REG - Tullow Oil PLC - ANNUAL REPORT AND ACCOUNTS
24/03/2023 07:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230324:nRSX1415Ua&default-theme=true
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 (http://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
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdata.fca.org.uk%2F%23%2Fnsm%2Fnationalstoragemechanism&data=05%7C01%7Cmatthew.evans%40tullowoil.com%7Ce7694085f9db41c642e808db2ae6fdba%7C9d5a858ee6c746a7a63cda2023c57cf8%7C1%7C0%7C638150943821280864%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=gDjYG15huXnO0I%2BTxDHkQ14uRjyCozAN5tyoUBcys6I%3D&reserved=0)
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
(http://www.tullowoil.com) .
Follow Tullow on:
Twitter: www.twitter.com/TullowOilplc (http://www.twitter.com/TullowOilplc)
YouTube: www.youtube.com/TullowOilplc (http://www.youtube.com/TullowOilplc)
Facebook: www.facebook.com/TullowOilplc (http://www.facebook.com/TullowOilplc)
LinkedIn: www.linkedin.com/company/Tullow-Oil
(http://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 conduct Cyber
Failure to deliver production targets (commercial and financial risk)
Risk details Risk mitigations
Tullow's Business Plan is anchored on production from the Jubilee and TEN • Robust control over operations &
fields in Ghana and non-operated fields in Côte d'Ivoire and Gabon. A maintenance (O&M) contract as well as the Jubilee O&M transformation
decline, or problems with the performance, of wells or facilities could result project successfully completed in July 2022
in not meeting planned production levels which in turn would lead to a
reduction in revenue and cash flow ultimately impairing our ability • Cross-discipline integrated performance
to reduce leverage. management including clear KPIs and forums
• Maintenance and integrity management plans
covering all equipment classes
• Management and oversight of JV Partners to
ensure maintenance and integrity plans are implemented effectively
A failure to grow the business via targeted investment in existing fields • Jubilee Expansion project, Jubilee South East,
and/or investment in new fields could ultimately impact our ability to deliver North East and TEN Enhancement Projects
the Business Plan and meet longer-term production targets.
• Exploration strategy focused on acreage close
to existing infrastructure, to enable discoveries to be converted 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 be cause by failures to follow our procedural • The FPSO vessels are subject to regular
requirements for operating equipment within safety limits, equipment failure internal and external certification
on the FPSO or lack of critical equipment or spares. The effects could include
reduction in production, revenue and cash flow, damage to facilities • Our asset and well integrity and maintenance
and damage to relationships with JV Partners and host governments. programmes are in place, and overseen by senior managers
• When incidents do occur we complete a root
cause analysis for every incident
• Robust control over operations &
maintenance (O&M) contract as well as the Jubilee O&M transformation
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 result in asset integrity failures and/or • Risk management processes embedded at all
extensive damage to facilities. This may in turn lead to a loss of life, levels of the organisation
environmental damage, increased costs and reputational damage.
• Asset and well integrity and maintenance
programmes are in place, including regular self-verification and external
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 to meet safety standards or adhere • Tiered assurance activities ensuring all
to procedural requirements could result in operation of equipment outside safe critical processes are adhered to
operating limits leading to a major EHS or operation incident.
• Robust EHS aspects are included at all stages
of contract management (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 has been identified on current • A workstream has been established to assess
licences and failure to secure gas market share could delay development of commercialisation opportunities in Ghana and the region that will enable
these resources. development of the identified resources while playing an important role for
the industrial development of Ghana
Delay in approval of a revised Field Development Plan (FDP) by the Government • A revised FDP has been submitted to the
of Kenya could impact a final investment decision. Government of Kenya for approval in line with the licence extension conditions
• Continued engagement with the Government of
Kenya and regulators to ensure timely approval of the revised FDP
Failure to secure a strategic partner would impact our ability to progress • The Kenya JV Partners via an ongoing farm-down
the Kenya project to final investment decision and unlock value. process are actively seeking a strategic partner to fund the next stage of
development and unlock value. Discussions are under way with potential bidders
around a range of commercial arrangements
The inability to successfully explore and add accretive upside value to • Close collaboration focused on fully
Tullow's assets through addition of reserves and resources around producing leveraging geoscience expertise to identify and mature reserves and resources
assets could limit the return on the licences. which have the potential to rapidly unlock value for producing 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 exposure to historical exploration • A number of farm-down processes are under way
commitments in selective emerging basins of Guyana and Argentina may result in to limit capital exposure on selective emerging basins by aiming to reduce our
having to divert capital from producing assets. equity share. This will ensure Tullow can participate 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 Africa region, where our producing assets • An extensive relationship management plan is
are concentrated, could delay and impact decision making by host governments in place, to actively manage senior relationships with host governments,
and local partners and may also impact security arrangements. including an Advisory Board in Ghana
• We ensure alignment of our business 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 demands by host governments could obstruct • We have robust stabilisation clauses in all
efficient operations, delay implementation of our growth plans and cause our Petroleum Agreements and Production Sharing Contracts with international
increased costs and financial loss. dispute resolution to protect us against unreasonable demands
Failure to manage climate change risks (climate risk)
Risk details Risk mitigations
Tullow recognises climate change as a material risk for our business. • There is recognition and support from the
Board that decarbonisation requires investment. We are implementing our plan
There is a potential for climate-related risks, including regulatory to achieve Net Zero by 2030 (Scope 1 and 2 net equity), through reducing our
constraints, carbon pricing mechanisms, low oil price or conditional access to emissions from routine flaring and offsetting hard to abate emissions
capital, to affect Tullow's ability to implement our strategy.
