REG - Tullow Oil PLC - Annual Report and Accounts and Notice of AGM <Origin Href="QuoteRef">TLW.L</Origin> - Part 1

Tullow OilAnnouncement

17/03/2015 14:41

RNS Number : 6731H
Tullow Oil PLC
17 March 2015
Tullow Oil plc ("Tullow" or the "Company")
17 March 2015
Annual Report and Accounts and Notice of Annual General Meeting
Following the release on 11 February 2015 of the Company's preliminary full year results announcement for the year ended 31 December 2014 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for 2014 (the "Annual Report and Accounts"). 
The Company's 2015 AGM will be held at Haberdashers' Hall, 18 West Smithfield, London EC1A 9HQ on Wednesday 30 April 2015 at 12 noon. 
Copies of the Annual Report and Accounts and the Notice of the Annual General Meeting 2014 are available to view on the Company's website: www.tullowoil.com.
In accordance with Disclosure 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 the position of the Company and the group.
In accordance with Listing Rule 9.6.1, a copy of each of the Annual Report and Accounts, the 2015 Notice of Annual General Meeting and the form of proxy in relation to the 2015 Annual General Meeting has been submitted to the Financial Conduct Authority via the National Storage Mechanism and will be available for viewing shortly at www.morningstar.co.uk/uk/nsm. Those documents are also being submitted to the Irish Stock Exchange and the Ghana Stock Exchange.
In addition, all of the above documents will shortly be available for inspection at the Irish Stock Exchange (which is situated at: Irish Stock Exchange, 28 Anglesea Street, Dublin 2, Ireland) and will be available to shareholders located in Ghana by contacting the Company's registrar: Central Securities Depository (Ghana) Limited, 4th Floor, Cedi House, PMB CT 465 Cantonments, Accra, Ghana (Telephone: +233 (0)302 689 3103 or +233 (0)302 689 314). 
For further information, please contact:
Tullow Oil plc (London) (+44 20 3249 9000)
 Chris Perry (Investor Relations)
 James Arnold (Investor Relations)
 George Cazenove (Media Relations)


Appendices
Appendix A: Directors' responsibility statement
The following directors' responsibility statement is extracted from the Annual Report and Accounts (page 112).
Directors' responsibility statement required by DTR 4.1.12R
We confirm that to the best of our knowledge:
 The Financial Statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;
 The Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole together with a description of the principal risks and uncertainties that they face; and
 The Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.
 
By order of the Board
Aidan Heavey Ian Springett
Chief Executive Officer   Chief Financial Officer
10 February 201510 February 2015
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 (page 43 and pages 73 -77).
2015 to 2019 Short-to-Medium Term Performance Risks
Each year Tullow identifies a number of key risks and uncertainties with regard to the successful delivery of the Group's business plan. These short-to-medium term risks are set out below, and indicate the principal risks associated with the 2015 to 2019 business plan period.
High-margin production cash flow
 Sustainedlowoilprices
 PerformanceanduptimeofFPSOandonshoregasprocessing facilityimpactsJubileeproduction
 Declineinnon-operatedWestAfricanproductionthrough lowerinvestmentoroperationalissues
 Delaysinstart-upoftheTENfield
Exploration & Appraisal
 Sustainedexploration failure
 FurtherreductionsinE&Aspend
 Partners'financialabilitytofundexplorationprogrammes
 Lackofviableopportunitiestogrowportfolio

Monetisation options & portfolio management
 Sustaineddownturninthemarketreducesopportunities forassetacquisitionsanddivestments
 Explorationremainsoutof favourwiththewidermarket, reducing farm-inand farm-outactivity
Selective development
 Delay in first oil from the TEN field
 Furtherchangestocapitalallocationwhich coulddelay JubileeFFD
 LackofincrementalinvestmentopportunitiesinWestAfrican non-operatedassets
Funding
 TENstart-upisdelayedorbudgetisexceeded, impactingthebalancesheet
 Failuretodeliveron costefficiencies,capitalallocation andhedgingprogramme
Organisation
 Lossofkeystaffduringstrategicorganisationreview andindustrydownturn
 Inabilitytoachieveappropriate cost controlsandefficiencies
Long-Term Performance Risks
We have identified a number of risks to our longer-term performance and strategic delivery, which are in addition to the short-to-medium term risks that are specifically associated with the delivery of our business plan. Each year we review the risks Tullow faces and refresh these to reflect the changes in our business and operational profile. The tables below present the Board and Management view of the most material and important long-term performance risks to Tullow. They do not comprise all the risks and uncertainties we face.
