Placing, Open Offer & Interim Results

TULLOW OIL PLC 29 October 1999 TULLOW OIL PLC Interim Results for the Half Year Ended 30 June 1999 Placing of 38,461,538 New Ordinary Shares incorporating an Open Offer at STG 52p per share to raise approximately STG £20 million FINANCIAL HIGHLIGHTS Half Year Ended 30 June 1999 1998 Euro'000 Euro'000 Turnover 3,830 2,639 Pre-tax 319 (5,577) Profit/(loss) Basic 0.14c (2.43)c Earnings/(loss) per share (EPS) PLACING AND OPEN OFFER - Tullow Oil announces today a Placing of 38,461,538 New Ordinary Shares at STG 52p per share and an Open Offer of 10,739,423 of those New Ordinary Shares on the basis of 1 New Ordinary Share for every 22 Existing Ordinary Shares. - The purpose of the Placing and Open Offer is to allow the Group to fund its 3 key exploration, development and production projects and for general working capital purposes. - Holders of 11.66 per cent. of the Existing Ordinary Shares have irrevocably undertaken to allow their allocation of 1,252,458 New Ordinary Shares under the Open Offer to be placed firm. - The Placing and Open Offer has been underwritten by ABN Amro Rothschild. It is expected that dealings in the New Ordinary Shares will commence on 3rd December 1999. - Investec Henderson Crosthwaite has been appointed UK broker to Tullow Oil. Enquiries: Aidan Heavey, Managing Director Tel: +44-171 976 2600 Graham Martin, Legal & Commercial Director Tullow Oil plc Judith Parry/Simon Rothschild Tel: +44-171 256 5756 Millham Communications Joe Murray/Rachel Watchorn Tel: +353-1-661 4666 Murray Consultants TULLOW OIL PLC ('TULLOW' or 'COMPANY') PROPOSED PLACING OF 38,461,538 NEW ORDINARY SHARES AT STG 52p (EURO 0.81) PER SHARE ('PLACING') INCLUDING AN OPEN OFFER TO SHAREHOLDERS OF 10,739,423 NEW ORDINARY SHARES AT STG 52p (EURO 0.81) PER SHARE ('OPEN OFFER') INTRODUCTION The Board announced today a Placing and Open Offer to Qualifying Shareholders to raise approximately STG£18.9 million net of expenses (STG£20.0 million before expenses). It is expected that the Prospectus and the Application Form will be sent to Qualifying Shareholders during the week beginning Monday 8th November 1999. TERMS OF THE PLACING AND OPEN OFFER The Company proposes to issue 38,461,538 New Ordinary Shares by way of a Placing of which 10,739,423 New Ordinary Shares are the subject of an Open Offer. The Placing and Open Offer have been fully underwritten by ABN AMRO Rothschild. Investec Henderson Crosthwaite has been appointed UK brokers to the Company and to the Placing and Open Offer. Of these New Ordinary Shares, 28,974,573 will be placed firm, (including 1,252,458 New Ordinary Shares which certain Existing Shareholders have irrevocably undertaken not to take up under the Open Offer) and 9,486,965 New Ordinary Shares will be placed subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer. In order to provide Qualifying Shareholders with the opportunity to acquire New Ordinary Shares at the Issue Price, your Directors have arranged for the Company to invite applications for New Ordinary Shares at STG 52p per share on the basis of: 1 New Ordinary Share for every 22 Existing Ordinary Shares held at the close of business on the Record Date and so in proportion for any greater number of Existing Ordinary Shares then held. Fractional entitlements to New Ordinary Shares will not be allotted pursuant to the Open Offer (but will be aggregated and allotted as part of the Placing) and Qualifying Shareholders' entitlements will be rounded down accordingly. Application may be made by a Qualifying Shareholder for any number of New Ordinary Shares up to and including his maximum pro rata entitlement. Qualifying Shareholders should be aware that any New Ordinary Shares not applied for under the Open Offer will not be sold in the market or placed for the benefit of Qualifying Shareholders, but will be taken up by placees pursuant to the Placing Agreement. The New Ordinary Shares will, when issued, rank pari passu with the Existing Ordinary Shares. Application may only be made for New Ordinary Shares on the Application Form to be enclosed with the Prospectus, which is personal to the Qualifying Shareholder(s) named in the Application Form and may not be assigned, transferred or split except to satisfy bona fide market claims in relation to purchases through the market prior to the Existing Ordinary Shares being marked 'ex' the Open Offer. The Placing and Open Offer are conditional on, inter alia, Shareholders' approval at the EGM and Admission. The Prospectus