the reserves of our new North Sea acreage, while exploration opportunities in Bangladesh and Algeria offer outstanding potential in the medium term. Finally, in December 2000, Tullow completed its re-domicile to the United Kingdom and has recently entered the All-Share Index. Results The combination of strong resource prices and a full year of production in Pakistan resulted in a 50% increase in Tullow's turnover to EUR12.5m and a 125% increase in its operating profitability before exploration costs. While revenues from North Yorkshire were lower than 1999, West Firsby had an excellent year and increased its revenue by c.60%. The principal investments in 2000 were on Ivory Coast development and deposits and related costs associated with the UK acquisition. Cash on hand at year end of EUR57 million represents the retained balance of the equity funding raised in August 2000. The Company has fully adopted FRS 15 in respect of 2000. The Exploration Cost write-off of EUR1.1m reflects the relatively low level of exploration undertaken due to the focus in 2000 on development projects, notably Cote d'Ivoire and the concentration on the UK acquisition. The costs of re-domicile have been written off as an exceptional item, in line with established precedent and best accounting practice. Following its re-domicile and the completion of the southern North Sea acquisition, Tullow will in future report in Sterling. We expect our next set of figures to show very significant growth in turnover and profitability following the full integration of the UK offshore assets into the Tullow Group. Acquisition of Southern North Sea Assets from BP Amoco Arco Tullow's strategy is to become a fully integrated oil and gas exploration and production business with a continuing focus on active exploration. To facilitate this strategy, in early 2000 the Group undertook a major strategic review encompassing all elements of its existing asset portfolio, production profile and funding options. As a result of their review, the Directors determined that a significant gas production purchase was central to the realisation of its objectives. A major opportunity arose when, under a condition of the merger of BP Amoco with ARCO, certain southern North Sea interests held by ARCO and Britoil were offered for sale in a competitive bid process. In a single transaction, the acquisition met all the key targets identified in our strategic review. The consideration was Stg £200.5 million and the acquisition was partly funded by a very successful equity placing in August which raised approximately Stg £41.8 million (net of expenses), and a five year syndicated loan providing up to Stg £125 million in financing. Following completion, Tullow will be one of the largest producers of gas in the North Sea. In addition, the existence of high quality exploration acreage and a number of undeveloped discoveries gives major scope for further low risk reserve additions. The building of an organisation to manage the North Sea assets and its integration into the Tullow Group is at an advanced stage. Since the announcement of the transaction, the assets being acquired have performed in line with expectations and the Company will benefit from their contribution in the current year. This acquisition, which increases Tullow's proven and probable reserves by over 30% and raises the production profile immediately to almost 25,000 boepd, positions the Company ideally both to benefit from further growth and development of the UK and European gas markets and to develop and extend its international exploration activities in an optimal manner. This was a protracted and difficult sale process which was subject to the approval of the UK Government, the European Commission, licence partners and Tullow shareholders. I would like to thank all who assisted the Company during this process, in particular the team of legal, financial and technical advisors who complemented a focused and dedicated Tullow team. International Operations The Espoir field development in Cote d'Ivoire has been progressing and remains on target for first