Final Results - Year Ended 31 Dec 1999, Part 2

Enterprise Oil PLC
2 March 2000


Part 2


Consolidated Profit and Loss Account
for the year ended 31 December 1999

                                                            1999        1998
                                                                   (Restated)
                                               Notes          £m          £m
-----------------------------------------------------------------------------
Turnover                                                   850.0       563.1
Cost of sales                                      2      (427.5)     (436.9)
-----------------------------------------------------------------------------
Gross profit                                               422.5       126.2
Exploration costs                                          (64.0)     (142.2)
Administrative and selling expenses                        (35.9)      (41.0)
-----------------------------------------------------------------------------
Operating profit (loss)                            3       322.6       (57.0)
-----------------------------------------------------------------------------
Income from fixed asset investments                          0.7         0.7
Gain on sales of oil and gas assets                4         1.5        34.8
Interest receivable and similar income                      18.3        38.7
Interest payable and similar charges                       (53.9)      (46.8)
-----------------------------------------------------------------------------
Profit (loss) on ordinary activities before taxation       289.2       (29.6)
Tax on profit (loss) on ordinary activities        5      (112.0)       27.3
-----------------------------------------------------------------------------
Profit (loss) on ordinary activities after taxation        177.2        (2.3)
Dividends - preference shares (non equity)                  (6.9)       (6.5)
Dividends - ordinary shares                                (35.8)      (34.0)
-----------------------------------------------------------------------------
Retained profit (loss) for the financial year              134.5       (42.8)
Basic earnings (loss) per ordinary share           6        34.8p      (1.8p)
Diluted earnings (loss) per ordinary share         6        34.6p      (1.8p)
Dividends per ordinary share                                 7.3p       6.9p


The result for 1998 has been restated for the effects of applying FRS12
'Provisions, Contingent Liabilities and Contingent Assets' (see note 1).

The result for 1998 includes significant amounts relating to ceiling test
write-downs (note 2(iii)), the amendment of a transportation agreement (note
2(iv)), an unsuccessful drilling programme in the Middle East (note 3), a
restructuring programme (note 3), a gain on the sale of oil assets (note 4)
and deferred tax credits (note 5).



Consolidated Balance Sheet as at 31 December 1999

                                                            1999        1998
                                                                   (Restated)
                                               Notes          £m          £m
-----------------------------------------------------------------------------
Fixed assets
Intangible assets                                  7       209.8       199.3
Tangible assets                                    7     2,106.8     1,883.7
Investments                                                 52.6        41.2
-----------------------------------------------------------------------------
                                                         2,369.2     2,124.2
-----------------------------------------------------------------------------
Current assets
Stocks                                                      15.1        20.1
Debtors                                                    208.2       173.1
Investments 
  (liquid resources)                                       307.7       355.3
Cash at bank and in hand                                    68.5        36.7
-----------------------------------------------------------------------------
                                                           599.5       585.2
Creditors: amounts falling due within one year            (437.2)     (565.2)
-----------------------------------------------------------------------------
Net current assets                                         162.3        20.0
-----------------------------------------------------------------------------
Total assets less current liabilities                    2,531.5     2,144.2
Creditors: amounts falling due after more than one year (1,104.7)     (904.9)
Provisions for liabilities and charges                    (349.0)     (299.5)
-----------------------------------------------------------------------------
Net assets                                               1,077.8       939.8
-----------------------------------------------------------------------------
Capital and reserves
Called up share capital                                    198.9       198.8
Share premium account                                      100.5        98.6
Capital redemption reserve                                 103.8       103.8
Other reserves                                             179.7       179.7
Profit and loss account                                    494.9       358.9
-----------------------------------------------------------------------------
Shareholders' funds                                      1,077.8       939.8
-----------------------------------------------------------------------------
Analysis of shareholders' funds
Equity                                                   1,003.5       865.5
Non-equity                                                  74.3        74.3
-----------------------------------------------------------------------------
                                                         1,077.8       939.8



