Final Results - Year Ended 31 December 1999
Tullow Oil PLC
6 April 2000
Tullow Oil Plc
Preliminary Results for the year ended 31 December 1999
* Turnover up 31% to Euro 8.35m (1998: Euro 6.35m)
* Operating profit at Euro 944,622 (1998:operating loss Euro 735,585)
* Increased involvement in Ryedale gas to power project makes major
contribution to operating profits
* Exploration write off, providing for all costs connected with 1999/2000
drilling programme and deferred costs relating to Block 34 in Pakistan,
of Euro 19.7m leads to net loss of Euro 19.28m
* Pakistan gas sales commenced Dec '99, major contribution to turnover
anticipated in 2000
* Progress made on Cote d'Ivoire project - reserves recently revised
upward; first production scheduled for late 2001
* Major expansion in interests in Indian sub-continent achieved: 90%
interests in 3 blocks acquired from Okland and agreement signed with
Larsen and Toubro
* Re-domicile of company in UK expected June 2000
Commenting on the results, Tom Toner, Chairman, said:
'The Company's prospects are currently better than they have ever been; there
are substantial production assets, the development of the Sara and Suri gas
fields has been completed and production commenced and an exciting set of
exploration acreage has been assembled. The company is already seeing the
real benefits of its gas-to-power strategy, particularly through its
involvement in the Ryedale Project, which bodes well for the future.'
For further information please contact:
Aidan Heavey Tel: 00 44 20 7976 2600
Chief Executive
Graham Martin Tel: 00 44 20 7976 2600
Legal and Commercial Director
Judith Parry/Simon Rothschild Tel: 00 44 20 7256 5756
Millham Communications
CHAIRMAN'S STATEMENT
I am pleased to announce the results for 1999, which show an operating profit
of Euro 944,622. This improved performance principally reflects the impact of
Tullow's increased involvement in the Ryedale gas to power project in the
United Kingdom. Turnover for the year increased 31% from Euro 6,346,495 to
Euro 8,354,742 resulting in an increase in operating profits to Euro 944,622
from a loss of Euro 735,585 in 1998. Tullow expects substantial increases in
turnover over the next few years. Sales of gas in Pakistan commenced late in
the year and had only a minimal impact in 1999, however, is having a major
effect on turnover and operating profit in the current year.
During the period the Company made a provision for all costs connected with
the 1999/2000 drilling programme in Bangladesh and Senegal and the deferred
costs in Pakistan in relation to Block 34. The result was an exploration
write off of Euro 19,737,425 in 1999 leaving a net loss for the period of
Euro 19,276,067. The Group balance sheet was strengthened in December 1999 by
the placing and open offer, which raised approximately US$30 million. This
leaves Tullow well funded for its key exploration and development programmes
in 2000. Great credit is due the management team for bringing the Company to
the point where it now has substantial production assets and the Company's
prospects are currently better than they have ever been.
The Ryedale gas to power project includes three producing gas fields in North
Yorkshire and the Knapton Electricity Generating Station. Tullow, which in
January 1999 increased its interest in the fields from 13% to 60%, now
operates both the fields and the power station. This project was the main
contributor to operating profits in 1999. With an expanded workforce in the
United Kingdom, Tullow also took over the operatorship of the facilities for
the nearby Hatfield Moor gas storage system.
On the signing of a gas sales agreement in Pakistan in March 1999, the
development of the Sara and Suri gas fields commenced immediately and was
completed in November 1999. Production commenced in December and gas is
currently being sold at a rate of approximately 38 mmcfd. The production from
the two fields is sold to the state-owned Guddu Power Station, which is
operated by WAPDA, the Water and Power Development Authority. To date, sales
targets have been met and payments received on time. Reservoir pressure
testing programmes are currently being conducted with a view to determining
further development plans in these fields in the year 2000. The start of
production in Pakistan is a major milestone for the Company and is having a
significant impact on current cash flow and profitability.
The largest project currently being undertaken by the Company is the
development of the Espoir oil and gas field offshore Cote d'Ivoire. The
reserves have recently been revised upwards by the operator, Ranger Oil, to
93 mmbo and 191 bcf of gas. The gas sales agreement was signed in July 1999
and the award of major development contracts has commenced. First production
is currently scheduled to commence in late 2001 and at peak production the
field is expected to produce 35 mmcfd and 28,800 bopd.
Two major exploration programmes started in 1999 and continued into the early
part of 2000: an offshore exploration well in Block 17 in Bangladesh and two
onshore wells in Senegal. Whilst the results of these wells were
disappointing, the Bangladesh well had gas shows and considerable thicknesses
of reservoir sands, providing significant information for further drilling in
the block. Unfortunately neither of the wells in Senegal discovered gas in
commercial quantities. In addition to these projects Tullow was active in a
number of other licence areas. The North Abu Rudeis-1 well, drilled in late
1998 and early 1999, discovered an oil reservoir which is currently being
evaluated. Offshore 3D seismic was conducted in India in Block GK-OSJ/1 and
an onshore 2D survey is currently under way in Pakistan in the Nawabshah
block. Other existing seismic data was reprocessed and preliminary geological
and geophysical studies were conducted in India. Exploration efforts will
increase over the coming years in line with the expanding production profile.
