Interim Results
Tullow Oil PLC
4 September 2001
4 September 2001
Tullow Oil plc
Unaudited Interim Results for the six months to 30 June 2001
Tullow Oil plc ('Tullow') the independent oil and gas exploration,
development and production company, announces record Interim Results for the
six months to 30 June 2001. Tullow has interests in the North Sea, Onshore
UK, Pakistan, Bangladesh, India, Cote d'Ivoire, Romania, Egypt and Algeria.
Interim Results
Financial Position Strengthens
* Turnover Increases by c.490% to Stg£27.1 million (2000 - Stg£4.6 m)
including a significant contribution from recently acquired Southern North
Sea ('SNS') Assets.
* Operating Profitability before exploration costs increases to Stg£11.2 m
(2000 - Stg£1.2 m).
* Cash Flow from Operating Activities of Stg£16.7 m (2000 - Stg£1.4 m).
Transforming Acquisition Completed
* All elements of BP ARCO Acquisition now completed. Proven and Probable
Reserves increased by over 30%, production increased to c.25,000 boepd.
* Tullow becomes an offshore field operator for the first time.
* Murdoch K well exploration success the catalyst for CMS III development;
DTI approval recently granted.
* Further scope for low-risk development of SNS reserves.
Significant International Developments
* Bangladesh Block 9 PSC award finalised April 2001; seismic planning now
well advanced.
* First oil from Espoir project in Ivory Coast confirmed for 15 January 2002;
seven well development drilling programme progressing.
* Government approval received for tie in of Chachar field in Pakistan;
production expected to commence in 2002.
* Launch of Level 1 American Depository Receipt (ADR) programme through JP
Morgan.
* Active Exploration ongoing in SNS and internationally.
Commenting on the Interim Results, Aidan Heavey, Managing Director, Tullow
Oil plc, said:
'These results demonstrate the huge advances Tullow has made in the first
half of 2001, both in the UK and Internationally. The turnover and
profitability of the group have been transformed by the SNS acquisition where
a great deal of potential remains to be exploited. The long-awaited award of
Block 9 gives Tullow an extremely valuable position in a highly prospective
region while elsewhere, the Espoir field in the Cote d'Ivoire continues to
develop into a first class project.
'The Board looks forward to a very positive outcome to 2001 and further
success in 2002'
For Further Information please contact:
Aidan Heavey, Peter Binns/Emma Judith Parry/ Simon
Managing Director McCaffrey/Simon Ellis Rothschild
Tom Hickey, Binns & Co PR Ltd Millham Communications
Financial Director
John Lander, Director Tel: 020 7786 9600 Tel: 0113 242 1171/
Tel: 020 7389 0300 Tel: 020 7256 5756
Chairman's Statement
Having re-registered in the United Kingdom last December 2000, this is the
first occasion on which Tullow has reported its results in Sterling and I am
delighted to announce significant increases in turnover and profitability for
the first half of 2001. The principal reason for this is the progressive
completion of the BP ARCO Southern North Sea acquisition, which has caused
turnover to increase by approximately 490% to Stg£27.1 million (2000 -
Stg£4.6 million) while operating profitability before Exploration Costs
showed an increase of over 800% to Stg£11.2 million (2000 - Stg£1.2 million).
UK
Offshore -Acquisition of BP Amoco Arco Assets
Since the beginning of the year we have completed the acquisition of the
Murdoch-Boulton and Thames-Hewett packages in the United Kingdom Southern
North Sea, the final stage being the completion of the Orwell field on 28th
August. During the first half of the year, the acquired assets performed
ahead of expectations, recording total Revenues of some Stg£68 million of
which Stg£23.4 million was booked as Turnover following staged completions on
the assets.
The completion of Orwell brings with it Tullow's first offshore production
operatorship, a major milestone in the development of any exploration and
production Company.
We have been delighted with the performance of the assets to date and in
particular with the success of the Murdoch K exploration well which forms the
cornerstone of the CMS III development of five fields in the Caister and
Murdoch Areas. Interests in the five reservoirs have been unitised, with
Tullow's interest fixed at 14.1%. On 25th June government consent was
received to develop CMS III project and it is expected that the
Stg£207million project will achieve first production of natural gas in the
fourth quarter of 2002. The project combines the latest subsea technology
with existing infrastructure to minimise costs and environmental impact.
The Boulton F well is currently at an advanced stage of drilling, while
further wells are being planned in the Thames-Hewett area over the coming
months.