Consolidated Cash Flow Statement
for the year ended 31 December 1999

                                                            1999        1998
                                                                   (Restated)
                                                                     (note 1)
                                               Notes          £m          £m
-----------------------------------------------------------------------------
Cash flow from operating activities            8 (i)       514.4       360.2
Returns on investments and                    
  servicing of finance                        8 (ii)       (84.0)      (54.0)
Taxation                                      8 (ii)       (38.1)      (74.9)
-----------------------------------------------------------------------------
Operating cash flow after tax and finance costs            392.3       231.3
Capital expenditure and financial investment:
- capital expenditure 
  (including asset acquisitions)              8 (ii)      (437.5)     (608.5)
- financial investment                                     (14.0)      (13.2)
Corporate disposals                           8 (ii)           -       141.9
Equity dividends paid                                      (13.7)      (85.6)
-----------------------------------------------------------------------------
Cash (outflow) before use of liquid 
  resources and financing                                  (72.9)     (334.1)
Management of liquid resources                8 (ii)        51.1       156.5
Financing - issue of shares                   8 (ii)         2.0         0.5
          - increase in debt                  8 (ii)        63.4       180.9
-----------------------------------------------------------------------------
Increase in cash in the year                                43.6         3.8

Reconciliation of net cash flow                             1999        1998
  to movement in net debt                      Notes          £m          £m
-----------------------------------------------------------------------------
Increase in cash in the year                                43.6         3.8
Cash (inflow) from movement in debt 
  and lease financing                          8 (i)       (63.4)     (180.9)
Cash (inflow) from movement in liquid 
  resources                                    8 (i)       (51.1)     (156.5)
-----------------------------------------------------------------------------
Change in net debt resulting 
  from cash flows                                          (70.9)     (333.6)
Translation differences                                    (19.2)        7.3
Other differences                                           (0.4)       (0.8)
-----------------------------------------------------------------------------
Movement in net debt in the year                           (90.5)     (327.1)
-----------------------------------------------------------------------------
Net debt at 1 January                                     (770.2)     (443.1)
-----------------------------------------------------------------------------
Net debt at 31 December                       8 (ii)      (860.7)     (770.2)



Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 1999
                                                            1999        1998
                                                                   (Restated)
                                                                     (note 1)
                                               Notes          £m          £m
-----------------------------------------------------------------------------
Profit (loss) on ordinary activities 
  after taxation                                           177.2        (2.3)
Unrealised currency translation differences                  1.5         6.2
-----------------------------------------------------------------------------
Total recognised gains and losses relating 
  to the year                                              178.7         3.9
-----------------------------------------------------------------------------
Prior year adjustment                                       58.8           -
-----------------------------------------------------------------------------
Total recognised gains and losses since the 
  last financial statements                                237.5         3.9


The prior year adjustment arises from the implementation during the year of
the revised accounting policy for decommissioning costs (see note 1).

The currency translation differences shown above are the net result of
retranslation to sterling of significant overseas investments and certain
foreign currency borrowings which provide a partial hedge against the impact
of currency movements on those investments.



Notes
for the year ended 31 December 1999

1. Accounting policies
--------------------------------------------------------------------------
The 1999 accounts have been prepared using the same policies as those adopted
in the accounts for the financial year ended 31 December 1998, other than
where changes were necessary to implement FRS12 'Provisions, Contingent
Liabilities and Contingent Assets'. 

Implementation of FRS12 'Provisions, Contingent Liabilities and Contingent
Assets'

This standard, which affects the way the group accounts for decommissioning
costs, has been adopted by the group for the first time in these accounts. 
Comparative amounts have been restated as appropriate. 

Licensees are generally required to restore oil and gas field sites at the end
of the producing lives of the fields to a condition acceptable to the relevant
authorities.  The expected cost of decommissioning, discounted to its net
present value, is provided and capitalised when the installation of facilities
has had an environmental impact.  The capitalised cost is amortised over the
life of the operation and the increase in the net present value of the
expected cost is included in interest.  In practice the adoption of the new
policy, which has been made by way of an adjustment to previously published
results as though the revised policy had always been applied by the Group, has
had the following effects on prior year figures:

1. Fixed assets at 31 December 1998 have increased by £25.3 million and
provisions have decreased at that date by £33.5 million from the figures
previously published resulting in an increase in shareholders' funds of £58.8
million.

