TIDMTLW
RNS Number : 1415U
Tullow Oil PLC
24 March 2023
TULLOW OIL PLC
Annual report and accounts
Tullow Oil plc ("Tullow" or the "Company")
24 March 2023 - Following the release on 8 March 2023 of the
Company's preliminary full year results announcement for the year
ended 31 December 2022 (the "Preliminary Announcement"), the
Company announces it has published its Annual Report and Accounts
for this period (the "Annual Report and Accounts").
A copy of the Annual Reports and Accounts are available to view
on the Company's website: www.tullowoil.com
The Company is also pleased to announce it has published its
Sustainability Report and Climate Risk & Resilience Report,
which is also available on the Company's website: www.tullowoil.com
.
The Company's 2023 Annual General Meeting will be held on
Wednesday 24 May 2023. The Notice of Meeting will be released at a
later date.
In accordance with Disclosure Guidance and Transparency Rule
6.3.5(2)(b), additional information is set out in the appendices to
this announcement. This information is extracted in full unedited
text from the Annual Report and Accounts.
The Preliminary Announcement included a set of condensed
financial statements and a fair review of the development and
performance of the business and position of the Company and its
group.
In accordance with Listing Rule 9.6.1, a copy of the Annual
Report and Accounts have been submitted to the Financial Conduct
Authority via the National Storage Mechanism and will be available
for viewing shortly at :
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
In addition, all of the above documents have been submitted to
the Ghana Stock Exchange, and therefore will shortly be available
to shareholders located in Ghana by contacting the Company's
registrar: Central Securities Depository (GH) Limited, 4th Floor,
Cedi House, PMB CT 465 Cantonments, Accra, Ghana (Telephone: +233
(0)302 906 576).
CONTACTS
==================== ====================
Tullow Oil plc Camarco
(London) (London)
(+44 20 3249 9000) (+44 20 3781 9244)
Robert Hellwig Billy Clegg
Nicola Rogers Georgia Edmonds
Matthew Evans Rebecca Waterworth
==================== ====================
Notes to editors
Tullow is an independent oil & gas, exploration and
production group which is quoted on the London and Ghanaian stock
exchanges (symbol: TLW) and is a constituent of the FTSE250 index.
The Group has interests in over 30 licences across eight countries.
In March 2021, Tullow committed to becoming Net Zero on its Scope 1
and 2 emissions by 2030.
For further information, please refer to our website at
www.tullowoil.com .
Follow Tullow on:
Twitter: www.twitter.com/TullowOilplc
YouTube: www.youtube.com/TullowOilplc
Facebook: www.facebook.com/TullowOilplc
LinkedIn: www.linkedin.com/company/Tullow-Oil
Appendices
Appendix A : Directors' responsibility statement
The following directors' responsibility statement is extracted
from the Annual Report and Accounts (page 102).
Directors' responsibility statement required by DTR 4.1.12R
The Directors confirm, to the best of their knowledge:
- that the consolidated Financial Statements, prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and IFRSs adopted
pursuant to Regulation (EC) No.1606/2002 as it applies in the
European Union, give a true and fair view of the assets,
liabilities, financial position and profit of the Parent Company
and undertakings included in the consolidation taken as a
whole;
- that the Annual Report, including the Strategic Report,
includes a fair review of the development and performance of the
business and the position of the Company and undertakings included
in the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face; and
- that they consider the Annual Report, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position,
performance, business model and strategy.
By order of the Board
Rahul Dhir Richard Miller
Chief Executive Officer Chief Financial Officer
8 March 2023 8 March 2023
Appendix B: A description of the principal risks and uncertainties that the Company faces
The following description of the principal risks and
uncertainties that the Company faces is extracted from the Annual
Report and Accounts (pages 40 to 45).
Risk oversight and governance
A risk focused culture and consistent risk management framework
is embedded across all levels at Tullow and is driven by the Board.
