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Building a Balanced Portfolio of International Exploration and Production Assets
Tullow Oil plc – 2006 Interims Results
2Interim Results 2006
Disclaimer
This presentation contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business.
Whilst Tullow believes the expectations reflected herein to be reasonable in light of the information available to them at this time, the actual outcome may be materially different owing to factors beyond the Group’s control or within the Group’s control where, for example, the Group decides on a change of plan or strategy.
The Group undertakes no obligation to revise any such forward-looking statements to reflect any changes in the Group’s expectations or any change in circumstances, events or the Group’s plans and strategy. Accordingly no reliance may be placed on the figures contained in such forward looking statements.
3Interim Results 2006
Presentation Contents
X
54
4
44Appendix 1 – Tullow Overview
42Summary
27Exploration
16Production and Development
6Financials
Introduction
PageSection
Appendix 3 – Africa
49Appendix 2 – NW Europe
Appendix 4 - South Asia 65
4Interim Results 2006
2006 Interim ResultsIntroduction
4
5Interim Results 2006
Tullow – Focused growth from strong portfolio
□ Record results, strong portfolio and a balanced business
□ Core areas that we understand
□ Long term plans and a long term view
□ Strong Track Record of performance
Financial – maximising value
Operations – discipline and focus
Exploration – core plays and key skills
□ Business Development – generating new opportunities
6Interim Results 2006
2006 Interim Results Financials
6
7Interim Results 2006
2006 Interim Results
(£126.4m)£207.5 m£81.1 mNet debt3
Up 103%£116.4 m£236.4mCash generated from operations2
Up 100%1.00 p2.00 pDividend per share
Up 50%9.82 p14.72 pBasic earnings per share
Up 51%£63.1 m£95.4 mNet Profit
Up 65%£108.4 m£178.5 mOperating profit before exploration activities
Up 54%£201.4 m£310.7 mSales Revenue
Change1H200511H200630 June 2006
Record revenue, operating profit, cash flow and net profit
1 Includes disposal profits of £34.1m (net of overlift)2 Before working capital movements3 Including all cash balances
8Interim Results 2006
1H2006 Revenue up 54% to £311 million
□ Increased revenue from both price and volume rises
− Schooner and Ketch full six months contribution
□ Balanced revenue mix between oil and gas
− 1H2006 Oil 46% Gas 54%
− 1H2005 Oil 67% Gas 33%
□ Working interest production up 10% to 62,800 boepd, sales up 2% to 55,400 boepd
□ Significant price increases
− Average UK gas prices up 85% to 53.3p/therm− Realised oil price up 30% to $54.4/bbl − Average discount to Brent ~ 5%
□ UK tariff income of £8.3m (1H2005: £6.2m)
1H 05 1H 06
Revenue£311m
0
50
100
150
200
250
300
350£m
NW Europe Africa South Asia
Revenue£201m
54.3%
45.5%
41.8%
57.9%0.3%
0.3%
9Interim Results 2006
1H2006 Gross Profit up 146% to £187 million
□ Underlying Cash Operating costs of £4.85/bbl, working interest basis (1H2005 - £4.38/bbl)
− Gabon royalty £0.78/bbl
□ Reported Operating Costs affected by overliftedvolumes and stock movement - £4.5m (£0.40/bbl)
□ DD&A charge of £5.66/barrel (1H2005 - £5.82/bbl), benefiting from reserves upgrades
□ Exploration write-off £17.6m (1H2005 £4.0m)
− Gabon, Pakistan, Angola and New Ventures
Outlook
□ 2006 operating costs to remain steady at 1H levels, some benefits in 2007
□ 2006 Group DDA approximately £5.50/bbl
*Gross Profit before admin costs, exploration and disposals
Revenue£311m
0
50
100
150
200
250
300
350£m
Gross Profit* DD&A Cash Operating Profit
Revenue£201m
186,840
64,254
76,009
60,432
19,525
4,500
Overlift
45,468
55,126
1H 05 1H 06
10Interim Results 2006
Taxation: effective tax rate of 33%
□ 1H2006 effective tax rate of 33% pre exploration write-off and overlift□ Corporation Tax exposures in UK, Gabon and Equatorial Guinea□ Effective tax rate for period as follows
1UK CT £41.5m, UK PRT £13.3m, Overseas CT £3.3m
□ UK Supplemental tax rate increased to 20% with effect from 1 January 2006− Impact of £12.1m in period