oil this year. In addition to the current development, a number of further exciting exploration prospects have recently been identified by seismic. These have the potential to lead to major reserve increases. During 2000, significant progress continued to be made in relation to the finalisation of the grant of Block 9 in Bangladesh under the second licensing round. In March the Production Sharing Contract was initialled and the first phase exploration programme was agreed. I am now delighted to announce that we have been informed by the Authorities in Bangladesh that the formal signing ceremony for the licence will occur in Dhaka in early April. We look forward to starting work on this outstandingly prospective area as soon as possible. Production continues from the Sara and Suri fields in Pakistan to the Guddu Power station. While a number of exploration wells drilled in the area during 2000 failed to prove additional reserves, Pakistan nevertheless remains a core area for Tullow and where it retains some very exciting exploration acreage. In India work continued on finalising the Production Sharing Contracts of a number of Blocks. Since the year end Tullow has signed a farm out agreement with an Indian company, Reliance Industries, in relation to 5 of these Blocks. Exploration continued in Romania where a preliminary seismic study on Blocks EPI-3 and EPI-8 has yielded very encouraging results and a further programme of seismic acquisition is planned for spring 2001. Production from our North Yorkshire fields declined during the year but has now increased again following the successful appraisal/development well, Marishes-2. This well also discovered gas in the previously untested Brotherton formation and will secure supplies to Knapton for the foreseeable future. On 19 March 2001, Tullow executed an Agreement with AGIP Algeria Exploration B.V. to acquire a 30% participating interest in Block 222b, onshore Algeria. It is the first time that Tullow has undertaken a project in Algeria. Board Appointment To reflect Tullow's commitment to long term participation in the North Sea and the importance of this package of assets to the Group going forward, I am delighted to announce that John Lander, Managing Director of the Company's North Sea subsidiary, Tullow Exploration Limited, has been appointed to the Board of Tullow. John has been involved in international oil and gas exploration for over 30 years and from 1989 to 1995 was Managing Director of Pict Petroleum plc, which in 1996 merged with Premier Oil plc. More recently he was Executive Director UK for British Borneo Petroleum Syndicate plc and Managing Director of Vectis Petroleum Limited, a private oil & gas consultancy company. As a former President of the PESGB, John brings a wealth of experience in the areas of exploration and new ventures, both in the North Sea and internationally and I look forward to working with him. Re-domicile In 1999, Tullow announced its intention to re-domicile to the UK. This process was completed in December, making the company eligible for inclusion in all major indices and greatly increasing the number of investors who can invest in the company, and on Monday, 19th March, the company entered the All Share Index. While this means that future Annual General Meetings will be held in the UK, Tullow is committed to retaining strong links with its loyal Irish shareholder base and intends to hold a similar meeting to facilitate Irish shareholders on the day following its statutory UK AGM. Conclusion I would like to thank all Tullow employees for their unceasing commitment and enthusiasm during a year of major progress for the group and our shareholders for their support in making this advance possible. I look forward with great confidence to a very bright future for Tullow. Patrick Plunkett Chairman 23rd March 2001 TULLOW OIL PLC PRELIMINARY RESULTS FOR YEAR ENDED 31ST DECEMBER 2000 CONSOLIDATED PROFIT AND LOSS ACCOUNT NOTES 2000 1999 EUR EUR TURNOVER 12,495,964 8,354,742 ---------- --------- COST OF SALES Operating Costs 4,513,591 5,022,977 Depletion and Amortisation 