The Board is responsible for overseeing the risk identification,
assessment and mitigation process. To this end, the Board
undertakes a bi-annual assessment of the risks facing the Company,
including those risks that could threaten our business strategy,
operating model, performance, solvency and liquidity. Emerging
risks are discussed by the Board and the Senior Leadership Team
periodically throughout the year.
The Board is responsible for ensuring Tullow maintains an
effective risk management and internal control system and works
closely with Tullow's Senior Leadership Team to ensure this is in
place. The Senior Leadership Team is collectively responsible and
accountable for the risk management process in place across the
organisation, with individual members taking ownership for risks
that fall in their business area.
Tullow recognises that risk cannot be fully eliminated and that
there are certain risks the Board and/or the Senior Leadership Team
accept when pursuing strategic business opportunities. Acceptance
of risk is made at an appropriate authority level and within
Tullow's defined risk appetite and tolerance levels.
Risk management process
Our risk management framework takes a 'top-down, bottom-up'
approach. It is a rigorous method that ensures ownership and
responsibility for identification, assessment and management of key
risks and opportunities, and is embedded throughout the business.
The Board sets the context for risk management through defining
principal risks, setting the strategic direction and establishing
the appropriate risk appetite for the organisation.
Risk identification and assessment
Each Business Head and Head of Function is responsible, and
accountable, for managing risk and risk mitigation within their
remit. Extended Leadership Team members review and re-assess risk
on at least a quarterly basis in their functional areas to evaluate
the strength of existing controls and determine whether changes in
risk reduction actions are needed to ensure the risk level is
within the risk appetite set by the Board.
Consolidation of business risks
To facilitate assessment of the main risks facing the business,
Tullow's leadership undertakes a bottom-up review of the key risks
faced by the business. The key risks in each area are identified by
the Business Heads and Heads of Functions, including mitigating
actions and any emerging risks. These are consolidated upwards into
the Business Unit risk registers and assessed according to their
likelihood of occurring, and the potential consequences to Tullow
in terms of safety, reputational, financial, legal and regulatory
impact.
From this, the Senior Leadership Team identifies the principal
and enterprise-wide risks which can be either a single risk or a
set of aggregated risks which, taken together, are significant for
Tullow. Members of the Senior Leadership Team have ownership and
accountability for stewardship of each of the principal and
enterprise-wide risks. As a collective, the Senior Leadership Team
reviews and discusses the risks bi-annually to understand whether
mitigations are being effectively executed within the agreed
timeframe.
The principal risks and mitigants are discussed by the Board
bi-annually to provide 'top-down' challenge and support. The result
of this review is communicated back down to the SLT and Business
Units to facilitate risk awareness and effective decision making
throughout the organisation.
Risk appetite
The Board sets Tullow's risk appetite and acceptable risk
tolerance levels for each of the principal risk categories. In
considering Tullow's risk appetite, the Board reviews the risk
identification process, the assessment of enterprise level risks,
the existing controls and mitigating actions and the residual
risks. During this process, the Board articulates which risks
Tullow should not tolerate, which risks should be managed to an
acceptable level and which risks are accepted in order to deliver
our business strategy.
The risk appetite is reviewed at least annually by the Board to
ensure that it reflects the current external and market conditions.
A revised risk appetite was last reviewed by the Board in March
2023.
Evolution of Tullow's management of risk
Development of the risk management framework is an ongoing
process. During 2022 senior risk owners have been working to
promote a culture of risk awareness and challenge throughout the
business with an increased focus on managing risk. Further
consistency in risk identification, measurement and reporting has
been rolled out across the organisation.
Tullow's risk profile
The Company risk profile has been closely monitored throughout
the year, with consideration given to the risks to delivering the
Business Plan, as well as whether external factors such as the war
in Ukraine, inflationary pressures and oil price volatility have
resulted in any new risks or changes to existing risks. The impact
of these factors has been considered and managed across all
principal risks. The following table represents the Company's
current principal risks.
