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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Tullow Oil Plc | LSE:TLW | London | Ordinary Share | GB0001500809 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.10 | -0.27% | 36.90 | 36.70 | 36.90 | 36.98 | 36.06 | 36.68 | 762,700 | 14:45:51 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Crude Petroleum & Natural Gs | 1.63B | -109.6M | -0.0754 | -4.90 | 537.74M |
TIDMTLW
RNS Number : 1415U
Tullow Oil PLC
24 March 2023
TULLOW OIL PLC
Annual report and accounts
Tullow Oil plc ("Tullow" or the "Company")
24 March 2023 - Following the release on 8 March 2023 of the Company's preliminary full year results announcement for the year ended 31 December 2022 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for this period (the "Annual Report and Accounts").
A copy of the Annual Reports and Accounts are available to view on the Company's website: www.tullowoil.com
The Company is also pleased to announce it has published its Sustainability Report and Climate Risk & Resilience Report, which is also available on the Company's website: www.tullowoil.com .
The Company's 2023 Annual General Meeting will be held on Wednesday 24 May 2023. The Notice of Meeting will be released at a later date.
In accordance with Disclosure Guidance and Transparency Rule 6.3.5(2)(b), additional information is set out in the appendices to this announcement. This information is extracted in full unedited text from the Annual Report and Accounts.
The Preliminary Announcement included a set of condensed financial statements and a fair review of the development and performance of the business and position of the Company and its group.
In accordance with Listing Rule 9.6.1, a copy of the Annual Report and Accounts have been submitted to the Financial Conduct Authority via the National Storage Mechanism and will be available for viewing shortly at : https://data.fca.org.uk/#/nsm/nationalstoragemechanism
In addition, all of the above documents have been submitted to the Ghana Stock Exchange, and therefore will shortly be available to shareholders located in Ghana by contacting the Company's registrar: Central Securities Depository (GH) Limited, 4th Floor, Cedi House, PMB CT 465 Cantonments, Accra, Ghana (Telephone: +233 (0)302 906 576).
CONTACTS ==================== ==================== Tullow Oil plc Camarco (London) (London) (+44 20 3249 9000) (+44 20 3781 9244) Robert Hellwig Billy Clegg Nicola Rogers Georgia Edmonds Matthew Evans Rebecca Waterworth ==================== ====================
Notes to editors
Tullow is an independent oil & gas, exploration and production group which is quoted on the London and Ghanaian stock exchanges (symbol: TLW) and is a constituent of the FTSE250 index. The Group has interests in over 30 licences across eight countries. In March 2021, Tullow committed to becoming Net Zero on its Scope 1 and 2 emissions by 2030.
For further information, please refer to our website at www.tullowoil.com .
Follow Tullow on:
Twitter: www.twitter.com/TullowOilplc
YouTube: www.youtube.com/TullowOilplc
Facebook: www.facebook.com/TullowOilplc
LinkedIn: www.linkedin.com/company/Tullow-Oil
Appendices
Appendix A : Directors' responsibility statement
The following directors' responsibility statement is extracted from the Annual Report and Accounts (page 102).
Directors' responsibility statement required by DTR 4.1.12R
The Directors confirm, to the best of their knowledge:
- that the consolidated Financial Statements, prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and IFRSs adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Parent Company and undertakings included in the consolidation taken as a whole;
- that the Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of the Company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
- that they consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy.
By order of the Board
Rahul Dhir Richard Miller Chief Executive Officer Chief Financial Officer 8 March 2023 8 March 2023 Appendix B: A description of the principal risks and uncertainties that the Company faces
The following description of the principal risks and uncertainties that the Company faces is extracted from the Annual Report and Accounts (pages 40 to 45).
Risk oversight and governance
A risk focused culture and consistent risk management framework is embedded across all levels at Tullow and is driven by the Board. The Board is responsible for overseeing the risk identification, assessment and mitigation process. To this end, the Board undertakes a bi-annual assessment of the risks facing the Company, including those risks that could threaten our business strategy, operating model, performance, solvency and liquidity. Emerging risks are discussed by the Board and the Senior Leadership Team periodically throughout the year.
The Board is responsible for ensuring Tullow maintains an effective risk management and internal control system and works closely with Tullow's Senior Leadership Team to ensure this is in place. The Senior Leadership Team is collectively responsible and accountable for the risk management process in place across the organisation, with individual members taking ownership for risks that fall in their business area.
