2011 Annual Report PDF - Tullow Oil plc

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Notes to the Group financial statements Year ended 31 December 2011 Note 1. Retrospective restatement During the year the Group has revised its inventory oil product valuation accounting policy to value inventory oil product at net realisable value in line with IAS 2 Inventories. In order to aid comparability the Group has retrospectively applied the revised accounting policy. The impact on the financial statements is summarised in the table below. Previously stated 2010 $m Impact of revision in accounting policy $m Restated 2010 $m Previously stated 2009 $m Impact of revision in accounting policy $m Restated 2009 $m Effect on income statement: Cost of sales (611.4) 27.3 (584.1) (625.5) 17.5 (608.0) Profit from continuing activities before tax 151.9 27.3 179.2 32.5 17.5 50.0 Income tax expense (79.4) (10.3) (89.7) (1.9) – (1.9) Profit from continuing activities 72.5 17.0 89.5 30.6 17.5 48.1 Effect on balance sheet: Deferred tax assets 110.7 (10.3) 100.4 50.4 – 50.4 Non-current assets 7,087.3 (10.3) 7,077.0 4,372.8 – 4,372.8 Inventories 138.2 44.8 183.0 109.6 17.5 127.1 Current assets 1,290.7 44.8 1,335.5 752.5 17.5 770.0 Total assets 8,378.0 34.5 8,412.5 5,125.3 17.5 5,142.8 Current tax liabilities (120.0) (0.6) (120.6) (73.8) 0.8 (73.0) Current liabilities (1,485.1) (0.6) (1,485.7) (630.9) 0.8 (630.1) Deferred tax liabilities (466.1) 0.6 (465.5) (473.5) (0.8) (474.3) Non-current liabilities (3,024.0) 0.6 (3,023.4) (2,063.4) (0.8) (2,064.2) Total liabilities (4,509.1) – (4,509.1) (2,694.3) – (2,694.3) Net assets 3,868.9 34.5 3,903.4 2,431.0 17.5 2,448.5 Retained earnings 2,839.1 34.5 2,873.6 1,402.0 17.5 1,419.5 Total equity 3,868.9 34.5 3,903.4 2,431.0 17.5 2,448.5 124 Tullow Oil plc 2011 Annual Report and Accounts
5 Note 2. Business combinations On 24 May 2011 Tullow announced that it had acquired 100% of Nuon Exploration & Production B.V. (“Nuon”) from the Vattenfall Group. The acquisition of Nuon added a portfolio of 25 licences over 30 producing fields, a number of development and exploration opportunities and ownership of key infrastructure. The Nuon transaction had an effective date of 1 January 2011 but completed on 30 June 2011 and this is therefore the acquisition date. Accordingly, the financial statements include the balance sheet of Nuon including fair value adjustments. Revenue and expenses were included within the Group income statement from 1 July 2011. The fair value allocation to the Nuon assets is preliminary due to the finalisation of an independent review of acquired contingent resources and will be reviewed in accordance with the provisions of IFRS 3 – Business Combinations. The purchase consideration equals the aggregate of the fair value of the identifiable assets and liabilities of Nuon and therefore no goodwill has been recorded on the acquisition. Deferred tax has been recognised in respect of the fair value adjustments as applicable. FINANCIAL STATEMENTS Provisional fair value $m Intangible exploration and appraisal assets 424.1 Property, plant and equipment 539.6 Trade and other receivables 19.8 Trade and other payables (20.0) Deferred tax liabilities (472.9) Provisions (86.6) Total consideration satisfied by cash 404.0 Transaction costs in respect of the Nuon acquisition of $1.1 million have been recognised in the income statement. From the date of the acquisition, Nuon has contributed $67.6 million to Group revenues and $3.2 million to the profit of the Group. If the acquisition had been completed on the first day of the financial year, Group revenues for the year would have been $2,384.3 million and group profit would have been $695.4 million. There were no acquisitions involving business combinations in 2010 or 2009. 125 www.tullowoil.com
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Tullow Oil plc 2011 Annual Report a
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Contents BUSINESS REVIEW Tullow had
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4 2011 highlights 2011 was a very g
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Sales revenue $2.3 BILLION 2010: $1
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1 WEST & NORTH AFRICA SOUTH & EAST
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In Ghana, we have experienced techn
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More information Page Strong organi
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CLEAR VISION SPECIAL FEATURE TO BE
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1 Exploration & appraisal 7 Shared
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EXPLORATION & APPRAISAL Strategic p
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DELIVERING MATERIAL PRODUCTION GROW
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21 www.tullowoil.com
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RISK MANAGEMENT Strategic priority:
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SUSTAINING OUR GOOD REPUTATION 25 w
