Issue of Equity

RNS Number : 9845L

Tullow Oil PLC

21 January 2009

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

 21 January 2009

TULLOW OIL PLC ANNOUNCES A PLACING OF UP TO 9.1% OF ITS ISSUED ORDINARY SHARE CAPITAL 

Tullow Oil plc ('Tullow Oil', 'Tullow' or the 'Company') announces today its intention to place up to 66,938,141 new ordinary shares (the 'Placing Shares') in the Company, representing up to approximately 9.1 per cent of Tullow Oil's existing issued ordinary share capital ('the Placing'), with both new and existing institutional investors.

The Placing is being conducted, subject to the satisfaction of certain conditions, through an accelerated book-building process to be carried out by Merrill Lynch International ('Merrill Lynch') and RBS Hoare Govett Limited ('RBS Hoare Govett'), who are acting as joint bookrunners (the 'Joint Bookrunners'). The timing of the closing of the book, pricing and allocations are at the discretion of Tullow Oil, Merrill Lynch and RBS Hoare Govett. The number of Placing Shares and the price at which the Placing Shares are to be placed (the 'Placing Price') are subject to agreement between Tullow Oil, Merrill Lynch and RBS Hoare Govett at the close of the book-building process. Details of the number of Placing Shares and the Placing Price will be announced as soon as practicable after the close of the book-building process.

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of 10 pence each in the capital of the Company, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after the date of issue of the Placing Shares. The Placing will be made on a non-pre-emptive basis. If all the Placing Shares are placed, it would represent an increase of approximately 9.1 per cent. of the current issued ordinary share capital of the Company, and the Placing Shares would represent approximately 8.4 per cent. of the enlarged issued ordinary share capital of the Company.

The Company will apply for admission of the Placing Shares to listing on the Official List of the Financial Services Authority, to trading on the main market of the London Stock Exchange and trading on the Irish Stock Exchange ('Admission'). It is expected that Admission will take place and that trading will commence on 26 January 2009 (the 'Closing Date').

The Placing is conditional upon, inter alia, Admission becoming effective. The Placing is also conditional on the placing agreement between the Company, Merrill Lynch and RBS Hoare Govett not being terminated.

The Appendix to this announcement (which forms part of this announcement) sets out the terms and conditions of the Placing.

Background to the Placing

Tullow's business has continued to perform very strongly in 2008. A 100% exploration success rate was achieved in Ghana and Uganda and overall the Group's exploration drilling programme has resulted in 17 discoveries from 22 wells. Booked Commercial Reserves and Contingent Resources are expected to be upgraded to approximately 800 mmboe at the end of 2008 compared with 551 mmboe a year ago.

In Ghana, the recent Mahogany-3 and Hyedua-2 appraisal results have indicated the scope for additional phases of development on the Jubilee field and validated the fast track development decision for Phase 1.  Resource potential of up to 1.8 billion barrels for the Jubilee field has been confirmed with a P50 most likely case upgraded to 1.2 billion barrels. Most recently, the Hyedua-2 test flowed at 16,750 bopd. This result has provided a strong underpinning to the Phase 1 Jubilee development by confirming good reservoir connectivity and high productivity which indicates future production well deliverability in excess of 20,000 bopd. In addition, this result has contributed to Tullow's independent auditor assessing that 170 mmbo of Commercial Reserves can be booked at year end, equivalent to 490 mmbo of gross field reserves. First oil remains on target for the second half of 2010.

In Uganda, the discovery of the Buffalo oil field in December 2008 ensured that the resources threshold for commercial development has been achieved. Significant further exploration success has now been announced this month with the Giraffe discovery, which is one of the largest recent onshore oil discoveries in Africa. These latest results mean that Lake Albert is Tullow's second world class basin and options for commercialisation and first oil production are now being fast tracked.

Phase 1 of the Jubilee development project is now substantially under way. Tullow's existing reserve based lending facility, which matures in 2012, is underpinned by a strong syndicate of 18 banks. Tullow has been working very closely with this syndicate and certain new banks to incorporate the first phase of the Ghana Jubilee project, together with the existing production assets, into a new combined facility of up to $2bn. Approval from banks of facilities of $1.15bn (c.60%) is already in place with the remainder of banks well advanced in their internal process and scheduled to seek credit committee approval before the end of January. Tullow is highly confident of securing an increased reserve based lending facility sufficient to deliver upon its existing development expenditure, including the first phase of the Jubilee field development. Financial close is targeted for February, 2009. 