Strategyfailstomeetshareholderobjectives
Strategicpriority
Deliversubstantialreturnsto
shareholders.
Executiveresponsibility
AidanHeavey
ChiefExecutiveOfficer
Performanceindicator
 Long-term TSR
Impact
Ineffectiveorpoorlyexecuted strategyfailstocreateshareholdervalueandto meetshareholderexpectations, leading toa lossofinvestorconfidenceanda declineintheshareprice.Thisinturn reducestheGroup'sabilitytoaccess financeandincreasesvulnerabilityto ahostiletakeover.
Policiesand systems
Exploration-ledgrowth strategy,
ongoingportfoliomanagement,fiveyear businessplan,activeInvestorRelations programme,bi-annualinvestorsurvey, annualreviewof strategicobjectivesandmonthlyoperationaland financialreporting.
Mitigationprocess
Clearandconsistent strategyexecution high-impactexplorationandappraisal programme,selectivedevelopment projects,assetmonetisationacrossthe valuechain,resourcegrowth,portfolio renewalandhigh-grading, strongbalancesheetandfinancialflexibilityand effectivecommunicationwithall stakeholdersbasedonopenand transparentdialogue.
Riskmitigationactivitiesand outcomesin2014
 Proactive review, adaptation
and communication of strategy. Shift away from expensive complex exploration wells to focus on lower cost plays onshore and offshore
 Exploration success in Kenya
 TEN Project on track
and on budget in Ghana
 Feedback through meetings with some 300 institutions
 Capital Markets Day followed by perception survey
Costandcapitalindiscipline
Strategic priority
Managefinancialandbusinessassetsto enhanceourportfolio,replenishupside potentialandsupportfundingneeds.
Executive responsibility
IanSpringett
ChiefFinancialOfficer
Performanceindicator
 Cash operating costs per boe
 Finding and development costs
 per boe
  Capital expenditure and
 cost management
 targets
 Administrative expenses
Impact
Ineffectivecostcontrol leadstoreducedmarginsandprofitability,reducing operatingcashflowandtheability tofundthebusiness.
Policiesand systems DelegationofAuthority(DoA)and budgetingandreportingprocesses, andprojectapprovalprocessforall significantcategoriesofexpenditure.
Mitigationprocess Comprehensiveannualbudgeting processescoveringallexpenditureare approvedbytheBoard.Executive managementapprovalisrequiredfor majorcategoriesofexpenditure,and
investmentanddivestmentopportunities are rankedonaconsistentbasis, resultingineffectivemanagement
ofcapitalallocation.
Riskmitigationactivitiesand outcomesin2014
Capital expenditure for 2014
 was $2.0 billion (2013: $1.8
 billion)
 Finding costs $19.5 per boe
(2013: $5.1) after
contingent resource bookings deferred to 2015
 Cash operating costs
 $18.6 per boe
 Monitoring of expenditure integrated with quarterly Business Unit reviews of performance
Insufficientliquidity,inappropriatefinancialstrategy
Strategicpriority
Managefinancialandbusinessassetsto enhanceourportfolio,replenishupside potentialandsupportfundingneeds.
