Superior operating capability

"As part of this journey we are building a superior operating capability by employing the best people and adopting best industry practices."

Paul McDade, Chief Operating Officer

Jubilee sets a new industry benchmark

Delivering First Oil from our first ever deepwater project on schedule and within 5% of the original budget is a great achievement in its own right. To do so in 40 months since the field was discovered made it an outstanding result by global industry standards. The critical elements to delivering success were high quality people working as part of a team; strong relationships with partners, contractors and governments; and a clear vision of what had to be delivered. These elements differentiate our approach and are fundamental to continued growth beyond Jubilee.

Building superior operating capability

Jubilee also represented a further step in our journey to becoming one of the most efficient and entrepreneurial operators globally. We are building a superior operating capability by employing the best people and adopting industry best practices. A challenge for us is to ensure that best practice is adopted in a manner that empowers our operating teams but does not burden them with unnecessary or ineffective processes and procedures. As a management team, we need to achieve strong corporate governance but in a way that does not dampen our entrepreneurial culture.

The Jubilee deepwater project is a great example of what can be achieved when these principles are applied. The approach on this project was to fully utilise the skills, ideas and leadership of all parties involved and to empower the teams delivering the project. As a learning organisation, we welcome everyone's input and involvement as this approach delivers world-class results.

Broad portfolio that continues to perform

The performance of our global assets in 2010 was very strong with production exceeding our budget forecasts. This was due to an excellent performance across our African assets and our UK assets significantly outperforming expectations. While the Jubilee field will considerably increase production in 2011, we also have a pipeline of development projects that will continue to build our production profile in the medium term. This pipeline is replenished by our exploration programmes and development opportunities across our portfolio:

• In Ghana, we have further phases of Jubilee to deliver as well as our second deepwater project Enyenra-Tweneboa, which we hope to sanction in 2012;
• In Uganda, we expect to accelerate delivery of this major onshore project with our potential new partners, Total and CNOOC;
• In Namibia, we continue to make progress on the Kudu gas-to-power project;
• In the UK and Gabon, we have multiple small projects which will continue to replace production and reserves in these mature areas; and
• Elsewhere in West Africa we have numerous infill drilling and facility upgrade projects in hand.

On an ongoing basis we continue to review our investment in development projects to determine whether shareholder value is best served by development, dilution or divestment of these assets.

Developing best global standards

Our response to the Macondo deepwater blowout in the Gulf of Mexico has been to review all of our well engineering practices and procedures even though the technical challenges of the Macondo well far exceeded those of the wells being drilled by Tullow anywhere in the world. These reviews, as anticipated, indicated that we were following best practice although some minor improvements were identified. We also need to be sure that all the learnings from extensive industry reviews of this incident are incorporated and, to support this, we have been actively involved in industry workgroups on how to improve operational practice and emergency response. In Ghana, we had already introduced a safety case regime for the Jubilee FPSO based on the North Sea standard which post-Macondo is acknowledged as one of the most robust processes for managing risk on large projects. This is a strong example of our desire to apply best global and industry practices wherever we work and in setting these standards, we then work in partnership with local governments to mature local regulations as appropriate.

Ensuring safety is given a high priority

We continually look for ways to involve all our staff and improve awareness of their personal responsibility for safety and the people they work with. In 2010, we have continued to develop our in-house safety management training for all employees. To date 269 employees and contractors have attended our three-week modular EHS course.

We constantly monitor our performance and respond promptly if any issues are identified. In October 2010, the Tullow global workforce of approximately 1,200 people stopped working for a one hour safety stand-down following a rise in safety incidents.

This stand-down allowed us to reinforce a clear message to all staff about the importance of our safety performance and underline their support to active management of safety across Tullow. With a 40% increase in our total workforce this year, it is a challenge for us to ensure that everyone is empowered and aware of our safety standards. Our role is to continue training and developing our people to ensure they continuously make the right decisions when managing safety.