29th Mar 2006 07:03
Tullow Oil PLC29 March 2006 Tullow Oil plc 2005 Results Record Results in 2005; Positive Outlook for 2006 29 March 2006 - Tullow Oil plc (Tullow), the independent oil and gas,exploration and production Group, announces its results for the year ended 31December 2005. These results have been prepared in accordance with the Group'spolicies under International Financial Reporting Standards (IFRS). Tullow had a strong 2005, delivering record results. The Group achievedexceptional asset performance and consistent organic production growth against abackground of increasing global oil and gas prices. This performance, coupledwith financing initiatives undertaken in 2005, has allowed Tullow to reinvest atrecord levels while maintaining a progressive dividend policy and modest levelsof gearing. Results Highlights 2005 2004 Change £ millions £ millionsSales Revenue 445.2 225.3 Up 98%Operating Profit 198.6 56.8 Up 250%Profit Before Tax 178.6 46.8 Up 282%Operating Cash Flow before Working Capital 288.1 139.5 Up 106% Stg p Stg pBasic Earnings per Share 17.50 5.88 Up 198%Final Dividend per Share 3.00 1.25 Up 140% • 44% increase in average annual production to 58,450 boepd • Organic reserves replacement of 118%; total reserves increased by 53 mmboe to 358 mmboe • Current production is 69,000 boepd and is expected to reach 75,000 boepd by year end • Three discoveries close to Tullow infrastructure in the UK and Gabon • Completion of £200 million Schooner and Ketch acquisition and major redevelopment under way • Steady progress in development of the giant Kudu gas project offshore Namibia • Good progress on the key Okume Complex and West Espoir developments • Year-to-date exploration: two oil discoveries in Uganda, one UK gas discovery, two dry holes in Gabon Commenting today, Pat Plunkett, Chairman, said: "2005 was a year of many achievements for Tullow which included our firstoperated UK offshore development, the largest refinancing ever undertaken by aUK oil and gas independent and a record level of development, exploration andnew venture activity across the Group's three core areas. Today's record resultsdemonstrate the quality and depth of Tullow's portfolio. We are reaping thebenefits of the scale achieved through our major acquisition and investmentprogramme of recent years and we look forward to the many exciting opportunitiesfor further development and growth in 2006 and beyond." Aidan Heavey, Chief Executive, said: "Our production is growing strongly and is expected to reach 75,000 boepd by theend of the year. On the exploration front we plan to drill over 20 wells,including further wells in Uganda, where we have scheduled an extensiveexploration and appraisal programme to build on the recent M'Puta and Waragadiscoveries. The outlook for Tullow is very positive. Oil and gas prices arestrong and forecast to remain so. Our existing assets and work programmes areexpected to deliver robust organic growth and our new ventures programme andother development opportunities offer compelling upside potential." Presentation, Webcast and Conference Calls In conjunction with these results Tullow is conducting a presentation in Londonand a number of events for the financial community. Details are available onpage 14 of this announcement and in the 2005 Results Centre on the Group'swebsite at www.tullowoil.com. 2005 Results For the year ended 31 December 2005 2005 was an excellent year for Tullow, with many new achievements in operationsand a record financial performance. These results illustrate the benefits ofthe Group's increased scale and deliver on the significant investments made overthe past five years, during which period the Group has been transformed througha mixture of organic and acquisition-led expansion. Record Financial Performance Sales revenue increased 98% to £445.2 million (2004: £225.3 million), reflectinga full year contribution from the Energy Africa assets, nine months contributionfrom the Schooner and Ketch fields and oil and gas prices significantly higherthan in 2004. Operating profit increased 250% to £198.6 million (2004: £56.8 million) andprofit before tax increased 282% to £178.6 million (2004: £46.8 million),including the profit of £36.1 million on the disposal of non-core oil assets inthe UK and offshore Congo and the sale of equity in the Horne & Wrendevelopment. Basic earnings per share amounted to 17.50 pence, an increase