will contain a notice convening an Extraordinary General Meeting at which the approval of Shareholders for the Placing and Open Offer will be sought. Application will be made for the New Ordinary Shares to be admitted to the Irish Official List and the Official List. It is expected that all the conditions will have been satisfied and that Admission will take place and that dealings in the New Ordinary Shares will commence on 3rd December 1999. It is anticipated that the Open Offer will close at 3.00pm on 30 November 1999. BACKGROUND TO AND REASONS FOR THE PLACING AND OPEN OFFER Since the completion of Tullow's last equity fundraising, a IR£30m rights issue in mid 1996, Tullow has pursued a progressive exploration policy, which the directors of Tullow believe has substantially contributed to the success of the Company, measured in terms of reserves growth, production and its exploration licence portfolio. In particular, Tullow has been successful in building a substantial acreage position in the Indian sub- continent and currently has interests in Bangladesh, Pakistan and India. With the imminent commencement of gas sales in Pakistan and the forthcoming drilling programme planned for Bangladesh, the Directors believe that Tullow's interest in this emerging gas province will be one of the key core areas of activity and revenue generation for Tullow over the next few years. Over the next 12 months, Tullow has planned an intensive programme of exploration and development covering 7 countries and including the drilling of 6 wells. In order to fulfil these exploration obligations and allow the development of the Company's existing reserves in a manner consistent with its strategy, the Directors believe it is now appropriate for Tullow to raise further equity funding. TULLOW'S STRATEGY Tullow's corporate strategy is to become a major player in the gas-to-power business in selected emerging markets while continuing to optimise its portfolio of exploration, development and production oil and gas assets. Gas-to-power projects involve the development of gas discoveries as a central element of an integrated electricity-generating project. One of the critical elements of securing finance for such an integrated power project is the availability of sufficient reliable supplies of gas to fuel the power generation. Tullow's reserve and development portfolio and exploration acreage in the Indian sub-continent leave it well positioned to be a major player in this market. Tullow has been active in the gas-to-power market for a number of years through its operations in Senegal which involve the management and operation of the provision of gas to the Cap des Biches power station, and more recently in the UK through its assumption of operational responsibility for the Knapton power station which is fuelled from Tullow's North Yorkshire gas fields. Tullow's recent agreement with Larsen & Toubro, which is India's largest integrated engineering company, in respect of its Indian exploration assets is also expected to provide access to the gas-to-power market in that country in a manner which it is hoped can be replicated throughout the Indian sub-continent. The first stage in this strategy is to identify proven hydrocarbon provinces where there is a major power demand and/or a power industry currently fuelled by expensive imports. Having identified such regions Tullow evaluates the exploration potential of hydrocarbon acreage within an economic distance of infrastructure and market and then acquires strategically positioned acreage. The second stage is to secure the market, before exploration drilling, by entering into strategic and synergistic joint ventures with local partners and/or power companies. Its current arrangement with Larsen & Toubro is an example of this type of structure. These joint ventures are aimed at integrating the gas field development and financing with the power projects while allowing for the trading of excess gas production. Such integrated gas-to-power projects should be flexible enough to meet the local demand for cheap power while maintaining a suitable rate of return for the gas-to-power joint venture partners. Tullow would expect to retain or acquire an equity interest in both the gas and the power elements of each project. Tullow believes this strategy will allow the Group to establish a stable earnings and cashflow position through gas sales to the power plant whilst retaining equity participation in any exploration upside. In addition to its