• We stress test our portfolio to ensure core
Challenges to our business strategy and failure to align with broader energy assets are resilient in different oil and carbon price environments
transition goals could result in reduced or conditional access to capital or
shareholder/investor reluctance to invest. • There is ongoing engagement with host
countries to understand and align with their long-term energy transition
Failure to deliver on our commitment to eliminate routine flaring by 2025 and strategies, including Paris Nationally Determined Contributions
thereby mitigate the carbon intensity of Tullow's business or to off-set hard
to abate emissions (e.g. through nature-based off-set schemes, which we • We are aligning our objectives with the Ghana
continue to investigate in Ghana) may lead to erosion of stakeholder Forestry Commission and local stakeholders to implement a project, with a
confidence and impact our ability to attract and retain talent. Final Investment Decision expected in 2023
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 of its balance sheet and revenues due to oil • Business Plan in place and being delivered to
price volatility, unexpected operational incidents, cost inflation and failure deliver strong cash flow and deleveraging
to deliver targeted farm downs of exploration assets and Kenya.
• Capital structure provides liquidity headroom
Failure to deliver our Business Plan could have a material negative impact on through to December 2024 even in a low oil price environment
cash flow and our ability to reduce debt and strengthen the balance sheet,
which may affect our ability to meet our financial obligations when they fall • Disciplined capital allocation prioritising
due. high-return and short-payback investments, and a strong focus on cost control
• Material commodity hedging programme protects
against the impact of a sustained low oil price environment
• 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 leave the organisation resulting in • The Employee Value Proposition (EVP) rolled
difficulty to deliver against our Business Plan. out in 2021, covering culture, working environment, remuneration, learning
and development and performance management was further developed in 2022
We operate a lean and agile structure and are dependent on a small number of
key and critical roles. Loss of staff would increase pressure on remaining • Employee engagement initiatives are in place,
colleagues and could lead to deterioration in the wellbeing of our colleagues, including an employee advisory panel, Tullow town halls, coffee mornings and
a poor working environment and, potentially, further attrition. employee engagement surveys
We may be unable to recruit the skills needed due to the overheated global • We have refreshed our Inclusion and Diversity
labour market in oil & gas. (I&D) policy and hosted a number of speakers during the year, to increase
awareness and re-affirm 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 corruption legislation or • Tullow maintains high ethical standards across
contractual obligations along with other applicable business conduct the business. Strong anti-bribery and corruption (ABC) governance
requirements could expose the Company to penalties or regulatory oversight. processes/procedures are in place as a core element of the Ethics and Conduct
(E&C) programme
In particular, an unforeseen material compliance breach could lead to
regulatory action, an unsettled litigation/dispute or additional future • A mandatory annual Code of Ethical Conduct
litigation that may result in unplanned cash outflow, penalty/fines, eLearning and acknowledgement/certification process is in place for all
reputational damage and a loss of stakeholder confidence in Management. employees. Third-party due diligence procedures and assurance processes are in
place
• Investigation procedures and an associated
misconduct and loss reporting 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 environment is continuously evolving and • Security Incident Event Management (SIEM)
intensifying; therefore, the risk of a major cyber-attack is an ongoing risk system in place, supported by an Advanced Security Operations Centre (SOC)
that requires constant monitoring and management. providing 24/7 network and device monitoring, alerting and response
Tullow may suffer an external cyber-attack which could have far reaching • Security awareness programme in place
consequences for the business. This could limit our ability to operate, impact supported by regular staff susceptibility phishing training and testing.
production, expose the Company to high ransomware demands or potentially Annual mandatory security awareness training for all staff
trigger a major incident. This could result in financial loss, loss of
stakeholder confidence, loss of production, or additional cost by way of • An independent technical assurance programme
fines or resolution of service. is in place
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 risks Base case assumptions Downside scenario
Failure to deliver production targets Production is assumed to be in line with the Corporate Business Plan. 5% reduction in production in each year.
Failure to manage geopolitical risks The Group has assumed no cash outflow associated with tax exposures and The Group has included $72 million for potential outflows related to
provisions. settlement for legal claims in 2024. These are
currently not deemed to be probable but whose likelihood is greater than
remote.
Failure to manage climate change risks The key impact of climate change on the Group's portfolio of assets is The Directors have considered an oil price sensitivity in line with the IEA
reflected in the oil price assumptions. See below. 'Net Zero by 2050 Scenario'; see below. The Group has also assessed the impact
of carbon pricing; refer to the TCFD disclosure.
Risk of insufficient liquidity and funding capacity to sustain and grow the Oil price assumptions are based on the forward curve at 31 December 2022 for The Group has analysed two downside oil price scenarios; the first is based on
business / failure to deliver a highly cash generative business two years, followed by the Group's Corporate Business Plan assumption from the Directors' assessment of a reasonably plausible downside scenario: 2023:
2025 onwards: 2023: $84/bbl 2024: $79/bbl 2025: $70/bbl 2026: $70/bbl 2027: $70/bbl 2024: $70/bbl 2025: $65/bbl 2026: $65/bbl 2027: $65/bbl. The second is
$70/bbl. in line with the IEA "Net Zero by 2050 Scenario": 2023: $61/bbl 2024: $58/bbl
2025: $54/bbl 2026: $50/bbl 2027: $46/bbl
Operating costs and capital investment are assumed to be in line with the
Corporate Business Plan. 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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END ACSJIMRTMTBTMBJRecent news on Tullow Oil
See all newsREG - Tullow Oil PLC - Director/PDMR Shareholding
AnnouncementREG - Tullow Oil PLC - Total Voting Rights
AnnouncementREG - Tullow Oil PLC - Director/PDMR Shareholding
AnnouncementREG - Tullow Oil PLC - Director/PDMR Shareholding
AnnouncementREG - Tullow Oil PLC - Total Voting Rights
Announcement