Use of Proceeds

Tullow will fund Jubilee Phase 1 and existing mature production activities from these reserve based lending debt facilities. However, Tullow is now in the middle of a very exciting period for its Ghanaian and Ugandan operations with further transformational exploration wells to be drilled in the first half of 2009. In particular, this includes the Tweneboa and Teak exploration wells in Ghana, which are of a similar play type to the Jubilee field. Tullow may also undertake further appraisal of the Jubilee field beyond Phase 1. In Uganda, Tullow will soon drill the Ngassa well in Lake Albert, the largest prospect identified so far in the region, as well as continuing to appraise and commercialise the area on a fast track basis.

In 2009, Tullow will also seek to augment underlying cash flow through ongoing active portfolio management and careful allocation of discretionary capital. Given the significant success of Tullow's ongoing drilling campaigns, the Company believes that it is now appropriate to increase its equity capital base to finance these exciting growth opportunities. As well as strengthening the balance sheet, today's placing will allow Tullow to fund selective high impact exploration and appraisal opportunities in Ghana, to commercialise its world class asset in Uganda and also take advantage of other opportunities that may present themselves in the coming months.

Commenting on the proposed Placing, Aidan Heavey, Chief Executive Officer said:

'Tullow has had an outstanding year in 2008 and in recent weeks has announced major exploration and appraisal success in both Ghana and Uganda. Further potentially transformational wells will be drilled in 2009 in both locations. The Jubilee Phase 1 development is on track and the potential for additional phases has been confirmed. Secondly, Tullow has significantly exceeded the threshold in Uganda and now also regards the Lake Albert area as a world class basin. This success and future prospectivity, combined with the Placing announced today and the imminent closure of Tullow's debt refinancing, will mean that Tullow will start 2009 from a position of significant financial and operational strength.'

Contacts

Tullow Oil plc
Aidan Heavey, Chief Executive Officer	[phone]
Ian Springett, Chief Financial Officer	[phone]
Chris Perry, Head of Investor Relations	[phone]
Merrill Lynch International
Andrew Osborne	[phone]
Rupert Hume-Kendall
RBS Hoare Govett Limited
Andrew Foster	[phone]
Jeremy Thompson

This announcement contains (or may contain) certain forward-looking statements with respect to certain of Tullow Oil's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. Tullow Oil cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as 'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', or other words of similar meaning. Examples of forward-looking statements include, amongst others, statements regarding Tullow Oil's oil and gas Contingent Reserves, future financial position, income growth, impairment charges, business strategy, projected levels of growth in the banking and financial markets, projected costs, estimates of capital expenditure, and plans, dividend growth and objectives for future operations of Tullow Oil and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic and global economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ('IFRS') applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation or regulatory investigations, the success of future explorations, acquisitions and other strategic transactions and the impact of competition - a number of which factors are beyond Tullow Oil's control. As a result, Tullow Oil's actual future results may differ materially from the plans, goals, and expectations set forth in Tullow Oil's forward-looking statements. Any forward-looking statements made herein by or on behalf of Tullow Oil speak only as of the date they are made. Except as required by the Financial Services Authority (the 'FSA'), the London Stock Exchange, the Irish Stock Exchange or applicable law, Tullow Oil expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in Tullow Oil's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. 

This announcement is for information purposes only and shall not constitute an offer to buy, sell, issue, or subscribe for, or the solicitation of an offer to buy, sell, issue, or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This announcement has been issued by and is the sole responsibility of Tullow Oil.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Merrill Lynch, RBS Hoare Govett or by any of their respective affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Merrill Lynch International, which is authorised and regulated in the United Kingdom by the FSA, is acting for Tullow Oil and for no-one else in connection with the Placing, and will not be responsible to anyone other than Tullow Oil for providing the protections afforded to customers of Merrill Lynch International or for providing advice to any other person in relation to the Placing or any other matter referred to herein.