participation in the gas-to-power market, the Company will also retain its historic exploration philosophy of securing open acreage, as operator, in areas which exhibit favourable geological and economic characteristics. Tullow also undertakes regular discussions with potential partners who share the Company's strategy with a view to accelerating exploration and development initiatives in all its territories through farmouts, strategic joint ventures and alliances or other mutually advantageous arrangements. USE OF PROCEEDS The proceeds of the Placing and Open Offer, which are expected to be Euro 29.3m (STG£18.9m) (net of expenses), is intended principally to be utilised as follows: STG£million (i) Committed Exploration 4.8 Programme on Blocks 17/18 in Bangladesh over the period 1999-2000 (ii) Tullow Equity obligations 6.2 in respect of the redevelopment of the Espoir field (iii)Completion of development 2.1 of Sara/Suri Fields in Pakistan (iv) General working capital 5.8 including refinancing of corporate debt In addition to the projects outlined in (i) to (iii) above, Tullow will participate in 2 further wells on its Senegalese interests in the period to December 2000, where its financial obligation is being carried pursuant to a recent farmout agreement, and 2 exploration wells in Pakistan. Tullow's remaining obligations and corporate overhead will be met from its operating cashflows and available facilities. All amounts are translated at the rate STG£1 = EURO1.56 and STG£1 = IR£1.23, being the effective rates on 28 October 1999, the latest practicable date prior to the publication of this announcement CURRENT TRADING AND FUTURE PROSPECTS OF THE GROUP The annual report and accounts of the Company for the year ended 31 December 1998 were issued to Shareholders on 30 June 1999. In 1999 the Group has continued to produce oil and gas from its properties in Senegal and the United Kingdom and revenues and cashflows have significantly increased over the corresponding period in 1998. Furthermore, Tullow's interim results for the 6 month period ended 30 June 1999, which are also announced today indicate that the Group has returned to profitability and given the improved resource prices currently being experienced, the Directors are confident of a satisfactory outcome for the year. The Group has an active drilling programme planned for the remainder of 1999 and 2000. The Directors believe that, following the successful completion of the Placing and Open Offer, Tullow will be well placed and have the necessary finances to continue to pursue its progressive exploration and appraisal/development programmes on its licence interests and discoveries. Should the Placing and Open Offer not be approved by shareholders, Tullow intends to consider other such avenues, including farmouts and adjustment of its planned programmes, and the rescheduling of certain of its debt, as may be necessary to meet its minimum exploration obligations and continue its development activities. In the near future, Tullow intends to seek shareholder approval for a change in its place of domicile from Ireland to the UK. Tullow already has dual headquarters in Dublin and London and the time of senior management is divided between the two. This is in line with Tullow's goal to become a leading international player in the gas-to-power business. Political Situation in Pakistan Tullow has operated in Pakistan since 1989, during which time the Company has operated under various different administrations. In common with its approach in its other operating territories, Tullow's policy in Pakistan is to operate its business in accordance with all applicable national laws and regulations for the benefit of shareholders and independent of the identity or philosophy of government. On an operational level the Directors do not expect Tullow's plans for Sara/Suri gas production nor any of the Company's other production, development or exploration plans in Pakistan to be in any way adversely impacted by recent events. In particular, WAPDA, the governmental authority operating the Guddu power station, has confirmed that it expects to receive gas from the Sara/Suri fields as planned under the provision of the Gas Sales Agreement negotiated earlier this year. The Directors are confident that the current administration will maintain a 'business as usual' approach to the energy sector and that Tullow's licence portfolio in Pakistan remains in full force and effect. EXPECTED TIMETABLE OF PRINCIPAL EVENTS 1999 Record date