Following completion of the acquisition Tullow now controls a valuable
portfolio of Southern North Sea assets which is managed by an experienced
team and we are actively seeking to complement these assets with other
suitable acquisitions.
Onshore
Onshore United Kingdom, the Marishes-2 appraisal/exploration well in the
North Yorkshire gas field complex was completed in February. The well flowed
on test at a rate of 11 mmscfd from the Kirkham Abbey Formation and 2.5
mmscfd from the Brotherton formation. The well has been tied in to the North
Yorkshire infrastructure as feedstock for the Knapton Power Station, where
production for the period averaged 4 mmscfd. We believe the discovery of new
reserves in North Yorkshire enhances the prospectivity of the area and will
ensure consistent production for many years to come.
International
Ivory Coast
Drilling on the Espoir field offshore Cote d'Ivoire commenced in May
following the installation of the east wellhead tower and the laying of a gas
pipeline to shore. Seven deviated wells are being drilled from the tower in
the initial phase and first production is expected in January 2002. The
Floating Production Storage and Offtake vessel (FPSO) is in the final stages
of being fitted out in Singapore and will reach Cote d'Ivoire in October. On
the Exploration front, a recent programme of 3D seismic has identified a very
significant potential extension to the Espoir field. This prospect, known as
Acajou, will be drilled in early 2002.
Bangladesh
In April 2001, Tullow and its partners, Chevron, Texaco and Bapex, signed the
Production Sharing Contract in respect of Block 9 onshore Bangladesh with
Tullow holding a 30% interest and the operatorship.
Tullow, in conjunction with partners is currently planning an extensive
programme of 3D seismic over the most prospective areas of the block with
first drilling planned for the second quarter of 2002. Negotiations in
relation to the similarly prospective Block 11 are continuing, however no
outcome is anticipated before the forthcoming elections in Bangladesh.
Pakistan
In Pakistan production continued from the Sara and Suri fields at an average
of 35 mmscfd and plans are being made for the Suri-2 development well to spud
in October. In May Tullow received a request from WAPDA, the existing
purchasers of gas from Sara and Suri, to initiate development of the pipeline
and related facilities required to bring the Chachar field into production at
a rate of 30 mmscfd. The Chachar field was discovered by Tullow in 1995 and
Tullow holds a 75% stake.
India
In India various government approvals are being advanced to allow final
ratification of the Reliance farm-in to 5 of Tullow's operated blocks. On the
GK-OSJ-5 licence a total of 594 km 2D seismic was acquired and is currently
being processed. Design and planning work is under way for an a well in in
GK-OSJ-1 to appraise an existing gas accumulation.
Romania
A 350 km 2D survey and a 670 sq.km. geochemical survey are being conducted in
Blocks EPI-3 and EPI-8 in Romania with the first well planned for 2002. Egypt
farmout agreement was completed with Soekor for 50% of the North Abu Rudeis
licence in Egypt. A two well exploration programme on this licence has now
been agreed and drilling will start shortly.
Algeria
In March Tullow executed an Agreement with AGIP Algeria Exploration B.V. to
acquire a 30% participating interest in Block 222b, in the prolific Illizi
basin onshore Algeria. It is the first time that Tullow has undertaken a
project in Algeria. The agreement remains subject to an official approval by
the State Company Sonatrach and the relevant Algerian Authorities. A 1,000 km
seismic infill programme and a geochemical survey have recently been
completed with encouraging results and the first well on this licence is
planned for 2002.
Corporate Developments
The London office is in the process of moving to a new location at Old
Burlington Street following the formation of a team to manage the North Sea
Assets while the first UK based AGM was held in London in May. In recognition
of the increasing importance of the North Sea Assets to Tullow, John Lander
was appointed to the Board on 21 March 2001.
In addition, in recent weeks Tullow has completed arrangements to establish a
Level 1 ADR programme to facilitate US Investors. This programme will today
be formally launched and declared effective. This follows upon a most
encouraging introductory US Investor Relations programme early in 2001. We
believe that the US has the potential to become a very important shareholder
constituency for Tullow in the coming years and we may extend this programme
to include a formal listing on NASDAQ or the New York Stock Exchange in the
future.
Outlook
The first half of 2001 has been a period of remarkable advances for Tullow.
The Southern North Sea assets retain very significant upside, only a fraction
of which has been realized to date and these, combined with the outstanding
potential of the International portfolio, provide the opportunity for
continued growth over the coming years
I look forward to a very positive outcome to 2001 and further success in 2002.