Executiveresponsibility
IanSpringett
ChiefFinancialOfficer
Performanceindicator
 Operating cash flow
 Debt profile and capacity
 Gearing
Impact
Assetperformanceandexcessive leverage leadstotheGroupbeingunable tomeetitsfinancialobligations.This scenario,intheextreme,impactsonthe Group'sabilitytocontinueasagoing concern,orcausesabreachofbankcovenants.
Policiesand systems Financial strategy,cashflow forecastingandmanagementand capitalallocationprocesses.
Mitigationprocess
Prudentapproachtodebtandequity,withabalancemaintainedthrough refinancing,cashflowfromoperations andportfoliomanagementactivity.Board reviewandapprovaloffinancial strategy. Short-termand long-termcashforecastsreportedonaregularbasis toSeniorManagementandtheBoard. Strongbankingandequity relationshipsmaintained.
Riskmitigationactivitiesand outcomesin2014
 Reserves based lending and
corporate debt facilities refinanced in 2014
 Second $650 million corporate bond issued, increasing the diversity of the Group's debt financing
 Partial sales of Schooner & Ketch UK gas assets and Brage field in Norway and agreement to sell interests in L12/L15 block, Q4 and Q5 blocks in the Netherlands
 Decision to retain current
 stake in TEN to first oil
Oilandgaspricevolatility
Strategicpriority
Managefinancialandbusinessassetsto
enhanceourportfolio,replenishupside potentialandsupportfundingneeds.
Executiveresponsibility
IanSpringett
ChiefFinancialOfficer
Performanceindicator
 Realised commodity
 prices
Impact
Volatilityincommoditypricesimpacts theGroup'srevenue streams,withan adverseeffectonliquidity.
Policiesand systems
Hedging strategy.
Mitigationprocess
Hedging strategyagreedbythe
Board,withmonthlyreportingof hedgingactivity
Riskmitigationactivitiesand outcomesin2014
 Realised oil price $97.5/bbl
 Realised gas price 51.7 pence per therm
 Secured average floor price for around 60% 2015 entitlement oil volumes at circa $86/bbl
Sustainedexplorationfailure
Strategicpriority
Executeselectivehigh-impact
explorationandappraisalprogrammes.
Executiveresponsibility
AngusMcCoss
ExplorationDirector
Performanceindicator
 Resourcesgrowth
 Success ratioscommensurate
 withE&Aprogrammemix
 Portfoliorenewalandhigh
 grading
 Findingcosts
Impact
Failuretosustainexplorationsuccessiscostlyandlimitsreplacementofreserves andresources,whichimpactsinvestor confidencein long-termdeliveryofthe Group'sexploration-ledgrowth strategy.
Policiesand systems
Clearexploration strategybasedoncore campaigns,GELTpeerchallenge, competitivecapitalallocationprocess andannualE&Aprogramme.
Mitigationprocess
BoardapprovedE&Aprogramme.MonthlyreportingtotheBoardonfinding costsperboeandhigh-gradingof
Group'sportfolio,withaviewto measuringsuccessofexploration investment.Applicationoftechnical excellenceandappropriatetechnologies inexplorationmethodologies.
Riskmitigationactivitiesand outcomesin2014
 Tullow'smulti-basincampaign
approachhedgesthenaturalannual variabilityinexplorationresults
 Are-balancingofGroupexploration spendawayfromhigh-costcomplex drillingtoward lower-costshelf/ onshoreexplorationwithmaterial
oilpotential
 Thecapitalallocationprocessresulted inaprudentandrisk-weightedE&A capexprofilewith15%ofspendon explorationbusinessdevelopment,
20%onfrontierdrilling,and65%on coreactivities.Notable2014successes includedtheHanssenoildiscoveryin Norway,andin Kenya,theAmosingoil discoveryandSouthLokicharBasin appraisalprogrammesupportour600mmblmeanrecoverableestimate forthebasintodate
Keyoperationalordevelopmentfailure
Strategicpriority
Safelymanage,andcosteffectively delivermajorprojectsandproduction operationsontime,whileincreasing cashflowandcommercialreserves. Comprehensivelyassess,consultwith stakeholders,andmitigateanypotential environmentalandsocialimpactsof activitiestomaintainpositiveCompany reputationwith stakeholdersandlicencetooperate.
