Final Results - Year Ended 31 Dec 1999, Part 1

Enterprise Oil PLC
2 March 2000

PART 1

ENTERPRISE OIL AUDITED RESULTS FOR THE YEAR 31 DECEMBER 1999

Enterprise Oil today announced its results for the year ended 31 December
1999. The main points are:

* The group made a record post tax profit of £177.2 million reflecting higher
production, improved oil prices and lower costs.

* Seven new fields were brought on stream in 1999 as production averaged
214,647 barrels of oil equivalent per day. Production in January 2000 averaged
a group record 263,476 boepd.

* Production replaced 212 per cent through the drill bit and reserve
revisions. Record reserves of 1,267 million barrels of oil equivalent.

* Drilling success with key wells in Ireland and Norway.

* Cost of sales per barrel £5.46 as against £5.58 in 1998.

* Full year dividend of 7.3 pence as against 6.9 pence in 1998.


Sir Graham Hearne, Chairman, commented that 1999 had been a year of
significant recovery for Enterprise, with record profits reflecting the impact
of rising production levels, lower costs and the improved oil price. 'I can
assure you that the group remains single-minded in its determination to
generate value for our shareholders. I emphasise that there will be no
complacency at Enterprise - the last two years have shown how volatile the
industry can be - and therefore we need to think and act with a longer view. I
firmly believe we have the right people, the right portfolio and the right
financial foundations to ensure the group has a profitable and exciting
future.'


A copy of the Stock Exchange Announcement is attached.

Enquiries:

Pierre Jungels, Chief Executive                       0207 925 4199
Andrew Shilston, Finance Director                     0207 925 4476
Patrick d'Ancona, Head of Public Relations            0207 925 4160
Peter Reilly, Head of Investor Relations              0207 925 4476



ENTERPRISE OIL plc

AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 1999


                                                        1999          1998
                                                               (Restated *)
                                                          £m            £m
-----------------------------------------------------------------------------
TURNOVER                                               850.0         563.1
PROFIT (LOSS) BEFORE TAXATION                          289.2         (29.6)
TAXATION (CHARGE)/CREDIT                              (112.0)         27.3
PROFIT (LOSS) AFTER TAXATION                           177.2          (2.3)
-----------------------------------------------------------------------------
AVERAGE PRODUCTION                             214,647 boepd   195,133 boepd
AVERAGE REALISED OIL PRICE                            £11.46         £7.84
                                                     ($18.53)      ($12.92)
-----------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE                              34.8p         (1.8p)
DIVIDENDS PER SHARE                                     7.3p          6.9p
-----------------------------------------------------------------------------
COST OF SALES PER BARREL                               £5.46         £5.58**
-----------------------------------------------------------------------------


* Restated for the effects of applying FRS12 (see note 1 and the 'restatement
of prior periods' section in the 'Financial Review - Full Year 1999' later in
this announcement).

** Adjusted to exclude the effect of ceiling test write-downs and a payment to
amend a transportation agreement (see note 2 to the accounts)


CHAIRMAN'S STATEMENT

Dear Shareholder

Twelve months ago, I opened my statement to you by declaring 1998 the toughest
year in the company's history. It is, therefore, with great pleasure and some
relief that I can declare 1999 to be a year of significant recovery. 

Post-tax profit of £177.2 million was a record for the group and reflected not
only a higher average realised oil price of $18.53 compared with $12.92 last
year, but also rising production levels and lower costs. 

Once again, the group more than replaced 1999 production, doing so by 212 per
cent. Upgrading of reserve estimates on existing fields such as Nelson, Pierce
and Valhall contributed significantly, together with the success of our
appraisal programme in Ireland. With first oil from seven of the new fields in
which we have been investing heavily, production rose to 214,647 boepd in 1999
(1998: 195,133 boepd), and in January 2000 averaged a record level of around
263,476 boepd.

It is our intention to provide an attractive mix of current returns and
growth, so that it is satisfying to note that as well as meeting our cost
targets, we have agreed in principle an important new project in Brazil, a
country now opening up to foreign investment from the oil sector for the first
time. Our exploration programme in 2000 will focus on significant prospects in
the West of Shetlands, the US Gulf of Mexico, Norway, Greece and Brazil.

The signals given by the oil price to the market are hard to interpret at
present. However, we continue to make our forward investment plans assuming
oil prices of $15-$18 per barrel rather than the much higher spot prices in
the range of $27-$28 presently being enjoyed. These high current prices are
nevertheless enabling us to rebuild our financial strength which continues to
be a cornerstone of our strategy.

