Tullow Oil plc Annual Report 2011 - The Group

Notes to the Group financial statements continuedYear ended 31 December 2011Note 20. Financial instruments continuedIncome statement hedge summaryLosses from settlements during the period amounted to $69.8 million (2010: $3.4 million gain) (note 4) and these are includedin the revenue line.The changes in the fair value of hedges which are required to be recognised immediately in the income statement for the yearwere as follows:Gain/(loss) on hedging instruments:Cash flow hedgesGas derivativesIneffectiveness – – –Time value 16.7 (11.9) 6.016.7 (11.9) 6.0Oil derivativesIneffectiveness (0.2) (0.2) (6.9)Time value 10.7 (15.6) (58.9)10.5 (15.8) (65.8)Total net gain/(loss) for the year in the income statement 27.2 (27.7) (59.8)Hedge reserve summaryThe hedge reserve represents the portion of deferred gains and losses on hedging instruments deemed effective in cash flowhedges. The movement for the period in the hedge reserve is recognised in other comprehensive income.Revaluation losses on open contracts arising during the year amounted to $6.7 million while reclassification adjustments forlosses included in profit on realisation amounted to $15.2 million. After tax effects of $2.9 million the total movement in thehedge reserve amounts to $11.4 million (note 24):Deferred amounts in the hedge reserveAt 1 January (25.7) 3.2 46.9Revaluation losses arising in the year (6.7) (26.8) (18.0)Reclassification adjustments for losses/(gains) included in profit on realisation 15.2 (10.3) (13.3)Movement in deferred tax 2.9 8.2 (12.4)11.4 (28.9) (43.7)At 31 December (14.3) (25.7) 3.2The following table summarises the deferred (losses)/gains on derivative instruments in the hedge reserve, by type of commodityand net of tax effects:2011$m2011$m2010$m2010$m2009$m2009$mDeferred amounts in the hedge reserve net of tax effects2011$m2010$m2009$mCash flow hedgesGas derivatives 0.1 1.2 9.4Oil derivatives (7.2) (13.3) 2.7Interest rate derivatives (7.2) (13.6) (8.9)(14.3) (25.7) 3.2146Tullow Oil plc 2011 Annual Report and Accounts