of 198% comparedto 5.88 pence in 2004. Operating cash flow before movements in working capitalamounted to £288.1 million, an increase of 106% over 2004, reflecting thequality of the Group's producing asset base and allowing record levels ofreinvestment in the business. Progressive Dividend Policy The Group's capital expenditure programmes are comfortably funded from strongoperating cash flow and profit on disposals. The refinancing initiativesundertaken during 2005 have significantly enhanced the Group's financialflexibility over both the short and long-term. In line with the Group'sprogressive dividend policy, and reflecting the cash generated by the businessand the capital investment and acquisition opportunities available, the Boardrecommends a final dividend of 3.00 pence per share. This brings the totaldividend for the year to 4.00 pence per share (2004: 1.75 pence per share).Subject to shareholder approval at the Annual General Meeting (AGM), thedividend will be paid on 7 June to shareholders on the register at 12 May. Major investment in People and Facilities A major investment in people and facilities has been made reflecting thematerial growth of the Group in recent years. During 2005 the London team movedto a new office at Chiswick, over 40 additional staff were recruited anddedicated teams were put in place for the important Schooner & Ketch and Kuduprojects. As announced in February, Adrian Nel, Tullow's Exploration Director, will retireat the AGM in May. Since his appointment to the Board in September 2004, Adrianhas made an outstanding contribution to the integration of Tullow's explorationactivities and enhanced the Group's licence portfolio and exploration strategy.Angus McCoss will join Tullow in April as General Manager Exploration. Anguspreviously worked for the Shell Group in Nigeria. Paul McDade is appointed to the Board of Tullow, with effect from today. Pauljoined the Group in 2001 and became Chief Operating Officer following the EnergyAfrica Acquisition in 2004. Continuing Positive Outlook Tullow has steadily developed a balanced portfolio of international explorationand production assets. The performance of these assets during 2005 and theorganic growth expected in 2006 provide a solid base for further growth.Projects such as the development of the Kudu field in Namibia and theexploration programme in Uganda provide possibilities for significant changes inthe Group's scale, while the Group's cash flow and modest gearing create theflexibility to accelerate programmes and take advantage of development andacquisition opportunities as they arise. The outlook for Tullow is verypositive. Operations Review The focus of Tullow's business is to maintain a strong portfolio of assets and agrowth strategy that will allow the Group to continue its development throughall phases of the resource price cycle. Over time we have built a balancedportfolio focused on three core areas - North West Europe, Africa and SouthAsia. We strive to maintain this balance in the various aspects of ourportfolio: between oil and gas production, between our geographical areas,across political and currency exposures and between moderate and high-riskexploration programmes. Growing in the UK Gas Market Tullow has steadily increased its acreage and developed its reputation as atechnically innovative and commercially astute operator since its entry into theUK Southern North Sea in 2001. Tullow now has over 40 licences and a strategicposition in terms of acreage and infrastructure. During this time, the UK hasbecome a net importer of gas to satisfy indigenous demand. This market changehas increased pressure on pricing, resulting in sustained gas price rises fordomestic and industrial consumers. While a number of initiatives are planned toincrease national supply capability, the recent extreme volatility in Europeangas markets provides further evidence that the prospects for independentproducers in the UK gas market remain very favourable. The Group continues to extend and enhance its position through a combination ofacquisitions, organic growth via active development, exploration andparticipation in licensing rounds. 