It is proposed to pay a final dividend for 1999 of 4.5 pence, making a full
year dividend of 7.3 pence compared with 6.9 pence in 1998, with a record date
of 17 March and payment on 1 June.

I can assure you that the group will remain single-minded in its determination
to generate value for you, our shareholders. I am confident that our staff
possess the talent and the focus to deliver both growth and returns from the
company's high quality portfolio of assets and opportunities. I emphasise that
there will be no complacency at Enterprise - the last two years have shown how
volatile the industry can be - and therefore we need to think and act with a
longer view. This means investing at a level that can be sustained through the
inevitable cycles in the oil price.

I would like to take this opportunity to thank both the management and staff
for their continuing commitment during what has been a challenging time. I
firmly believe we have the right people, the right portfolio and the right
financial foundations to ensure the group has a profitable and exciting
future.

Sir Graham Hearne, Chairman
1 March 2000 


CHIEF EXECUTIVE'S REVIEW

Overview

* Post-tax profits of £177.2 million - a group record.
Reserve replacement of 212 per cent, with a finding cost of 60 pence per
barrel of oil equivalent.
* Future cash flow enhanced by significant production growth - seven new
fields on stream in 1999.
* Progress made in reaching our target return on fixed assets of 15 per cent
by 2001 - in 1999 return on fixed assets was 11.7 per cent, and cost of sales
down to £5.46 per barrel.
* Continued exploration and appraisal success with key wells in Ireland and
Norway, resulting in lower write-offs of exploration and appraisal
expenditure.
* Increased focus on new venture activity, with particular success in Brazil.
* Progress on the Val d'Agri development in Southern Italy.

Introduction

We believe that Enterprise, through the quality and breadth of its asset base
and the knowledge and skills of its staff, can continue to offer competitive
returns. We are committed to creating both growth and returns over a sustained
period, and have the management skill and rigorous processes to do so.

Consequently, despite the recovery of the oil price, we have not been
distracted from focusing on enhancing margins, controlling costs,
strengthening investment discipline and continuing active portfolio
management.

Our results for 1999 show that we have made significant progress in providing
a balance between growth, in terms of reserves and production, and returns on
the capital we invest.

In 1999 oil price realisations rose by more than 40 per cent to $18.53
(£11.46) per barrel as against $12.92 (£7.84) in 1998, and recent prices have
been around $28, significantly benefiting our financial performance. However,
we continue to plan our activities in full knowledge of the historic
short-term volatility of crude prices. Our task is to develop the group's
portfolio so that it provides returns right through the oil price cycle,
whilst maintaining a balance of risk and reward. Overall investment levels for
2000 and 2001 are expected to be broadly similar to 1999.

Reserves and Production

In 1999 the group replaced 212 per cent of its production excluding sales and
purchases. Finding costs per barrel were 60 pence for 1999. On a three year
rolling average basis these figures are 210 per cent and 89 pence per boe
respectively.  At the end of the year reserves stood at a record 1,267 million
barrels of oil equivalent as against 1,172 million boe 12 months earlier.

Key contributions came from Ireland where good progress was made in appraising
the Corrib gas discovery, from Norway where the Valhall water-flood project
will lead to the accessing of further reserves on the structure, and from an
upgrade on Nelson following additional well information and reservoir
modelling.

Production rose 10 per cent to 214,647 boepd from 195,133 boepd in 1998.
Adjusted to exclude the contribution from assets disposed of in the first half
of 1998, production from Enterprise's ongoing business in 1999 was 17 per cent
higher than in 1998. Seven new fields came on stream during the year: Pierce,
our second operated field in the UK North Sea, Banff, Buckland and Orion also
in the UK; Jotun in Norway; Siri in Denmark; and Garden Banks 161 in the US
Gulf of Mexico. Bell in the UK came on stream in January 2000. Bittern in the
UK and Cook, our third operated UK field, are expected on stream by the middle
of 2000.

Group production in January 2000 averaged 263,476 boepd, reflecting in
particular the benefits of Jotun's strong performance. We anticipate
production of between 270,000-280,000 boepd in 2000, on the basis of our
current portfolio.

The group's production in Norway and Denmark passed a significant landmark in
late 1999 when output surpassed 100,000 barrels of oil equivalent per day for
the first time. This represents strong growth in the region, where Enterprise
was a relatively late entrant in 1989. Jotun's contribution to this total was
around 43,000 boepd, following first oil in late October.