2. The interest charge for year ended 31 December 1998 have increased by £5.2
million and operating profit for the period has increased by £3.9 million. 

3. The gain arising on disposal of a package of UKCS North Sea assets in 1998
has reduced by £8.8 million.



                                                            1999        1998
                                                                   (Restated)
                                                                     (note 1)
2. Cost of Sales                                              £m          £m
-----------------------------------------------------------------------------
Depreciation of development costs                          203.8       243.2
Operating costs                                            199.5       175.3
Research and development                                     1.8         2.6
Royalties                                                   22.4        15.8
-----------------------------------------------------------------------------
                                                           427.5       436.9

(i) Following the implementation of FRS12 'Provisions, Contingent Liabilities
and Contingent Assets' during 1999, amortisation in respect of the cost of
decommissioning is included within the depreciation charge for the period.  
(See note 1).

(ii) Included in operating costs in 1999 is an amount of £9.0 million relating
to restructuring costs charged to the group by operators of  joint ventures.
Also included in 1999, as a reduction in the depreciation charge, is an amount
of £7.1 million reflecting the reversal of past ceiling test provisions.

(iii) The depreciation charge for 1998 includes additional depreciation of
£30.7 million arising from the application of ceiling tests to the Garden
Banks 161 field in the US and the Siri field in Denmark. There was no related
taxation.

(iv) Operating costs for 1998 includes a charge of £9.0 million relating to a
payment to amend a transportation agreement. The tax charge for the year was
reduced by £2.8 million as a consequence.



3. Operating profit (loss)
-----------------------------------------------------------------------------
Operating loss in 1998 includes a charge of £10.0 million relating to the
reorganisation programme announced during 1998. The tax charge for 1998 was
reduced by £3.1 million as a consequence. 

Included within exploration costs charged to income in 1998 is an amount of
£23.1 million in respect of the costs of an unsuccessful drilling programme in
the Middle East. There was no related taxation.


4. Gains on Sale of Oil and Gas Assets
-----------------------------------------------------------------------------
The gain on disposal of fixed assets in 1999 primarily reflects the gain of
£2.2 million on the sale of the group's entire interest in the Johnston field
in the Southern Gas Basin, together with certain appraisal acreage, to Eastern
Natural Gas Offshore.

Gains on asset disposals for 1998 included £30.4 million, as restated (see
note 1), arising from the sale of the group's entire interests in the UK
Piper, Claymore, Saltire and Scapa producing fields together with associated
infrastructure and certain exploration acreage to Intrepid Energy North Sea
Limited. Also included was a 5.7 per cent interest in the Nelson field owned
by Enterprise Oil Production Limited. There was no tax charge associated with
this gain.



                                                            1999        1998
5. Tax on Profit (Loss) on Ordinary Activities                £m          £m
-----------------------------------------------------------------------------
UK petroleum revenue tax charge (credit):
  current                                                   57.1        31.5
  deferred                                                  (5.7)      (18.0)
UK corporation tax charge (credit):
  current at 30% (1998: 31%)                                42.8        (7.2)
  deferred                                                  17.9       (15.0)
Overseas tax charge (credit), principally Norwegian taxes:
  current                                                    0.1         0.4
  deferred                                                  (0.2)      (19.0)
-----------------------------------------------------------------------------
                                                           112.0       (27.3)

UK deferred corporation tax and overseas deferred tax in 1998 include credits
of £9.9 million and £17.2 million respectively arising from revised
expectations of future capital expenditure profiles.