Executiveresponsibility
PaulMcDade
ChiefOperatingOfficer
Performanceindicator
 Annualoperationstargets,
 includingsafety,social
 performance andenvironment
 indicators
 Deliverytargetsforproject
 budget estimatesand
 scheduleforecasts
 Productionforecasts
 Maintenancehoursand
 backlogson preventative
 equipment
 Wellandsurfaceasset
 integrityindicators
Impact
 Projectandoperational
 deliveryfailstomeetcostand
 schedulebudgetsor
 operationalobjectives,causing
 returns tobeeroded
  Activitiesnegativelyaffectthe
 environmentand local
 communities, impacting
 Companyreputationand
 licencetooperate
Policiesand systems
 AnIntegratedManagement
 System(IMS)including
 Operational,Financial, People
 andSafety,Sustainabilityand
 ExternalAffairs(SSEA)
 principles, policies,and
 standards
 Well-definedaccountabilitiesfor DevelopmentandOperations staff and leadership
 ClearDelegationofAuthority
 (DoA)offinancialcontrols
 CodeofBusinessConduct
 Assetdeliveryriskmanagement includingtheprocessformulti- disciplinemajorprojectreviews/audits atvarious stagegatesfromproject conceptthroughtoexecution
Mitigationprocess
 Multi-disciplineproject
 review/auditof
'stagegate'processbyexperienced professionalpersonnelincluding Technical,Financial/Economic,Safety, Sustainability,Commercial, Operationaland Politicalaspects
 ExecutiveandBoardapprovalrequired forallmajorprojectsandfor staffing alldedicatedprojectteams
 Multi-disciplinerisk evaluation, mitigationandmonitoringare completedonallprojectsand reportedonmonthly
Riskmitigationactivitiesand outcomesin2014
 Multi-disciplineprojectreviews
conductedthroughouttheyear includingforactivitiesinKenya, Uganda,Mauritania,Namibia,Ghana, UKandNorway.Findingsdocumented andreportedtoExecutive;action
plansimplemented
 MajordeepwaterTENProject
 over50%completeandon
 tracktodeliver firstoilinmid
 2016
 MajorUgandafront-endengineering workunderwayincludingmajorESIA work.Targetprojectsanctionin
late2016
 Kenyaearlyconceptselectionwork underwayincludingESIAandwater supplyimpact studies.Targetproject sanctioninlate2016
 EastAfricaonshorepipelinefrontend engineeringworkunderwayincluding routingsurveyandESIAactivities
 Group-widecrisismanagement structurewithregulardrills
 Preventivemaintenanceprogramme; wellandplantintegritymonitoring; businesscontinuityplanning;and PDBIinsuranceprogramme
Supplychainfailure
Strategicpriority
Managefinancialandbusinessassetsto enhanceourportfolio,replenishupside potentialandsupportfundingneeds.
Achieve stronggovernanceacross allTullowactivitiesandcontinuetobuildtrustandreputationwith all stakeholders.
Executiveresponsibility
GrahamMartin
ExecutiveDirector&CompanySecretary
Performanceindicator
 Timelinessandcompletion
 ofdeliveries
 Contractmanagement
 scorecard
 Localcontentexpenditure
Impact
Adelayindeliveryofproductsorservicesresultsinvalueerosionandproject deliverydelays,causingsignificant financialpenalties,increased costsanda lossofreputationwithstakeholders.
Insufficient localcontentwilljeopardise ourlicencetooperateandbreach legislationinsomecountries.