Jotun's strong performance and Garden Banks 161's early start-up offset to a
certain extent the production problems encountered by the Floating Production
Storage and Offloading vessel (FPSO) on the Banff field.

1999 saw the group's cost of sales at £5.46 per barrel of oil equivalent,
compared to £5.58 in 1998. The group intends to drive this cost lower where
possible.

Developments

The group currently has interests in four field developments in progress as
well as several fields awaiting developments and a number of potentially
commercial projects. Capital investment in field development during 2000 will
total approximately £285 million.

In the UK, the Bittern field (Enterprise, 15.1 per cent) is expected to
achieve first oil in the second quarter of 2000. The field is being exploited
using a floating production system as part of the Triton project. Enterprise's
operated Cook field development, a satellite being produced through the
Anasuria FPSO (Enterprise, 25.8 per cent) is due on stream by the end of the
second quarter of 2000. 

The development concept for the Corrib gas field in Ireland (Enterprise, 45
per cent) has been selected. Work has progressed to the detailed planning and
engineering phase, with the objective of bringing the project to sanction by
the end of the fourth quarter of 2000.

In Norway, the parliament granted royalty relief to mature fields where new
project commitments were taken on.  This has allowed the Valhall water-flood
project (Enterprise 28.1 per cent) to progress, with the Plan for Development
Operations (PDO) being prepared for issue this summer.  First injection and
production is scheduled for early 2003.

In Italy, work continues on the expansion of the Val d'Agri oil centre
(Enterprise, 29 per cent provisional working share) and the permission process
for the installation of the pipeline system is on track for approval in the
second quarter of 2000, following the signing of key agreements in June 1999
with regional authorities and with operator ENI. Currently production from the
area is taken by road tanker to the refinery at Taranto. The first phase of
production from the unification of the Monte Alpi and Monte Enoc fields via
the pipeline is anticipated in the first half of 2001. In addition, planning
continues for the development of the Tempa Rossa field, with long term testing
commencing in March.

New ventures activity in Brazil has led to Enterprise agreeing in principle to
acquire a 55 per cent interest in and operatorship of the Bijupira-Salema
fields in the Campos Basin through a farm-in arrangement with Petrobras
undertaken with co-venturers Odebrecht. The development has a target sanction
date of the fourth quarter of 2000, and is likely to comprise an FPSO. It is
expected to produce first oil in 2003 with a gross plateau rate of over 50,000
bopd.

Exploration and Appraisal

Finding costs were 60 pence per barrel of oil equivalent in 1999, as against
£1.00 in the previous year, well below our target of 80 pence per boe.
Spending on exploration and appraisal totalled £100.0 million during the year
(1998: £172.5 million).

In 1999 the group participated in the completion of 15 exploration and
appraisal wells, of which seven were successful.

The Corrib appraisal well 70 kilometres offshore the west coast of Ireland was
successfully tested in August, with flow rates of up to 64 million standard
cubic feet of gas per day. The well, drilled in 350 metres of water,
successfully delineated the south-eastern end of the field. 

In Norway the Idun discovery in May (previously known as Sara) confirmed the
hydrocarbon potential of the licence, in which Enterprise first acquired an
interest in 1997. The well on block 6507/3 was drilled approximately 170
kilometres off the coast of Helgeland and encountered gas. Idun is located
just north of the 1998 Skarv discovery in block 6507/5 which was successfully
appraised in October. The Skarv appraisal well was drilled down dip from the
discovery well and discovered gas pay in the Jurassic. Further exploration and
appraisal drilling is planned for 2000.

The testing of the sidetrack drilled from the Cerro Falcone-1 well in the
Volturino concession in Southern Italy was completed successfully in January
1999. The well tested at a maximum rate of 5,435 barrels per day, becoming the
most productive well to date on the field. The Cerro Falcone-3 appraisal well
spudded in October and reached the objective in January 2000. Testing, which
is planned to commence in March, will lead either to the completion of the
well or the drilling of a long horizontal open hole section, depending on
productivity.  Monte Enoc-4 was completed in August, after testing at a
maximum rate of 8,100 barrels of oil per day. Long term tests were also
continuing at year end on Cerro Falcone-2 and Monte Enoc-1.

In the US Gulf of Mexico, the first appraisal of the 1998 Llano discovery in
Garden Banks block 386 confirmed the presence of hydrocarbons in early 1999.
Although the well did not test all the objectives, it successfully delineated
the eastern side of the field. A second appraisal well was spudded in October.
Work on this well is expected to be complete in April 2000.