6. Earnings (Loss) per share
-----------------------------------------------------------------------------
The calculation of basic earnings per share is based upon the profit (loss)
attributable to ordinary shareholders for 1999 of £170.3 million (1998: £8.8
million loss) and the adjusted weighted average of 489.8 million ordinary
shares outstanding during the year (1998: 491.8 million ordinary shares).
Profit (loss) attributable to ordinary shareholders is arrived at by deducting
preference share dividends from profit (loss) on ordinary activities after
taxation. The weighted average number of ordinary shares outstanding excludes
8.1 million shares (1998: 6.0 million) held by employee share schemes on which
no dividend is payable. Diluted earnings per share differs from basic earnings
per share in that the weighted average number of ordinary shares includes
potential shares, being any financial instrument or right that may entitle its
holder to ordinary shares, such as share options. The weighted average number
of ordinary shares used to calculate diluted earnings per share is 491.9
million in 1999 (1998: 494.6 million). The total number of dilutive potential
ordinary shares is 2.1 million (1998 2.8 million). The total number of
dilutive potential ordinary shares is 2.1 million (1998: 2.8 million),
comprising 0.2 million (1998: 0.9 million) in respect of the Senior Executive
Share Option Schemes, 1.5 million (1998 1.1 million) in respect of the Long
Term Performance Related Share Schemes and 0.4 million (1998: 0.8 million) in
respect of the Savings Related Share Option Schemes.


                                                             At           At
                                                    31 December  31 December 
7. Fixed Assets                                            1999         1998
Capital expenditure comprises:                               £m          £m
-----------------------------------------------------------------------------
Exploration and appraisal expenditure:
Exploration and appraisal                                  99.9       172.5
Acquisitions                                                0.1         2.8
-----------------------------------------------------------------------------
                                                          100.0       175.3
Development expenditure:
Development                                               320.0       442.3
Capitalised interest                                       49.5        52.1
Decommissioning                                            13.1           -
Acquisitions                                                7.0           -
-----------------------------------------------------------------------------
                                                          389.6       494.4
Other fixed assets                                          2.1         8.0
-----------------------------------------------------------------------------
                                                          491.7       677.7


(i) Development acquisitions in 1999 reflect the acquisition of an additional
3.1 per cent in the Clair field, West of Shetlands.

(ii) Ceiling tests were conducted as at 31 December 1999. Tests were performed
on a field by field basis other than in the case of shared facilities where
groups of fields were considered.


The following assumptions were used in performing the ceiling tests:
 
                                                             At           At
                                                    31 December  31 December 
                                                           1999         1998
-----------------------------------------------------------------------------
Oil price
2000                                                     $15.00       $12.80
2001-2003                                                $15.00       $14.40
2004 Onwards                                             $15.00       $14.40
                                                                     plus 3%
                                                                   per annum

Foreign exchange rate                                   $1.6:£1      $1.6:£1
Cost inflation per annum                                      -           3%
Discount rate                                               10%           7%


In 1998 there were individual deficiencies on two fields totalling £30.7
million and accordingly accelerated depreciation was provided within cost of
sales in that period (see note 2). 

In 1999 an amount of £7.1 million was included in cost of sales, as a
reduction of the depreciation charge, reflecting the reversal of past ceiling
test provisions. 



8. Cash Flow Statement
                                                            1999        1998
                                                                   (Restated)
(i) Reconciliation of operating profit                               (note 1)
(loss) to operating cash flow                                 £m          £m
-----------------------------------------------------------------------------
Operating profit (loss)                                    322.6       (57.0)
Depreciation charges                                       211.4       253.1
Exploration costs                                           64.0       142.2
Movements in stocks                                          4.3        (4.1)
Movements in operating debtors                             (84.0)       54.6
Movements in operating current liabilities                  (8.8)      (35.9)
Other deferrals and accruals of operating cash flows         4.9         7.3
-----------------------------------------------------------------------------
Net cash inflow from operating activities                  514.4       360.2

                                                            1999        1998
                                                                   (Restated)
(ii) Analysis of cash flow captions                                  (note 1)
Returns on investments and servicing of finance:              £m          £m
-----------------------------------------------------------------------------
Interest received                                           17.5        38.8
Interest paid                                              (94.5)      (85.2)
Interest element of finance lease rentals paid              (0.1)       (1.1)
Preference dividends paid                                   (6.9)       (6.5)
-----------------------------------------------------------------------------
Net cash outflow for returns on investments 
  and servicing of finance                                 (84.0)      (54.0)

