Tullow Oil plc Annual Report 2011 - The Group

Financial reviewFUNDING FUTURE GROWTHRecord financial results in 2011 were complemented in February 2012 with the completion ofthe $2.9 billion Uganda farm-down to Total and CNOOC. Tullow now has a very strong balancesheet which gives the Group the financial flexibility to pursue its exploration-led growth strategy,invest in key development projects and acquisitions, and support a progressive dividend policy.“Tullow’s successful growth strategyis underpinned by a clear financialstrategy, which is to build a strongwell funded balance sheet andsignificant operational cash flow.Jubilee production in Ghana andthe completion of the Ugandafarm-down provide a powerfulplatform to fund future growth.”2011 results overviewTullow delivered record results in 2011. Sales revenue grew111% to $2.3 billion (2010: $1.1 billion) as a result of a 41%increase in sales volumes and significantly higher averageprice realisations. Profit from continuing activities before taxwas up 499% to $1.1 billion (2010: $179 million) as a resultof a combination of: $1.2 billion increase in sales revenue; $27 million IAS 39 gain; $34 million reduction in exploration costs written-off; and Partly offset by an increase in operating costs of$160 million and an increase in Depreciation, Depletionand Amortisation (DD&A) and impairment charges of$187 million; both largely due to first year of productionfrom the Jubilee field in Ghana.Profit for the year from continuing activities increased 670%to $689 million (2010: $90 million). Basic earnings per sharegrew 795% to 72.5 cents (2010: 8.1 cents).Profit after tax 2011 versus 20101,5001,2501,0007505002500Ian SpringettChief Financial Officer2010PriceVolumeOperating expenseDD&A/ImpairmentExploration write-offsNet financeTaxIAS 39201134Tullow Oil plc 2011 Annual Report and Accounts