RBS Hoare Govett, which is authorised and regulated in the United Kingdom by the FSA, is acting for Tullow Oil and for no-one else in connection with the Placing, and will not be responsible to anyone other than Tullow Oil for providing the protections afforded to customers of RBS Hoare Govett nor for providing advice to any other person in relation to the Placing or any other matter referred to herein. 

The distribution of this announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by Tullow Oil or the Joint Bookrunners that would permit an offering of such shares or possession or distribution of this announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by Tullow Oil and the Joint Bookrunners to inform themselves about, and to observe such restrictions.

The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS (AS DEFINED IN ARTICLE 2(1)(E) OF EU DIRECTIVE 2003/71/EC (THE 'PROSPECTUS DIRECTIVE')); AND/OR (B) PERSONS IN THE UNITED KINGDOM WHO ARE QUALIFIED INVESTORS AND PERSONS WHO ARE (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE 'ORDER'); OR (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ('HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC') OF THE ORDER; OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS IN (A) AND (B) TOGETHER BEING REFERRED TO AS 'RELEVANT PERSONS'). THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN TULLOW OIL.

Persons (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given ('Placees') will be deemed to have read and understood this announcement, including the Appendix, in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings contained in the Appendix. In particular, each such Placee represents, warrants and acknowledges that it is: (i) a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business; and (ii) outside the United States and is subscribing for the Placing Shares in an 'offshore transaction' (within the meaning of Regulation S under the United States Securities Act of 1933 (the 'Securities Act').

This announcement, including the Appendix, is not for distribution directly or indirectly in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan or any jurisdiction into which the same would be unlawful. This announcement does not constitute or form part of an offer or solicitation to purchase or subscribe for shares in the capital of Tullow Oil in the United States, Canada, Australia or Japan or any jurisdiction in which such an offer or solicitation is unlawful. In particular, the Placing Shares referred to in this announcement have not been, and will not be, registered under the Securities Act and may not be offered or sold in the United States absent registration or an exemption from the registration requirements under the Securities Act. The Placing Shares referred to in this announcement are being offered and sold outside the United States in accordance with Regulation S under the Securities Act and in the United States to 'qualified institutional buyers' in accordance with the exemption from registration under the Securities Act for transactions by an issuer not involving a public offering. No public offering of securities of Tullow Oil will be made in connection with the Placing in the United Kingdom, the United States or elsewhere.

The relevant clearances have not been, and nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Placing Shares have not been, and nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Canada, Australia or Japan. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Canada, Australia or Japan or any other jurisdiction outside the United Kingdom. 

The Placing Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission (the 'SEC'), any State securities commission or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this announcement. Any representation to the contrary is unlawful. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of the Appendix or this announcement should seek appropriate advice before taking any action.

The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the London Stock Exchange and the Irish Stock Exchange. Neither the content of Tullow Oil's website nor any website accessible by hyperlinks on Tullow Oil's website is incorporated in, or forms part of, this announcement.

APPENDIX

TERMS AND CONDITIONS

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

Details of the Placing

The Joint Bookrunners have entered into an agreement with Tullow Oil (the 'Placing Agreement') under which, subject to the conditions set out therein, the Joint Bookrunners have agreed to use reasonable endeavours to procure subscribers for Placing Shares at a price determined following completion of the bookbuilding process in respect of the Placing (the 'Bookbuild'), described in this announcement and set out in the Placing Agreement.

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of Tullow Oil including the right to receive all dividends and other distributions declared in respect of such ordinary shares after the date of issue of the Placing Shares.

As part of the Placing, Tullow Oil has agreed that it will not issue or sell any ordinary shares for a period of 90 days after Admission, without the prior consent of Merrill Lynch and RBS Hoare Govett. These agreements are subject to certain customary exceptions and do not prevent Tullow Oil from granting or exercising options pursuant to the terms of the existing employee share schemes of Tullow Oil or convertible bonds disclosed in publicly available information. 

Application for listing and admission to trading

Application will be made to the FSA for admission of the Placing Shares to the Official List of the FSA (the 'Official List'), to London Stock Exchange plc for admission to trading of the Placing Shares on its main market for listed securities and to the Irish Stock Exchange for the shares to be admitted to the official list of the Irish Stock Exchange. It is expected that Admission will become effective on or around 26 January 2009 and that dealings in the Placing Shares will commence at that time.