Policiesand systems
 Groupcontractingandprocurement
procedures
 Market,contractandsupplierdue diligence
 Post-contractawardprocedures
 Logistics standardoperating procedures
 Localcontentpolicy
 Transparentgovernance structure withahierarchyofcontractreview boardsfromtheBusinessUnit level totheGroup
 DelegationofAuthority
Mitigationprocess
 Riskassessmentandfulldue
diligenceofallsupplierscarried outpriortoawardofthecontract
 Riskmanagementembeddedinthe Groupcontractingandprocurement proceduresatall stagesoftheprocess
 Comprehensivesuppliermonitoring undertakentoensurethatanyissues areidentifiedpromptlyandrectified
Riskmitigationactivitiesand outcomesin2014
 Independentreviewofall
 suppliers;
newcontractingandprocurement assurancemodel;newsupplier managementtoolrolledout; ongoingprogrammetoimprove contractholdercapabilityin suppliermanagement
 Supplierriskassessmentanddue diligencerevisedandrisk managementnowembeddedfor pre-andpost-awardactivities
 Supplychainmanagement scorecardrebalanced
 Localcontentreporting
Adverseenvironmentalimpact,safetyorsecurityincident
Strategicpriority
Ensuresafeandsecureoperationsandminimiseenvironmentalimpacts.
Executiveresponsibility
PaulMcDade
ChiefOperatingOfficer
Performanceindicator
 Environmental,Healthand
 Safety(EHS)elementsof
 corporate scorecard,tiedto
 executive remuneration,
 includingLTIfand Spills/million
 manhoursquantitative targets
 andqualitativedeliverytargets
 suchasdeliveryofTransport
 Safety PlansineachBU
 EHSKPIsinBusinessUnit
 scorecards
Impact
Major eventfromexploration,
developmentorproductionoperations mayimpact staff,contractors, communitiesortheenvironment, leading toincreasedcosts, lossofreputation, revenueand/orshareholdervalue.
Policiesand systems
 Board-levelEHSCommittee
 GroupEHS Policy
 Group-wideEHS standards,aspart ofTullowIntegratedManagement System(IMS)
 AdherencetotheVoluntaryPrinciples ofSecurityandHumanRights (VPSHR)inoperations
 GroupandBusinessUnit level assuranceprocesses
Mitigationprocess
 Board-levelcommitmentand
Active oversight
 EHS standardssetandmonitored acrosstheGroupthroughBusiness Unitperformancereportingandtarget setting
 ClearEHS standardsandprocedures supportedby strong leadership accountabilityandcommitment throughouttheorganisation
 EHSprofessionalsembeddedinthe businesstosupportdeliveryofsafe andsustainableoperations
Riskmitigationactivitiesand outcomesin2014
 EHSandExternalAffairs
 teamsintegratedinlate2013
 toenhance non-technicalrisk
 management
 Improvementsmadetobetter reflectnon-technicalrisksinthe corporatescorecard
 EHS Standards implemented and conformance assured via independent Group audits
 BoardEHS Committee madeoperational
Politicalrisk
Strategicpriority
Nurture long-termrelationshipswithnationaland localgovernmentsand ensurecompliancewithapplicable lawsandregulations.
Executiveresponsibility
PaulMcDade
ChiefOperatingOfficer
Performanceindicator
 Unscheduled non-production
 time due to work stoppage to
 our activities, disturbances or
 Force Majeure events
  Degree of conformance
 with internationally
 recognised conventions
 such as VPSHR
Impact
Politicalfactorscan leadtonecessaryre-negotiationoflicenceandagreement terms,delaysingrantsoflicensees,or approvalofagreements,and/orother stateaction.