Pat Plunkett
Chairman
4 September 2001
Consolidated Profit and Loss Account
Six Months Ended 30th June 2001
6 Months 6 Months 12 Months
30.06.01 30.06.00 31.12.00
Unaudited Unaudited Audited
Stg£'000 Stg£'000 Stg£'000
Turnover
Existing Operations 3,652 4,577 7,782
Acquisition 23,420 - -
Turnover - Continuing Operations 27,072 4,577 7,782
Cost of Sales
Operating Costs (6,501) (1,596) (2,811)
Depletion and Amortisation (7,946) (1,253) (2,444)
(14,447) (2,849) (5,255)
Administrative Expenses (1,424) (464) (1,163)
Depreciation (31) (24) (42)
(1,455) (488) (1,205)
Operating Profit Before Exploration 11,170 1,240 1,322
Costs
Exploration Costs Written Off (2,383) (270) (687)
Operating Profit/(Loss)
Existing Operations (1,724) 970 635
Acquisition 10,511 - -
Operating Profit - Continuing Operations 8,787 970 635
Group Re-organisation Costs - - (338)
Profit on Ordinary Activities Before 8,787 970 297
Interest
Interest Receivable & Similar Income 562 268 968
Interest Payable (2,733) (250) (472)
Profit on Ordinary Activities before 6,616 988 793
Taxation
Taxation On Ordinary Activities (1,955) - -
Net Profit 4,661 988 793
Stg p Stg p Stg p
Earnings Per Share (Note 2)
- Basic 1.32 0.36 0.26
- Diluted 1.30 0.36 0.25
Consolidated Balance Sheet
As at 30th June 2001
6 Months 6 Months 12 Months
30.06.01 30.06.00 31.12.00
Unaudited Unaudited Audited
Stg£'000 Stg£'000 Stg£'000
FIXED ASSETS
Investments 250 - -
Intangible 29,552 17,934 18,896
Tangible 147,615 25,532 35,952
177,417 43,466 54,848
CURRENT ASSETS
Stock 773 - -
Debtors 18,203 3,963 8,165
Cash at Bank and in Hand 37,109 8,681 35,485
56,085 12,644 43,650
CREDITORS - Amounts falling due within
one year
Bank Loans and Overdrafts 20,382 1,671 1,299
Trade and Other Creditors 37,059 5,812 8,288
57,441 7,483 9,587
NET CURRENT (LIABILITIES)/ASSETS (1,356) 5,161 34,063
TOTAL ASSETS LESS CURRENT LIABILITIES 176,061 48,627 88,911
CREDITORS - Amounts falling due after
one year
Bank Loans (57,351) (9,804) (9,424)
Provisions for Liabilities and Charges
Decommissioning Costs (30,159) (306) (348)
NET ASSETS 88,551 38,517 79,139
CAPITAL AND RESERVES
Equity Share Capital 35,782 27,075 35,248
Share Premium 1,651 - -
Merger Reserve 69,212 36,158 69,212
Profit and Loss Account (18,094) (24,716) (25,321)
EQUITY SHAREHOLDERS' FUNDS 88,551 38,517 79,139
Group Cash Flow Statement
Six Months Ended 30th June 2001
6 Months 6 Months 12 Months
30.06.01 30.06.00 31.12.00
Unaudited Unaudited Audited
Stg£'000 Stg£'000 Stg£'000
Net Cash Inflow from Operating
Activities
Operating Profit for the Period 8,787 970 635
Depletion and Amortisation 7,946 1,253 2,444
Depreciation of Other Fixed Assets 31 24 42
Exploration Costs 2,383 270 687
Increase in Operating Debtors (3,924) (1,106) (474)
Increase in Operating Creditors 2,264 - 1,137
Increase in Stocks (773) - -
Group Re-Organisation Costs - - (338)
16,714 1,411 4,133
Returns on Investments and Servicing of (328) (216) 13
Finance
Capital Expenditure and Financial (83,014) (12,023) (27,054)
Investment
Net Cash Outflow before Use of Liquid
Resources and Financing (66,628) (10,828) (22,908)
Management of Liquid Resources - Term 2,642 9,904 (1,878)
Deposits
Financing 54,813 26 38,973
(Decrease)/Increase in Cash (9,173) (898) 14,187
Reconciliation of Net Cash Flow to
Movement in Net Funds/(Debt)
(Decrease)/Increase in Cash for Period (9,173) (898) 14,187
Cash (Inflow)/Outflow from
(Increase)/Decrease in Debt (66,348) 961 1,445
Cash (Outflows)/Inflows from
(Decrease)/Increase in Liquid Resources (2,642) (9,904) 1,878
Change in Net Cash arising from (78,163) (9,841) 17,510
Cashflows
Translation Difference (325) 722 907