□ Improvement in fiscal regime in overseas jurisdiction− Amendment to corporation and capital allowances tax rates− Effective in respect of 2005 (reversal of £5m)
175.2Taxable Base
57.71 (33%)Tax Charge/(effective rate)
17.6- Exploration Write-Off
4.5- Impact of Overlift on Operating Costs
153.1 Profit Before Tax
£m
11Interim Results 2006
IAS39 – Financial Derivatives
□ Total Mark to Market at 30 June of £140.8m, c. 80% associated with EA Hedges
□ IAS39 Financial Derivative Income Statement impact for period as follows:
□ Total ineffectiveness at 30 June £2.4m (31 December 2005 £9.5m)− Cumulative hedge ineffectiveness decreased materially during the period
− Improved correlation of underlying production and realisations to the hedge instruments
£m
1.7Interims results charge (pre-tax)
-6.3Reversal of cumulative ineffectiveness
8.0Change in time value
12Interim Results 2006
Commodity price hedge programme
43.99
69.58
46.37
11,717
2H2006
49.4556.63Current hedged p/therm
20.6031.25Volume hedged (mmcfd)
GAS
49.9355.10Current price hedge ($/bbl)
7,5009,500Volume hedged (bopd)
OIL
20082007
□ EA hedges – 4,000 bopd until end 2009 at $29.30
□ Oil hedging – Oil curve exceptionally strong and liquid− Zero cost collars still very attractive (e.g. 2007 – Floor $65/bbl, Cap $90/bbl)
□ Gas hedging− Strong forward curve
− Continue to capitalise on strong 2007 to 2008
13Interim Results 2006
Robust cash flow and financial capacity
1H2006 performance metrics□ 1H2006 operating cash flow* up 51% to £236 m
(36.5p/share)
□ Net debt at 30 June 2006 £81.1m (1H2005:£207.5m)
□ Gearing at 30 June 2006 of 17% (13% pre-hedging)
□ Over $450m of unused capacity at 30 June 2006
Outlook□ Ongoing investment programme continue to be funded
from cash flows and currently available facilities
□ Completion of developments will further enhance financial capacity
Cash Inflow Cash Outflow0
50
100
150
200
250
300
£m
Operating cashflow Proceeds on disposals Foreign exchange loss
Capex Payment of bank loans Interest, tax & dividends
152,385
51,338
48,949257,6483,281727
*Before working capital
14Interim Results 2006
□ 2006 Capex of £330m largely driven by development programmes in UK, Gabon, Equatorial Guinea
□ Programmes in place to achieve 75,000 boepd by end 2006
□ Cost Inflation and rig/equipment supply had limited impact on 2005/6 Development programmes but is impacting 2006/7 Exploration activities – both cost and timing
Capital Expenditure: well funded programme
South Asia
2005 20060
50
100
150
200
250
300
Development
Exploration
Expenditure£193m
Expenditure£330m
46%
48%6%
350
NW Europe
Africa
2006 Forecast Capex by Core Area£330 million
15Interim Results 2006
Financial Outlook
□ Allocating capital to invest in high value assets
□ Exploration and Development programmes producing positive results
□ Reinvestment opportunities continue to be generated
□ Capturing strong oil and gas prices
□ Growing the dividend while growing the business
16Interim Results 2006 16
2006 Interim Results Production and Development
17Interim Results 2006
2006 Production□ First Half Actual 62,800 boepd
2006 Performance □ Full Year Forecast 65 to 66,000 boepd
− UK – planned H&W summer shut-in
− Africa – portfolio delivering within target
− Asia – Bangora field onstream
□ Year-end >75,000 boepd
2007 Outlook□ Average 80,000 boepd
Production Summary
2005 1H 06
62,800bopd
0
10
20
30
40
50
60
70
Prod
uctio
n (m
boep
d)
NW Europe Africa South Asia
58,450bopd
28,000
33,800
24,400
33,600
450
1,000
18Interim Results 2006
Reserves Summary
Total Reserves - 354 Mmboe
□ Over 40bcf (6.8 mmboe) commercial reserves added to UK portfolio
□ African producing fields & development assets not reviewed at mid-year
Year End Outlook
□ New Licence activity, post mid year, in West Africa is expected to add >20 mmboe of reserves
□ Uganda reserves will be independently assessed, operator currently indicates ~15mmboe net
□ Bangora appraisal ongoing will be assessed at year end
Africa244.7 mmboe
NW Europe90.6 mmboe
South Asia 18.4 mmboe
TOTAL RESERVES – 354 mmboe(all reserves audited by ERC)
19Interim Results 2006
UK Gas: Continue to benefit from Infrastructure & Experience