Policiesand systems
 Board level oversightof
 politicalrisks
 Board level oversightofcountry- specificnon-technicalrisk
(NTR) strategies
 Portfolioriskmanagement assessments,includingactive monitoringofpoliticalchanges, risksandopportunities
Mitigationprocess
 Earlyidentificationand
 ongoing
monitoringofpoliticalrisks andopportunities
 Managementplansaddressing politicalimpactsassociatedwith existingorplannedoperations
 Appropriate levelsofresourcingand competencytoidentify,analyseand adviseonpoliticalriskmanagement
Riskmitigationactivitiesand outcomesin2014
 Developmentofaforward
 lookingquarterly PoliticalRisk
 Reportfor Executive
 Committee(ExCom)and the
 Board
 DevelopmentofBoard levelcountry strategypapers
Social risk
Strategicpriority
Nurture long-termrelationships
withcommunities,Non-Government Organisations(NGOs),CivilSociety Organisations(CSOs),multilateral organisations,andotherkey stakeholders.
Executiveresponsibility
PaulMcDade
ChiefOperatingOfficer
Performanceindicator
 Unscheduled non-production
 time due to work stoppage to
 our activities, disturbances or
 Force Majeure events
 Social performance
 elements of corporate
 scorecard, tied to
 executive remuneration
 Social performance KPIs in
 Business Unit Scorecards
Impact
ErosionofTullow'ssociallicenceto operate leadingtoreducedvalueof projects,possible localdisruptions, delaysinprojectschedulesand increasedprojectcosts.Impactstoour external stakeholdersincludeeffecton traditionallivelihoods, localemployment andbusinessopportunities,andland acquisitionandresettlement,
amongothers.
Policiesand systems
 Board level oversightof
country-specificnontechnical risk(NTR) strategies
 GroupSocial PerformanceStandards andtoolsembeddedintheIMS
 Group Local Content Guidelines to drive 'shared prosperity' and tools embedded in the IMS
 GroupSocialInvestmentStandardand toolsembeddedintheIMS
Mitigationprocess
 Socialinvestmentprojects
 targetedatmanagingsocial
 risksandat delivering
 opportunitiestomaximise our
 businessbenefits
 Arisk-basedapproachtooperatingin sensitive/protectedareascoupledwith aWorldHeritage'nogo'policy
 Proactivecommunityengagement, supportedbygrievance managementprocesses
 Proactivelandacquisitionand relocationprocedures
Riskmitigationactivitiesand outcomesin2014
 Doubleddiscretionary
 investmentinsocialprojectsin
 Kenya
 Strengthenedfocusonsocial performanceinGroup-wide EnvironmentalSocialImpact Assessments(ESIAs)
 ConductedaHumanRights AssessmentinKenya,tobeusedto informGroup-wideprocessesfor futuredevelopmentandemployment
 Recruitedadditional
 CommunityLiaisonOfficersin
 Kenya
Briberyandcorruption
Strategicpriority
Ensureadequateprocedurestopreventbriberyareinplace,inlinewiththeUK MinistryofJustice'sGuidance,to minimiseopportunitiesforbriberyandcorruption.
Executiveresponsibility
GrahamMartin
ExecutiveDirector&CompanySecretary
Performanceindicator
 No active bribery cases and
 any known or suspected
 cases of passive bribery
 investigated and appropriate
 action taken
Impact
Corruptactionsorpracticesin
theGroup'sactivities leadingto investigationsorprosecutionwhich wouldimpacttheGroup'sreputation and leadto lossofshareholdervalue.
Policiesand systems
 CodeofBusinessConductand
 Safecallwhistleblowing
 procedures
Mitigationprocess
 Consistent ethical standards
established and applied through the Code of Business Conduct and associated standards and procedures
 Continual awareness programme delivered across the Company using a variety of media
 Regular monitoring of compliance across the business, both internal and external assessments of the adequacy of the anti-bribery and corruption programme
 Periodic reporting to the
 Compliance Committee and
 the main Board.
 Internal and external independent reporting mechanisms (Safecall) embedded and used across
the business
Riskmitigationactivitiesand outcomesin2014
 Online Code of Conduct
 Certification process extended
 to all staff; enhancement of
 the awareness of mechanisms
 to report concerns
 Additional compliance team resources recruited
 Enhanced investigation resources and capability
 Bribery and corruption risk management process implemented
 Good Corporation compliance review recommendations implemented; further review carried out to assess Tullow as upper quartile
 An enhanced anti-corruption due diligence evaluation procedure developed and implemented
Informationandcybersecurity
Strategicpriority
Achieve stronggovernanceacross allTullowactivitiesandcontinue tobuildtrustandreputationwith all stakeholders.