2005 activity, including the completion ofthe operated Horne & Wren development, the acquisition of the Schooner and Ketchassets and infill drilling in producing fields brought Tullow's UK Gasproduction to over 200 mmscfd for the first time in December. This productionlevel has since increased to over 210 mmscfd with the recent completion of theDelilah well. In addition, the first well in the Schooner and Ketchredevelopment, Schooner-10, has successfully encountered the reservoir and isbeing prepared for production in April 2006. Exploration is an important part of the UK business and the gas discoveriesduring 2005 by the Opal and K3 exploration wells, and more recently of theHumphrey well, continue to demonstrate the prospectivity of the region andsupport its long-term future. Tullow plans a further six UK exploration wellsfor this year, including the Cygnus exploration well which is currentlydrilling. African Reserve and Production Growth Tullow believes there is an outstanding opportunity over the coming years forthe Group to continue to build a truly pan-African oil and gas business. During2005 we invested over £139 million in our African business, with exceptionalresults: • In Gabon, infill drilling and exploration programmes have more than doubled reserves over the last two years and allowed us to maintain net production to Tullow in excess of 17,000 boepd; • In Equatorial Guinea, ongoing infill drilling and careful management of the Ceiba field have enabled it to attain production levels not seen since 2002, while the Okume project remains within budget and on schedule for first oil by the end of 2006; • In Congo, the M'Boundi field delineation is almost complete. In 2005 the field delivered further significant increases in production and reserves and improved sales prices; • In Cote d'Ivoire, infill drilling on Espoir has brought production increases of over 20% in recent months, while first oil from the West Espoir development project is expected before year end; • Current African oil production exceeds 34,000 bopd, with further increases anticipated over the remainder of the year. In Namibia, Tullow continues to make steady progress in the development of theKudu gas field. This is a strategic project, with the potential to transform theNamibian energy market and contribute significantly to its future energyrequirements. 2006 will be an important year both for the gas sales negotiationsfor the gas-to-power development and for the preparation for two appraisal wellsscheduled for the first quarter of 2007. These wells will assist in determiningthe potential of the significant reserves upside of the field. Africa is a region of high exploration potential. During 2005 Tullow drilled atotal of six wells, recording a discovery in Gabon and providing significantsupport for future work in Mauritania. Three wells were drilled in Angola andwhile results were disappointing, a number of further opportunities have beenidentified. The 2006 drilling programme has already brought very encouragingresults. High impact exploration projects in Uganda produced two discoveries,M'puta and Waraga and could mark the first stage in the development of amaterial new hydrocarbon province. Tullow and its partners plan a minimum offour further onshore wells in 2006 and two additional wells in Lake Albert in2007 as part of an extensive exploration and appraisal programme across itsAlbertine Basin acreage. Neither of two wells in early 2006 on the Akoum Westand Soulandaka prospects in Gabon discovered commercial hydrocarbons and the rigwill now move to drill the Dogbolter prospect in the Gryphon Marin licence. Tullow continues to seek new ventures in Africa and in March 2006, theGovernment of Madagascar approved Tullow's participation in the onshore Block3109. Further exploration and development opportunities are currently in thefinal stages of negotiation and should include entry into at least oneadditional country. Renewing the South Asia Business While Tullow's production in South Asia has been modest, an extensive workprogramme in 2005 covering a number of important exploration and developmentprojects has the potential to transform the Group's business in the area. In Bangladesh, Tullow submitted an Appraisal Programme to Petrobangla for theBangora and Lalmai discoveries in Block 9. The programme includes extensive 3Dseismic, appraisal drilling and the initiation of production on a long-term testbasis to help supply much needed gas to the Dhaka region. The seismic has beencompleted and provided key information and encouragement for the appraisaldrilling, which will start in April 2006, as will first gas from the long-termtest. The