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27 www.tullowoil.com
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CREATING SHARED PROSPERITY 29 www.t
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Key Performance Indicators MEASURIN
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More information Page Long-term per
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Financial results and KPI summary 2
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Operating cash flow Higher producti
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Capital market relationships Tullow
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Regional business management units
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LONG-TERM PERFORMANCE RISKS We grou
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1 Operational risk continued Key de
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48 2011 operations overview Overall
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2 OPERATIONS REVIEW Europe, South A
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DEVELOPMENT & OPERATIONS A new scal
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Senior Drilling Supervisor with tra
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Mauritania & Senegal Production fro
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periods for Kasamene, Wahrindi, Kig
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2 West African and South American e
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62 Creating shared prosperity Creat
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More information Page Special featu
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Social performance standards We are
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3 The effect of Uncontrolled Releas
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3 Future talent pool In October 201
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3 LOCAL CONTENT Creating real oppor
Page 75 and 76: 3 Key corporate responsibility poli
Page 77 and 78: 76 Chairman’s introduction At Boa
Page 79 and 80: 4 In order to provide the human and
Page 81 and 82: I am delighted to have taken on the
Page 83 and 84: Board of Directors EXPERIENCED LEAD
Page 85 and 86: 4 CORPORATE GOVERNANCE Ann Grant No
Page 87 and 88: Audit planning and update on releva
Page 89 and 90: Directors in their place. On 12 May
Page 91 and 92: CONTENTS 89 Introduction 89 Remuner
Page 93 and 94: Remuneration mix The pay structure
Page 95 and 96: 2011 PSP grant policy Executive Num
Page 97 and 98: Service agreements Each Executive D
Page 99 and 100: 4 Directors’ interests in the sha
Page 101 and 102: 4 Deferred Share Bonus Plan (DSBP)
Page 103 and 104: Attendance at meetings The attendan
Page 105 and 106: BOARD PERFORMANCE EVALUATION 4 CORP
Page 107 and 108: Executive team. In 2012, Tullow pla
Page 109 and 110: Company’s assets in whole or in p
Page 111 and 112: All employees are helped and encour
Page 113 and 114: As part of our Code of Business Con
Page 115 and 116: Independent Auditor’s Report to t
Page 117 and 118: Group balance sheet As at 31 Decemb
Page 119 and 120: Group cash flow statement Year ende
Page 121 and 122: The principal accounting policies a
Page 123 and 124: 5 Finance costs of debt are allocat
Page 125: 5 Commercial reserves estimates (no
Page 129 and 130: 5 Europe, South America and Asia $m
Page 131 and 132: 5 Non-current assets by origin Ghan
Page 133 and 134: 5 Note 6. Staff costs The average m
Page 135 and 136: 5 The Group’s profit before taxat
Page 137 and 138: 5 Note 12. Property, plant and equi
Page 139 and 140: 5 Note 13. Investments 2011 $m 2010
Page 141 and 142: 5 Note 18. Trade and other payables
Page 143 and 144: 5 The $3.5 billion Reserves Based L
Page 145 and 146: 5 Note 20. Financial instruments Fi
Page 147 and 148: 5 Oil and gas prices The Group uses
Page 149 and 150: 5 Financial derivatives The Group i
Page 151 and 152: 5 Deferred tax assets are recognise
Page 153 and 154: 5 Note 27. Share-based payments 200
Page 155 and 156: 5 UK & Irish Share Incentive Plans
Page 157 and 158: Independent Auditor’s Report to t
Page 159 and 160: Company balance sheet As at 31 Dece
Page 161 and 162: Notes to the Company financial stat
Page 163 and 164: 5 Note 6. Bank loans Current Short-
Page 165 and 166: 5 Note 9. Shareholders’ funds Sha
Page 167 and 168: 2010 Share Option Plan (2010 SOP) a
Page 169 and 170: 5 Note 13. Subsequent events Since
Page 171 and 172: Commercial reserves and contingent
Page 173 and 174: Area Tullow Licence Fields sq km in
Page 175 and 176: Licence / Blocks Fields Area sq km
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Contacts Secretary & registered off
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K Kenya 6, 7, 57 Key financial metr
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M mmbbl mmboe mmscfd MoU MTM Millio
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This report is printed on Heaven 42
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