Licence & Infrastructure Portfolio□ 56 offshore blocks
□ Extensive Infrastructure− Bacton gas terminal− 18 offshore platforms− 17 subsea hubs− 660 km pipelines
□ Operating Capability− 40% of infrastructure operated− 70% of production operated
Costs continue to be managed□ Opex being controlled - 9p/therm
Gas prices continue to be strong□ Tullow’s early positioning has enabled
the Group to take advantage of the current gas market
20
40
60
80
100
120
140
160
180
2002 2003 2004 2005 1H 06
pro
duct
ion (
mm
scfd
)
0
10
20
30
40
50
60
Gas
Price
and O
pera
ting C
ost
(p/t
herm
)
Production Actual (mmscfd) Opex Realised Gas Price
0
UK
20Interim Results 2006
UK Gas: Continue to Maintain Strong Opportunity Set
Production and Development□ 12 producing fields
− Schooner & Ketch redevelopment− Infill drilling
□ 3 near term developments − CMS Area - Kelvin, K4− Thames Area - Thurne
□ Discoveries under review − CMS Area - Humphrey, Opal, Topaz,
Arrol, Cygnus− Thames Area – Wissey, Bure, Blythe, Fizzy
Exploration□ Strong prospect inventory
− 250 bcf risked− Application for further 6 licences
0
200
400
600
800
2P Commercial
Developed
2P Commercial
Undeveloped
2P Contingent 3P
Rese
rves
(BCF)
764 BCF
330
177
221
100
300
500
700
36
UK
21Interim Results 2006
Africa: Strong Activity throughout P&D portfolio
□ Gabon− Continue to maintain stable production
− Ongoing activity in Niungo and Etame Area
□ Congo (Brazzaville)− M’Boundi infield drilling continues−Water injection start-up 4Q 06
□ Equatorial Guinea− Ceiba infill drilling confirmed for 2007
− Okume on track for Dec 06 start-up
□ Côte d’Ivoire− East Espoir infill drilling continues to deliver−West Espoir first oil
□ Namibia− Commercial discussions ongoing
− Appraisal drilling on schedule Africa
22Interim Results 2006
Africa: Continue to Build Upon Significant Upside
Production and Development□ Nine producing fields
− M’Boundi recovery factor upside− Gabon infill & appraisal drilling− Ceiba continued infill programme
□ Three near term developments − West Espoir additional drilling− Okume multi year drilling programme− Avouma & Ebouri
□ Potential Developments− Kudu gas to power− Gabon Azobe discoveries− New Angola and Ghana licences− Espoir near field potential
Exploration□ Strong exploration licence and prospect
inventory
100
400
0
200
300
500
Rese
rves
(m
mboe
)
2P Commercial
Developed
2P Commercial
Undeveloped
2P Contingent
3P
474 mmboe
209
NewLicences
74
134
20
Africa
37
23Interim Results 2006
South Asia: Production growth being delivered
Bangladesh□ Block 9 Appraisal programme
− 3D seismic interpretation ongoing
− Bangora first gas May 06
− Bangora 2 & 3 successful
□ Full Field Development − Reserve potential being assessed
− Conceptual studies ongoing
Pakistan□ Chachar Development
− Drilling phase complete
− Facilities construction underway
− First Gas Q1 2007
South Asia
24Interim Results 2006
Developments and Opportunities
DevelopmentsSanctionDecision
FirstProduction
No ofWells Status
Thurne 1Q 08 1 Long lead committed, design ongoing
Wissey 2006 2008 1 Pending sanction
Bure 2006 2008 1 Pending sanction
Kelvin (K3) 2006 4Q 07 1 Long lead committed, design ongoing
K4 2 Pending sanction
Thames/Hewett Area
CMS Area
Conceptual developments under review include:- Blythe, Fizzy
Conceptual developments under review include:- Murdoch SE, Humphrey, Opal, Arrol, Topaz, Cygnus
UK
- -
Pakistan Chachar 1Q 07 3 Drilling complete, facilities constr. underway
Suri Compression 2Q07 - Detailed design underway
Bangladesh Bangora LTT May-06 1 to 2 Bangora -1 prod., Bangora-2 tie in 4Q 06
Bangora Phase 2 2007 2008/09 - Appr. drilling & dev. planning underway
DevelopmentsSanctionDecision
FirstProduction
No ofWells StatusAsia
UK
Asia
25Interim Results 2006
Developments and Opportunities
DevelopmentsSanctionDecision
FirstProduction
No ofWells Status
Africa
Angola Pit-Ban Discoveries 2007/08 2009 Appraisal wells late 2007/early 2008
Congo M'Boundi Water Inj. 4Q 06 Design complete, drilling 60% complete, install. underway
East Espoir Infill Jun-05 4 CompletedCôte d'IvoireWest Espoir Jul-06 8 to 11 Facilities installation is complete, drilling underway.