Bookbuild

The Joint Bookrunners will today commence the Bookbuild to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

The Joint Bookrunners and Tullow Oil shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their sole discretion, determine.

Participation in, and principal terms of, the Placing

1. Merrill Lynch and RBS Hoare Govett are acting as Joint Bookrunners and agents of Tullow Oil.

2. Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by the Joint Bookrunners. The Joint Bookrunners and their affiliates are each entitled to enter bids in the Bookbuild as principal.

3. The Bookbuild will establish a single price payable to the Joint Bookrunners by all Placees whose bids are successful (the 'Placing Price'). The Placing Price and the number of Placing Shares to be issued will be agreed between the Joint Bookrunners and Tullow Oil following completion of the Bookbuild. Any discount to the market price of the ordinary shares will be determined in accordance with the Listing Rules. The Placing Price and the number of Placing Shares will be announced on a Regulatory Information Service following the completion of the Bookbuild (the 'Pricing Announcement'). 

4. To bid in the Bookbuild, Placees should communicate their bid by telephone to their usual sales contact at either of the Joint Bookrunners. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at either the Placing Price, which is ultimately established by Tullow Oil and the Joint Bookrunners, or at prices up to a price limit specified in its bid. Bids may be scaled down by the Joint Bookrunners on the basis referred to in paragraph 9 below.

5. The Bookbuild is expected to close no later than 4.30 p.m. (London time) on 21 January 2009 but may be closed earlier or later at the discretion of the Joint Bookrunners. The Joint Bookrunners may, in agreement with Tullow Oil, accept bids that are received after the Bookbuild has closed. Tullow Oil reserves the right (upon the agreement of the Joint Bookrunners) to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion.

6. Each prospective Placee's allocation will be agreed between the Joint Bookrunners and Tullow Oil and will be confirmed orally by one of the Joint Bookrunners as agent of Tullow Oil following the close of the Bookbuild. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who will at that point become a Placee) to subscribe for the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with Tullow Oil's memorandum and articles of association.

7. Each prospective Placee's allocation and commitment will be evidenced by a contract note issued to such Placee by one of the Joint Bookrunners. The terms of this Appendix will be deemed incorporated therein. 

8. Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the relevant Joint Bookrunner as agent of Tullow Oil, to pay in cleared funds, an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe and Tullow Oil has agreed to allot and issue to that Placee.

9. Subject to paragraphs 4 and 5 above, the Joint Bookrunners may choose to accept bids, either in whole or in part, on the basis of allocations determined in agreement with Tullow Oil and may scale down any bids for this purpose on such basis as they may determine. The Joint Bookrunners may also, notwithstanding paragraphs 4 and 5 above, subject to the prior consent of Tullow Oil (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.

10. A bid in the Bookbuild will be made on the terms and subject to the conditions in this announcement and will be legally binding on the Placee on behalf of which it is made and except with the consent of either of the Joint Bookrunners will not be capable of variation or revocation after the time at which it is submitted.

11. Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under 'Registration and Settlement'.

12. All obligations under the Bookbuild and Placing will be subject to fulfilment of the conditions referred to below under 'Conditions of the Placing' and to the Placing not being terminated on the basis referred to below under 'Termination of the Placing Agreement'.

13. By participating in the Bookbuild, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

14. To the fullest extent permissible by law, neither of the Joint Bookrunners nor any of their affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither of the Joint Bookrunners nor any of their affiliates shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of the Joint Bookrunner's conduct of the Bookbuild or of such alternative method of effecting the Placing as the Joint Bookrunners and Tullow Oil may agree.

Conditions of the Placing

The obligations of the Joint Bookrunners under the Placing Agreement are conditional on, inter alia: 

(a) agreement being reached between Tullow Oil and the Joint Bookrunners on the Placing Price and the number of Placing Shares; 

(b) the representations and warranties contained in the Placing Agreement being true and accurate on the date of the Placing Agreement and at the Closing Date; 

(c) Tullow Oil complying with its obligations under the Placing Agreement to the extent the same fall to be performed or satisfied prior to Admission; 

(d) Tullow Oil allotting, subject only to Admission, the Placing Shares in accordance with the Placing Agreement; and

(e) Admission taking place by 8.00 a.m. (London time) on 26 January 2009 or such later date as Tullow Oil and the Joint Bookrunners may otherwise agree.