introduction of Total as a partner in offshore Blocks 17&18 brought arenewal of activity with the recent commencement of an offshore seismic survey. In Pakistan, work on the development of Chachar field continues, with first gasforecast for the final quarter of 2006. Drilling has commenced on the ShahpurChakar well in the Nawabshah block. We also added a number of potentially highimpact exploration blocks to our portfolio in Pakistan including Kohat, where aseismic survey is under way and drilling is likely to begin early in 2007. In India, we recently commenced a 1,152 km 2D seismic programme in Block CB-ON/1. In parallel, the joint venture is integrating information from significantregional discoveries to the South and the North, and we anticipate a multi-welldrilling programme in 2007. Rigorous Operational Risk Management Risk management is central to our business, particularly in light of theinternational spread of our activities and the dynamic nature of our industry.The Group gives regular consideration to the key risks facing the business, withparticular reference to those concerning the overall safety of our operations,the geographical balance of our activities and the characteristics of ourindividual assets and joint ventures. Finance Review Tullow had a very strong 2005, achieving record profits, earnings and cash flowfrom operations. Compliance with IFRS The results for 2005 have been prepared in accordance with the Group's policiesunder IFRS. Tullow adopted IFRS with effect from 1 January 2004, with theexception of IAS 39 in respect of derivative financial instruments, which hasbeen adopted with effect from 1 January 2005. The 2004 financial statementshave been restated under IFRS and were published on 22 August 2005 with fulldetails of the accounting policies adopted and are published on the Group'swebsite at www.tullowoil.com. Strong Results across Key Performance Indicators The Group's financial performance was complemented by strong results across keyperformance indicators. Key Performance Indicators 2005 2004 ChangeLost Time Incident Frequency Rate1 0.82 1.96 Down 58%Production (boepd) 58,450 40,600 Up 44%Operating Cash flow before working capital per boe (£) 13.50 9.45 Up 43%Cash Operating Costs per boe (£)2 4.84 4.40 Up 10%Gearing (%)3 36% 17% Up 19%Reserve Replacement (%) 118% 83% Up 35%Realised Oil Price per bbl ($) 43.05 34.13 Up 26%Realised Gas Price (pence per therm) 33.85 22.89 Up 47% 1 Lost Time Incidents per million man hours worked 2 Cash operating costs are cost of sales excluding depletion and amortisationand under/over lift movements 3 Gearing is net debt divided by net assets Excellent Operating Performance Working interest production averaged 58,450 boepd, while sales volumes averaged53,350 boepd. These production figures are 44% ahead of 2004, principally as aresult of a full year contribution from the Energy Africa assets and anine-month contribution from the Schooner and Ketch acquisition, completed inMarch. During the year the Group disposed of the Alba and Caledonia assets inJune and the offshore Congo (Brazzaville) interests in August. Average prices realised during the year were significantly higher than in 2004.Oil was US$43.05/bbl (2004: US$34.13/bbl) and UK gas was 33.85p/therm (2004:22.89p/therm). Tullow's oil production sold at an average discount of 13% toBrent during the year. This discount is expected to reduce to between 8% and 9%during 2006. The Group also received tariff income of £14.7 million (2004: £9.4million) from use of its UK infrastructure. The combination of the higher prices and increased volumes meant that revenueincreased 98% to £445.2 million (2004: £225.3 million). Revenue analysed by Core Area Oil Gas Total % of Total £ millions £ millions £ millionsNW Europe (UK) 17.6 161.9 179.5 40%Africa 264.9 - 264.9 60%South Asia - 0.8 0.8 -Total 282.5 162.7 445.2% of Total 63% 37% Operating profit before exploration activities amounted to £224.4 million (2004:£74.7 million), up 200%, reflecting the strong growth in Group production,profit on disposals and realised oil and gas prices. Underlying cash operating costs, which exclude depletion and amortisation andmovements on under/over lift, amounted to £102.2 million (£4.84/boe). Thesecosts were marginally above expectations and reflected, in particular, oil pricelinked royalty payments on Gabonese production. Reported operating costs beforedepletion