Ceiba North Area Sep-06 6 Subsea upgrades complete - 3 of 6 wells completed
Equatorial Guinea
Ceiba 07/08 Infill Proj. mid 07 6 to 7 Planning underway, rig contracted
Okume Dec-06 >45 Install. to be completed Oct 06, drilling initiated Aug 06.
Ghana
Kudu Gas to Power 2007/08 2010/11 4 Tech. studies complete, commercial disc. ongoingNamibia
Kudu Phase 2 2008/09 2012 4 to 6 Concept studies underway, appr. drilling 2007
Gabon
Echira appraisal under review for 2007 drilling.
Tano Shallow discoveries under review with appraisal expected 2007/08
Okume Abang satellite pending completion of the main Okume development
Conceptual developments under review include:- Acajou, Espoir level 0
-
-
Avouma 4Q 06 2 Facilities installation ongoing, drilling Oct 06
Ebouri 2008 1 Development is awaiting government approval.
Niungo Infill 2007 8+ First well spudded in Sept 06
Azobe (Assala) 2007 2009 1 to 2 Appraisal well 2007
Africa
26Interim Results 2006
Continue to grow Production and Development portfolio
□ Excellent delivery founded on robust portfolio
□ Significant inventory of development opportunities
□ Strong team and effective organisation
□ Integrated P&D, New Ventures and Exploration growth strategy
27Interim Results 2006
2006 Interim ResultsExploration
27
28Interim Results 2006
Exploration direction – Core Strengths
Building on successes established in Core Regions by leveraging
□ Core Capabilities
− Profitably leverage local knowledge & develop globally
□ Core Plays
− Excel in salt basins, stratigraphic traps, rift basins & fold belts
Assam ArakanSouthern North SeaGulf of GuineaAtlantic NW Africa
Indus BasinCambay BasinSouthern North SeaLower Congo Basin
Kohat PotwarAlbertine BasinOrange BasinSouthern North Sea
Fold BeltsRift BasinsStrat TrapsSalt Basins
29Interim Results 2006
Core Plays: Current Exploration
Fold Belts
Rift Basins
Salt Basins
Strat TrapsCO
RE
PLA
YS
East African Rift
Southern North Sea
Central North Sea
South Viking Graben
Potwar Basin
Indus Basin
Gulf of Kutch
Orange BasinKwanza Basin
Lower Congo Basin
Rio Muni Basin
Rio del Rey Basin
Côte d’Ivoire – Tano Basin
Senegal – Mauritania Basin
Morondava Basin
Cambay Basin
Bengal Basin
Assam Arakan
30Interim Results 2006
2006 Activity Overview
NW Europe□ 3 gas wells drilled, all discoveries (Humphrey, Cygnus, K4)
□ 2 oil wells planned (Acer, Peveril)
□ 6 blocks applied for in 24th Licensing Round
Africa□ 7 Blocks gained
−Ghana (3), Angola (1), Congo (DRC) (2), Madagascar (1)
□ Uganda frontier success−Mputa-1 & 2 and Waraga-1 Discoveries & Production Tests
□ Dry holes in Gabon and Equatorial Guinea
South Asia□ India CB-ON/1 2D seismic reveals several leads for drilling 2Q 2007
□ Pakistan Kohat seismic defines material prospect to drill 2H 2007
31Interim Results 2006
Leading position with 50% of the Albertine Rift Basin
Basin-wide Knowledge
Partner in all licences
Staffed up to leverage new data
Basin-wide Influence
Long-term relationships in Africa
Facilitating operations
Basin-wide Strategy
Leverage knowledge & influence
Quickly discover basin potential
Appraise in parallel
Scaled development options
32Interim Results 2006
Albertine Rift Basin – Physical setting
Albert Nile
Victoria Nile
Lake Albert
33Interim Results 2006
Albertine Rift Basin – Basin-wide full-cycle campaign
Kaiso-Tonya Area
Appraisal of discoveries
Mputa & Waraga well testing