If any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the Joint Bookrunners, by the respective time or date where specified (or such later time and/or date as Tullow Oil and the Joint Bookrunners may agree), the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.

The Joint Bookrunners may, at their discretion and upon such terms as they think fit, waive compliance by Tullow Oil with the whole or any part of any of Tullow Oil's obligations in relation to the conditions in the Placing Agreement save that the condition in the Placing Agreement relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this announcement.

None of the Joint Bookrunners, Tullow Oil or any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and /or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Joint Bookrunners.

Termination of the Placing

The Joint Bookrunners are entitled, at any time before Admission, to terminate the Placing Agreement in relation to their obligations in respect of the Placing Shares by giving notice to Tullow Oil if, inter alia:

(a) there has been a breach of any of the warranties and representations contained in the Placing Agreement or any failure to perform any of the undertakings or agreements in the Placing Agreement; or

(b) it shall come to the notice of the Joint Bookrunners that any statement contained in this announcement, or any other document or announcement issued or published by or on behalf of Tullow Oil in connection with the Placing (together the 'Placing Documents'), is or has become untrue, incorrect or misleading in any respect, or any matter has arisen, which would, if the Placing were made at that time, constitute a material omission from the Placing Documents, or any of them, and which the Joint Bookrunners consider to be material in the context of the Placing or the underwriting of the Placing Shares, Admission or any of the transactions contemplated by the Placing Agreement; or

(c) in the opinion of the Joint Bookrunners, there has been, or the Joint Bookrunners have become aware of, or there has been made public, a material adverse change, or any development reasonably likely to involve a material adverse change in the condition (financial, operational, legal or otherwise), or in the earnings, management, solvency, business affairs, business prospects or financial prospects of Tullow Oil and its subsidiaries, whether or not arising in the ordinary course of business since the date of the Placing Agreement; or

(d) there has occurred (i) any material adverse change in the financial markets in the United States, the United Kingdom, member states of the European Union or in the international financial markets, (ii) any outbreak or escalation of hostilities, act of terrorism or other calamity or crisis or (iii) any change or development involving a prospective change in national or international political, financial or economic conditions, or currency exchange rates, in each case the effect of which is such as to make it, in the judgement of the Joint Bookrunners, impracticable or inadvisable to market the Placing Shares or to enforce contracts for the sale of the Placing Shares.

Upon such termination, the parties to the Placing Agreement shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement subject to certain exceptions.

By participating in the Placing, Placees agree that the exercise by the Joint Bookrunners of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Joint Bookrunners and that they need not make any reference to Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.

No prospectus

No offering document or prospectus has been or will be submitted to be approved by the FSA in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in this announcement (including this Appendix) released by Tullow Oil today, and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.

Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement (including this Appendix) is exclusively the responsibility of Tullow Oil and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of Tullow Oil or the Joint Bookrunners or any other person and none of the Joint Bookrunners or Tullow Oil nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of Tullow Oil in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Registration and settlement

Settlement of transactions in the Placing Shares following Admission will take place within the system administered by Euroclear UK & Ireland Limited ('CREST'), subject to certain exceptions. Tullow Oil reserves the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if, in the Joint Bookrunners' opinion, delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Following the close of the Bookbuild for the Placing, each Placee allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares to be allocated to it at the Placing Price and settlement instructions.

Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with the Joint Bookrunners.

Tullow Oil will deliver the Placing Shares to a CREST account operated by Merrill Lynch as agent for Tullow Oil and Merrill Lynch will enter its delivery (DEL) instruction into the CREST system. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

It is expected that settlement will be on 26 January 2009 on a T + 3 basis in accordance with the instructions given to the Joint Bookrunners.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Joint Bookrunners. 