and amortisation for the year of £123.5 million (2004: £60.1 million)are also impacted by the inclusion at market value of £8.2 million associatedwith overlifted volumes at 31 December, £5.5 million of overlift associated withthe disposal of Alba and Caledonia and £7.6 million of overlift associated withthe sale of the Group's offshore Congo interests, completed in August 2005. Depreciation, depletion and amortisation for the year amounted to £119.7 million(£5.67/boe). Depreciation includes a total of £2.4 million of impairment costsassociated with Tullow's producing interests in Pakistan. Higher Exploration Write-off reflecting Increased Activity Exploration costs written off were £25.8 million (2004: £18.0 million), inaccordance with the Group's "successful efforts" accounting policy, whichrequires that all costs associated with unsuccessful exploration are written offto the Income Statement. The Group drilled 10 wells in 2005, achieved fourdiscoveries, and is planning to drill 20 wells in 2006. Hedging reflected in Income Statement under IFRS At 31 December 2005 the Group's derivative instruments had a negative mark tomarket value of £147.8 million. Of this amount, £97.2 million (66%) relates tocontracts acquired as part of the acquisition of Energy Africa in 2004. Whilethe bulk of these arrangements qualify for hedge accounting and willconsequently be largely reflected in the Income Statement as the relatedcontracts mature, the variations in crude oil discounts and gas productionpatterns for Tullow inevitably led to a degree of hedge ineffectiveness which isaccordingly included in the charge of £0.2 million recognised in the IncomeStatement for the year. The charge also reflects the effect of time value on themark to market value of the Group's derivative instruments. The Group's hedgeposition as at 22 March 2006 can be summarised as follows: Hedge Position H1 2006 H2 2006 2007OilVolume - bopd 10,242 11,217 7,000Current Price Hedge - US$/bbl 39.99 42.90 45.06Gas HedgesVolume - mmscfd 91.67 50.00 15.00Current Price Hedge - p/therm 58.70 42.61 58.68 Healthy Interest Cover The net interest charge for the year was £19.8 million (2004: £10.0 million).The increase reflects higher levels of net debt arising from acquisitions and aone-off non-cash charge of £4.1 million representing accelerated amortisation offinancing fees associated with facilities cancelled during the year as part ofthe Group's refinancing. Excluding these items, and eliminating gains fromasset disposals, interest was covered over 15.5 times (2004: 15.9 times). Taxation The tax charge of £65.4 million (2004: £15.5 million) relates to the Group'senlarged North Sea and Gabonese activities and represents 37% of the Group'sprofit before tax (2004: 33%). After adjusting for exploration costs andnon-recurring items associated with the profit on asset disposals, the Group'sunderlying effective tax rate for the year is 35% (2004: 25%). While Tullow's UK business has prospered, the Government's decision to raise thesupplemental corporation tax rate for the industry is difficult to understand ata time when the UK, as a net importer of gas, is seeking to promote investmentin exploration and maximise recovery of indigenous reserves. Acquisitions and Portfolio Management During the year Tullow completed the acquisition of the Schooner and Ketchassets for a net cash payment on completion of £189.3 million. A purchase priceallocation exercise has been undertaken on these assets incorporating the fairvalue of all reserves, costs and contractual arrangements acquired, resulting ina total allocation to oil and gas assets of £218.0 million. A creditor of £31.3million in respect of the gas contracts which were out-of-the-money as at 31March 2005 has also been recognised; the majority of these contracts expire inlate 2007. The Group completed the disposal of the Alba and Caledonia offshore assets inthe UK and the offshore Congo (Brazzaville) assets in June and August 2005respectively. In addition, final income has been recognised in relation toincremental consideration received based on reserves and performance of theHorne & Wren fields. The profit on disposals amounts to £36.1 million (inclusiveof the £5.5 million of overlift outlined above). Record Operating Cash Flow and Strong Balance Sheet The strong pricing environment, allied to increasing production and effectivecontrol of underlying operating