for the Open Offer 1 November Despatch of Circular and Notice of 8 November Extraordinary General Meeting to shareholders Latest time and date for splitting 3.00 pm on 25 Application Forms (to satisfy bona November fide market claims only) Latest time and date for receipt of Noon on 26 November forms of proxy for use at the Extraordinary General Meeting Latest time and date for receipt of 3.00 pm on 30 completed Application Forms and November payment in full under the Open Offer Extraordinary General Meeting Noon on 1 December Dealings in the New Ordinary Shares 8.30 am on 3 to commence December Share certificates for the New 10 December Ordinary Shares to be despatched by DEFINITIONS The following definitions apply throughout this document unless the context otherwise requires: 'ABN AMRO ABN AMRO Rothschild, an unincorporated Rothschild' collaboration between ABN AMRO Bank N.V. and NM Rothschild and Sons Limited 'Admission' the admission of the New Ordinary Shares to be issued pursuant to the Placing and Open Offer to the Official List and to the Irish Official List which is expected to become effective on 3rd December 1999 'Application the Application Form relating to the Form' Open Offer which is expected to be sent to Qualifying Shareholders on 8th November 1999 'Directors' the directors of the Company 'Existing the ordinary shares of Euro 0.13 each Ordinary in the capital of the Company in issue Shares' at the date of this document 'Extraordinary the Extraordinary General Meeting of General Meeting' the Company which is expected to be held at the offices of the Company at 12 noon on 1st December 1999 'Investec Investec Henderson Crosthwaite, a Henderson division of Investec Bank (UK) Limited Crosthwaite' 'Irish Official the Official List of the Irish Stock List' Exchange 'Irish Stock The Irish Stock Exchange Limited Exchange' 'Issue Price' STG 52p per New Ordinary Share 'London Stock London Stock Exchange Limited Exchange' 'New Ordinary the 38,461,538 new Ordinary Shares Shares' proposed to be issued pursuant to the Placing and Open Offer 'Official List' the Official List of the London Stock Exchange 'Open Offer' the conditional offer by the Company, to Qualifying Shareholders to subscribe for up to 10,739,423 New Ordinary Shares at the Issue Price on the terms and conditions to be set out in the Prospectus 'Open Offer the 10,739,423 New Ordinary Shares Shares' which are to be offered to Qualifying Shareholders under the Open Offer 'Ordinary Shares' the ordinary shares of Euro 0.13 each in the capital of the Company 'Placing' the conditional placing by ABN Amro Rothschild and Investec Henderson Crosthwaite of the Placing Shares pursuant to the Underwriting Agreement 'Placing Shares' the 38,461,538 New Ordinary Shares to be issued pursuant to the Placing 'Prospectus' Circular incorporating Listing Particulars and Notice of an Extraordinary General Meeting of the Company which is expected to be sent to shareholders on 8th November 1999 'Qualifying a holder of Ordinary Shares on the Shareholder' register at the close of business on the Record Date other than certain overseas shareholders 'Record Date' 1st November 1999 'Stock Exchanges' together the Irish Stock Exchange and the London Stock Exchange 'Subsidiaries' the subsidiaries of the Company 'Tullow' or Tullow Oil plc 'Company' 'Tullow Group' or the Company and its subsidiaries 'Group' TULLOW OIL PLC UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1999 CHAIRMAN'S STATEMENT FINANCIAL RESULTS - UK gas-to-power project contributes significantly to profits - Gas production from 2 Pakistani fields before year end; production to contribute substantial revenues in 2000 - Development proceeding on Espoir Oil and Gas field; production to commence in 2001 - Bangladeshi, Indian and Senegalese wells to be spudded shortly - Priority for gas-to-power development - Operating profits of Euro 452,233 - Diluted EPS of Euro 0.12 cents - Placing and Open Offer to raise approximately STG £20 million Commenting on these announcements today, Aidan Heavey, Managing Director of Tullow Oil said: 'In our interims shareholders can see tangible results from our policy of focusing strongly on gas-to-power development. Our UK gas-to-power interests are currently the principal contributors to profits. Two of our Pakistani discoveries are in the final stages of development and gas-to- power sales there will make a substantial contribution to revenues in 2000. We have a long history of operations in Pakistan and are confident that