Principal risk categories
Commercial Stakeholder Climate EHS or security Financial People Ethics and Cyber
conduct
Failure to deliver production targets (commercial and financial risk)
Risk details Risk mitigations
---------------------------------------- --------------------------------------------
Tullow's Business Plan is anchored -- Robust control over operations
on production from the Jubilee and & maintenance (O&M) contract as well
TEN fields in Ghana and non-operated as the Jubilee O&M transformation
fields in Côte d'Ivoire and project successfully completed in
Gabon. A decline, or problems with July 2022
the performance, of wells or facilities -- Cross-discipline integrated performance
could result in not meeting planned management including clear KPIs and
production levels which in turn forums
would lead to a reduction in revenue -- Maintenance and integrity management
and cash flow ultimately impairing plans covering all equipment classes
our ability to reduce leverage. -- Management and oversight of JV
Partners to ensure maintenance and
integrity plans are implemented effectively
---------------------------------------- --------------------------------------------
A failure to grow the business via -- Jubilee Expansion project, Jubilee
targeted investment in existing South East, North East and TEN Enhancement
fields and/or investment in new Projects
fields could ultimately impact our -- Exploration strategy focused on
ability to deliver the Business acreage close to existing infrastructure,
Plan and meet longer-term production to enable discoveries to be converted
targets. to production quickly
-- Continued investment in non-operated
portfolio, including accelerating
projects where possible
-- Mergers & acquisitions (M&A),
inorganic growth with a focus on
producing assets
-- Working to secure a long-term
gas offtake commercialisation contract
in Ghana as agreed in principle by
the Board
-- Continued investment in the non-operated
portfolio
---------------------------------------- --------------------------------------------
Risk of an asset integrity breach (commercial and EHS or security risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
A loss of asset integrity could -- The FPSO vessels are subject to
be cause by failures to follow our regular internal and external certification
procedural requirements for operating -- Our asset and well integrity and
equipment within safety limits, maintenance programmes are in place,
equipment failure on the FPSO or and overseen by senior managers
lack of critical equipment or spares. -- When incidents do occur we complete
The effects could include reduction a root cause analysis for every incident
in production, revenue and cash -- Robust control over operations
flow, damage to facilities and damage & maintenance (O&M) contract as well
to relationships with JV Partners as the Jubilee O&M transformation
and host governments. project successfully completed in
July 2022
------------------------------------------- ----------------------------------------------------
Risk of a major accident event (EHS or security risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
A major incident could potentially -- Risk management processes embedded
result in asset integrity failures at all levels of the organisation
and/or extensive damage to facilities. -- Asset and well integrity and maintenance
This may in turn lead to a loss programmes are in place, including
of life, environmental damage, increased regular self-verification and external
costs and reputational damage. certification, audit and assurance
of integrity plans
-- Root cause failure analysis processes
in place for production losses and
EHS incidents to prevent recurrence
and ensure lessons are learned
-- Emergency Response Plans and Incident
Management Framework to aid in escalation
when incidents do occur
------------------------------------------- ----------------------------------------------------
A failure of our colleagues or contractors -- Tiered assurance activities ensuring
to meet safety standards or adhere all critical processes are adhered
to procedural requirements could to
result in operation of equipment -- Robust EHS aspects are included
outside safe operating limits leading at all stages of contract management
to a major EHS or operation incident. (from specification/pre-qualification
through to contract closure)
-- Active contractor engagement on
safety throughout life of contract
including EHS forums to enable direct
participation
------------------------------------------- ----------------------------------------------------
Failure to unlock value (stakeholder, commercial and financial risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
Significant non-associated gas resource -- A workstream has been established
has been identified on current licences to assess commercialisation opportunities
and failure to secure gas market in Ghana and the region that will
share could delay development of enable development of the identified
these resources. resources while playing an important
role for the industrial development
of Ghana
------------------------------------------- ----------------------------------------------------
Delay in approval of a revised Field -- A revised FDP has been submitted
Development Plan (FDP) by the Government to the Government of Kenya for approval
of Kenya could impact a final investment in line with the licence extension
decision. conditions
-- Continued engagement with the
Government of Kenya and regulators
to ensure timely approval of the
revised FDP
------------------------------------------- ----------------------------------------------------
Failure to secure a strategic partner -- The Kenya JV Partners via an ongoing
would impact our ability to progress farm-down process are actively seeking
the Kenya project to final investment a strategic partner to fund the next
decision and unlock value. stage of development and unlock value.