Kaiso-Tonya 3D seismic planning
Mputa appraisal wells 2007
Further exploration drilling
Nzizi (Nov-Dec 2006)
Ngambwa (using 3D seismic)
Development concepts
Studies launched
Regional & basin-wide / modular
34Interim Results 2006
Albertine Rift Basin – Basin-wide full-cycle campaign
Butiaba-Paara Area
Exploration surveys
Gravity & magnetic surveys 06
2D seismic planning
Exploration wells
Preparing drill-worthy prospects
Rig options study
35Interim Results 2006
Albertine Rift Basin – Basin-wide full-cycle campaign
Lake Albert
Exploration surveys
2D seismic planning in Congo (DRC) Blocks I & II
Metocean & EIA studies
Exploration drilling
Bugoma (Kingfisher & Pelican)
Lake operations (Ngassa plans)
36Interim Results 2006
Albertine Rift Basin Schedule
Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008
Uganda PaaraBlock 1 Exploration
Uganda ButiabaBlock 2 Exploration
Uganda Kaiso-TonyaBlock 2 Exploration
And Appr.
UgandaLake AlbertBlock 2
Congo (DRC)1&2 Ituri N & S
Block 3 Bugoma
Uganda EarlyBlock 2 Production
Paara 2D (Acquire-Process-Interpret)
Paara Prospects Drilling
Rig options study - tender - rig up
Butiaba 2D (Acquire-Process-Interpret)
Butiaba Prospects Drilling
Nzizi-1
Nzizi-2 Kaiso-Tonya Prospects Drilling
Test M-1 M-3 + M-4
Kaiso-Tonya 3D (Acquire-Process-Interpret)
Metocean & EIA
Ngassa 2D evaluation Optional Ngassa 3D Lake Prospects Drilling
DRC-1&2 2D (Acquire-Process-Interpret)
Kingfisher-1 Pelican-1 Kingfisher-2 & Pelican-2
Kingfisher 3D (Acquire-Process-Interpret)
Concept Studies
Optional Front End Engineering - Design - Construction
Country Development
Seismic Drilling Study Contingent Testing
37Interim Results 2006
Ghana: Upside potential and proven oil
3 licences gained offshore Ghana□ Deepwater Tano - 49.95% (op)
□ West Cape Three Points - 22.9%
□ Shallow Water Tano - 85.5% (op)
Deep Water□ Significant exploration upside potential
□ Diverse prospect configurations
Shallow Water Tano□ Three undeveloped oil and gas fields
□ Evaluating potential to commercialise
38Interim Results 2006
Kudu Stratigraphic Traps
Gas field extension/exploration upside
Proprietary geological insights
Fully integrated geosciences data
2 gas plays proven
Prospect testing: 2 wells (Q1-Q2 2007)
Kudu East: potential multi-tcf play
39Interim Results 2006
Cambay Rift Basin – Identifying targets in prospective trend
Seismic programme increased to 1,500 km
1,287 km acquired and processing ongoing
Expected completion in September
Initial prospect evaluation by November 2006
First Well to Spud June 2007
40Interim Results 2006
Mputa
Akoum West
Humphrey
Cygnus
Waraga
Shahpur Chakar
Soulandaka
Dogbolter
Banyan
K-4
Mputa-2
Kingfisher
Acer
Level Zero
Peveril
Nzizi
2 Oil Prospects
2 Kudu East wells
Campaign
Campaign
Oil Prospect
Campaign
DATE/STATUS
2006: Active Exploration Programme
COUNTRY PROSPECT INTERESTLICENCE
50%
100%
35%
35%
50%
30%
25%
23.5%
10%
22.5%
50%
50%
6.25%
21.33%
30%
50%
40%
90%
50%
50%
40%
23-100%
Oil Discovery
Dry Hole
Gas Discovery
Gas Discovery
Oil Discovery
Dry Hole
Dry Hole
Dry Hole
Dry Hole
Gas Discovery
Oil Discovery
Drilling
October 2006
October 2006
November 2006
November 2006
Q1 2007
Q1 2007
Q2 2007
Q2 2007
Q2 2007
Q2 2007
Block 2
Akoum
44/16-3
44/12-2
Block 2
Nawabshah
Akoum
Gryphon
Block L
44/23b
Block 2
Block 3A
16/13c
CI-26
Quad 39
Block 2
Nziembou
Kudu
CB-ON/1
Block 2
Ngosso
SNS
Uganda
Gabon
U.K.