costs, led to record operating cash flow beforeworking capital movements of £288.1 million, 106% ahead of 2004. This cash flowenabled the Group to maintain modest gearing of 36% at year end, to increasedividends to shareholders in respect of the period by 129% and to invest £193.0million in exploration and development activities in the year. Over 80% of Group capital expenditure was associated with ongoing developmentand production enhancement projects in the UK, Gabon, Congo (Brazzaville),Equatorial Guinea and Cote d'Ivoire. The programmes associated with thisexpenditure have allowed Tullow to achieve organic reserve replacement of 118%over the period. Tullow has approved total 2006 capital expenditure of £280million across all assets, driving group production to a target of over 75,000boepd by year end. Net assets at 31 December 2005 amounted to £389.0 million (2004: £375.5million). Net assets were reduced by £120.4 million in the year due to therecognition of a hedge reserve in accordance with IAS 39 (adopted 1 January2005). An increase in net assets (foreign currency translation reserve) of£32.4 million resulted from the strengthening of the US Dollar against Sterlingfrom US$1.93 to US$1.72 in the year. Successful major Refinancing Over the last five years Tullow has undertaken a range of acquisitions and fielddevelopments, all of which have been wholly or partly debt financed. During 2005the Group completed a US$850 million refinancing, the largest such facility evernegotiated by a UK independent oil company. This has allowed Tullow toconsolidate existing borrowings into a single facility, to halve itscollateralisation obligations and to maintain financial flexibility for futuregrowth. The Group currently has over US$400 million of unutilised debt capacityin addition to its cash balances. Ends For further information contact: Tullow Oil plc Citigate Dewe Rogerson Murray Consultants + 44 20 8996 1000 +44 20 7638 9571 +353 1 498 0300Aidan Heavey, CEO Martin Jackson Joe MurrayTom Hickey, CFOChris Perry, IRO Disclaimer This statement contains certain forward-looking statements that are subject tothe usual risk factors and uncertainties associated with the oil and gasexploration and production business. Whilst the Group believes the expectationsreflected herein to be reasonable in light of the information available to themat this time, the actual outcome may be materially different owing to factorsbeyond the Group's control or within the Group's control where, for example, theGroup decides on a change of plan or strategy. Accordingly no reliance may beplaced on the figures contained in such forward-looking statements. Group Income Statement Year Ended 31 December 2005 2005 2004 £'000 *Restated £'000Sales Revenue 445,232 225,256Cost of Sales (243,149) (141,228)Gross Profit 202,083 84,028Administrative Expenses (13,793) (11,573)Disposal of Subsidiaries 30,537 -Profit on Sale of Oil and Gas Assets 5,524 2,292Exploration Costs Written Off (25,783) (17,961)Operating Profit 198,568 56,786Loss on Hedging Instruments (159) -Finance Revenue 4,367 3,458Finance Costs (24,197) (13,449)Profit from Continuing Activities before Tax 178,579 46,795Income Tax Expense (65,443) (15,460)Profit for the Year from Continuing Activities 113,136 31,335Earnings per Ordinary Share Stg p Stg p- Basic 17.50 5.88- Diluted 17.15 5.81 Group Statement of Recognised Income and Expense Year Ended 31 December 2005 2005 2004 £'000 *Restated £'000Profit for the Financial Year 113,136 31,335Currency Translation Adjustments 32,447 (19,338)Hedge Movement (120,449) -Total Recognised Income and Expense for the Year 25,134 11,997 *Restated for the effect of adopting IFRS Group Balance Sheet As at 31 December 2005 2005 2004 £'000 *Restated £'000ASSETSNon-Current AssetsIntangible Exploration and Evaluation Assets 160,543 103,944Property, Plant and Equipment 736,563 545,527Investments 496 496 897,602 649,967Current AssetsInventories 5,141 3,392Trade Receivables 66,441 37,156Other Current Assets 26,851 17,051Cash and Cash Equivalents 65,386 85,070 163,819 142,669Total Assets 1,061,421 792,636LIABILITIESCurrent LiabilitiesTrade and Other Payables (139,415) (102,614)Other Financial Liabilities - (5,302)Income Tax Payable (25,038) (13,359)Derivative Financial Instruments (70,639) -Total Current Liabilities (235,092) (121,275)Non-Current LiabilitiesTrade and Other Payables (19,118) (13,014)Other Financial