Strong first half results in line with market expectations
Exploration success continues; Owo-1 confirms second major oil field in Ghana
Uganda discovered resources now 1 billion barrels

25 August 2010 – Tullow Oil plc (Tullow), the independent oil and gas exploration and production Group, announces its half-yearly results for the six months ended 30 June 2010. These results are presented in US Dollars, the Group’s presentational currency with effect from 1 January 2010.

2010 Half-yearly results summary

The Group had a strong first half. Results were up on the first half of 2009 reflecting a 30% increase in average commodity price realisations. While production declined by 6%, first oil from Ghana is expected before year-end and will result in significant production growth and increased cash flow in 2011.

Key highlights

• Jubilee project remains on schedule for first oil in November or December 2010;
• Heritage Ugandan assets acquired; finalisation and planned farm-down to CNOOC and Total awaiting resolution of the Capital Gains Tax dispute with Heritage;
• Excellent exploration & appraisal performance year-to-date: 14 successes from 17 wells;
• New oil field discovered by Owo-1 in Ghana; accelerated appraisal of Owo & Tweneboa planned;
• Mpyo-1 discovers new oil field; discovered resources in Uganda now 1 billion barrels;
• Basin-testing exploration wells in West Africa and South America to be drilled in next 6 months;
• Full year production forecast increased to 57 - 58,000 boepd; and
• US$1.45bn equity placing completed to support accelerated activities in Ghana and Uganda.

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AFRICA

2010 Half-yearly results highlights

• Exploration and appraisal success rate 82% year-to-date;
• Owo-1 in Ghana – significant light oil discovery, drilling operations continue on appraisal sidetrack;
• High impact six month drilling campaign to commence with Onyina-1 in September;
• 1H 2010 working interest production averaged 37,500 boepd;
• Jubilee development remains on track for November or December; and
• In Uganda, Heritage acquisition and related farm-down expected to complete in the coming months.

REST OF THE WORLD

2010 Half-yearly results highlights

• 1H 2010 working interest production averaged 18,300 boepd;
• UK production above expectations due to excellent performance from Schooner and Ketch ;
• Successful Ketch (KA8z) infill well; production expected to commence in September ;
• Vessel secured for a 1,500 sq km 3D seismic survey over Netherlands blocks E10, E14, E15c, E11 and E18b during H2 2010; and
• Shekhan-1 gas discovery in Pakistan flowed at 15 mmscfd on test.

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Following its announcement on 6 July 2010, Tullow Oil plc (“the Company”, together with its subsidiaries, “the Group”) has changed its presentational currency from sterling to US dollars with effect from 1 January 2010, due to the majority of oil revenues and costs now being dollar denominated.

Tullow’s half-yearly results are in line with expectations and primarily reflect higher average price realisations which increased by over 30% in the period offset by a 6% decrease in production to 55,800 boepd. Profit after tax increased 184% to $89.0 million (1H2009: $31.3 million) and earnings per share increased 134% to 9.4 cents (1H2009: 4.0 cents).

1. Cash operating costs are cost of sales excluding depletion, depreciation and amortisation, impairment loss and under/over lift movements.
2. Net debt is financial liabilities gross of unamortised arrangement fees less cash and cash equivalents.
3. Interest cover is earnings before interest, impairment losses and depreciation charges divided by net finance costs (excluding gains/losses on interest rate hedges).
4. Gearing is net debt net of unamortised arrangement fees divided by net assets.

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The outlook for the remainder of 2010 and the coming years is positive for Tullow. The Jubilee development is on track for first oil in the second half of 2010 and good progress is being made in Uganda towards development and production of the significant discovered resources. Over the next 12 months we plan to drill exploration and appraisal wells in Côte d’Ivoire, French Guiana, Ghana, Sierra Leone and Uganda which have the potential to add material resources to the Group. Overall, we are well placed to deliver growth in shareholder value over the coming years.

Download Tullow Oil plc 2010 Half year results (PDF, 0.28MB, opens in a new window)