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  • Glossary

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    Glossary

    A

    AGM

    Annual General Meeting

    AFS

    Available for sale

    B

    bll

    Barrel

    bcf

    Billion cubic feet

    boe

    Barrels of oil equivalent

    boepd

    Barrels of oil equivalent per day

    bopd

    Barrels of oil per day

    C

    CMS

    Caister Murdoch System

    CMS III

    A group development of five satellite fields linked to CMS

    CR

    Corporate Responsibility

    CSO

    Civil Society Organisation

    CNOOC

    China National Offshore Oil Corporation

    D

    DLT

    Development Leadership Team

    DoA

    Delegation of Authority

    DRC

    Democratic Republic of Congo

    DSBP

    Deferred Share Bonus Plan

    E

    EA

    Exploration Area

    E&E

    Exploration and evaluation

    E&A

    Exploration and Appraisal

    E&P

    Exploration and Production

    EBITDA

    Earnings Before Interest, Tax, Depreciation and Amortisation

    EHS

    Environment, Health and Safety

    EMS

    Environmental Management System

    ERC

    Energy Resource Consultants

    ESOS

    Executive Share Option Scheme

    F

    FEED

    Front End Engineering and Design

    FPSO

    Floating Production Storage and Offloading vessel

    FRC

    Financial Reporting Council

    FRS

    Financial Reporting Standard

    FTG

    Full Tensor Gravity Gradiometry

    FTSE 100

    Equity index whose constituents are the 100 largest UK listed companies by market capitalisation

    FVTPL

    Fair Value Through Profit or Loss

    G

    GELT

    Global Exploration Leadership Team

    GNPC

    Ghana National Petroleum Corporation

    GoU

    Government of Uganda

    Group

    Company and its subsidiary undertakings

    H

    H&S

    Health and Safety

    HIPO

    High Potential Incident

    HNBS

    Hewitt New Bridge Street

    HR

    Human Resources

    I

    IAS

    International Accounting Standard

    IASB

    International Accounting Standards Board

    IFRIC

    International Financial Reporting Interpretations Committee

    IFRS

    International Financial Reporting Standards

    IMS

    Information Management System

    ISO

    International Organization for Standardization

    K

    km

    kilometres

    KPI

    Key Performance Indicator

    L

    LIBOR

    London Interbank Offered Rate

    LTI

    Lost Time Incident

    LTIFR

    LTI Frequency Rate measured in LTIs per million hours worked

    M

    mmbbl

    Million barrels

    mmbo

    Million barrels of oil

    mmboe

    Million barrels of oil equivalent

    mmscfd

    Million standard cubic feet per day

    MoU

    Memorandum of Understanding

    MTM

    Mark To Market

    N

    NGO

    Non-Governmental Organisation

    O

    OR&A

    Operational Readiness and Assurance

    P

    p

    pence

    P10

    Reserves and/or resources estimates that have a 10 per cent probability of being met or exceeded

    P50

    Reserves and/or resources estimates that have a 50 per cent probability of being met or exceeded

    P&D

    Production and Development

    PAYE

    Pay As You Earn

    PRT

    Petroleum Revenue Tax

    PSC

    Production Sharing Contract

    PSP

    Performance Share Plan

    S

    SCT

    Supplementary Corporation Tax

    SIP

    Share Incentive Plan

    SMC

    Senior Management Committee

    SPA

    Sale and Purchase Agreement

    sq km

    Square kilometres

    SRI

    Socially Responsible Investment

    T

    toes

    Tullow Oil Environmental Standards

    TSR

    Total Shareholder Return

    U

    UK GAAP

    UK Generally Accepted Accounting Principles

    V

    VAT

    Value Added Tax

    W

    WAEP

    Weighted Average Exercise Price

    WCTP

    West Cape Three Points

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Protecting our business

Risk management is a dynamic and critical business function as it is important to help achieve long-term shareholder value and protect our business, people, assets, capital and reputation.

Risk management is an essential element of how we run our business and it is a Board level responsibility. Like many businesses we cannot function properly unless we continuously identify and manage those risks and opportunities that could affect Tullow and the achievement of our business plans and strategic objectives. Our approach is aimed at early identification of key risks, reducing or removing those risks and/or responding quickly and effectively when a risk crystallises. In each instance, where possible, we seek to mitigate risks in order to reduce risk to an acceptable level.

We have formal risk management processes in place at Tullow, with designated Executive Director responsibility for key risks. In each area of risk Executive Directors are supported by members of the senior management committee or senior managers with functional, business unit or in-country roles. Accountability for managing risk is assigned to individual managers and each employee is personally responsible for managing risk within the remit of their role.

We combine Board level assessment of risk with risk factors originating from and identified by the Group’s regional business units. These processes continue to evolve and develop each year, in line with Tullow’s growth.

Responding to changing risk

We operate in a dynamic environment where responding effectively to changing risks is key to our continued success. During 2010 we addressed emerging risks in the following ways:

  • The Jubilee project team implemented an Operational Readiness and Assurance (OR&A) management plan to manage transition risks from the development to operational phase of the project and to demonstrate operational readiness assurance. This plan was split into six key areas including OR&A management, operations, EHS, cost, organisation, commissioning and start-up with a detailed breakdown of activity to ensure accountability for delivery. A series of assurance activities and reviews were delivered throughout the project phase and during the run up to First Oil and reported on through the Unit Operating report. This provided a seamless transition from the project phase to the operational phase. In addition, an integrated EHS plan was developed detailing all audits undertaken by the Ghana team and Modec;
  • A Financial Risk Committee was established during the year with the objective of ensuring that the overall framework for financial risk management is comprehensive and responsive to changes in the business. The Committee is chaired by the Chief Financial Officer and comprises the General Manager Finance, Head of Corporate Planning, Head of Risk and Marketing, Group Internal Audit Manager, Group Tax Manager and Head of Supply Chain Management. Achievements during the year included:
    • Development of a key financial risks register that is tracked and updated to ensure mitigating actions are being followed up in a timely way;
    • Control of Well insurance review with limits being increased in the fourth quarter of 2010;
    • Development of improved and integrated management reporting and planning processes that were subsequently delivered during 2010;
    • Development and implementation of integrated supply chain and financial systems to support enhanced reporting; and
    • Review and update of Group Delegation of Authority (DoA) to reflect new organisation structure and implementation of supply chain management processes and system.
  • In response to the Macondo well blowout in the Gulf of Mexico we:
    • Undertook a detailed audit of well control procedures and a physical audit of blowout preventor capabilities for our Ghana drilling operations in collaboration with key contractors;
    • Implemented a new approach to assessing critical aspects and risk areas of the Group’s well programme, which has resulted in focusing resources to manage risks; and
    • Reviewed and updated control of well insurance limits; and
  • A Development Leadership Team (DLT) was established to oversee project development processes to improve assurance to Group management that good practice is being applied to all developments.
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