Portfolio Management

The company has made good early progress in its long-term strategy to build a
business in Brazil, with the award of the BC2 licence offshore Brazil in the
Campos Basin, a prolific hydrocarbon province. The group has taken a 15 per
cent stake in the Elf-operated block in a region that qualifies as a
world-class petroleum province. It is also pursuing other blocks in the area,
and has agreed in principle to assume the operatorship of and acquire a 55 per
cent interest in the Bijupira-Salema development. In addition, we hope shortly
to agree with Petrobras to acquire a 25 per cent interest in the BCe2 block in
the Ceara Basin offshore northern Brazil. We believe many of our skills
developed in our existing core areas will make us highly competitive in this
promising  region.

During 1999 Enterprise increased its interest in the Clair development west of
the Shetlands to 18.7 per cent (from 15.4 per cent) through the purchase of
Elf's interest in the field by an Enterprise-led consortium with existing
owners BP Amoco and Conoco. Study work is now in progress to address the
potential for a sanctionable development. This phase of work, looking at
concept selection, is expected to be complete in the second quarter of 2000,
with potential sanction of the project by mid 2001. 

In February 2000, the group took further steps to strengthen its presence in
the Atlantic Margin with the assumption of operatorship with an increased
interest of 46.2 per cent in Tranche 4 covering 12 blocks north of the
Shetlands. In addition, the agreement to acquire ARCO's Irish exploration
acreage will, when completed, bring increased equities in 17 blocks with
existing Enterprise stakes and 15 new blocks. 

In Norway, the group was awarded three licences in the North Sea Licensing
Round in 1999, and has submitted applications for further acreage in the
country's current 16th Licensing Round, in which awards are expected in April.

The group is still examining potential projects in Iran, and has established a
good relationship with the National Iranian Oil Company. We continue to
monitor opportunities in the country and the Middle East as a whole, as it
opens up further to overseas investment.

In October the group announced the completion of a $20 million investment to
acquire a 7.5 per cent common stock holding in Khanty Mansiysk Oil Corporation
(KMOC), an independent US oil exploration and production company with assets
in West Siberia, Russia. The investment followed a period of joint technical
work between the two companies through a Technical Services Agreement signed
in 1998.

KMOC's assets are focused in the West Siberian Basin, ranked number one in the
world on the basis of known hydrocarbon volumes by the United States
Geological Survey. The company has licences covering 11 fields as well as
equity in one production joint venture. A significant appraisal and
development drilling campaign, comprising 41 wells, was initiated by KMOC in
December with the aim of increasing production, currently at around 7,450
bopd, and delineating key reservoirs and associated reserves.

As we stated in our interim results, we continue to look at opportunities
presented by the continuing restructuring of the industry, but have found so
far that they are of insufficient quality, or too high in price to merit
pursuing.

In summary, while 1999 was a year of continuing change within the industry,
the group has successfully built on its existing fundamental strengths in the
pursuit of value creation. It is more focused than ever on maintaining
financial discipline, and the quality of its asset base, while remaining alive
to opportunities as they arise. 

2000 will be another challenging year for the group, but one in which I
believe it will further consolidate and indeed enhance its position as
Europe's leading E&P company. With an exciting drilling programme in the UK,
Ireland, Norway, the US, Greece and Brazil and further development work in
core areas such as the UK, Norway and Italy, I look forward to reporting to
you on our progress in our interim results in September.


Finance Review - Full year 1999

Summary

The record results reflect a strong recovery in the oil price in the second
half of the year, which coincided with record levels of production. A £379.6
million increase in operating profit reflects significantly higher sterling
realisations, increased production, continued improvement in the cost of sales
and the lower level of exploration and appraisal costs written off. 

The Return on Fixed Assets ('ROFA') was 11.7 per cent in 1999, an improvement
from three per cent from the half year 1999.

The group made a profit after tax of £177.2 million in 1999, compared with a
loss of £2.3 million in 1998. Earnings per ordinary share were 34.8 pence,
against a loss of 1.8 pence in 1998.

Production at 214,647 boepd was 10 per cent higher than in 1998.

Cost of sales of £5.46 per boe in 1999 was 12 pence per barrel lower than in
1998, adjusted to a comparable basis, reflecting the sale of high cost fields
in 1998. Exploration and appraisal costs written off have reduced
significantly from £142.2 million in 1998 to £64.0 million in 1999. 

The group's financial strength enabled it to weather the period of low oil
prices whilst continuing with its core investment programme for the
development of new fields.  This positions Enterprise well to capitalise on
the recent upturn in oil prices. Further increases in production in 2000
together with ongoing capital discipline will continue to improve returns
compared with 1999 at the same oil price, and generate growth.