During 1999 Tullow expanded its interests in the Indian subcontinent. The
Company acquired a 90% interest in three new blocks from Okland and entered
an arrangement with Larsen and Toubro (L&T) under which Tullow acquired
L&T's interest in two key onshore exploration blocks in return for a 10%
stake in Tullow India. The companies have also agreed to co-operate in
upstream and downstream projects.
In March 2000 the Company was asked to attend negotiations in Bangladesh
concerning the licence for Block 9. Although we were disappointed that the
licence was not finalised at this time, discussions continue and we are
confident of a favourable outcome.
As stated in October, Tullow plans to re-register as a UK company in mid
2000. This process, which will position the Company in a larger market of
potential investors, is now at an advanced stage and is likely to take effect
in June. To support this change a number of board changes will take effect.
The board will reduce in size with the retirement from the board of myself,
Matt Maher, Duilio Ciriani and Dan O'Donohoe; Duilio will, however, retain
his executive role with responsibility for exploration. From a personal
perspective I am delighted to announce that Pat Plunkett will take over as
Chairman. Pat, who has made an invaluable contribution to the Board since his
appointment in July 1998, was previously Chairman and Managing Director of
ABN-AMRO Stockbrokers, Dublin and has considerable experience to bring to the
position.
I have had a challenging and greatly enjoyable ten years as Chairman of
Tullow. I would like to take this opportunity to wish the Company well at an
exciting stage in its development and to thank all the staff and the
shareholders for their support during my time in the Chair.
Thomas Toner
GROUP PROFIT AND LOSS ACCOUNT
YEAR ENDED 31ST DECEMBER 1999
1999 1998
Euro Euro
TURNOVER 8,354,742 6,346,495
------------ ------------
COST OF SALES
Operating Costs 5,022,977 3,136,066
Amortisation 1,482,012 3,109,399
------------ ------------
6,504,989 6,245,465
------------ ------------
GROSS PROFIT 1,849,753 101,030
------------ ------------
ADMINISTRATION AND DEPRECIATION
Administration Costs 828,986 735,140
Depreciation 76,145 101,475
------------ -------------
905,131 836,615
------------ ------------
OPERATING PROFIT/(LOSS) 944,622 (735,585)
OTHER INCOME 241,269 437,404
INTEREST PAYABLE (724,533) (240,886)
-------------- ------------
PROFIT/(LOSS) BEFORE EXPLORATION COSTS 461,358 (539,067)
EXPLORATION COSTS (19,737,425) (22,368,736)
-------------- ------------
LOSS ON ORDINARY ACTIVITIES BEFORE
TAXATION (19,276,067) (22,907,803)
Taxation Credit on Ordinary Activities - 65,172
-------------- ------------
LOSS FOR THE FINANCIAL YEAR (19,276,067) (22,842,631)
============= ============
LOSS PER SHARE - EURO CENTS
- Basic (8.05) (9.79)
- Diluted (7.55) (9.74)
============= ============
GROUP BALANCE SHEET
AS AT 31ST DECEMBER 1999
1999 1998
Euro Euro
Fixed Assets
Intangible Assets 25,825,659 19,764,159
Tangible Assets 39,581,445 36,582,633
-------------- --------------
65,407,104 56,346,792
-------------- --------------
Current Assets
Debtors 3,234,651 1,837,338
Cash at Bank and in Hand 28,447,061 2,778,367
-------------- --------------
31,681,712 4,615,705
-------------- --------------
Creditors
(Amounts falling due within one year)
Bank Loans 2,394,613 2,774,186
Trade and Other Creditors 17,476,300 5,236,533
-------------- --------------
19,870,913 8,010,719
-------------- --------------
Net Current Assets / (Liabilities) 11,810,799 (3,395,014)
-------------- --------------
Total Assets Less Current Liabilities 77,217,903 52,951,778
-------------- --------------
Creditors
(Amounts falling due after more than one year)
Bank Loans 15,879,413 1,084,629
Provision for Charges 471,483 278,545
-------------- --------------
16,350,896 1,363,174
-------------- --------------
Net Assets 60,867,007 51,588,604
============== ==============
Capital and Reserves
Called Up Share Capital 35,771,950 29,993,411
Share Premium Account 65,272,528 41,031,788
Profit and Loss Account (40,177,471) (19,436,595)
-------------- --------------