the recent political changes there will have no adverse effect on our plans. At the same time we are about to commence a drilling programme with exciting potential in Bangladesh. Based on these plans and a number of other exciting opportunities, we believe it is now appropriate for Tullow to raise further equity funding.' Enquiries: Aidan Heavey, Managing Director Tel: +44-171 976 2600 Graham Martin, Legal & Commercial Director Tullow Oil plc Judith Parry/Simon Rothschild Tel: +44-171 256 5756 Millham Communications Joe Murray/Rachel Watchorn Tel: +353-1-661 4666 Murray Consultants TULLOW OIL PLC UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 1999 The period under review saw the first results from our gas-to-power development programme. In January 1999, Tullow assumed operational responsibility for the Knapton Electricity Generating Station in the United Kingdom. The Company also increased its interest in and became operator of the three gas fields in North Yorkshire which supply the generating station. These developments were the principal contributors to the improved Operating Profits of 452,233 compared with Operating Losses of 699,057 in the first half of last year. A gas sales agreement was signed for the Sara gas field in Pakistan in March. Development of the field is on schedule and we expect to commence gas sales before the end of 1999 at an initial rate of 20 mmcfd. Test production from the nearby Suri discovery is also scheduled to commence in the same time frame, bringing expected total sales to the Guddu state owned electricity generating station to an initial 40 mmcfd. Sales from these fields are expected to make a substantial contribution to revenues and cash flow in the year ahead. While we are closely monitoring the situation in Pakistan, we do not expect our plans for Sara/Suri gas production nor any of our other production, development and exploration operations in Pakistan to be in any way adversely impacted by the recent political changes there. We have operated in Pakistan since 1989 and have experience of a variety of different administrations and, as a result, are confident that the current administration will maintain a 'business as usual' approach to the energy sector. Indeed, WAPDA, the governmental authority operating the Guddu power station, has confirmed that it expects to receive gas from the Sara/Suri fields as planned. These developments have been funded from our own resources, borrowing and partner participation. Tullow has today announced a Placing and Open Offer to raise approximately STG £20 million to provide funding for the Company's first offshore exploration drilling programme and first offshore development project as well as ongoing funding for the gas-to-power programme and further exploration activities. A gas sales agreement was signed for the Espoir oil & gas field, offshore Cte d'Ivoire in July. It is envisaged that the field will be developed in two phases, beginning with East Espoir where first oil and gas production is planned for late 2001. Development of West Espoir is scheduled for 2003/4. Production from the total field is planned to reach 18,000 bopd with a gas sales plateau of 33 mmcfd for some ten years. Tullow's first offshore exploration well in Bangladesh will be spudded in December 1999 in Blocks 17 & 18 where we have identified six major prospects. The Bangladeshi Government previously advised Tullow of its intention to award the onshore Blocks 9 and 11 to the Company under the second licensing round. We are currently awaiting an invitation from the Government to commence final negotiations on the terms of the Production Sharing Contracts in respect of these blocks. The rapidly growing demand for gas in India for the purpose of generating electricity presents considerable opportunities for fast-track gas-to-power projects. This fits our corporate strategy ideally and we have therefore positioned Tullow to capitalise upon these opportunities. We have entered into an agreement with India's largest integrated engineering company, Larsen and Toubro, to co-operate in exploration, development and downstream projects. As a result of this and the acquisition of a 90% interest in three new blocks from Okland, Tullow's oil and gas exploration portfolio is now the largest held by a foreign company in India and is twice the size of that held by its nearest overseas competitor. Exclusive negotiations continue and are at an advanced stage with the Tanzanian government for the development of the Mnazi Bay