Discussions are under way with potential
bidders around a range of commercial
arrangements
------------------------------------------- ----------------------------------------------------
The inability to successfully explore -- Close collaboration focused on
and add accretive upside value to fully leveraging geoscience expertise
Tullow's assets through addition to identify and mature reserves and
of reserves and resources around resources which have the potential
producing assets could limit the to rapidly unlock value for producing
return on the licences. assets
-- This is reinforced by an infrastructure-led
exploration (ILX) strategy to strengthen
the portfolio, by focusing on opportunities
near producing assets, and create
value through integration of assets,
expertise and regional knowledge
------------------------------------------- ----------------------------------------------------
The inability to limit our capital -- A number of farm-down processes
exposure to historical exploration are under way to limit capital exposure
commitments in selective emerging on selective emerging basins by aiming
basins of Guyana and Argentina may to reduce our equity share. This
result in having to divert capital will ensure Tullow can participate
from producing assets. at an equity consistent with our
capital allocation guidance
------------------------------------------- ----------------------------------------------------
Failure to manage geopolitical risks (stakeholder and financial risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
Political instability in the West -- An extensive relationship management
Africa region, where our producing plan is in place, to actively manage
assets are concentrated, could delay senior relationships with host governments,
and impact decision making by host including an Advisory Board in Ghana
governments and local partners and -- We ensure alignment of our business
may also impact security arrangements. plans with national priorities and
have developed a communication plan
to inform stakeholders of the positive
impact of our activities on host
nations and communities
-- We maintain constructive non-partisan
relationships with all political
parties in Ghana
------------------------------------------- ----------------------------------------------------
Unreasonable fiscal or regulatory -- We have robust stabilisation clauses
demands by host governments could in all our Petroleum Agreements and
obstruct efficient operations, delay Production Sharing Contracts with
implementation of our growth plans international dispute resolution
and cause increased costs and financial to protect us against unreasonable
loss. demands
------------------------------------------- ----------------------------------------------------
Failure to manage climate change risks (climate risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
Tullow recognises climate change -- There is recognition and support
as a material risk for our business. from the Board that decarbonisation
There is a potential for climate-related requires investment. We are implementing
risks, including regulatory constraints, our plan to achieve Net Zero by 2030
carbon pricing mechanisms, low oil (Scope 1 and 2 net equity), through
price or conditional access to capital, reducing our emissions from routine
to affect Tullow's ability to implement flaring and offsetting hard to abate
our strategy. emissions
Challenges to our business strategy -- We stress test our portfolio to
and failure to align with broader ensure core assets are resilient
energy transition goals could result in different oil and carbon price
in reduced or conditional access environments
to capital or shareholder/investor -- There is ongoing engagement with
reluctance to invest. host countries to understand and
Failure to deliver on our commitment align with their long-term energy
to eliminate routine flaring by transition strategies, including
2025 and thereby mitigate the carbon Paris Nationally Determined Contributions
intensity of Tullow's business or -- We are aligning our objectives
to off-set hard to abate emissions with the Ghana Forestry Commission
(e.g. through nature-based off-set and local stakeholders to implement
schemes, which we continue to investigate a project, with a Final Investment
in Ghana) may lead to erosion of Decision expected in 2023
stakeholder confidence and impact
our ability to attract and retain
talent.
