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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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Long-term performance risks

We group our risks into strategic, financial, operational and external risks, which we believe could potentially adversely impact our employees, operations, performance and assets.

Throughout the year we have critically reviewed and evaluated the risks the Group faces. This list is not exhaustive and it is likely to change as some risks assume greater importance than others during the course of the year.

Our business risk systems combined with the Board's ownership of strategic risks ensure that risk management is embedded in the business, aligned with our business model and is directly linked to strategic delivery.

Our assessment of the most significant risks and uncertainties which could impact the Group's long-term performance is outlined in this section of the report. These risks are not set out in any order or priority and they do not comprise all the risks and uncertainties we face.

Strategy fails to meet shareholder expectations
Performance indicator TSR performance Executive responsibility Aidan Heavey Chief Executive Officer	Impact Ineffective or poorly-executed strategy fails to create shareholder value and to meet shareholder expectations, leading to a loss of investor confidence and a reduction in the share price. This in turn reduces the Group’s ability to access finance and increases vulnerability to a hostile takeover. Policies and systems Annual business plan, RBM responsibility supported by corporate functional teams, monthly reporting, annual strategy review, IR programme.	Mitigation process Strategy focused on delivering Ghana and Uganda developments and selective high-impact exploration programme. Effective communication with all stakeholders, based on open and transparent dialogue. Progress in 2011 Ghana: Since production start-up in 2010 over 30 million barrels of oil have been produced. Jubilee Phase 1 development was completed in October. Phase 1A development received Government approval in January 2012. Good progress was also made in appraising the TEN discoveries. Uganda: Government approvals and the related farm-down transactions were completed in February 2012. Development planning for the basin has progressed through integrated teams with CNOOC and Total.

Strategy fails to meet shareholder expectations

Performance indicator
TSR performance

Executive responsibility
Aidan Heavey
Chief Executive Officer

Impact
Ineffective or poorly-executed strategy fails to create shareholder value and to meet shareholder expectations, leading to a loss of investor confidence and a reduction in the share price. This in turn reduces the Group’s ability to access finance and increases vulnerability to a hostile takeover.

Policies and systems
Annual business plan, RBM responsibility supported by corporate functional teams, monthly reporting, annual strategy review, IR programme.

Mitigation process
Strategy focused on delivering Ghana and Uganda developments and selective high-impact exploration programme. Effective communication with all stakeholders, based on open and transparent dialogue.

Progress in 2011
Ghana: Since production start-up in 2010 over 30 million barrels of oil have been produced. Jubilee Phase 1 development was completed in October. Phase 1A development received Government approval in January 2012. Good progress was also made in appraising the TEN discoveries.

Uganda: Government approvals and the related farm-down transactions were completed in February 2012. Development planning for the basin has progressed through integrated teams with CNOOC and Total.

Loss of key staff and succession planning
Performance indicator Staff turnover Executive responsibility Graham Martin General Counsel & Company Secretary	Impact The loss of key staff and a lack of internal succession planning for key roles within the Group causes short- and medium-term disruption to the business. Policies and systems Living our values, HR function and policies, training and development. Mitigation process Clearly defined people strategy based on culture and engagement, talent development and reward and recognition, together with the continuing success of the Group.	Progress in 2011 Total workforce increased by 26% to support continued business growth. An employee survey was completed and the results will be used to develop targeted improvements in people management as required. Tailored training programmes were also implemented with a focus on developing coaching and mentoring skills, including the commencement of a bespoke leadership programme open to Tullow managers.

Loss of key staff and succession planning

Performance indicator
Staff turnover

Executive responsibility
Graham Martin General Counsel
& Company Secretary

Impact
The loss of key staff and a lack of internal succession planning for key roles within the Group causes short- and medium-term disruption to the business.

Policies and systems
Living our values, HR function and policies, training and development.

Mitigation process
Clearly defined people strategy based on culture and engagement, talent development and reward and recognition, together with the continuing success of the Group.

Progress in 2011
Total workforce increased by 26% to support continued business growth. An employee survey was completed and the results will be used to develop targeted improvements in people management as required. Tailored training programmes were also implemented with a focus on developing coaching and mentoring skills, including the commencement of a bespoke leadership programme open to Tullow managers.

Sustained exploration failure
Performance indicator Reserves and resources organic replacement Finding costs per boe Executive responsibility Angus McCoss Exploration Director	Impact Failure to sustain exploration success limits replacement of reserves and resources, which impacts investor confidence in long-term strategic delivery. Policies and systems GELT, competitive capital allocation process, clear exploration strategy.	Mitigation process Board approval of E&A programme. Monthly reporting to the Board on finding costs per boe and high-grading of Group’s portfolio, with a view to measuring success of exploration spend. Continued use of appropriate technologies and technical excellence in exploration methodologies. South America discovery opens new hydrocarbon basin. Progress in 2011 E&A success ratio of 74% was achieved. This included discoveries in Ghana and Uganda and the significant Zaedyus discovery offshore French Guiana.

Sustained exploration failure

Performance indicator
Reserves and resources organic replacement

Finding costs per boe

Executive responsibility
Angus McCoss Exploration Director

Impact
Failure to sustain exploration success limits replacement of reserves and resources, which impacts investor confidence in long-term strategic delivery.

Policies and systems
GELT, competitive capital allocation process, clear exploration strategy.

Mitigation process
Board approval of E&A programme. Monthly reporting to the Board on finding costs per boe and high-grading of Group’s portfolio, with a view to measuring success of exploration spend.

Continued use of appropriate technologies and technical excellence in exploration methodologies. South America discovery opens new hydrocarbon basin.

Progress in 2011
E&A success ratio of 74% was achieved. This included discoveries in Ghana and Uganda and the significant Zaedyus discovery offshore French Guiana.

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CR Report

Annual Report feature: Clear progress

CR Report feature: Responsible Business

In this section

Record results

Chairman's statement

In this section

E&A success ratio

Uganda farm-down

Working interest production

In this section

Lost time incident frequency rate (LTIFR)

Increase in total workforce

Stakeholder engagement

In this section

Chairman's introduction

Board of Directors

Directors' remuneration

In this section

Profit after tax

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Glossary

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G

H

I

K

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M

N

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P

S

T

U

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Annual Report feature:
Clear progress

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Responsible Business