Each Placee is deemed to agree that, if it does not comply with these obligations, Tullow Oil may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Tullow Oil's account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

Representations and warranties

By participating in the Placing each Placee (and any person acting on such Placee's behalf):

1. represents and warrants that it has read this announcement, including the Appendix, in its entirety; 

2. acknowledges that no offering document or prospectus has been prepared in connection with the placing of the Placing Shares and represents and warrants that it has not received a prospectus or other offering document in connection therewith;

3. acknowledges that the Tullow Oil Ordinary Shares are listed on the Official List of the FSA, and Tullow Oil is therefore required to publish certain business and financial information in accordance with the rules and practices of the FSA, which includes a description of the nature of Tullow Oil's business and Tullow Oil's most recent balance sheet and profit and loss account and that it is able to obtain or access such information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other publicly traded company, without undue difficulty;

4. acknowledges that none of the Joint Bookrunners or Tullow Oil nor any of their affiliates nor any person acting on behalf of any of them has provided, and will not provide, it with any material regarding the Placing Shares or Tullow Oil or any other person other than this announcement; nor has it requested any of the Joint Bookrunners, Tullow Oil, any of their affiliates or any person acting on behalf of any of them to provide it with any such information;

5. acknowledges that (i) it and, if different, the beneficial owner of the Placing Shares is not, and at the time the Placing Shares are acquired will not be residents of Australia, Canada or Japan, and (ii) the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada or Japan and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, in or into those jurisdictions;

6. acknowledges that the content of this announcement is exclusively the responsibility of Tullow Oil and that none of the Joint Bookrunners nor any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this announcement or any information previously published by or on behalf of Tullow Oil and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to subscribe for the Placing Shares is contained in this announcement and any information previously published by Tullow Oil by notification to a Regulatory Information Service, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of the Joint Bookrunners or Tullow Oil and none of the Joint Bookrunners or Tullow Oil will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of Tullow Oil in deciding to participate in the Placing;

7. acknowledges that none of the Joint Bookrunners nor any person acting on behalf of them nor any of their affiliates has or shall have any liability for any publicly available or filed information, or any representation relating to Tullow Oil, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person; 

8. represents and warrants that neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services)

9. represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 (the 'Regulations') and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations; 

10. if a financial intermediary, as that term is used in Article 3(2) of the Directive of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading (No 2003/71/EC) (as amended) (the 'Prospectus Directive') (including any relevant implementing measure in any member state), represents and warrants that the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the European Economic Area which has implemented the Prospectus Directive other than to qualified investors, or in circumstances in which the prior consent of the Joint Bookrunners has been given to the proposed offer or resale;

11. represents and warrants that it has not offered or sold and, prior to the expiry of a period of six months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 ('FSMA');

12. represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);

13. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;

14. represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;

15. represents and warrants that it is a 'qualified investor' within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);

16. represents and warrants that it and any person acting on its behalf is entitled to subscribe for and purchase the Placing Shares under the laws of all relevant jurisdictions which would apply to it, and that it and any person acting on its behalf is in compliance with applicable laws in the jurisdiction of its residence, the residence of the Company, or otherwise;

17. undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as the Joint Bookrunners may in their discretion determine and without liability to such Placee;

18. acknowledges that its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares which it will be entitled, and required, to subscribe for, and that Tullow Oil may call upon it to subscribe for a lower number of Placing Shares (if any), but in no event in aggregate more than the aforementioned maximum;

19. acknowledges that neither of the Joint Bookrunners, nor any of their respective affiliates, nor any person acting on behalf of either of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of either Joint Bookrunners and that the Joint Bookrunners have no duties or responsibilities to it for providing the protections afforded to their clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

20. undertakes that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither of the Joint Bookrunners or Tullow Oil will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify Tullow Oil and the Joint Bookrunners in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of Merrill Lynch who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;

21. acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by Tullow Oil or the Joint Bookrunners in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange; 

22. agrees that Tullow Oil, the Joint Bookrunners and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Joint Bookrunners on its own behalf and on behalf of Tullow Oil and are irrevocable;

23. agrees to indemnify and hold Tullow Oil, the Joint Bookrunners and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

24. acknowledges that its commitment to subscribe for Placing Shares on the terms set out herein and in the contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to Tullow Oil's conduct of the Placing. The foregoing representations, warranties and confirmations are given for the benefit of Tullow Oil as well as the Joint Bookrunners. The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to the subscription by it and/or such person direct from Tullow Oil for the Placing Shares in question. Such agreement assumes, and is based on a warranty from each Placee, that neither it, nor the person specified by it for registration as holder, of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services). If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event the Placee agrees that it shall be responsible for such stamp duty or stamp duty reserve tax, and neither Tullow Oil nor the Joint Bookrunners shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify the Joint Bookrunners accordingly;

25. acknowledges that no action has been or will be taken by any of the Company, the Joint Bookrunners or any person acting on behalf of Tullow Oil or the Joint Bookrunners that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required; and

26. acknowledges that it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and are able to sustain a complete loss in connection with the Placing. It has relied upon its own examination and due diligence of Tullow Oil and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved.