Liabilities (198,372) (143,398)Deferred Tax Liabilities (51,473) (68,803)Provisions (91,139) (70,679)Derivative Financial Instruments (77,208) -Total Non-Current Liabilities (437,310) (295,894)Total Liabilities (672,402) (417,169)Net Assets 389,019 375,467EQUITYEquity attributable to Equity Holders of the ParentCalled up Share Capital 64,744 64,537Share Premium 123,019 121,656Other Reserves 60,589 148,591Retained Earnings 140,667 40,683Total Equity 389,019 375,467 *Restated for the effect of adopting IFRS Group Cash Flow Statement Year Ended 31 December 2005 2005 2004 £'000 *Restated £'000Cash Flows from Operating ActivitiesCash Generated from Operations 273,840 154,307Income Taxes Paid (25,360) (14,497)Net Cash from Operating Activities 248,480 139,810Cash Flows from Investing ActivitiesAcquisition of Subsidiary, Energy Africa, Net of Cash Acquired - (166,055)Disposal of Subsidiary 57,227 -Disposal of Oil and Gas Assets 31,769 4,730Purchase of Intangible Exploration & Evaluation Assets (69,766) (23,912)Purchase of Property, Plant and Equipment (298,320) (71,193)Interest Received 4,359 3,436Net Cash used in Investing Activities (274,731) (252,994)Cash Flows from Financing ActivitiesNet Proceeds from Issue of Share Capital 1,570 120,913Debt Arrangement Fees (10,481) (3,050)Repayment of Bank Loans (351,637) (67,261)Drawdown of Bank Loan 390,515 98,620Interest Paid (21,483) (9,494)Dividends Paid (14,555) (6,995)Net Cash Used in Financing Activities (6,071) 132,733Net (Decrease)/Increase in Cash and Cash Equivalents (32,322) 19,549Cash and Cash Equivalents at Beginning of Period 85,070 65,631Translation Difference 12,638 (110)Cash and Cash Equivalents at end of Period 65,386 85,070 *Restated for the effect of adopting IFRS Notes to the Preliminary Accounts Year Ended 31 December 2005 1. Basis of Accounting and Presentation of Financial Information The financial information contained in this announcement does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. However,the financial statements contained in this announcement are extracted from theaudited statutory accounts for the financial year ended 31 December 2005.Statutory accounts for 2004 prepared under UK GAAP have been delivered to theRegistrar of Companies and those for 2005 prepared under IFRS will be deliveredfollowing the Company's AGM. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under s.237(2) or(3) Companies Act 1985. Whilst the financial information included in this preliminary announcement hasbeen complied in accordance with IFRS, this announcement does not itself containsufficient information to comply with IFRS. This is the first year in which the Group has prepared its financial statementsunder IFRS and the comparatives have been restated from UK Generally AcceptedAccounting Practice (UK GAAP) to comply with IFRS. The Group issued a pressrelease in August 2005 incorporating its preliminary IFRS financial statementsfor 2004 and revised accounting policies, which are unchanged in these financialstatements, and the reconciliations to IFRS from the previously published UKGAAP financial statements. This information is available on our website(www.tullowoil.com). 2. Earnings per Share The calculation of basic earnings per share is based on the profit for the yearafter taxation of £113,136,158 (2004 - £31,335,220) and 646,637,815 (2004 -532,980,261) ordinary shares, being the weighted average number of shares inissue for the year. The calculation of diluted earnings per share is based on the profit for theyear after taxation as for basic earnings per share. The number of sharesoutstanding, however, is adjusted to show the potential dilution if employee andother share options are converted into ordinary shares. The weighted averagenumber of ordinary shares is increased by 13,214,424 (2004: 6,042,545) inrespect of the share option scheme, resulting in a diluted weighted averagenumber of shares of 659,852,239 (2004: 539,022,806). 3. Dividends Paid and Proposed During the year the Company paid a final 2004 dividend of 1.25 pence per shareand an interim 2005 dividend of 1 pence per share, a total dividend of 2.25pence per share (2004: 1.5 pence per share). The Directors intend to recommend afinal 2005 dividend of 3 pence per share, which, if approved at the AGM, will bepaid on 7 June to shareholders on the register at 12 May. 4. 