U.K.
Uganda
Pakistan
Gabon
Gabon
Eq. Guinea
U.K.
Uganda
Uganda
U.K.
Côte d’Ivoire
U.K.
Uganda
Gabon
Namibia
India
Uganda
Cameroon
UK
41Interim Results 2006
Exploration conclusions
□ Excellent delivery founded on robust portfolio
□ Balanced inventory of Exploration opportunities
□ Experienced team and extensive knowledge base
□ Focused Exploration strategy based on core plays
42Interim Results 2006 42
2006 Interim Results Conclusions
43Interim Results 2006
Conclusions
□ A strong outlook for 2006
□ Solid business foundations for long term growth
□ Financial strength enables flexibility
□ Current environment provides significant opportunities
Overall….Executing our strategy and delivering growth
44Interim Results 2006 44
2006 Interim ResultsAppendix 1 – Tullow Overview
45Interim Results 2006
EHS & CSR: Continual improvement
Environment, Health & Safety� ISO14001 certification rollout
ongoing
� Continue to improve safety performance
� New London Crisis Management Facility
Corporate Social Responsibility� First CSR Report published
� Aligned approach to CSR commitments
2005 and 2006 LTI Performance
0
0.5
1
1.5
2
2.5
3
Jan'05
Mar May Jul Sep Nov Jan'06
Mar May
LTI
LTIFR 12 mnth avg
LTI = Lost Time Incident / LTIFR = Lost Time Incident Frequency Rate
46Interim Results 2006
NW Europe – 50% Production
□ Gas focus
□ Mature Basin Operator
□ Extending core plays in wider North Sea
Africa – 50% Production
□ Pan-African Focus
□ Developing regional positions
□ Consistent organic growth
Asia
□ Rapidly growing Energy demand
□ Still under explored
□ Knowledge and acreage position
to fuel growth
The Tullow footprint
47Interim Results 2006
Tullow Growth Strategy
• Improving asset performance and extending field lives• Independent technical view on non-operated assets
• A balance of near-infrastructure and high impact exploration• Building on knowledge - expansion based on core plays and skills
• Rigorous opportunity identification, execution and integration• Ongoing programme of bolt-on acquisitions
• Focus on assets where we have influence• Maximise value of each region
PRODUCTIONand
DEVELOPMENT
EXPLORATION
ACQUISITIONS
PORTFOLIOMANAGEMENT
48Interim Results 2006
Evolution of the Tullow Business
Company-transforming acquisitions
□ Southern North Sea Assets – 2001
□ Energy Africa – May 2004
□ Schooner and Ketch – March 2005
Organic growth
□ UK – Schooner and Ketch, Thurne and Kelvin developments
□ West Africa – West Espoir, M’Boundi & Okume developments
□ Asia – Chachar and Bangoradevelopments
Group Turnover
0
50
100
150
200
250
300
350
400
2000 2001 2002 2003 2004 2005
£m
illio
n
500
600
700
2006*
* Brokers Forecast
49Interim Results 2006 49
2006 Interim Results Appendix 2 – NW Europe
50Interim Results 2006
SNS Business Background
Continued growth of non-majors
□ Mature basin - assets not material for the Majors and not attracting investment
□ Various asset sales packages (including cash in of some venture capital)
□ Success of the 24th Licensing Rounds
□ Stewardship drive continues to maximise recovery
□ Access to rigs, services etc remains challenging
Gas Supply
□ Security of supply highlighted
□ New import projects factored into forward curve
□ UK fiscal terms SCT increased to 20%
SOUTHERN NORTH SEA
51Interim Results 2006
Thames/Hewett Area: continue to consolidate position
Thames Area
□ Tullow acting as subsurface and development operator
□ Thames contract negotiated to allow blowdown
□ H&W virtual storage to access value of winter prices
□ Thurne development progressing well
□ Further developments under review
□ Additional tariff income - Arthur phase 2
Hewett Fields
□ Equity further increased to 51.69%
□ Delilah sidetrack on stream Mar 06
□ 30% reduction in operating cost since 2004
□ Demanning project under way- Phase 1 complete