3,923,985 1,482,012 --------- --------- 8,437,576 6,504,989 ---------- --------- GROSS PROFIT 4,058,388 1,849,753 ---------- --------- Administrative Expenses 1,866,945 828,986 Depreciation 68,656 76,145 ---------- --------- 1,935,601 905,131 ---------- --------- OPERATING PROFIT BEFORE EXPLORATION COSTS 2,122,787 944,622 Exploration Costs Written Off (1,103,544) (19,737,425) ---------- ----------- OPERATING PROFIT/(LOSS) 1,019,243 (18,792,803) Group Reorganisation Costs 3 (542,172) - ---------- ----------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE INTEREST 477,071 (18,792,803) Interest Receivable and Similar Income 1,554,619 241,269 Interest Payable (758,573) (724,533) ---------- ---------- PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 1,273,117 (19,276,067) Taxation - - --------- ---------- NET PROFIT/(LOSS) 1,273,117 (19,276,067) ========= ========== EARNINGS/(LOSS) PER SHARE - EURO CENTS 4 - Basic 0.41 (8.05) - Diluted 0.40 (7.55) ========= ========= TULLOW OIL PLC PRELIMINARY RESULTS FOR YEAR ENDED 31ST DECEMBER 2000 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2000 1999 EUR EUR Profit/(Loss) for the Year 1,273,117 (19,276,067) Currency Translation Adjustments on Foreign Currency Net Investments (2,071,737) (749,970) ---------- ----------- Total Recognised Losses (798,620) (20,026,037) ========== =========== RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2000 1999 EUR EUR Profit/(Loss) for the Year 1,273,117 (19,276,067) Currency Translation Adjustments (2,071,737) (749,970) Shares Issued & Share Premium on Shares Issued 67,397,616 29,304,440 ---------- ----------- Net Increase in Shareholders' Funds 66,598,996 9,278,403 Shareholders' Funds - At 1st January 60,867,007 51,588,604 ---------- ----------- Shareholders' Funds - At 31st December 127,466,003 60,867,007 =========== =========== TULLOW OIL PLC PRELIMINARY RESULTS FOR YEAR ENDED 31ST DECEMBER 2000 CONSOLIDATED BALANCE SHEET AS AT 31ST DECEMBER 2000 NOTES 2000 1999 EUR EUR FIXED ASSETS Intangible Assets 30,340,119 25,825,659 Tangible Assets 57,727,136 39,581,445 ---------- ----------- 88,067,255 65,407,104 ---------- ----------- CURRENT ASSETS Debtors 13,109,871 3,234,651 Cash at Bank and in Hand 56,976,872 28,447,061 ---------- ----------- 70,086,743 31,681,712 ---------- ----------- CREDITORS - Amounts falling due within one year Bank Loans and Overdrafts 2,085,451 2,394,613 Other Creditors 12,912,182 17,476,300 ---------- ----------- 14,997,633 19,870,913 NET CURRENT ASSETS 55,089,110 11,810,799 ---------- ----------- TOTAL ASSETS LESS CURRENT LIABILITIES 143,156,365 77,217,903 CREDITORS - Amounts falling due after more than one year Bank Loans (15,132,072) (15,879,413) PROVISION FOR LIABILITIES AND CHARGES Decommissioning Costs (558,290) (471,483) ---------- ---------- NET ASSETS 127,466,003 60,867,007 =========== =========== CAPITAL AND RESERVES Equity Share Capital 56,593,933 44,181,575 Merger Reserve 5 111,848,161 56,862,903 Profit and Loss Account 6 (40,976,091) (40,177,471) ----------- ----------- EQUITY SHAREHOLDERS' FUNDS 127,466,003 60,867,007 =========== =========== TULLOW OIL PLC PRELIMINARY RESULTS FOR YEAR ENDED 31ST DECEMBER 2000 CONSOLIDATED CASH FLOW STATEMENT NOTES 2000 1999 EUR EUR Net Cash Inflow from Operating Activities 7 3,418,893 2,213,769 Returns on Investments and Servicing of Finance 8 52,758 (1,176,461) Capital Expenditure (41,282,953) (19,088,265) ---------- ----------- Net Cash Outflow before Financing (37,811,302) (18,050,957) Financing 9 67,397,616 29,304,440 ----------- ----------- Increase in Cash in the Year 29,586,314 11,253,483 ========== ========== Analysis of Changes in Net Funds/(Debt) 31.12.99 Cash Flow 31.12.00 EUR EUR EUR Cash at Bank and in Hand 28,447,061 28,529,811 56,976,872 Bank Loans Due within one year (2,394,613) 309,162 (2,085,451) Due after more than one year (15,879,413) 747,341 (15,132,072) ----------- ---------- ---------- 10,173,035 29,586,314 39,759,349 =========== ========== ========== TULLOW OIL PLC PRELIMINARY RESULTS FOR YEAR ENDED 31ST DECEMBER 2000 NOTES TO THE PRELIMINARY ACCOUNTS Note 