2005 Annual Report and Accounts The Annual Report and Accounts will be posted to all shareholders on 2 May 2006,save those who have elected to receive these electronically. Investors willingto avail themselves of this facility should visit our website(www.tullowoil.com) and follow the appropriate links. 5. The Annual General Meeting is due to be held at Haberdashers' Hall, 18West Smithfield, London, EC1 on Wednesday 31 May at 12 noon. 6. Cash Flows from Operating Activities 2005 2004 £'000 *Restated £'000Profit before taxation 178,579 46,795Adjustments for:Depletion, Depreciation and Amortisation 119,697 81,098Foreign Exchange Profit/Loss 72 (4,044)Exploration Costs 25,783 17,961Disposal of Subsidiaries (30,537) -Profit on Disposal of Oil and Gas Assets (5,524) (2,292)Operating Cash Flow before Working Capital 288,070 139,517Increase in Trade and Other Receivables (38,538) (34,215)Increase in Inventories (1,749) (1,721)Increase in Trade Payables 4,665 40,179Share Based Payment Charge 1,403 556Hedge Ineffectiveness 159 -Interest Receivable (4,367) (3,458)Finance Costs Payable 24,197 (13,449)Cash Generated from Operations 273,840 154,307 7. Group Proven and Probable Reserves Summary (Unaudited) EUROPE AFRICA ASIA TOTAL Oil Gas Oil Gas Oil Gas Oil Gas Petroleum mmbbl bcf mmbbl bcf mmbbl bcf mmbbl bcf mmboeCommercial1 Jan 2005 14.60 131.95 116.07 28.00 - 96.20 130.67 256.15 173.36Revisions - 21.09 22.04 (3.79) - (0.03) 22.04 17.27 24.92Acquisitions/ (13.81) 250.45 (12.95) - - - (26.76) 250.45 14.97DisposalsProduction (0.79) (47.31) (12.20) (0.41) - (0.91) (12.99) (48.63) (21.10)31 Dec 2005 - 356.18 112.96 23.80 - 95.26 112.96 475.24 192.15Contingent1 Jan 2005 - 121.80 - 780.60 - 16.20 - 918.60 153.10Revisions - 69.60 0.70 0.60 - - 0.70 70.20 12.4031 Dec 2005 - 191.40 0.70 781.20 - 16.20 0.70 988.80 165.50Total31 Dec 2005 - 547.58 113.65 805.00 - 111.46 113.65 1,464.04 357.65 Proven and Probable Commercial Reserves are based on a Group reserves reportproduced by an independent engineer. Proven and Probable Contingent Reservesare based on both Tullow's estimates and the Group reserves report produced byan independent engineer. The Group provides for depletion and amortisation of tangible fixed assets on anet entitlements basis, which reflects the terms of the Production SharingContracts related to each field. Total net entitlement reserves were 162.2 mmboeat 31 December 2005 (2004: 149.99 mmboe), calculated at $40/bbl (2004: $30/bbl). Contingent Reserves relate to reserves in respect of which development plansare in the course of preparation or further evaluation is under way with a viewto development within the foreseeable future. About Tullow Oil plcTullow Oil plc is a leading independent oil and gas, exploration and productiongroup and is quoted on the London and Irish Stock Exchanges (symbol: TLW.L). TheGroup has interests in over 90 production and exploration licences in 15countries and focuses on three core areas: North West Europe, Africa and SouthAsia. For further information please consult the Group's websitewww.tullowoil.com. Events on Results Day In conjunction with these results Tullow is conducting a London Presentation anda number of events for the financial community. All times are BST. 09.30 UK/European Conference Call (and simultaneous Webcast) To access the call please dial the appropriate number below shortly before thecall and ask for the Tullow Oil plc conference call. A replay facility will beavailable from approximately noon on 29 March until 4 April. The telephonenumbers and access codes are: Live Event Replay Facility available from NoonUK Participants 020 7138 0828 UK Participants 020 7806 1970Irish Participants 01 655 0485 Irish Participants 01 659 8321Other Participants +44 20 7138 0828 Other Participants +44 20 7806 1970 Access Code 9143802# To join into the live webcast, or play the on-demand version, you will need tohave either Real Player or Windows Media Player installed on your computer. 17:30 US Conference Call To access the call please dial the appropriate number below shortly before thecall and ask for the Tullow Oil plc conference call. A replay facility will beavailable from approximately 20.30 29 March until 4 April. The telephonenumbers and access codes are: Live Event Replay Facility available from 20:30Domestic Toll Free 877 502 9274 Domestic Toll Free 888 203 1112Toll +1 913 981 5584 Toll +1 719 457 0820 Access Code 4166860 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Tullow Oil