Bacton Terminal
□ Further major cost reduction project initiated
□ Continue to deliver excellent uptime to third parties
□ Strong Safety Performance
0
50
100
150
200
250
300Thames Facilities Throughput
2000 2001 2002 2003 2004 2005 2006*
Th
rou
gh
pu
t (m
msc
fd)
* Forecast peak throughput
52Interim Results 2006
CMS Area: a region of significant further prospectivity
Exploration
□ Major exploration success with K4 well
□ Cygnus appraisal well under review
□ At least two further exploration wells in 2007
Developments
□ Kelvin (K3) project close to sanction
□ Potential developments of Rita, Opal & Topaz all under discussion with partners
□ Cavendish 3rd party field to be tied in early 2007
Producing Fields
□ Production growth of 3% over last year
□ Further infill wells on Boulton and Murdoch being considered
Outlook
□ Continue applying our subsurface Carboniferous expertise to exploit prospectivity of the area
□ Maximise utilisation and value of infrastructure
53Interim Results 2006
Schooner & Ketch: significant production growth in 2006
Team□ Experienced subsurface, drilling and
operations team in place
Production & uptime□ Production potential maintained c.65 mmscfd □ Facility uptime now steady around 98%
Redevelopment□ Ensco 101 contracted through 2007□ SA-10 on stream, KA-7 being completed□ Simultaneous well intervention work
programme in progress using coiled tubing□ Further four wells planned
Exploration/Appraisal□ Schooner NW - drilling in reservoir. If
successful, tie-in by late 2007□ 6 blocks applied for in 24th Round
54Interim Results 2006
2006 Interim Results Appendix 3 - Africa
54
55Interim Results 2006
Africa: developing a truly pan-African business
A continent with many opportunities□ Mature basins where majors are exiting
□ Significant areas currently unlicensed
□ A number of largely-unexplored frontier basins
Strong Knowledge Base□ Over 20 years of experience in Africa
□ Detailed understanding of African petroleum basins
□ Good access to a range of opportunities
Extensive Portfolio□ Interests in 13 countries, 38 licences and 9 producing fields
□ Current production of over 34,000 boepd
□ Interests in large development projects
□ Continually evaluating new venture opportunities
56Interim Results 2006
Gabon: targeting growth in production and operating capability
Niungo Area□ Rig arrived Sept 06□ Up to 8 development/appraisal wells
□ Two exploration wells planned
Etame Area□ Avouma first oil Q4 2006□ Ebouri project pending Government approval
Tchatamba Field□ Production sustained at higher than
anticipated levels□ Well optimisation programme under way
Azobe□ Secured operatorship, increased equity (60%)□ Assala appraisal/development under review
57Interim Results 2006
Congo: focus moving from delineation to recovery factor
M’Boundi Field STOIIP & Reserves
□ Field delineation complete
□ Current range 1.0 to 1.3 billion bbl
□ Recovery factor 21%
2006 Activity
□ Over 60,000 bopd in 1Q 06 (average 55,000 bopd in 2006)
□ Water injection drilling complete facilities startup 4Q 06 (3 injection wells, capacity 30,000bpd)
□ Upgrades to facilities ongoing
□ 60 wells drilled and continuous drilling planned
Oil Export
□ Oil now sold as N’Kossa Blend
□ Significant reduction in discount to Brent
58Interim Results 2006
Equatorial Guinea: production growth through 2006 and 2007
Ceiba Field□ Rig secured to continue infill drilling
throughout 2007
□ Field production being maintained around 40,000bopd
Okume Development□ Remains within budget
□ All six platforms installed
□ Topsides installation and tie-in phase in Oct 06
□ Two rigs now active with >40 wells planned
□ First oil on schedule for December
□ Significant operating cost synergies with Ceiba Field
59Interim Results 2006
Côte d’Ivoire: production growth and unit cost reduction