Net Funds at Beginning of Period 24,742 6,325 6,325
Net (Debt)/Funds at End of Period (53,746) (2,794) 24,742
Group Cash Flow Statement (contd)
Six Months Ended 30th June 2001
Analysis of Changes in Net Funds/(Debt)
01.01.01 CashFlow Exchange 30.06.01
Stg£'000 Stg£'000 Stg£'000 Stg£'000
Cash at Bank and in Hand 17,581 (6,535) 93 11,139
Overdrafts (353) (2,638) 12 (2,979)
17,228 (9,173) 105 8,160
Debt Due Within one Year (966) (16,437) - (17,403)
Debt Due After One Year (9,424) (49,911) (638) (59,973)
(10,390) (66,348) (638) (77,376)
Term Deposits 17,904 (2,642) 208 15,470
Net Funds/(Debt) 24,742 (78,163) (325) (53,746)
Cash at Bank and in Hand at 30th June 2001 per the Group Balance Sheet
includes £11,138,965 of Cash at Bank and in Hand, £15,470,014 of Term
Deposits and £10,500,000 on Fixed Deposit in support of future
decommissioning costs.
Long Term Loans are stated in the Group Balance Sheet net of related
arrangement fees.
Notes to the Interim Financial Statements
1. Accounting Policies and Presentation of Financial Information
The financial information presented above does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. The
financial information for the year ended 31st December 2000 has been derived
from the statutory accounts for that year. The statutory accounts, upon which
the auditors issued an unqualified opinion, were delivered to the Registrar
of Companies.
There are no changes to the accounting policies as set out on pages 41 and 42
of the Annual Report and Statement of Accounts for the year ended 31st
December 2000.
The accounts are presented in Pounds Sterling following a decision to adopt
the currency for reporting purposes. Comparative amounts, previously reported
in euro, have been translated at the rates of exchange ruling at 30th June
2000 and 31st December 2000 respectively.
2. Earnings per Ordinary Share
The Calculation of basic earnings per ordinary share is based on the Profit
for the Period after Taxation of £4,661,274 (first half 2000 - £987,700) and
a weighted average number of shares in issue of 354,378,682 (first half 2000
- 275,200,537).
The calculation of diluted earnings per share is based on the Profit for the
Period after Taxation as for basic earnings per share. The number of shares
is adjusted to show the potential dilution if employee and other share
options are converted into ordinary shares. The weighted average number of
shares in issue is increased to 359,138,284 (first half 2000 - 275,575,390).
3. Statement of Total Recognised Gains and Losses
6 Months 6 Months 12 Months
30.06.01 30.06.00 31.12.00
Unaudited Unaudited Audited
Stg£'000 Stg£'000 Stg£'000
Profit for period 4,661 988 793
Currency translation adjustment on
foreign currency net investments 2,566 (1,170) (1,580)
Total Recognised Gains/(Losses) 7,227 (182) (787)
4. Proven and Probable Reserves Summary
EUROPE AFRICA ASIA TOTAL
Oil Gas Oil Gas Oil Gas Oil Gas Petroleum
MMBO BCF MMBO BCF MMBO BCF MMBO BCF MMBOE
At 1st 0.18 17.23 33.01 40.74 - 183.51 33.19 241.48 73.44
January
2001
Revisions - - - - - - - - -
Acquisitions/ - 226.80 - - - - - 226.80 37.80
Disposals
Production (0.01) (9.64) - - - (2.40) (0.01) (12.04) (2.02)
At 30th 0.17 234.39 33.01 40.74 - 181.11 33.18 456.24 109.22
June 2001
5. Dividends
No dividend was declared in the half year to 30th June 2001 nor in 2000.
6. Auditors' Review
The interim accounts (unaudited) have been reviewed by the Group's joint
auditors, Arthur Andersen and Robert J Kidney & Co.
7. Approval of accounts
These interim accounts (unaudited) were approved by the board of Directors on
3rd September 2001.
Tuesday, 14th May 2024
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