------------------------------------------- ----------------------------------------------------
Risk of insufficient liquidity and funding capacity to sustain and
grow the business or failure to deliver a highly cash-generative business
(financial risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
Tullow remains exposed to erosion -- Business Plan in place and being
of its balance sheet and revenues delivered to deliver strong cash
due to oil price volatility, unexpected flow and deleveraging
operational incidents, cost inflation -- Capital structure provides liquidity
and failure to deliver targeted headroom through to December 2024
farm downs of exploration assets even in a low oil price environment
and Kenya. -- Disciplined capital allocation
Failure to deliver our Business prioritising high-return and short-payback
Plan could have a material negative investments, and a strong focus on
impact on cash flow and our ability cost control
to reduce debt and strengthen the -- Material commodity hedging programme
balance sheet, which may affect protects against the impact of a
our ability to meet our financial sustained low oil price environment
obligations when they fall due. -- Options and timings for refinancing
are regularly reviewed
------------------------------------------- ----------------------------------------------------
Failure to develop, retain and attract capability (people risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
There is a risk that critical staff -- The Employee Value Proposition
leave the organisation resulting (EVP) rolled out in 2021, covering
in difficulty to deliver against culture, working environment, remuneration,
our Business Plan. learning and development and performance
We operate a lean and agile structure management was further developed
and are dependent on a small number in 2022
of key and critical roles. Loss -- Employee engagement initiatives
of staff would increase pressure are in place, including an employee
on remaining colleagues and could advisory panel, Tullow town halls,
lead to deterioration in the wellbeing coffee mornings and employee engagement
of our colleagues, a poor working surveys
environment and, potentially, further -- We have refreshed our Inclusion
attrition. and Diversity (I&D) policy and hosted
We may be unable to recruit the a number of speakers during the year,
skills needed due to the overheated to increase awareness and re-affirm
global labour market in oil & gas. our focus on I&D
-- Succession plans are in place
for critical roles. We have undertaken
a leadership capability review of
the extended leadership team, to
ensure a focus on development and
ensuring the right capability is
in the organisation
------------------------------------------- ----------------------------------------------------
Risk of a compliance or regulatory breach (ethics and conduct risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
Non-compliance with bribery and -- Tullow maintains high ethical
corruption legislation or contractual standards across the business. Strong
obligations along with other applicable anti-bribery and corruption (ABC)
business conduct requirements could governance processes/procedures are
expose the Company to penalties in place as a core element of the
or regulatory oversight. Ethics and Conduct (E&C) programme
In particular, an unforeseen material -- A mandatory annual Code of Ethical
compliance breach could lead to Conduct eLearning and acknowledgement/certification
regulatory action, an unsettled process is in place for all employees.
litigation/dispute or additional Third-party due diligence procedures
future litigation that may result and assurance processes are in place
in unplanned cash outflow, penalty/fines, -- Investigation procedures and an
reputational damage and a loss of associated misconduct and loss reporting
stakeholder confidence in Management. standard are in place
-- Third-party due diligence and
assurance processes are in place
-- Anti-tax evasion risk assessments
are undertaken with clear mitigation
actions identified, including targeted
employee training
------------------------------------------- ----------------------------------------------------
Risk of major cyber-attack (cyber risk)
Risk details Risk mitigations
------------------------------------------- ----------------------------------------------------
The external cybersecurity threat -- Security Incident Event Management
environment is continuously evolving (SIEM) system in place, supported
and intensifying; therefore, the by an Advanced Security Operations
risk of a major cyber-attack is Centre (SOC) providing 24/7 network
an ongoing risk that requires constant and device monitoring, alerting and
monitoring and management. response
Tullow may suffer an external cyber-attack -- Security awareness programme in
which could have far reaching consequences place supported by regular staff
for the business. This could limit susceptibility phishing training
our ability to operate, impact production, and testing. Annual mandatory security
expose the Company to high ransomware awareness training for all staff
demands or potentially trigger a -- An independent technical assurance
major incident. This could result programme is in place
in financial loss, loss of stakeholder
confidence, loss of production,
or additional cost by way of fines
or resolution of service.
------------------------------------------- ----------------------------------------------------
Lines of defence
First line of defence
Business management (ownership and management of risk)
* Own and manage business risks. Implement and execute
controls in business. Monitor risks and control at
business level.
* Assurance provided through self-reviews and focused
assurance reviews.