Taxation:
-----------------------------------------------------------------------------
UK petroleum revenue tax                                   (31.6)      (27.3)
UK corporate taxes                                          (6.5)      (53.7)
Overseas tax                                                   -         6.1
-----------------------------------------------------------------------------
Net cash outflow for tax paid                              (38.1)      (74.9)

Capital expenditure and financial investment: 
-----------------------------------------------------------------------------
Capital expenditure:
  Development                                           (310.1)       (428.9)
  Exploration and appraisal                             (113.3)       (176.5)
  Sale of licence interests                                2.9          29.8
  Purchase of licence interests                          (14.9)        (25.0)
  Purchase of other fixed assets                          (2.1)         (7.9)
-----------------------------------------------------------------------------
Net cash outflow for capital expenditure                (437.5)       (608.5)

Corporate disposals:
-----------------------------------------------------------------------------
Disposal of Enterprise Oil Production Limited 
  and Enterprise Oil Transportation Limited                  -         141.9
-----------------------------------------------------------------------------
Net cash inflow from corporate disposals                     -         141.9

Net assets disposed of:
-----------------------------------------------------------------------------
Intangible and tangible fixed assets                         -         178.5
Net current liabilities                                      -         (10.1)
Provisions                                                   -         (56.9)
-----------------------------------------------------------------------------
                                                             -         111.5
Gain on disposal                                             -          30.4
-----------------------------------------------------------------------------
                                                             -         141.9
Satisfied by:
-----------------------------------------------------------------------------
Cash                                                         -         141.9
Less: Cash transferred on sale                               -             -
-----------------------------------------------------------------------------
                                                             -         141.9

Management of liquid resources:
-----------------------------------------------------------------------------
Purchase of investments                               (1,102.7)     (1,994.4)
Sales of investments                                   1,153.8       2,150.9
-----------------------------------------------------------------------------
Net cash inflow from management of liquid resources       51.1         156.5

Financing:
-----------------------------------------------------------------------------
Issue of ordinary share capital                            2.0           0.5
Debt repaid                                             (143.2)            -
Revolving credit facility repaid                          35.0         (55.0)
Revolving credit facility drawdown                           -          70.0
New debt issues                                          188.2         179.4
Debt issue costs                                          (1.8)         (1.4)
Capital element of finance lease rental payments         (14.8)        (12.1)
Redemption of preference shares                              -             -
-----------------------------------------------------------------------------
Net cash inflow from financing                            65.4         181.4



(iii) Analysis of net debt
                                                            At            At
                                                     1 January   31 December
                                                          1999          1999
                                                            £m            £m
-----------------------------------------------------------------------------
Cash at bank and in hand                                  36.7          68.5
Overdrafts                                               (12.5)         (1.7)
-----------------------------------------------------------------------------
                                                          24.2          66.8
Current asset investments (liquid resources)             355.3         307.7
Debt due within one year                                (232.8)       (132.7)
Debt due after one year                                 (897.2)     (1,097.6)
Finance leases                                           (19.7)         (4.9)
-----------------------------------------------------------------------------
                                                        (770.2)       (860.7)



9. Status of Financial Information
-----------------------------------------------------------------------------
The information contained herein does not constitute the  company's statutory
accounts for the years ended 31 December 1999 or 1998.  Statutory accounts for
1998 have been delivered to the Registrar of Companies and those for 1999 will
be delivered following the company's annual general meeting.  The auditor has
reported on both the 1999 and 1998 accounts; its reports were unqualified and
did not contain statements under section 237 (2) or (3) of the Companies Act
1985.