Executiveresponsibility
AngusMcCoss
ExplorationDirector
Performanceindicator Preventionofcyberattacksand informationsecuritybreaches.
Impact
Lossofsensitiveproprietary
information,financialfraud, reductionorhaltinproduction.
Policiesand systems Informationsecuritypolicy and standards.
Mitigationprocess
 The information security strategy
integrates information, personnel and physical security, as it relates to the protection of information assets
 A collaborative cross-functional risk group provides governance and ensures technical and non-technical solutions are prioritised, effective and proportionate
 An intelligence-led Protect, Monitor, Analyse and Respond cyber methodology recognises the ever- changing threat landscape that drives investment in next
generation technologies
Riskmitigationactivitiesand outcomesin2014
 Advanced 24/7 Security
 Operating Centre established
 Information security policy and
 standards framework updated
 with training ongoing
 Continued oversight by multi-
 functional Information Security
 Committee of delivery of the
 security programme
 Active member of Cyber
 Information Sharing
 Partnership (CISP) and Oil and
 Gas Information Security
 Forum
 Cyber Governance Health
 Check completed
Governanceandlegalrisk
Strategicpriority
Achieve stronggovernanceacrossallTullowactivitiesandcontinuetobuild trustandreputationwithall stakeholders.
Executiveresponsibility
GrahamMartin
ExecutiveDirector&CompanySecretary
Performanceindicator
 No material issues or claims
 arising
Impact
Contractualorotherliabilityclaimscauseunplannedfinancial,reputational oroperationalimpactonbusiness continuity,ultimatelyeroding shareholdervalue.
Policiesand systems
Stakeholderengagement.Ensuretimely identification,resourcingand managementofpotential legalliability claims.
Mitigationprocess
Experienced legalandcommercialteamsintegratedwithbusinessdecision makingprocess;comprehensive knowledgeofcontractualandregulatory regimes.
Riskmitigationactivitiesand outcomesin2014
 Established relationships with
experienced local and international external counsel
Lossofkeystaff&successionplanning
Strategicpriority
Builda strongunifiedteamwith
excellentcommercial,technicaland financialskillsandentrepreneurialflair.
Executiveresponsibility
GrahamMartin
ExecutiveDirector&CompanySecretary
Performanceindicator
 Staff turnover
 Recruitment for key roles
 Localisation
Impact
The lossofkey staffandalackofinternalsuccessionplanningforkey roleswithintheGroupcausesshortand medium-termbusinessdisruption.
Inabilitytorecruitforkeyroleshinders performance.
Policiesand systems
 The Tullow Values
 HR strategy
 Localisation plans
 HR policies and standards
 Performance management
 Training and development
Mitigationprocess
Clearlydefinedpeoplestrategybasedoncultureandengagement,talent developmentandrewardandrecognition, togetherwiththe continuingsuccessof theGroup.
Riskmitigationactivitiesand outcomesin2014
 Succession planning
 completed for senior people in
 critical roles
 Training and development capability strengthened
 Staff survey carried out annually and scheduled earlier to accommodate following year business planning
 Reward policy changes
Appendix C: Related party transactions
The following related party transactions are extracted from the Annual Report and Accounts (page 151).
The Directors of Tullow Oil plc are considered to be the only key management personnel as defined by IAS 24 - Related party disclosures.

2014
$m
2013
$m
Short-term employee benefits
9.5
9.9
Post employment benefits
1.2
1.1
Amounts awarded under long-term incentive schemes
3.3
4.1
Share-based payments
10.4
11.2

24.4
26.3
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 88 to 104.
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