Notes for this page
Billion cubic feet
Barrels of oil equivalent
Barrels of oil equivalent per day
Barrels of oil per day
Caister Murdoch System
- CMS III
A group development of five satellite fields linked to CMS
Civil Society Organisation
China National Offshore Oil Corporation
Development Leadership Team
Delegation of Authority
Democratic Republic of Congo
Deferred Share Bonus Plan
Exploration and evaluation
Exploration and Appraisal
Exploration and Production
Earnings Before Interest, Tax, Depreciation and Amortisation
Environment, Health and Safety
Environmental Management System
Energy Resource Consultants
Executive Share Option Scheme
Front End Engineering and Design
Floating Production Storage and Offloading vessel
Financial Reporting Council
Financial Reporting Standard
Full Tensor Gravity Gradiometry
- FTSE 100
Equity index whose constituents are the 100 largest UK listed companies by market capitalisation
Fair Value Through Profit or Loss
Global Exploration Leadership Team
Ghana National Petroleum Corporation
Government of Uganda
Company and its subsidiary undertakings
International Accounting Standard
International Accounting Standards Board
International Financial Reporting Interpretations Committee
International Financial Reporting Standards
Information Management System
International Organization for Standardization
London Interbank Offered Rate
Lost Time Incident
LTI Frequency Rate measured in LTIs per million hours worked
Million barrels of oil
Million barrels of oil equivalent
Million standard cubic feet per day
Memorandum of Understanding
Mark To Market
Operational Readiness and Assurance
Reserves and/or resources estimates that have a 10 per cent probability of being met or exceeded
Reserves and/or resources estimates that have a 50 per cent probability of being met or exceeded
Production and Development
Pay As You Earn
Petroleum Revenue Tax
Production Sharing Contract
Performance Share Plan
Supplementary Corporation Tax
Share Incentive Plan
Senior Management Committee
Sale and Purchase Agreement
- sq km
Socially Responsible Investment
- UK GAAP
UK Generally Accepted Accounting Principles
Value Added Tax
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"We made remarkable progress in 2010 and are building Tullow year-by-year. We are in great shape and in a strong position as Africa's leading independent oil
Pat Plunkett, Chairman
2010 was a very good year. In particular, Ghana and the Jubilee Partnership made history with First Oil and we had another year of exceptional exploration success.
Tullow's highlight of 2010 was achieving First Oil from the Jubilee field offshore Ghana with formal celebrations held on 15 December 2010. We are now a deepwater development operator having delivered production on schedule, within 5% of the original budget. The facilities uptime has been exceptional to date at approximately 90% and we will continue to ramp-up production over the coming months.
2010 revenue benefited from higher oil prices offset by slightly lower sales volumes. First Oil in Ghana will transform Tullow's financial profile in 2011. During the year we raised $1.45 billion from an equity placing and took the opportunity, based on good operational performance and a strengthening external environment, to increase our debt capacity.
2010 was another year of exceptional exploration and appraisal (E&A) delivery. We achieved an 83% success ratio, finding hydrocarbons in 24 out of 29 E&A wells during the year.
In Ghana, highlights were the discovery of Enyenra (formerly Owo), subsequently proved to be a major oil field, and the successful appraisal of the Tweneboa field. The Mercury-1 discovery well in Sierra Leone also extended the Jubilee play more than 1,000 km west of Ghana. The Equatorial-Atlantic play represents an important opportunity for further exploration and new basin opening potential in both West Africa and South America.
We had a 10 out of 10 success ratio in Uganda and have made good progress in developing new E&A targets in the Lake Albert Rift Basin. We are now seeking to replicate our Ugandan success elsewhere in the East African Rift Basins and have acquired six contiguous licences in Kenya and Ethiopia. We have an exciting high-impact E&A programme of some 40 wells planned in 2011 and already we have had seven out of nine successes.
The performance of our global assets in 2010 was very strong with production of 58,100 boepd. Contingent Resources increased by 500 mmboe during the year and our three-year reserves replacement ratio is 250%.
The contribution from the Jubilee field will considerably increase Group production in 2011, to an expected average of between 86,000 and 92,000 boepd. This broader range is more appropriate given the weighting of the Jubilee field production in our portfolio and the timing uncertainty of when Jubilee will reach gross plateau production of 120,000 barrels of oil per day (bopd).
A pipeline of development projects continues to be built from the exceptional results of our exploration programmes and this will build our production profile in the medium term.