gas field and for the provision of electricity from a dedicated power station utilising gas from this field. I would like to take this opportunity to thank shareholders for their support over the last six months. After a great deal of hard work at the research and negotiation stages the Company has succeeded in securing an excellent portfolio of assets and key strategic alliances. The development of these assets is proceeding satisfactorily and the first half results show the initial benefits from this programme. The funding announced today will enable these assets to be developed in an optimal manner for the benefit of our shareholders and will also facilitate an exciting ongoing exploration programme. I look forward to the future with great confidence and optimism. Thomas Toner Chairman 29 October 1999 TULLOW OIL PLC Consolidated Profit and Loss Account 6 Months 6 Months 12 Months 30.06.99 30.06.98 31.12.98 Unaudited Unaudited Audited Euro Euro Euro TURNOVER Continuing 1,958,906 2,639,242 6,346,495 Operations Acquisition 1,870,680 - - --------- --------- --------- 3,829,586 2,639,242 6,346,495 ========= ========= ========= COST OF SALES Operating Costs 2,348,538 1,681,206 3,136,066 Amortisation 460,782 1,210,651 3,109,399 --------- --------- --------- 2,809,320 2,891,857 6,245,465 --------- --------- --------- GROSS 1,020,266 (252,615) 101,030 PROFIT/(LOSS) --------- --------- --------- ADMINISTRATION AND DEPRECIATION Administration 530,928 375,642 735,140 Costs Depreciation 37,105 70,800 101,475 --------- --------- --------- 568,033 446,442 836,615 --------- --------- --------- Operating Profit/(Loss) Continuing 59,892 (699,057) (735,585) Operations Acquisition 392,341 - - --------- --------- --------- - - 452,233 (699,057) (735,585) Other Income 117,871 256,929 437,404 Interest Payable (374,051) (103,494) (240,886) --------- --------- --------- Profit/(Loss) 196,053 (545,622) (539,067) Before Exploration Costs Exploration 123,030 (5,031,159)(22,368,736 Costs --------- ----------- ---------- Recovered/(Charged) PROFIT /(LOSS) ON ORDINARY ACTIVITIES Before Taxation 319,083 (5,576,781)(22,907,803) Taxation On - - 65,172 Ordinary --------- --------- --------- Activities Profit/(Loss) 319,083 (5,576,781)(22,842,631) For The --------- --------- --------- Financial Period Earnings/(Loss) Per Share (Note 2) Euro.Cents Euro.Cents Euro.Cents - Basic .14 (2.43) (9.80) - Diluted .12 (2.28) (9.17) ======== ======= ======= TULLOW OIL PLC Consolidated Balance Sheet 6 Months 6 Months 12 Months 30.06.99 30.06.98 31.12.98 Unaudited Unaudited Audited Euro Euro Euro FIXED ASSETS Intangible 24,720,228 22,973,832 19,764,159 Tangible 42,940,980 46,218,766 36,582,633 --------- --------- --------- 67,661,208 69,192,598 56,346,792 --------- --------- --------- CURRENT ASSETS Debtors 3,512,599 3,585,034 1,837,338 Bank/Cash 1,504,603 4,058,154 2,778,367 --------- --------- --------- 5,017,202 7,643,188 4,615,705 --------- --------- --------- CREDITORS (Amounts Falling Due Within One Year) Creditors 6,033,988 5,769,207 5,515,078 Bank 9,746,916 571,333 2,774,186 Loans/Overdrafts --------- --------- --------- 15,780,904 6,340,540 8,289,264 --------- --------- --------- NET CURRENT (10,763,702 1,302,648 (3,673,559) (LIABILITIES)/ ----------- --------- ---------- ASSETS TOTAL ASSETS 56,897,506 70,495,246 52,673,233 LESS CURRENT LIABILITIES CREDITORS (Amounts Falling Due After One Year) Bank Loan (6,636,112) (1,345,451) (1,084,629) --------- --------- --------- NET ASSETS 50,261,394 69,149,795 51,588,604 --------- --------- --------- CAPITAL AND RESERVES Share Capital 29,993,411 29,941,352 29,993,411 Share Premium 41,031,788 40,892,458 41,031,788 Profit and Loss (20,763,805)(1,684,015)(19,436,595) --------- --------- --------- SHAREHOLDERS' 50,261,394 69,149,795 51,588,604 FUNDS --------- --------- --------- TULLOW OIL PLC Group Cashflow Statement 6 Months 6 Months 12 Months 30.06.99 30.06.98 31.12.98 Unaudited Unaudited Audited Euro Euro Euro Net Cash Inflow from Operating Activities Profit/(Loss) 319,083 (5,576,781) (22,842,631) for the Period Amortisation 460,782 1,210,651 3,109,399 Depreciation 37,105 70,801 101,475 Interest (117,871) (256,929) (437,404) Receivable Interest Payable 374,051 103,494 240,886 Exploration (161,179) 5,031,159 22,368,736 (Recovered)/Charged Decrease in 527,579 111,260 42,343 Trade Debtors Profit on Sale - - (1,095) other Tangible --------- --------- --------- Fixed Assets 1,439,550 693,655 2,581,709 Returns on (525,027) (385,769) (256,070) Investments and