REG - Tullow Oil PLC - Annual Financial Report <Origin Href="QuoteRef">TLW.L</Origin> - Part 2

Tullow OilAnnouncement

07/03/2017 14:05

- Part 2: For the preceding part double click  ID:nRSG7546Ya 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               management system (CMMS) to manage asset integrity·   Standard processes in place for major topside                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                upgrades and to manage equipment corrosion and well integrity·   Competency training assessment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                programmes, regular emergency response exercise and oil spill contingency plans in place·   Skilled                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                and well trained people to ensure safe operations·   All wells designed, constructed and operated in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                accordance with appropriate standards and procedures·   Third party well examination, internal audit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                and assurance processes carried out                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 9. Inability to replenish exploration portfolioExecutive responsibilityAngus McCoss Exploration DirectorLink to business modelExploration and Appraisal                                           ·   Lack of/under investment in portfolio high grading activities ·   Lack of dedicated resources to identify new business activities ·   Failure to encourage entrepreneurial/creative exploration innovation or de-motivation of key staff                                               ·   Failure to replenish exploration acreage or fund new ventures ·   Loss of reputation and exploration value from share price·   Sustained exploration failure results                                                                                                                                                                          ·   New opportunities are considered against existing portfolio to maintain diversity of prospects and ·   New licence granted in Namibia·   Farm-down of licences in Pakistan, Norway, Mauritania and Uganda·   Review of New Ventures strategy·   Seismic interpretation used to decipher best prospects ·   Ongoing farm-downs to reduce Tullow equity earlier in licence cycle                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              in poor or no drill-ready prospects                                                                                                                                                                                                                                                                                                               the exploration portfolio is reviewed annually·   An Exploration and Appraisal Values Controls                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Standard in place·   Exploration and Development Geosciences Executive team work across the business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                on portfolio planning·   A review of exploration prospect inventory and tracking of net prospective                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                risked resources takes place twice a year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
 10. Major cyber or information security incidentExecutive responsibilityAngus McCoss Exploration DirectorLink to business modelGovernance and Risk Management                                     ·   External cyber-attack resulting in network compromise or disruptive/destructive impact to Industrial Control Systems·   Deliberate or accidental internal theft/loss of confidential information                                                                                       ·   Disruption to or halt of critical business systems resulting in stopped production, explosion or loss of life·   Loss or theft of confidential information·   Loss of competitive advantage and intellectual property·   Reputational damage                                                                                                  ·   Advanced Security Operations Centre (ASOC) provides global monitoring, analysis, alerting and     ·   Ongoing enterprise-wide awareness training, with additional bespoke training for higher risk areas·   Ongoing improvement of network infrastructure resilience ·   Specialist external assurance of TEN and Jubilee Industrial Control Systems                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                incident response ·   Bespoke advanced security equipment used at key operations sites ·   Active                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                member of Cyber Information Sharing Partnership (CISP) ·   Third-party specialists analyse                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                vulnerabilities and provide network assurance activities·   Enterprise-wide information security                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                awareness training, aligned with Information Security Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
 11. Failure to have a balanced, diverse workforce and attractive employee propositionExecutive responsibilityAidan HeaveyChief Executive OfficerLink to business modelOrganisation & Culture      ·   Tullow culture and values not embedded ·   Staff do not support our current operating model ·   Lack of staff confidence in strategy and senior leadership ·   Diversity and localisation plans not effectively implemented·   Ineffective staff development and reward programmes     ·   Loss of key personnel/lack of succession and increased staff turnover·   Lack of in-house skills and requirement to buy-in short-term contractors increases costs·   Negative relations with the government due to failure to implement localisation plans·   Reputational damage                                                             ·   Biannual performance and development cycle·   Succession planning, localisation and diversity     ·   Revised organisation design with clear accountabilities·   Embedded performance management framework·   Implementation of employee engagement plan·   Restructured HR delivery and reward team ·   Review and revision of reward packages·   Diversity plan defined with actions implemented for 2016                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                objectives are set and key targets monitored ·   Nominations Committee focus on diversity plan·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Periodic reporting to Executives of HR data·   Staff engagement plan is agreed with HR, Communications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                and Executives, with key actions·   Annual Employee Engagement Survey and annual review of reward                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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 COMPLIANCE                                                                                                                                                                                        
 12. Major breach of business or ethical conduct standardsExecutive responsibilityAidan HeaveyChief Executive OfficerLink to business modelGovernance and Risk Management                          ·   Insufficient staff understanding of compliance ·   Poor leadership behaviour ·   Insufficient 'speaking up' culture ·   Lack of compliance monitoring in business units and failure to adequately respond to non-compliance                                                            ·   Unethical behaviour ·   Breaches anti-corruption laws·   Investigations result in reputational damage·   Cost of investigations and fines·   Senior officers liable under                                                                                                                                                                     ·   Oversight and leadership from the Ethics & Compliance Committee·   Implementation of the Tullow   ·   Improved engagement of Ethics & Compliance in the business ·   Developed and launched E-Learning module to continue to promote the Code of Ethical Conduct ·   Consolidation of monitoring and assurance plan to be used by Business Units ·   Revised and implemented key standard to manage Expenditure relating to Public Officials·   Achieved 97 per cent completion of the self-certification of compliance with the Code of Ethical Conduct·   Received and investigated 91 speak up cases·   Continued local fraud awareness training                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              UK Bribery Act                                                                                                                                                                                                                                                                                                                                    Code of Ethical Conduct, with annual certification process carried out with all staff ·   Gifts and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Hospitality (G&H) Standard maintained and assured, with online G&H register available to all staff ·                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Other relevant Ethics & Compliance standards, policies and procedures in place, adhered to and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                maintained ·   Leadership leading by example and advocating good behaviour ·   Dedicated Ethics &                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Compliance Advisers in key Business Units ·   Appropriate due diligence carried out in relation to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                service providers, contractors and other counter-parties ·   Appropriate anti-bribery and corruption                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                provisions in agreements with service providers, contractors and other counter-parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
 
 
Appendix C:       Related party transactions 
 
The following related party transactions are extracted from the Annual Report
and Accounts (page 149). 
 
The Directors of Tullow Oil plc are considered to be the only key management
personnel as defined by IAS 24 - Related Party Disclosures. 
 
                                                    2016 ($m)  2015 ($m)  
 Short-term employee benefits                       8.9        10.0       
 Post-employment benefits                           1.0        1.1        
 Amounts awarded under long-term incentive schemes  3.7        4.2        
 Share-based payments                               2.6        5.7        
                                                    16.2       21.0       
 
 
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. 
 
Amounts awarded under long-term incentive schemes 
 
These amounts relate to the shares granted under the annual bonus scheme that
is deferred for three years under the Deferred Share Bonus Plan (DSBP) and
Tullow Incentive Plan (TIP). 
 
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 Payments. 
 
There are no other related party transactions. Further details regarding
transactions with the Directors of Tullow Oil plc are disclosed in the
Directors' Remuneration Report on pages 80 to 100. 
 
 END  
 
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