At the AGM on May 18, 2000 the standard limited authority will be sought to
repurchase ordinary shares in the market. The directors consider it desirable
for this general authority to be available to provide flexibility in the
management of the company's capital reserves. There is no present intention to
exercise this authority.

Restatement of prior periods

In September 1998 the Accounting Standards Board issued Financial Reporting
Standard (FRS) 12 'Provisions, Contingent Liabilities and Contingent Assets'.
The main impact on the group is to require a change in the method of providing
for decommissioning costs. In the past, the provision for decommissioning
costs has been built up on a unit of production basis over the life of each
field. In accordance with FRS 12, full provision now has to be made for the
net present value (NPV) of the group's estimated decommissioning liabilities
when the installation of facilities has had an environmental impact. The cost
of decommissioning is recognised as part of the cost of the field, which is
amortised within cost of sales over the life of the field in line with
production. The unwinding of the discount inherent in the NPV estimation is
included in the profit and loss account as a financial item and shown as a
notional interest charge. The implementation of FRS 12 has resulted in a prior
year adjustment which has increased the net assets of the group at 31 December
1998 by £58.8 million (see note 1). The current period earnings effect,
through cost of sales and net interest, is not material. Prior year numbers in
the financial review have been restated as appropriate.

Turnover

Turnover for the year was £850.0 million, an increase of £286.9 million over
the same period in 1998. Of this increase 81 per cent was due to higher
sterling oil price realisations. The average realised oil price for the period
was £11.46 ($18.53) per boe compared with £7.84 ($12.92) for the same period
last year. Adjusted to exclude the contribution from assets disposed of in the
first half of 1998, turnover and the average oil price for 1998 would have
been £530.0 million and £7.99 ($13.15) respectively.

Production increased by 10 per cent (or 19,514 boepd) in 1999. Adjusted to
exclude the contribution from assets disposed of in the first half of 1998,
which contributed 11,021 boepd to production in that year, production from
Enterprise's ongoing business in 1999 was 17 per cent higher than in 1998.

Operating profit 

Cost of sales in 1999 was £427.5 million (1998: £436.9 million). Adjusted to
exclude accelerated depreciation and a payment to amend a transportation
agreement, underlying cost of sales in 1998 were £397.2 million. On a per
barrel basis, cost of sales were £5.46 in 1999, 12 pence per barrel lower than
in 1998, again adjusted as above, reflecting the sale of high cost fields in
1998.

Underlying operating costs per barrel in 1999 were marginally higher than in
1998 reflecting increased production from leased FPSO vessels.  The cost of
the lease rentals is included in operating costs and effectively replaces the
depreciation which would have applied had the vessels been owned.

Exploration and appraisal costs written off as a percentage of expenditure
were 64 per cent in 1999, compared with 82 per cent in 1998. The spend for the
period was £100.0 million compared with £172.5 million in 1998. The lower
write-off reflects the reduced overall spend and the higher proportion spent
on the appraisal of discoveries such as Corrib in Ireland, Skarv in Norway and
Llano in the US Gulf of Mexico rather than exploration.

Administrative and selling expenses totalled £35.9 million (1998: £41.0
million) including expenditure associated with identifying new venture
opportunities of £13.7 million (1998: £7.8 million). The 1998 charge included
a provision of £10 million in respect of a restructuring programme. The
increase in underlying expenses reflects the cost of new venture activities
and increased provisions for awards relating to long term performance-related
payments to staff, which were partly offset by cost savings from the
restructuring programme. 

The operating result for the period was a profit of £322.6 million compared
with a loss of £57.0 million in 1998. Adjusted to exclude the contribution
from assets disposed of in the first half of 1998, the operating loss in 1998
would have been £58.7 million.


Key indicators (£ per boe)                                1999         1998
-----------------------------------------------------------------------------
Operating costs                                           2.55         2.33*
Depreciating costs                                        2.60         2.98*
Total costs of sales                                      5.46         5.58*
Finding costs (pre-tax)
Average over - one year                                   0.60         1.00
             - three years                                0.89         1.02
             - five years                                 0.88         0.97


* 1998 comparatives have been restated for the effects of applying FRS 12 (see
note 1).  In addition they exclude the effects of ceiling test write-downs and
the payment to amend a transportation agreement.

