Annual Financial Report

RNS Number : 4158Q

Tullow Oil PLC

09 April 2009

 



Tullow Oil PLC  

9 April 2009 

Tullow Oil plc ('Tullow' or the 'Company')

Annual Report and Accounts and Notice of Annual General Meeting

Following the release on 11 March 2009 of the Company's preliminary full year results announcement for the year ended 31 December 2008 (the 'Preliminary Announcement'), the Company announces it has published its Annual Report and Accounts for 2008 (the 'Annual Report and Accounts'). 

The Company's 2009 AGM will be held at Haberdashers' Hall, 18 West Smithfield, London EC1A 9HQ on 12 May 2009 at 12 noon.

Copies of the Annual Report and Accounts and the Notice of the Annual General Meeting for 2009 are available to view on the Company's website: www.tullowoil.com

In accordance with Disclosure and Transparency Rule 6.3.5(2)(b) additional information is set out in the appendixes to this announcement.

The Preliminary Announcement included a set of condensed financial statements and a fair review of the development and performance of the business and the position of the Company and the group.

Pursuant to Listing Rule 9.6.1, two copies of each of the Annual Report and Accounts, the Notice of the Annual General Meeting for 2009 and the form of proxy in relation to the Annual General Meeting for 2009 are being submitted to the UK Listing Authority. These documents are also being submitted to the Irish Stock Exchange.  These documents will shortly be available for inspection at the Document Viewing Facilities of the UK Listing Authority which is situated at:

Financial Services Authority

25 The North Colonnade
Canary Wharf
London E14 5HS,

and of the Irish Stock Exchange which is situated at:

Irish Stock Exchange
28 Anglesea Street
Dublin 2
Ireland.

In addition, two copies of the 'Year in Review' for the year ended 31 December 2008 have been submitted to the UK Listing Authority and the Irish Stock Exchange. This document has been sent to those shareholders who no longer receive a hard copy of the Annual Report and Accounts

The Notice of Annual General Meeting for 2009 includes a resolution to adopt new Articles of Association. A copy of the proposed new Articles of Association has also been forwarded to the UK Listing Authority and the Irish Stock Exchange in accordance with Disclosure and Transparency Rule 6.1.2. The proposed material changes to the Articles of Association are explained in the Notice of Annual General Meeting for 2009.

Appendixes

Appendix A: Directors' responsibility statement

The Annual Report and Accounts contains a responsibility statement in the form set out below (page 80); 

We confirm to the best of our knowledge: 

1  the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

2  the business review, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face. 

By order of the Board 
Aidan Heavey                               Ian Springett

Chief Executive Officer                    Chief Financial Officer 

Appendix B: A description of the principal risks and uncertainties that the Company faces

The following description of the principal risks and uncertainties that the Company faces is extracted from the Annual Report and Accounts (pages 45 to 47).

Tullow groups risk into strategic, financial, operational and external risks. A risk analysis outlining key risks facing Tullow together with their potential impact and the mitigation strategies developed is contained below: 

Strategic Risk

Impact - Ineffective or poorly executed strategy fails to create shareholder value or fails to meet shareholder expectations

Risk	Mitigation
Strategy fails to meet shareholder expectations	Strategy focused on delivering Ghana and Uganda developments and selective high-impact exploration programme. Effective communication with all stakeholders based on uniform, open and transparent dialogue.
Ineffective capital allocation	Consistent investment appraisal through application of agreed criteria with ranking of opportunities validated by executive management. Material acquisitions and disposals and new country entry require Board approval.
Loss of key staff and succession planning	Remuneration policies to attract and retain staff, staff appraisal, specific development and training policies implemented. Board succession plan to be reviewed in 2009.

Financial Risk

Impact - Asset performance and excessive leverage results in the Group being unable to meet its financial obligations.

Risk	Mitigation
Insufficient liquidity, Inappropriate financing strategy	Prudent approach to debt and equity balance maintained through refinancing and equity placing. Regular Board review and approval for financing options. Short- and long-term cash forecasts reported to senior management and Board monthly.
Inadequate or excessive hedging	Hedging strategy agreed by the Board utilises a mix of physical and derivative products appropriate to Tullow's size and production base. Hedging activity is reported to the Board monthly and accounting reviewed by external audit.
Underperforming assets	Monthly asset financial and operational performance reporting and KPI measures established. Detailed senior management review completed quarterly with business unit teams. Active portfolio management and review of carrying values.
Cost and capital discipline	Comprehensive annual budgeting process covering all expenditure approved by the Board. Executive management approval required for major categories of expenditure effectively managing capital allocation. Monthly reporting vs budget with variance analysis.
Uninsured events	Comprehensive insurance programme approved annually with business interruption cover for key producing assets.

Operational Risk

Impact - Operational event impacting staff, contractors, communities or the environment leading to loss of reputation and/or revenue.

Risk	Mitigation
EHS	EHS performance standards set and monitored regularly across the Group through KPI reporting. EHS management system implemented.
Security Incident	Integrated Management System covers day-to-day operational risks. Crisis management system implemented.
Key Development Failure	Technical, financial and Board approval for all projects, dedicated project teams established. Risk evaluation and progress reporting initiated for all projects. Project milestone KPI's established for Ghana and Uganda.
Ineffective management processes / increased scale of business	Policies and procedures developed for all significant business processes appropriate for Tullow's size and scale. Application validated through management and internal audit review.
Failure to secure equipment, services and resources	Rigorous contracting procedures and competitive tendering. Major contracts require senior management and partner approval.
Corruption or reputation risk	Consistent ethical standards established and applied through code of business conduct and contract and procurement procedures.
Corporate and Social Responsibility	Social and community programmes overseen by CSR Committee, policies established and regular reporting of progress and financial commitment implemented.
Sustained exploration failure	Exploration process validates programmes prior to Board approval, KPI measuring success of exploration spend reported monthly to Board.

External Risk

Impact - The overall external political, industry or market environment may negatively impact on the Group's ability to independently manage and grow its business.

Risk	Mitigation
Political risk and fiscal change	Developing and maintaining successful relationships with governments and communities.
Lack of control of key assets	Joint venturing with partners and governments. Enforceability of licence and production agreements.
Corporate governance failings	Regular review of compliance requirements with periodic Board reporting.
Oil and gas price volatility	Hedging strategy agreed by Board, monthly reporting of hedging activity.
Hostile acquisition	Robust defence strategies against hostile acquisitions. Effective investor engagement and ongoing communications programmes.
Industry cost inflation	Rigorous contracting procedures and competitive tendering required for all significant expenditures.

Appendix C: Related party transactions

The following related party transactions are extracted from the Annual Report and Accounts (page 114).

Transactions with the Directors of Tullow Oil plc are disclosed in the Remuneration Report on pages 66 to 75. Directors are considered to be the only key management personnel as defined by IAS 24 - Related party disclosures.

There are no other related party transactions.

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