Tullow Oil plc Annual Report 2011 - The Group

BUILDINGA WELL FUNDEDBALANCE SHEETFINANCE &PORTFOLIO MANAGEMENTStrategic priority: Manage financial and business assetsto enhance our portfolio, replenish upside potential andsupport the Group’s funding needs.Our financial strategy is to maintain a well funded balancesheet to enable growth through exploration, developmentand acquisitions. We utilise a range of funding sourcesincluding debt, equity, operating cash flow andportfolio management.Tullow’s appetite for funding is very significant and growing.2012 capital expenditure is forecast to be approximately$2 billion. Over a period of time capital expenditure is splitapproximately 50:50 between Exploration & Appraisal andDevelopment & Operations. In any given year it will dependon our investment priorities, which are based on a rigorousapproach to capital allocation. The key principle of Tullow’sfinancial management is to achieve a good balancebetween high-impact exploration campaigns andworld-class developments that have strong near-termmomentum in growing production.Another key element of our growth is portfolio management,an area where we have built up a strong track recordand considerable expertise. There are opportunities toreorganise our existing portfolio and consolidate our assetsthrough divestment. We are also well positioned to continueto create value through acquisitions. Opportunities includeadding new big oil plays to our portfolio, increasing anexisting equity interest to material levels or enhancingour production profile.Capital and acquisition expenditure ($m)3,0002,5002,0001,5001,000500007 08 09 10 11Capital expenditureAcquisition expenditure20Tullow Oil plc 2011 Annual Report and Accounts: Special feature