Shareholders' Funds 60,867,007 51,588,604
============== ==============
GROUP CASH FLOW STATEMENT
YEAR ENDED 31ST DECEMBER 1999
1999 1998
Euro Euro
Net Cash Inflow from Operating Activities 2,213,769 2,581,709
Returns on Investments and Servicing of
Finance (1,176,461) (256,070)
Capital Expenditure (19,088,265) (20,600,081)
------------- -------------
Net Cash Outflow before Financing (18,050,957) (18,274,442)
Financing 29,304,440 325,658
-------------- ------------
Increase/(Decrease) in Cash 11,253,483 (17,948,784)
============= ============
Reconciliation of Net Cash Flow to Movement in Net Debt
Increase/(Decrease) in Cash for the year 11,253,483 (17,948,784)
Net (Debt)/Funds at 1st January (1,080,448) 16,868,336
-------------- -------------
Net Funds/(Debt) at 31st December 10,173,035 (1,080,448)
============== =============
Analysis of Changes in Net Debt
01.01.99 Cash Flow 31.12.99
Euro Euro Euro
Cash at Bank and in Hand 2,778,367 25,668,694 28,447,061
Bank Term Loans
Due within one year (2,774,186) 379,573 (2,394,613)
Due after one year (1,084,629) (14,794,784) (15,879,413)
-------------- -------------- --------------
(1,080,448) 11,253,483 10,173,035
============= ============= =============
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
YEAR ENDED 31ST DECEMBER 1999
1999 1998
Euro Euro
Loss for the Year (19,276,067) (22,842,631)
Currency Translation Adjustments on
Foreign Currency Net Investments (749,970) (304,729)
--------------- ---------------
Total Recognised Losses (20,026,037) (23,147,360)
=============== ===============
MOVEMENTS ON PROFIT AND LOSS ACCOUNT
YEAR ENDED 31ST DECEMBER 1999
1999 1998
Euro Euro
At 1st January (19,436,595) 3,710,765
Loss for the Year (19,276,067) (22,842,631)
Currency Translation Adjustments (749,970) (304,729)
Re-denomination and re-nominalisation of
ordinary shares (714,839) -
-------------- -------------
At 31st December (40,177,471) (19,436,595)
============== =============
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
YEAR ENDED 31ST DECEMBER 1999
1999 1998
Euro Euro
Loss for the Year (19,276,067) (22,842,631)
Currency Translation Adjustments (749,970) (304,729)
Shares Issued 5,063,700 879,948
Share Premium on Shares Issued 24,240,740 8,362,793
-------------- --------------
Net Increase/(Decrease) in
Shareholders' Funds 9,278,403 (13,904,619)
Shareholders' Funds - At 1st January 51,588,604 65,493,223
-------------- --------------
Shareholders' Funds - At 31st December 60,867,007 51,588,604
============== ==============
Tullow Oil plc
Notes to the Results
Year Ended 31st December 1999
Note 1. Loss Per Ordinary Share
The calculation of basic and diluted loss per ordinary share is as follows:
Numerator 1999 1998
Euro '000 Euro '000
For basic and diluted loss per share
Loss After Tax (19,276) (22,843)
===== =====
Denominator
For basic loss per share Millions Millions
Weighted Average Number of Shares in
Issue for the Year 239 233
Effect of Dilutive Potential Ordinary Shares
(Share Options) 16 10
------ ------
Denominator for Diluted Loss per Share 255 243
==== ====
Euro Cents Euro Cents
Basic Loss per Ordinary Share (8.05) (9.79)
Diluted Loss per Ordinary Share (7.55) (9.74)
===== =====
Note 2. Profit and Loss Account
1999 1998
Euro Euro
At 1st January (19,436,595) 3,710,765
Loss for Year (19,276,067) (22,842,631)
Currency Translation Adjustments (749,970) (304,729)
Re-denomination and re-nominalisation
of share capital (714,839) -
--------------- -------------
At 31st December (40,177,471) (19,436,595)
======== =========
Note 3. Proven and Probable Reserves Summary
EUROPE AFRICA ASIA TOTAL
Oil Gas Oil Gas Oil Gas Oil Gas Petroleum
Mmbbl Bcf Mmbbl Bcf Mmbbl Bcf Mmbbl Bcf mmboe
1st Jan 1999 0.55 3.59 19.20 49.54 0.70 259.58 20.45 312.71 72.56
Revisions (0.39) 13.14 14.11 (8.57)(0.70) (44.17) 13.02 (39.60) 6.4
Production (0.04) (1.84) - (0.23) - (0.34) (0.04) (2.41) (0.41)
31st Dec 1999 0.12 14.89 33.31 40.74 - 215.07 33.43 270.70 78.55
Note 4. Dividends
No dividend is proposed (1998:nil).
Note 5. 1999 Annual Report and Accounts
The document will be posted to all shareholders in due course.
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