Cash flow and balance sheet
Operating cash flow
Higher production and increased commodity prices drove operating cash flow before working capital movements 132% higher to $1.8 billion (2010: $789 million). In 2011, this cash flow together with increased debt facilities helped fund $1.7 billion capital investment in exploration and development activities, $502 million on acquisitions, $114 million payment of dividends and the servicing of debt facilities.
Summary cash flow
| 2011 | 2010 | |
|---|---|---|
| Sales revenue | 2,304 | 1,090 |
| Operating costs | (386) | (264) |
| Operating expenses | (86) | (37) |
| Cash flow from operations | 1,832 | 789 |
| Working capital and tax | (101) | (57) |
| Capital expenditure | (1,653) | (1,179) |
| Investing activities | (388) | (1,612) |
| Financing activities | 279 | 2,149 |
| Net (decrease)/increase in cash | (31) | 90 |
Capital expenditure
2011 capital expenditure amounted to $1.4 billion (2010: $1.2 billion) with 28% invested on development activities, 23% on appraisal activities and 49% on exploration activities. More than 50% of the total was invested in Ghana and Uganda and over 80%, more than $1.2 billion, was invested in Africa. Based on current estimates and work programmes, 2012 capital expenditure is forecast to reach $2.0 billion.
2011 capital expenditure
$1.4 BILLION
2010: $1.2 BILLION
- D&O
- E&A
2012 forecast capital expenditure
$2.0 BILLION
 |
Exploration | 35% |
 |
Appraisal | 15% |
 |
Development | 50% |
Portfolio management
On 30 June 2011, Tullow completed the acquisition of Nuon E&P from the Vattenfall Group for a cash consideration of €300 million ($432 million), before working capital adjustments. This added a portfolio of 25 licences, over 30 producing fields as well as various development and exploration opportunities together with ownership of key infrastructure.
On 25 July 2011, Tullow completed the acquisition of the Ghanaian interests of EO Group Limited (EO) for a combined cash and share consideration of $305 million, before working capital adjustments. This increased Tullow's interest in the West Cape Three points licence by 3.5% to 26.4% and increased the Group's interest in the Jubilee fields by 1.75% to 36.5%.
Ghana share listing
In July 2011, Tullow allotted 3,531,546 ordinary shares of 10p each in the capital of Tullow, which rank pari passu with the existing shares in issue, pursuant to the offer for subscription of up to 4,000,000 shares in connection with Tullow's secondary listing on the Ghana Stock Exchange (GSE). This represented a total amount of 109,477,926 Ghana Cedis (approximately $72.3 million). It was the largest primary share offer ever completed on the GSE and has more than doubled the market capitalisation of the GSE. The first day of trading was on 27 July 2011.
Balance sheet
Tullow increased its Reserves Based Lending facility by $1.0 billion to $3.5 billion during 2011. Tullow also extended the term of the $650 million Revolving Corporate Facility by three years to December 2014. The Group had total debt facilities of $4.15 billion at year-end. At 31 December 2011, Tullow had net debt of $2.85 billion (2010: $1.9 million). Unutilised debt capacity at year-end amounted to approximately $825 million. Gearing was 60% (2010: 50%) and EBITDA interest cover increased in 2011 to 16.7 times (2010: 14.3 times). Total net assets at 31 December 2011 amounted to $4.8 billion (31 December 2010: $3.9 billion) with the increase in total net assets principally due to the profit for the year from continuing activities.