* Projects - implement and execute controls at
site/project level. Monitor risks and controls at
site/project level.
-------------------------------------------------------------------------
Second line of defence
Business leadership, risk management and compliance functions (oversight
of risk management)
* Set the framework and support embedding of effective
risk management practices.
* Provide oversight and management challenge to
leadership on the identification and management of
risk.
* Monitor compliance with functional standards (minimum
controls).
* Provide assurance through periodic reporting and
focused reviews.
-------------------------------------------------------------------------
Third line of defence
Internal Audit (independent assurance)
* Provide independent assurance of respective
governance, internal control systems and controls
across all levels of the business.
* Assurance provided through risk-based internal audit
reviews.
-------------------------------------------------------------------------
Internal control
A foundation of effective governance, risk management and
control exists throughout the organisation. The effectiveness of
the internal control framework is reviewed through the risk
management process and challenged as described above. In addition
to this, the Senior Leadership Team and Audit Committee perform an
annual review of the effectiveness of internal control. This was
last undertaken in February 2023 and reported to the Audit
Committee and the Board on 28 February and 1 March,
respectively.
Nature of assurance
-- Assurance activities are put in place across the three lines
of defence to assure that control activities are effective in
mitigating risks to the business. These specifically focus on areas
where there are internal/external changes, control failures and
historical issues.
-- Business management is the first line of defence and is
responsible for ensuring their key risks have been identified and
that adequate controls are in place to manage those risks.
-- Business leadership, risk management and compliance functions
act as the second line of defence, providing support, oversight and
challenge to the business in managing risks effectively, and
providing assurance that compliance with functional standards is
being met.
-- Internal Audit acts as the third line of defence and is
responsible for providing independent assurance through its
risk-based internal audit programme. The Internal Audit Plan and
outputs are reviewed by the Audit Committee. Agreed actions for
improving the control environment and managing risk are owned by
assigned individuals and monitored through Tullow's actions
tracking process. The Audit Committee monitors the implementation
of actions.
-- Tullow's risk management and assurance processes provide the
Board and the Management Team with reasonable, but not absolute,
assurance that our assets and reputation are protected.
Appendix C: Viability statement
Assessment period
In accordance with the provisions of the UK Corporate Governance
Code, the Board has assessed the prospects and the viability of the
Group over a longer period than the 12 months required by the
'Going Concern' provision. The Board assesses the business over a
number of time horizons for different reasons, including the
following: Annual Corporate Budget (i.e. 2023), Corporate Business
Plan (five years i.e. 2023-2027), long-term Business Plan (10
years). The Board's period of assessment for the purpose of the
viability statement is five years considering maturity of bonds in
2025 and 2026.
Notwithstanding the assessment period selected for the viability
statement the Group will continue to assess the business over all
time horizons noted above.
Assessment of the Group's principal risks
In order to make an assessment of the Group's viability, the
Directors have made a detailed assessment of the Group's principal
risks, and the potential implications these risks could have on the
Group's business delivery and liquidity over the assessment period.
This assessment included, where appropriate, detailed cash flow
analysis, and the Directors also considered a number of reasonably
plausible downside scenarios, and combinations thereof, together
with associated supporting analysis provided by the Group's Finance
team. A summary of the key assumptions aligned to the Group's
principal risks and reasonably plausible downside scenarios can be
found below. It should be noted that some assumptions encompass
multiple risks but have not been repeated to avoid unnecessary
duplication.
Principle Base case assumptions Downside scenario
risks
Failure to Production is assumed to be 5% reduction in production in
deliver production in line with the Corporate each year.
targets Business Plan.
------------------------------------ ---------------------------------------
Failure to The Group has assumed no cash The Group has included $72 million
manage geopolitical outflow associated with tax for potential outflows related
risks exposures and provisions. to settlement for legal claims
in 2024. These are
currently not deemed to be probable
but whose likelihood is greater
than remote.
------------------------------------ ---------------------------------------
Failure to The key impact of climate The Directors have considered
manage climate change on the Group's portfolio an oil price sensitivity in
change risks of assets is reflected in line with the IEA 'Net Zero
the oil price assumptions. by 2050 Scenario'; see below.