PROVEN AND PROBABLE OIL AND GAS RESERVES


                                           Crude oil         Gas        Total
                                             (mmbbls)     (mmboe)      (mmboe)
-----------------------------------------------------------------------------
Net proven and probable oil and gas 
       reserves at 1 January 1999             967.2        204.3      1,171.5
Changes during year:                                
Revisions of previous estimates               113.0          3.1        116.1
Purchase, exchange of reserves                  8.6          0.0          8.6
Discoveries, extensions and other additions     0.0         50.4         50.4
Disposals, exchange of reserves                 0.0         (1.1)        (1.1)
Production                                    (66.7)       (11.6)       (78.3)
-----------------------------------------------------------------------------
Net proven and probable reserves at 
      31 December 1999                      1,022.1        245.1      1,267.2
-----------------------------------------------------------------------------
Of which:
Fields in production                          689.2        144.3        833.5
Fields under development                      137.7         22.2        159.9
Fields awaiting development                   195.2         78.6        273.8
-----------------------------------------------------------------------------
                                            1,022.1        245.1      1,267.2


Note: Crude oil includes natural gas liquids and condensate; 'mmbbls' means
million barrels; 'mmboe' means million barrels of oil equivalent. Gas reserves
are converted to barrels of oil equivalent at the rate of 5,800 cubic feet of
gas per barrel.



ADDITIONAL INFORMATION UNDER US ACCOUNTING PRINCIPLES

The production figures, reserves and results reported in this statement are
prepared in accordance with the group's established reporting and accounting
policies which comply with UK accounting principles. The following
supplementary information is presented under US accounting principles:


                                              1999                1998 
(in millions, except per ADS amounts)                          (restated)
-----------------------------------------------------------------------------
Approximate net income (loss)
(after tax)                            $125.4     £77.8    $(143.9)    £(86.5)
-----------------------------------------------------------------------------
Approximate shareholders equity 
at 31 December                       $1,414.9    £877.9   $1,356.0     £815.0 
-----------------------------------------------------------------------------
Approximate earnings/loss per ADS (2)
   
   Basic                               $0.700    £0.434    $(0.943)   
£(0.567)
   Diluted                             $0.696    £0.432          -           -

Dividends per ADS (2)                  $0.353    £0.219     $0.344      £0.207


(1) US dollar amounts are shown translated for convenience at the exchange
rate on 31 December 1999 of $1.6117: £1 (1998: $1.6638: £1).
(2)On the basis of one ADS for every three ordinary shares.


The principal recurring differences between UK and US generally accepted
accounting principles ('GAAP') as applicable to the group relate to business
combinations and deferred taxation.  Certain business combinations completed
prior to 1990 were accounted for based on historical costs under UK GAAP.  US
GAAP requires these combinations to be dealt with under purchase accounting,
based on fair valuations, with consequent adjustments to depreciation charges,
interest capitalised and deferred taxation.  Also, US GAAP requires full
provision in respect of deferred tax temporary differences between the tax
basis of assets and liabilities and their carrying values for accounting
purposes, whereas UK GAAP requires provision for deferred tax timing
differences only to the extent it is expected that assets or liabilities will
crystallise in the foreseeable future.

In addition to the recurring difference between UK GAAP and US GAAP, the
group's results under US GAAP for the year ended 31 December 1998 include a
net additional charge of £80.2 million for asset impairments with a related
tax credit of £19.7 million.  This charge was calculated in accordance with
Statement of Financial Accounting Standard No. 121 'Accounting for Long-Lived
Assets and for Long-Lived assets to be Disposed Of'.  The fields for which
additional impairment losses were recognised under US GAAP were all previously
recorded at higher carrying values under US GAAP than UK GAAP, as a result of
purchase accounting adjustments.

Production in accordance with US principles (ie. excluding volumes
attributable to royalties payable in cash or in kind) averaged 208.4 thousand
barrels of oil equivalent ('boe') per day for 1999, compared with 189.9
thousand boe per day in 1998.

Oil and gas reserve quantities recorded in accordance with US GAAP comprise
proved developed and undeveloped reserves, rather than the definition of
proven and probable reserves used by the group.  The group's total proved
developed and undeveloped reserves at 31 December 1999 were 900.7 million
barrels of oil equivalent compared with 797.4 million barrels of oil
equivalent at 31 December 1998.