Servicing of Finance Capital (14,712,500) (15,169,122)(20,600,081) Expenditure --------- --------- --------- Net Cash Outflow (13,797,977) (14,861,236) (18,274,442) before Financing Financing - 134,270 325,658 --------- --------- --------- (Decrease)/Incre (13,797,977)(14,726,966) (17,948,784) ase in Cash Net Funds at (1,080,448) 16,868,336 16,868,336 beginning of Period --------- --------- --------- Net Funds at end (14,878,425) 2,141,370 (1,080,448) of Period ========= ========= ========= YEAR 2000 An assessment of the preparations required in order to ensure Year 2000 compliance has been undertaken. Each business unit was asked to outline its individual circumstances in terms of Year 2000 compliance for IT systems and business critical computer controlled equipment. In all cases the systems were either Year 2000 compliant or Tullow had capital expenditure plans in place with appropriate timetables to ensure compliance in adequate time. Year 2000 compliance testing is based on tests conducted by outside professionals or by the Group's trained staff. Where appropriate, discussions are taking place with suppliers, customers and other relevant parties. Total estimated cost of resolving issues solely related to Year 2000 compliance is not material. The capital expenditure plans for all companies include, as part of the normal evaluation process, a requirement that they be Year 2000 compliant, The majority of such capital expenditure plans relate to either expansion of capacity or asset replacement. As far as is practical, the compliance programme is now complete. Tullow is confident that the risk of there being thus far unidentified non Year 2000 compliant components is business critical equipment is minimal. TULLOW OIL PLC NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. Accounting Policies and Presentation of Financial Information There are no changes to the accounting policies as set out on pages 33 and 34 of the Annual Report and Statement of Accounts for the year ended 31st December 1998. The currency used in these accounts is the Euro denoted by 'Euro' or the Symbol Euro Comparative figures have been translated at the fixed translation rate of Euro = IR£0.787564. Arising from a resolution passed at the Company's Annual General Meeting held on 27th August 1999, the Company's ordinary shares of IR10p each have been redenominated as ordinary shares of Euro 0.13 each. 2. Earnings/(Loss) per Ordinary Share The Calculation of basic and diluted Earnings/(Loss) per ordinary share is as follows: 6 Months 6 Months 12 Months 30.06.99 30.06.98 31.12.98 Unaudited Unaudited Audited Euro Euro Euro '000 '000 '000 NUMERATOR For basic and diluted loss per share Profit/(Loss) After 319 (5,577) (22,843) Tax ------------------------------------------------- DENOMINATOR Millions Millions Millions For basic Earnings/(Loss) per share Weighted Average 236 229 233 Number of Shares in Issue for the period Effect of Dilutive 22 16 16 Potential Ordinary Shares (Employee Share Options) ------------------------------------------------- Denominator for 258 245 249 Diluted Loss per Share ------------------------------------------------- Earnings/(Loss) Per Share (Note 2) Euro.Cents Euro.Cents Euro.Cents - Basic .14 (2.44) (9.80) - Diluted .12 (2.28) (9.17) ======== ======= ======= 3. Statement of Total Recognised Gains and Losses 6 Months 6 Months 12 Months 30.06.99 30.06.98 31.12.98 Unaudited Unaudited Audited Euro Euro Euro Profit /(Loss) for 319,083 (5,576,781) (22,842,631) period Currency (1,646,293) 182,001 (304,729) Translation adjustment on Foreign currency net investments ----------------------------- Total Recognised (1,327,210) (5,394,780) (23,147,360) Losses ============================= 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 At 1 0.55 3.59 19.20 49.54 0.70 259.58 20.45 312.71 72.56 January 1999 Acquisi 0.00 12.96 0.00 0.00 0.00 0.00 0.00 12.96 2.16 tions Product (0.02)(0.95)(0.00)(0.14)(0.00)(0.00) (0.02) (1.09) (0.20) ion At 30 0.53 15.60 19.20* 49.40* 0.70 259.58 20.43 324.58 74.52 June 1999 *Note: Cote d'Ivoire interest is subject to Petroci option to acquire a 10 per cent interest 5. Dividends No dividend was declared in the half year to 30 June 1999 or in 1998. 6. Auditors' Review The interim accounts (unaudited) have been reviewed by the Group's auditors, Robert J Kidney & Co. 7. Approval of accounts These interim accounts (unaudited) were approved by the board of Directors on 29 October 1999.

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