See below. The Group has also assessed
the impact of carbon pricing;
refer to the TCFD disclosure.
------------------------------------ ---------------------------------------
Risk of insufficient Oil price assumptions are The Group has analysed two downside
liquidity based on the forward curve oil price scenarios; the first
and funding at 31 December 2022 for two is based on the Directors' assessment
capacity to years, followed by the Group's of a reasonably plausible downside
sustain and Corporate Business Plan assumption scenario: 2023: $70/bbl 2024:
grow the business from 2025 onwards: 2023: $84/bbl $70/bbl 2025: $65/bbl 2026:
/ failure 2024: $79/bbl 2025: $70/bbl $65/bbl 2027: $65/bbl. The second
to deliver 2026: $70/bbl 2027: $70/bbl. is in line with the IEA "Net
a highly cash Operating costs and capital Zero by 2050 Scenario": 2023:
generative investment are assumed to $61/bbl 2024: $58/bbl 2025:
business be in line with the Corporate $54/bbl 2026: $50/bbl 2027:
Business Plan. $46/bbl
Operating cost are assumed to
be 12% than those included in
the Corporate Business Plan.
------------------------------------ ---------------------------------------
For detailed information on risk mitigation, assurance and
progress in 2022 refer to the detailed discussion of risks in
Appendix B.
For 'Risk of an asset integrity breach', 'Failure to unlock
value', 'Risk of a major EHS accident and Security', 'Risk of a
compliance or regulatory breach', 'Failure to develop, retain and
attract capability', and 'Risk of major cyber-attack' the Group has
assessed that there is no reasonably plausible scenario that can be
modelled in isolation or in combination with other risks from a
cash flow perspective.
Conclusion
The Group has $2.5 billion notes outstanding, maturing in 2025
and 2026. The Corporate Business Plan does not project sufficient
free cash flow generation to allow the Group to fully repay these
notes when they fall due, and therefore it will need to access debt
markets within the viability assessment period.
In the base case, net debt and gearing are forecast to reduce
sufficiently such that the Directors are confident that the Group
will be able to secure the funding required to maintain adequate
liquidity headroom throughout the viability assessment period.
Under the two downside scenarios, which assume all risks arise
simultaneously, execution of a refinancing would be challenging.
Management is focused on mitigating the risks around production,
operating cost increases and potential outflows associated with
disputes in order to reduce the likelihood of these risks
materialising, or their impact in the event these risks
materialise. Furthermore, the Directors have considered additional
mitigating actions that may be available to the Group, such as
incremental commodity hedging executed in periods of higher oil
prices, alternative funding options, further rationalisation of the
Group's cost base including cuts to discretionary capital
expenditure, M&A, portfolio management and careful management
of stakeholder relationships.
Based on the results of the analysis and the ability to mitigate
some of the risks associated with the downside scenarios, the Board
of Directors has a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities, including
through refinancing activities, as they fall due over the five-year
period of their assessment.
Appendix D: Related party transactions
The following related party transactions are extracted from the
Annual Report and Accounts (page 157).
The Directors of Tullow Oil plc are considered to be the only
key management personnel as defined by IAS 24 Related Party
Disclosures.
2022 2021
$m $m
------------------------------ ------ ------
Short term employee benefits 2.5 3.9
Post-employment benefits 0.1 0.3
Share-based payments 1.4 1.8
------------------------------ ------ ------
4.0 6.0
------------------------------ ------ ------
Short-term employee benefits
These amounts comprise fees paid to the Directors in respect of
salary and benefits earned during the relevant financial year, plus
bonuses awarded for the year.
Post-employment benefits
These amounts comprise amounts paid into the pension schemes of
the Directors.
Share-based payments
This is the cost to the Group of Directors' participation in
share-based payment plans, as measured by the fair value of options
and shares granted, accounted for in accordance with IFRS 2
Share-based Payment .
[END]
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