Trading Statement and Operational Update

• Outstanding exploration success leads to Reserves Replacement of over 500% in 2008
• Two world-class basins now being fast-tracked
• Debt refinancing on schedule; Additional funding from equity placing1

The Operational Update is in respect of recent Production, Development and Exploration activities. The information contained herein has not been audited and is subject to further review.

HIGHLIGHTS

• 100% exploration success in 2008 in Ghana and Uganda. 17 discoveries from 22 wells in overall drilling programme;
• In Ghana, Jubilee field appraisal confirms major resource potential of up to 1.8 billion barrels and a most-likely case of up to 1.2 billion barrels. Phase 1 development first oil on target for 2H 2010;
• Major world class discoveries in Uganda, including the recent 300 mmbo Buffalo-Giraffe field in the Butiaba region. Commercial threshold for Lake Albert Rift basin development significantly exceeded;
• Reserves and Resources upgrade from 551 to circa 800 mmboe expected at year-end;
• Working interest production averaged 66,600 boepd for 2008, in line with previous guidance;
• High impact exploration wells, Tweneboa and Teak in Ghana and Ngassa in Uganda, are targeting over 1.5 billion barrels of gross upside potential and will commence drilling in the first quarter 2009;
• In line with Tullow’s business strategy, active profitable portfolio management is ongoing and £285 million was raised from the sale of non-core assets in 2008. The proposed divestment of M’Boundi, announced in January 2008, will not now be concluded as government approvals for the transfer of the asset have not been received within a reasonable timeframe; and
• The Group’s debt refinancing is on schedule for close in February with 60% of approvals already received and remaining banks well advanced for the balance. In addition, a placing of circa 10% equity is announced today to fund further growth opportunities following successful 2008 drilling campaigns.

1 Full details in separate Stock Exchange Announcement.
Download Tullow Oil plc Trading Statement and Operational Update(PDF, 243 KB, opens in a new window)

Commenting today, Aidan Heavey, Chief Executive, said:

“We have had our best ever year in 2008 with phenomenal exploration and appraisal results in Ghana and Uganda, significantly increasing the Group’s booked Reserves and Resources estimates. The Jubilee development in Ghana is progressing very well and is on track for first oil in the second half of 2010. Another major milestone was recently achieved in Uganda as we comfortably exceeded the commercial threshold with further world class discoveries.

We have made a strong start in 2009 and looking ahead, Tullow has excellent opportunities to continue to grow its business and high grade the portfolio, with our main focus on Ghana and Uganda. Our success, and strong support from our shareholders and banks, means that the equity placement announced today and the imminent closure of our debt refinancing will secure funding and give Tullow very significant financial and operational strength for the next phase of transformational growth.”

Conference Call

A conference call hosted by Aidan Heavey (Chief Executive), Paul McDade (Chief Operating Officer), Angus McCoss (Exploration Director) and Ian Springett (Chief Financial Officer) will be held today at 08:30 (GMT).

To access the call please dial the appropriate number below shortly before the call and ask for the Tullow Oil plc conference call. A replay facility will be available three hours after the conference call until 28 January. The telephone numbers and access codes are:

Disclaimer

This announcement contains certain operational and financial information in relation to 2008 that is subject to final review and has not been audited. Furthermore it contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil & gas exploration and production business. Whilst the Group believes the expectations reflected herein to be reasonable, the actual outcome may be materially different owing to factors either within or beyond the Group’s control, and accordingly no reliance may be placed on the figures contained in such forward looking statements.

For further information please refer to our website at www.tullowoil.com