Annual Report PDF (8.0MB) - Tullow Oil plc

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Group overviewChairman’s statementAn outstanding year2008 was another year of record achievement for Tullow.Exceptional exploration and appraisal results, strong production,profitable portfolio management and the recent successfulfund-raising underpin our ability to continue to grow.An outstanding yearThe scale of Tullow’s business is being transformed again.There has been a material increase in the Group’s bookedreserves and resources and two major world-class basinsare being successfully fast-tracked towards development.Highlights for 2008 include:• 100% exploration and appraisal success in Ghana andUganda, which significantly de-risks these projects andsupports material follow-on campaigns;• Strong progress towards being a leading deepwateroperator with the preparation of the Jubilee Plan ofDevelopment and initiation of Phase 1;• Major oil discoveries in Uganda, moving past thecommercial volume threshold for the Lake Albert RiftBasin and into basin-wide phased development;• 66,600 boepd average working interest production, withstrong results from key producing assets in Africa;• £285 million proceeds realised from asset sales includingthe sale of the Hewett-Bacton fields and terminal;• Exploration and impairment write-offs of £253 millioncomprising impairment charges of £26 million,exploration write-off of £63 million and asset write-downsof £164 million;• Best ever safety performance and US$1.8 million investedin ‘Working with Communities’ initiatives, up 100%;• 46% increase in employees, as we continued to attractkey people and skills to build depth and strengthin technical, operational and financial capabilitiesthroughout Tullow; and• Good discipline in capital allocation, supported by asuccessful debt financing and equity placing in early 2009.Record health and safety performanceA Lost Time Incident Frequency Rate (LTIFR) of 0.49 permillion hours worked was achieved against the current Oil& Gas Producers (OGP) most recent average of 0.66. Thisis the Group’s best Health and Safety (H&S) performance todate and these results reflect Tullow’s unwaveringcommitment to ensure the safety of our staff, contractors,“We are financially strong,entrepreneurial in spirit andwell resourced with excellenttechnical and operationalcapability. The future forTullow is very bright.”Pat Plunkett, Chairman8 Tullow Oil plc 2008 Annual Report and Accounts
Group overview Directors’ report: Business reviewDirectors’ report: Corporate governance Financial statementsTotal Shareholder Return (TSR) (%)2%Tullow was the 9th best performerin the FTSE 100, in a difficult yearfor global stock markets.4966Read more on page 69060708082Go online at: www.tullowoil.compartners and local communities and our determination tocontinuously improve our performance in the area.Board and management changesIn March 2008, Matt O’Donoghue retired as GeneralManager Projects and from the Board. Since joining Tullowin 1987, Matt had given great service in a 21-year careerspanning Tullow’s first project in Senegal to commencingthe Jubilee field development in Ghana. His dedication andcommitment played a major role in the success of Tullow.In April 2008, Tom Hickey announced his resignation, forpersonal reasons, from his position as Chief FinancialOfficer and from the Board. Since joining Tullow in 2000,Tom has made an outstanding contribution to the Groupduring a unique period in the growth and development ofthe business. To effect an orderly transition, Tom remainedin his role until the end of September.Ian Springett was appointed to the Board as Chief FinancialOfficer, from 1 September 2008. Ian has a wealth ofinternational oil and gas experience having worked formuch of his career with BP and brings excellent financial,commercial and planning skills to the Group.In May 2008, Tullow announced the appointment ofAnn Grant as a non-executive Director. Ann has had anextensive diplomatic career with invaluable experiencein Africa, which is of particular relevance to Tullow aswe seek to expand our business there.Major investment in peopleWe have continued to invest in the Tullow team andincrease the capability of the organisation. As the scale andcomplexity of our portfolio increases we are ensuring thatwe are fully prepared for the next phase of growth. One ofthe big issues for most Exploration and Production (E&P)companies today is recruitment and retention. However,because of the success we have enjoyed in recent years andthe career opportunities and rewards this offers, we havebeen able to build and continue to build a very strong team.At the start of 2008, we employed 370 people and now havea team of 540, up 46%. On pages 48 and 49 of this report,we have a new ‘Our people’ section which sets out in moredetail our people strategy.Comprehensive risk managementTullow faces a wide range of risks in its day-to-dayoperations and, in addition, the Group has identified and isaddressing material risks to strategic delivery. Risk is ofparticular importance in today’s environment and detailedinformation on risk and how this is managed by the Groupis outlined in the risk management and risk factors section,on pages 44 to 47 of this report.Delivering shareholder valueIn 2008, share prices across all sectors were affected bythe unprecedented turmoil in global financial marketsand economies. As a consequence, Tullow deliveredTSR of 2% for 2008. However, the Group significantlyoutperformed the FTSE 100 where TSR was minus 28%.The Group achieved the 9th best share performance inthe Index for the year. Over a five-year period since 2004,Tullow has consistently outperformed the market and hasdelivered TSR of more than 700%.DividendIn light of the current economic uncertainty and therequirement for major capital investment in Ghana andUganda, the Board feels that it is prudent to maintain the2008 final dividend at the 2007 level. Consequently, theBoard has proposed a final dividend of 4.0 pence per share(2007: 4.0 pence per share). This brings the total payout inrespect of 2008 to 6.0 pence per share (2007: 6.0 penceper share). The dividend will be paid on 21 May 2009 toshareholders on the register on 17 April 2009.Looking aheadGiven the current economic climate, these will bechallenging times for the oil and gas sector but Tullowis well positioned following an outstanding year in 2008.We are clear on our key priorities – Ghana and Uganda –and have focused our resources, both human and capital,on these significant challenges. We are financially strong,entrepreneurial in spirit and well resourced with excellenttechnical and operational capability. The future for Tullowis very bright.Pat Plunkett, ChairmanTullow Oil plc 2008 Annual Report and Accounts 9
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Annual Report PDF (8.0MB) - Tullow Oil plc

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