East Espoir□ Infill drilling programme completed
□ Well performance continues to be strong
□ Assessing reservoir performance
West Espoir
□ Facilities installed within budget
□ First Oil on schedule – July 2006
□ Up to 11 wells planned
CI-107 and CI-108
□ 2D seismic survey complete
□ 3D seismic scheduled for Q3 2006
□ Exploration likely in 2008
60Interim Results 2006
Kudu: an important year for commercial progress
Kudu Opportunity
□ Tullow operated asset
□ 90% working interest
□ Reserves potential up to 9tcf
Phase 1
□ Gas to power (800MW)
□ FEED study completed
□ GSA and PPA negotiations under way
□ First gas ~2010
Phase 2
□ Two well appraisal programme
□ Rig secured 1Q 2007
□ Ongoing concept studies (Gas to Power, Modular LNG, gas export)
61Interim Results 2006
Mauritania/Senegal: encouraging results from gas discovery
Mauritania Block 1 (20%)□ Faucon gas discovery in November 2005
proves up a regional working hydrocarbon system
Mauritania Block 2 (20%)□ New well results being integrated into
geological model
□ Exploration well in 2007
Senegal (60%)□ St Louis – several leads identified
□ Mauritania Block 1 discovery reduces risk for the region
62Interim Results 2006
Angola: continuing to build our position
Block 1/06□ Awarded in August 2006□ Tullow operated
− 3,800 square kilometres
□ Three undeveloped discoveries− Pitangueira− Bananeira− Sapesapeiro
□ Evaluate commerciality with 2 wells in late 2007
□ Work programme includes 600 square kilometres of 3D seismic
□ A third exploration well planned to investigate prospective intervals
Blocks 10/05 and 24/99□ 15% interest in Blocks 10 and 24 c□ Covered by good quality 3D seismic□ Largely unexplored region
63Interim Results 2006
Madagascar: a proven prospective region for oil
Overview□ Block 3109 – Tullow 50%
□ 11,050 sq km block in the Karoo Rift
□ Potential high impact (100 mmbbl+) oil prospects
Work Programme□ Tullow operated
□ Initial work programme - 30 months
□ Gravity survey, aeromagnetic and seismic complete
□ Potential drilling in 2009
64Interim Results 2006
Cameroon: current 3D seismic, potential drilling in 2007
Overview□ 40% interest in the offshore Ngosso Block
□ Three existing oil discoveries plus gas potential
Work Programme□ 2006 3D seismic programme focused on
development opportunities
□ Drilling planned for Q2 2007
65Interim Results 2006 65
2006 Interim Results Appendix 4 – South Asia
66Interim Results 2006
South Asia: reinvesting for growth
A growth region for Tullow□ Region of growing energy demand□ Major high-impact exploration potential□ Relatively low-cost exploration/operations□ Limited competition for assets
Developments to fund exploration□ 15 Exploration and development licences □ Development projects in Pakistan and Bangladesh
□ Exciting exploration acreage in Pakistan, India and Bangladesh
Future growth
□ Focused on organic growth
□ Extensive technical and geological knowledge of South Asia
□ Continue to assemble an attractive high-impact portfolio
67Interim Results 2006
Pakistan: significant high impact exploration potential
Production & Development□ Sara-Suri gas field
− Compression project sanctioned
□ Chachar gas field− Drilling completed
− Facilities construction under way
− First gas – Q1 2007
Exploration□ Nawabshah dry hole
□ Kohat Block− Seismic in progress
− Well planned 3Q 07
68Interim Results 2006
Bangladesh: considerable potential upside in Bangora
Bangora-1 Production□ First gas April 2006
□ Gas sales of 35 to 50mmscfd
Bangora/Lalmai Appraisal□ Appraisal programme approved
□ 620 sq km 3D seismic acquired
□ Up to 4 appraisal wells planned
□ GIIP potential of up to 1 tcf
Block 17/18□ Total farmout completed
□ 2D seismic under way
□ Extensive 3D seismic planned late 2006
69Interim Results 2006
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