The management of EHS remains a core priority. During 2010, we delivered a strong EHS performance across the organisation while progressing a number of key EHS initiatives. Of particular note was the EHS performance on the Jubilee deepwater development, which delivered excellent EHS results during the course of a diverse and challenging project with many complex and potentially hazardous operations.
We reviewed well control (which relates to prevention) and oil spill response in Ghana in the immediate aftermath of the Deepwater Horizon incident in the Macondo prospect in the Gulf of Mexico; and we have continued with our follow-up throughout the year at operational and Board level.
Our safety performance was good but did not achieve our objective of top quartile industry performance for the year.
In 2010, we again enhanced our risk management processes and procedures including:
- The Jubilee project team implemented an operational readiness and assurance (OR&A) plan to manage transition risks from development to production;
- A Financial Risk Committee was established with the objective of ensuring the overall framework for financial risk management is comprehensive and responsive to changes in the business; and
- We reacted, as outlined above, to the Macondo incident in the Gulf of Mexico.
The Board feels it is appropriate to continue to observe a stable dividend policy for 2010. The final dividend proposed is 4.0 pence per share, which brings the total payout for 2010 to 6.0 pence per share. The dividend will be paid on 20 May 2011 to shareholders on the register on 15 April 2011. The Annual General Meeting (AGM) will be held on 12 May 2011 in Haberdashers Hall in London. A meeting for shareholders in Ireland will be held on 2 June 2011 in the Royal College of Physicians of Ireland in Dublin.
In August 2010, Tutu Agyare was appointed to the Board as a non-executive Director. Tutu has had an extensive career in investment banking and is currently a Managing Partner at an Africa-focused hedge fund. Tutu brings a wealth of experience in banking and invaluable knowledge of doing business in Africa to the Group, as we continue to expand our business there.
At the AGM in May, Clare Spottiswoode CBE will retire from the Board of Tullow having served as a Director for over nine years including three years as the Chairman of the Remuneration Committee. On behalf of the Board I would like to thank Clare for her immense contribution. Following Clare's departure from the Board, David Bamford will become the Chairman of the Remuneration Committee.
The Board has appointed Simon Thompson as a non-executive Director with effect from 16 May 2011. Simon was previously an executive Director of Anglo American plc, Chairman of the Tarmac Group and also held investment banking positions with S G Warburg and N M Rothschild. He is currently a non-executive Director of Newmont Mining Corporation, Sandvik AB and AMEC plc.
Finally, I would like to announce that after over 12 years as a non-executive Director of Tullow and 10 years as the Chairman, I have advised the Board that now would be a good time to identify my successor. The Board plans to commence the search after this year's AGM and expects to make an appointment prior to the AGM in 2012.
We measure the performance of the business with seven key KPIs together with specific objectives for major projects, finance and managing our portfolio of assets. In 2010, we did well against our targets with the main exceptions being TSR targets and ongoing delays in Uganda.
In November 2010, we announced that we were planning a secondary listing on the Ghana Stock Exchange. This was in order to create a more accessible opportunity for Ghanaian individuals and institutions to invest in the future of their oil industry through Tullow. Originally planned for December, the Listing was postponed due to the need to focus on achieving First Oil from the Jubilee field and year-end corporate planning. The Listing is now planned to go ahead as soon as practicable after the issue of this Annual Report.
In 2010, we took the opportunity to pre-empt a deal agreed by our partner in Uganda when it decided to sell its stake. In parallel we agreed to farm down two thirds of our interests to CNOOC and Total to create a like-minded, aligned partnership.
However, a transaction of this size and importance takes time to negotiate and finalise, particularly in an election year. Large scale oil development is new to Uganda and it is important to get the appropriate fiscal and legal framework in place for the long-term benefit of all parties.
After many months of discussion, we are close to signing an MoU with the GoU. This agreement will satisfy the GoU's taxation concerns and enable Tullow, CNOOC and Total to proceed with the basin-wide development with the full support and commitment of the GoU.
Finalising the Ugandan farm-down will secure our funding for the medium term and ensure we are adequately capitalised to develop our major projects, fund our high-impact exploration programme and achieve our strategic objectives.
This time last year I wrote that Tullow had a very bright future after an outstanding 2009. We continued to make remarkable progress in 2010 towards our vision of being the leading global independent exploration and production company. Our excellent performance is due to Aidan Heavey, his Executive colleagues and all our employees who are building the Group year-on-year. Tullow is in great shape and in a strong position as Africa's leading independent oil company.
Pat Plunkett, Chairman
Jubilee special feature
On 15 December 2010, celebrations were held to mark First Oil from the Jubilee field offshore Ghana.
We measure our progress through seven KPIs that are closely aligned with delivering our strategy.