By participating in the Placing, each Placee (and any person acting on Placee's behalf) subscribing for Placing Shares pursuant to Regulation S of the Securities Act acknowledges that the Placing Shares are being offered and sold pursuant to Regulation S under the Securities Act in a transaction not involving a public offering of securities in the United States and the Placing Shares have not been and will not be registered under the Securities Act. The offer and sale of the Placing Shares to it has been made outside of the United States in an 'offshore transaction' (as such term is defined in Regulation S under the Securities Act). It is outside of the United States during any offer or sale of Placing Shares to it.

By participating in the Placing, each Placee (and any person acting on such Placee's behalf) who is a QIB (as defined below) subscribing for Placing Shares being offered under a relevant exemption from the registration requirements of the Securities Act:

1. represents and warrants that it is a 'qualified institutional buyer' ('QIB') within the meaning of Rule 144A under the Securities Act;

2. represents and warrants that the Placing Shares are being offered and sold to it in accordance with the exemption from registration under the Securities Act for transactions by an issuer not involving a public offering of securities in the United States and that the Placing Shares have not been, and will not be, registered under the Securities Act or with any State or other Jurisdiction of the United States;

3. represents and warrants that the Placing Shares will not be reoffered, resold, pledged or otherwise transferred by it except (a) outside the United States in an offshore transaction pursuant to Rule 903 or Rule 904 of Regulation S under the Securities Act, (b) in the United States to a person whom the seller reasonably believes is a QIB to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A, pursuant to rule 144A under the Securities Act, (c) pursuant to Rule 144 under the Securities Act (if available), (d) to Tullow Oil, (e) pursuant to an effective registration statement under the Securities Act, or (f) pursuant to another available exemption, if any, from registration under the Securities Act, in each case in compliance with all applicable laws; 

4. acknowledges that the Placing Shares are 'restricted securities' as defined in Rule 144(a)(3) under the Securities Act;

5. represents and warrants that it will notify any transferee to whom it subsequently reoffers, resells, pledges or otherwise transfers the Placing Shares of the foregoing restrictions on transfer;

6. represents and warrants that for so long as the Placing Shares are 'restricted securities' (within the meaning of Rule 144(a)(3) under the Securities Act), it will segregate such Placing Shares from any other shares that they hold that are not restricted securities, shall not deposit such shares in any depositary facility established or maintained by a depositary bank and will only transfer such Placing Shares in accordance with the foregoing restrictions;

7. represents and warrants that if it is acquiring the Placing Shares as a fiduciary or agent for one or more investor accounts, each such account is a QIB, it has sole investment discretion with respect to each such account and they have full power and authority to make the acknowledgements, representations, warranties and agreements herein on behalf of each such account;

8. represents and warrants that it is acquiring such Placing Shares for its own account (or the account of a QIB as to which it has sole investment discretion) for investment purposes and (subject to the disposition of its property being at all times within its control) not with a view to any distribution of the Placing Shares; and

9. represents and warrants that no representation has been made as to the availability of the exemption provided by Rule 144 or any other exemption under the Securities Act for the reoffer, resale, pledge or transfer of the Placing Shares.

In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares. 

Each Placee and any person acting on behalf of each Placee acknowledges and agrees that the Joint Bookrunners or any of their affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares. 

When a Placee or person acting on behalf of the Placee is dealing with the Joint Bookrunners, any money held in an account with any of the Joint Bookrunners on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FSA made under FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the relevant Joint Bookrunners' money in accordance with the client money rules and will be used by the relevant Joint Bookrunners in the course of their own business; and the Placee will rank only as a general creditor of the Joint Bookrunners. All times and dates in this announcement may be subject to amendment. The Joint Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any changes.

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

 

END

 

 

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