1. Basis of Accounting The company was incorporated in England and Wales as a public limited company with registered number 3919249 on 4th February, 2000. Under a scheme of arrangement under Section 201 of the Companies Act, 1963 of Ireland holders of the ordinary shares in the Irish registered company Tullow Oil plc received one ordinary share in the company, being the new UK holding company of the same name, for each ordinary share held. This scheme became effective on 18th December, 2000. The consolidated accounts of the group have been prepared using merger accounting principles, as if businesses and assets comprising the group had been part of the group for the whole of 2000. Comparative accounts have been presented on the same basis. The accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards. Note 2. Basis of Preparation The financial information presented above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. An audit report has not yet been issued on the accounts for the year ended 31st December, 2000, nor have they been delivered to the Registrar of Companies. Note 3. Group Reorganisation Costs The costs associated with the restructuring of the Group under a scheme of arrangement under Section 201 of the Companies Act, 1963 of Ireland amounted to EUR 542,172. Note 4. Earnings/(Loss) Per Ordinary Share The calculation of basic and diluted earnings/(loss) per ordinary share is based on the following numbers of shares: 2000 1999 For basic earnings/(loss) per share Millions Millions Weighted Average Number of Shares in Issue for the Year 307 239 Effect of Dilutive Potential Ordinary Shares (Share Options) 6 3 ---- ---- For Diluted Earnings/(Loss) per Share 313 242 ==== ==== Note 5. Merger Reserve On 18th December, 2000 the new UK holding company issued 352,467,012 ordinary shares in exchange for the entire share capital of the previous Irish registered holding company. Shareholders received one Stg10p share for each EUR 0.13 share held. This transaction has been reflected in accordance with the merger accounting provisions of FRS 6. This gave rise to a merger reserve of EUR 111,848,161 at 31st December, 2000 and EUR 56,862,903 at 31st December 1999. Note 6. Profit and Loss Account 2000 1999 EUR EUR At 1st January (40,177,471) (19,436,595) Profit/(Loss) for Year 1,273,117 (19,276,067) Currency Translation Adjustments (2,071,737) (749,970) Re-denomination and re-nominalisation of share capital - (714,839) ---------------------------- At 31st December (40,976,091) (40,177,471) ============ ============= Note 7. Reconciliation of operating profit to operating cash flows 2000 1999 EUR EUR Operating Profit/(Loss) 1,019,243 (18,792,803) Depletion and Amortisation 3,923,985 1,482,012 Depreciation of Other Fixed Assets 68,656 76,145 Exploration Costs 1,103,544 19,737,425 (Increase)/Decrease in Trade Debtors (2,154,363) (347,120) Loss on Sale of Other Tangible Fixed Assets - 58,110 Group Reorganisation Costs (542,172) - ----------- ----------- Net Cash Inflow from Operating Activities 3,418,893 2,213,769 ----------- ----------- Note 8. Returns on Investments and Servicing of Finance Interest Receivable 1,554,619 241,269 Interest Payable (1,501,861) (1,417,730) -------------- ---------- 52,758 (1,176,461) -------------- ------------ Note 9. Financing Issue of Ordinary Shares 71,775,957 31,529,428 Costs of Share Issues (4,378,341) (2,224,988) --------------- ----------- 67,397,616 29,304,440 --------------- ----------- Note 10. Dividends No dividend is proposed (1999:nil). Note 11. 2000 Annual Report and Accounts The Annual Report and Accounts will be posted to all shareholders in due course. Unaudited Proven and Probable Reserves Summary EUROPE AFRICA ASIA TOTAL Oil Gas Oil Gas Oil Gas Oil Gas Petroleum mmbbl bcf mmbbl bcf mmbbl Bcf Mmbbl Bcf Mmboe 1st Jan 0.12 14.89 33.01 40.74 - 215.07 33.13 270.70 78.25 2000 Revisions 0.10 3.43 - - - (26.70) 0.10 (23.27) (3.78) Production(0.04) (1.09) - - - (4.86) (0.04) (5.95) (1.03) 31st Dec 0.18 17.23 33.01 40.74 - 183.51 33.19 241.48 73.44 2000

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