Annual Report PDF (8.0MB) - Tullow Oil plc

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Directors’ report: Business reviewOperations review continuedAfricaIn 2008, Tullow had a strong production performance from its Africanportfolio and outstanding exploration and appraisal results from bothGhana and Uganda. Both regions have contributed to substantialreserves and resources growth and are now being commercialised ona fast-track basis.2008 Highlights41,150 boepdAverage working interest production100% successAchieved from 15 exploration and appraisal wellsin Ghana and Uganda296 mmboeReserves and resources added to the African portfolio1.8 billion barrelsSignificant upside potential identified through exploratoryappraisal drilling in 2008Sales revenue (£ million)2680637207GlossaryAPIboepdbopdbwpdCNGFEEDFPSOmmbblmmboe47608£476 millionSales revenue28%Increase on prior yearMeasure of crude oil qualityBarrels of oil equivalent per dayBarrels of oil per dayBarrels of water per dayCompressed Natural GasFront End Engineering DesignFloating Production Storage and Offtake vesselMillion barrelsMillion barrels of oil equivalentIn Africa, Tullow has 47 licences in 14 countries, 17producing fields, approximately 745 mmboe bookedreserves and resources and majority interests in twoworld-class basins in Ghana and Uganda.GhanaIn 2008, the Group focused on the Phase 1 developmentof the Jubilee field, an appraisal campaign to determinethe ultimate field size and exploration work to establishthe upside potential of the remainder of the basin.Outstanding exploration successIn February 2008, the Odum field was discovered in the WestCape Three Points block, some 13 km east of Jubilee. Thisdiscovery opened up a new Campanian geological play ina previously unexplored reservoir interval. In November 2008,Tullow drilled the Ebony-1 commitment well in the ShallowWater Tano block which encountered normal pressuredoil sand and an over-pressured gas-condensate sandup-dip from Tweneboa. Data acquired from the recentTweneboa-1 well demonstrated that although chargedthrough Tweneboa, Ebony is not presently in pressurecommunication and as a result Ebony was determinedto have a sub-commercial resource potential. Tullow willtherefore relinquish its interest in the Shallow WaterTano licence.In March 2009, the Tweneboa-1 exploration well, in theDeepwater Tano licence, discovered a highly pressuredlight hydrocarbon accumulation of up to 1.4 billion barrelsof oil equivalent with a liquid yield currently consideredto be in the range of 30 to 40%. The well encountered21 metres of net pay on the edge of a giant 200 sq kmTuronian fan system related to the Jubilee play. Appraisaldrilling will now be required to test core areas within thisstratigraphic trap where thicker Turonian reservoir sectionsare mapped.The substantial Teak complex is one of an inventoryof prospects located in the region. Drilling is scheduledto commence on Teak in the fourth quarter of 2009.22 Tullow Oil plc 2008 Annual Report and Accounts
Group overview Directors’ report: Business reviewDirectors’ report: Corporate governance Financial statementsHighly successful Jubilee appraisal programmeThree exploratory appraisal wells, Mahogany-2, Hyedua-2and Mahogany-3, were drilled on the Jubilee structureduring the year. Each of the wells were approximately 5 kmaway from the original discovery well and each intersectedconsiderable hydrocarbon columns in the Upper andLower Mahogany sands which are both in lateral pressurecommunication. The Mahogany-3 well also discovered oil ina third and potentially extensive underlying sand, MahoganyDeep, which is being considered for appraisal drilling in2009. These results led to a significant upgrade in the grossresource base for the field with the most-likely P50 casebeing upgraded to 1.2 billion barrels with an upside potentialcase of 1.8 billion barrels. It is anticipated that the initialdevelopment area has gross reserves of 490 million barrelsresulting in Tullow booking its net share of 170 millionbarrels at year-end. Further extension of the eastern partof the Jubilee field may be targeted through an additionalMahogany exploratory appraisal well before the end of 2009.Flow tests performed on both Mahogany-2 and Hyedua-2confirmed that Jubilee is a highly productive and wellconnected reservoir and that once the wells have beenconfigured for long-term production, they should becapable of producing at rates in excess of 20,000 barrelsof 37° API crude oil per day.Jubilee Phase 1 on schedule for first oilSignificant progress has been made on the Phase 1development of the Jubilee field and the project is onschedule to deliver first oil in the second half of 2010.The field has been unitised across the Deepwater Tanoand West Cape Three Points blocks with Tullow namedas Unit Operator. In addition, a joint venture project teamhas been established with Kosmos Energy appointed asthe Technical Operator. The Phase 1 Plan of Developmenthas been submitted to the Ghanaian Government alongwith the related Unit Agreement and both are expectedto be approved in the near future following final resolutionof the gas development plan.Blackford Dolphin rig drilling Hyedua-2 appraisal well offshore Ghana.The Phase 1 development plan involves drilling a total of 17wells, for oil production, water injection and gas injection,which will be tied back to a Floating Production Storageand Offtake vessel (FPSO) with a production capacity of120,000 bopd. Sufficient rig capacity has been contractedfor the development and the first dedicated developmentwell is under way. Contractors have been selected for allmajor components of the project facilities and constructionwork has commenced. To support all offshore activities, anoperational organisation and associated infrastructure havebeen established in the city of Accra and the port of Takoradi.Tullow Oil plc 2008 Annual Report and Accounts 23
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