Profit before tax 

The net interest charge for the period, after capitalisation, was £35.6
million, an increase of £27.5 million over the same period in 1998. Interest
before capitalisation, increased due to higher average net debt levels.
Capitalisation of interest was reduced as a number of development projects
were completed. Positive net cashflow during the second half of the year went
some way to reversing the increase in interest charges.

Profit before tax in 1999 was £289.2 million compared with a loss of £29.6
million in 1998. Adjusted to exclude the gain on disposal and contribution
from assets disposed of in the first half of 1998, the loss before tax in 1998
would have been £58.8 million.

Taxation

The tax charge for the period was £112.0 million (1998 credit: £27.3 million).
The UK petroleum revenue tax charge was £51.4 million compared with £13.5
million in 1998, principally reflecting the significantly higher oil price in
the second half of the year. UK corporation tax increased from a credit of
£22.2 million in 1998 to a charge of £60.7 million in 1999 reflecting higher
UK profits and adjustments in 1998 to prior year estimated liabilities. The
availability of brought forward losses and the high level of current and the
increased level of planned future development spend meant that there was no
Norwegian tax charge in the period.

The effective tax rate in 1999 was approximately 39 per cent. The effect of a
move to full provisioning for deferred taxes, widely anticipated in 2000,
would have been to increase the effective tax rate in 1999 closer to 60 per
cent, which would also apply in 2000 with a similar average oil price.

Profit after tax

The resulting profit after tax was £177.2 million, compared with a loss of
£2.3 million in 1998. Adjusted to exclude the gain on disposal and
contribution from assets disposed of in the first half of 1998, the loss after
tax in 1998 would have been £39.7 million.

The return on fixed assets in 1999 was 11.7 per cent. This measure of return
on capital employed has the merit of being linked directly with the level of
cash returns and cash invested. It is defined as operating cash flow plus
gains or losses on asset disposals, less taxes paid, exploration expense and
depreciation divided by the average capital invested in oil and gas fixed
assets (excluding capitalised interest).  Both depreciation and fixed assets
are adjusted to exclude the effects of interest capitalised. The constituent
parts of the ROFA calculation are as follows:

                                                                          £M
-----------------------------------------------------------------------------
Operating cashflow (see note 8 (i))                                    514.4
Depreciation (see note 2)                                             (203.8)
Depreciation of capitalised interest                                    21.1
Exploration and appraisal write-off                                    (64.0)
Cash taxes (see note 8 (ii))                                           (38.1)
Gains and losses on asset disposals (see note 4)                         2.2
                                                                       231.8
Average capital invested in oil and gas assets                        1984.9
ROFA                                                                    11.7%


Capital expenditure

Capital expenditure, including capitalised interest but excluding
acquisitions, in 1999 totalled £471.5 million against £674.9 million last
year. Production and development expenditure, including capitalised interest
but excluding acquisitions, decreased from £494.4 million in 1998 to £369.5
million in 1999 as a number of development projects primarily Jotun in Norway,
Siri in Denmark and Pierce, Banff and Buckland in the UK North Sea were
completed. 

Exploration and appraisal expenditure in 2000 is expected to be slightly
higher than 1999 at approximately £110 million. Production and development
expenditure, excluding interest capitalisation and acquisitions, is expected
to decrease in 2000 to approximately £285 million, from £320 million in 1999.
Of this approximately £100 million relates to the development of the Val
d'Agri fields in Italy.  

Cash flow and financing

Operating cash flow after tax and finance costs was £392.3 million compared
with £231.3 million in 1998 reflecting significantly higher sterling oil price
realisations and increased production during the latter part of 1999. The high
oil prices obtained at the very end of the year are reflected in the higher
working capital balances. Interest cover for finance costs, including
preference share dividends, remained comfortable at over six times. Interest
cover is expected to improve significantly in 2000 with the increase in
production.

The first six months of 1999 saw the group draw close to completing its
unusually large investment programme in new fields. Consequently net cash
payments on capital items decreased by 28 per cent and net debt rose to £860.7
million compared with £770.2 million at the end of 1998. Gearing was 80 per
cent at the end of 1999 (1998: 82 per cent). The increase in production in
2000 together with the current high oil price will  provide considerable
flexibility over debt reduction and future capital expenditure commitments. 

During 1999 the group issued £125 million of ten year sterling bonds and
agreed a 200 million Euro facility to fund capital expenditure which has been
swapped into US dollars. 

The group had available funds, including committed facilities, of over £700
million at 31 December 1999. The group's credit ratings from Standard and
Poor's and Moody's  are unchanged at BBB+ and Baa1 respectively.


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