Tullow recognises that risk cannot be fully eliminated and that there are certain risks the Board and/or the Senior Leadership Team accept when pursuing strategic business opportunities. Acceptance of risk is made at an appropriate authority level and within Tullow's defined risk appetite and tolerance levels.
Risk management process
Our risk management framework takes a 'top-down, bottom-up' approach. It is a rigorous method that ensures ownership and responsibility for identification, assessment and management of key risks and opportunities, and is embedded throughout the business. The Board sets the context for risk management through defining principal risks, setting the strategic direction and establishing the appropriate risk appetite for the organisation.
Risk identification and assessment
Each Business Head and Head of Function is responsible, and accountable, for managing risk and risk mitigation within their remit. Extended Leadership Team members review and re-assess risk on at least a quarterly basis in their functional areas to evaluate the strength of existing controls and determine whether changes in risk reduction actions are needed to ensure the risk level is within the risk appetite set by the Board.
Consolidation of business risks
To facilitate assessment of the main risks facing the business, Tullow's leadership undertakes a bottom-up review of the key risks faced by the business. The key risks in each area are identified by the Business Heads and Heads of Functions, including mitigating actions and any emerging risks. These are consolidated upwards into the Business Unit risk registers and assessed according to their likelihood of occurring, and the potential consequences to Tullow in terms of safety, reputational, financial, legal and regulatory impact.
From this, the Senior Leadership Team identifies the principal and enterprise-wide risks which can be either a single risk or a set of aggregated risks which, taken together, are significant for Tullow. Members of the Senior Leadership Team have ownership and accountability for stewardship of each of the principal and enterprise-wide risks. As a collective, the Senior Leadership Team reviews and discusses the risks bi-annually to understand whether mitigations are being effectively executed within the agreed timeframe.
The principal risks and mitigants are discussed by the Board bi-annually to provide 'top-down' challenge and support. The result of this review is communicated back down to the SLT and Business Units to facilitate risk awareness and effective decision making throughout the organisation.
Risk appetite
The Board sets Tullow's risk appetite and acceptable risk tolerance levels for each of the principal risk categories. In considering Tullow's risk appetite, the Board reviews the risk identification process, the assessment of enterprise level risks, the existing controls and mitigating actions and the residual risks. During this process, the Board articulates which risks Tullow should not tolerate, which risks should be managed to an acceptable level and which risks are accepted in order to deliver our business strategy.
The risk appetite is reviewed at least annually by the Board to ensure that it reflects the current external and market conditions. A revised risk appetite was last reviewed by the Board in March 2023.
Evolution of Tullow's management of risk
Development of the risk management framework is an ongoing process. During 2022 senior risk owners have been working to promote a culture of risk awareness and challenge throughout the business with an increased focus on managing risk. Further consistency in risk identification, measurement and reporting has been rolled out across the organisation.
Tullow's risk profile
The Company risk profile has been closely monitored throughout the year, with consideration given to the risks to delivering the Business Plan, as well as whether external factors such as the war in Ukraine, inflationary pressures and oil price volatility have resulted in any new risks or changes to existing risks. The impact of these factors has been considered and managed across all principal risks. The following table represents the Company's current principal risks.
Principal risk categories Commercial Stakeholder Climate EHS or security Financial People Ethics and Cyber conduct Failure to deliver production targets (commercial and financial risk) Risk details Risk mitigations ---------------------------------------- -------------------------------------------- Tullow's Business Plan is anchored -- Robust control over operations on production from the Jubilee and & maintenance (O&M) contract as well TEN fields in Ghana and non-operated as the Jubilee O&M transformation fields in Côte d'Ivoire and project successfully completed in Gabon. A decline, or problems with July 2022 the performance, of wells or facilities -- Cross-discipline integrated performance could result in not meeting planned management including clear KPIs and production levels which in turn forums would lead to a reduction in revenue -- Maintenance and integrity management and cash flow ultimately impairing plans covering all equipment classes our ability to reduce leverage. -- Management and oversight of JV Partners to ensure maintenance and integrity plans are implemented effectively ---------------------------------------- -------------------------------------------- A failure to grow the business via -- Jubilee Expansion project, Jubilee targeted investment in existing South East, North East and TEN Enhancement fields and/or investment in new Projects fields could ultimately impact our -- Exploration strategy focused on ability to deliver the Business acreage close to existing infrastructure, Plan and meet longer-term production to enable discoveries to be converted targets. to production quickly -- Continued investment in non-operated portfolio, including accelerating projects where possible -- Mergers & acquisitions (M&A), inorganic growth with a focus on producing assets -- Working to secure a long-term gas offtake commercialisation contract in Ghana as agreed in principle by the Board -- Continued investment in the non-operated portfolio ---------------------------------------- -------------------------------------------- Risk of an asset integrity breach (commercial and EHS or security risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- A loss of asset integrity could -- The FPSO vessels are subject to be cause by failures to follow our regular internal and external certification procedural requirements for operating -- Our asset and well integrity and equipment within safety limits, maintenance programmes are in place, equipment failure on the FPSO or and overseen by senior managers lack of critical equipment or spares. -- When incidents do occur we complete The effects could include reduction a root cause analysis for every incident in production, revenue and cash -- Robust control over operations flow, damage to facilities and damage & maintenance (O&M) contract as well to relationships with JV Partners as the Jubilee O&M transformation and host governments. project successfully completed in July 2022 ------------------------------------------- ---------------------------------------------------- Risk of a major accident event (EHS or security risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- A major incident could potentially -- Risk management processes embedded result in asset integrity failures at all levels of the organisation and/or extensive damage to facilities. -- Asset and well integrity and maintenance This may in turn lead to a loss programmes are in place, including of life, environmental damage, increased regular self-verification and external costs and reputational damage. certification, audit and assurance of integrity plans -- Root cause failure analysis processes in place for production losses and EHS incidents to prevent recurrence and ensure lessons are learned -- Emergency Response Plans and Incident Management Framework to aid in escalation when incidents do occur ------------------------------------------- ---------------------------------------------------- A failure of our colleagues or contractors -- Tiered assurance activities ensuring to meet safety standards or adhere all critical processes are adhered to procedural requirements could to result in operation of equipment -- Robust EHS aspects are included outside safe operating limits leading at all stages of contract management to a major EHS or operation incident. (from specification/pre-qualification through to contract closure) -- Active contractor engagement on safety throughout life of contract including EHS forums to enable direct participation ------------------------------------------- ---------------------------------------------------- Failure to unlock value (stakeholder, commercial and financial risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- Significant non-associated gas resource -- A workstream has been established has been identified on current licences to assess commercialisation opportunities and failure to secure gas market in Ghana and the region that will share could delay development of enable development of the identified these resources. resources while playing an important role for the industrial development of Ghana ------------------------------------------- ---------------------------------------------------- Delay in approval of a revised Field -- A revised FDP has been submitted Development Plan (FDP) by the Government to the Government of Kenya for approval of Kenya could impact a final investment in line with the licence extension decision. conditions -- Continued engagement with the Government of Kenya and regulators to ensure timely approval of the revised FDP ------------------------------------------- ---------------------------------------------------- Failure to secure a strategic partner -- The Kenya JV Partners via an ongoing would impact our ability to progress farm-down process are actively seeking the Kenya project to final investment a strategic partner to fund the next decision and unlock value. stage of development and unlock value. Discussions are under way with potential bidders around a range of commercial arrangements ------------------------------------------- ---------------------------------------------------- The inability to successfully explore -- Close collaboration focused on and add accretive upside value to fully leveraging geoscience expertise Tullow's assets through addition to identify and mature reserves and of reserves and resources around resources which have the potential producing assets could limit the to rapidly unlock value for producing return on the licences. assets -- This is reinforced by an infrastructure-led exploration (ILX) strategy to strengthen
the portfolio, by focusing on opportunities near producing assets, and create value through integration of assets, expertise and regional knowledge ------------------------------------------- ---------------------------------------------------- The inability to limit our capital -- A number of farm-down processes exposure to historical exploration are under way to limit capital exposure commitments in selective emerging on selective emerging basins by aiming basins of Guyana and Argentina may to reduce our equity share. This result in having to divert capital will ensure Tullow can participate from producing assets. at an equity consistent with our capital allocation guidance ------------------------------------------- ---------------------------------------------------- Failure to manage geopolitical risks (stakeholder and financial risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- Political instability in the West -- An extensive relationship management Africa region, where our producing plan is in place, to actively manage assets are concentrated, could delay senior relationships with host governments, and impact decision making by host including an Advisory Board in Ghana governments and local partners and -- We ensure alignment of our business may also impact security arrangements. plans with national priorities and have developed a communication plan to inform stakeholders of the positive impact of our activities on host nations and communities -- We maintain constructive non-partisan relationships with all political parties in Ghana ------------------------------------------- ---------------------------------------------------- Unreasonable fiscal or regulatory -- We have robust stabilisation clauses demands by host governments could in all our Petroleum Agreements and obstruct efficient operations, delay Production Sharing Contracts with implementation of our growth plans international dispute resolution and cause increased costs and financial to protect us against unreasonable loss. demands ------------------------------------------- ---------------------------------------------------- Failure to manage climate change risks (climate risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- Tullow recognises climate change -- There is recognition and support as a material risk for our business. from the Board that decarbonisation There is a potential for climate-related requires investment. We are implementing risks, including regulatory constraints, our plan to achieve Net Zero by 2030 carbon pricing mechanisms, low oil (Scope 1 and 2 net equity), through price or conditional access to capital, reducing our emissions from routine to affect Tullow's ability to implement flaring and offsetting hard to abate our strategy. emissions Challenges to our business strategy -- We stress test our portfolio to and failure to align with broader ensure core assets are resilient energy transition goals could result in different oil and carbon price in reduced or conditional access environments to capital or shareholder/investor -- There is ongoing engagement with reluctance to invest. host countries to understand and Failure to deliver on our commitment align with their long-term energy to eliminate routine flaring by transition strategies, including 2025 and thereby mitigate the carbon Paris Nationally Determined Contributions intensity of Tullow's business or -- We are aligning our objectives to off-set hard to abate emissions with the Ghana Forestry Commission (e.g. through nature-based off-set and local stakeholders to implement schemes, which we continue to investigate a project, with a Final Investment in Ghana) may lead to erosion of Decision expected in 2023 stakeholder confidence and impact our ability to attract and retain talent. ------------------------------------------- ---------------------------------------------------- Risk of insufficient liquidity and funding capacity to sustain and grow the business or failure to deliver a highly cash-generative business (financial risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- Tullow remains exposed to erosion -- Business Plan in place and being of its balance sheet and revenues delivered to deliver strong cash due to oil price volatility, unexpected flow and deleveraging operational incidents, cost inflation -- Capital structure provides liquidity and failure to deliver targeted headroom through to December 2024 farm downs of exploration assets even in a low oil price environment and Kenya. -- Disciplined capital allocation Failure to deliver our Business prioritising high-return and short-payback Plan could have a material negative investments, and a strong focus on impact on cash flow and our ability cost control to reduce debt and strengthen the -- Material commodity hedging programme balance sheet, which may affect protects against the impact of a our ability to meet our financial sustained low oil price environment obligations when they fall due. -- Options and timings for refinancing are regularly reviewed ------------------------------------------- ---------------------------------------------------- Failure to develop, retain and attract capability (people risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- There is a risk that critical staff -- The Employee Value Proposition leave the organisation resulting (EVP) rolled out in 2021, covering in difficulty to deliver against culture, working environment, remuneration, our Business Plan. learning and development and performance We operate a lean and agile structure management was further developed and are dependent on a small number in 2022 of key and critical roles. Loss -- Employee engagement initiatives of staff would increase pressure are in place, including an employee on remaining colleagues and could advisory panel, Tullow town halls, lead to deterioration in the wellbeing coffee mornings and employee engagement of our colleagues, a poor working surveys environment and, potentially, further -- We have refreshed our Inclusion attrition. and Diversity (I&D) policy and hosted We may be unable to recruit the a number of speakers during the year, skills needed due to the overheated to increase awareness and re-affirm global labour market in oil & gas. our focus on I&D -- Succession plans are in place for critical roles. We have undertaken a leadership capability review of the extended leadership team, to ensure a focus on development and ensuring the right capability is in the organisation ------------------------------------------- ---------------------------------------------------- Risk of a compliance or regulatory breach (ethics and conduct risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- Non-compliance with bribery and -- Tullow maintains high ethical corruption legislation or contractual standards across the business. Strong obligations along with other applicable anti-bribery and corruption (ABC) business conduct requirements could governance processes/procedures are expose the Company to penalties in place as a core element of the or regulatory oversight. Ethics and Conduct (E&C) programme In particular, an unforeseen material -- A mandatory annual Code of Ethical compliance breach could lead to Conduct eLearning and acknowledgement/certification regulatory action, an unsettled process is in place for all employees. litigation/dispute or additional Third-party due diligence procedures future litigation that may result and assurance processes are in place
in unplanned cash outflow, penalty/fines, -- Investigation procedures and an reputational damage and a loss of associated misconduct and loss reporting stakeholder confidence in Management. standard are in place -- Third-party due diligence and assurance processes are in place -- Anti-tax evasion risk assessments are undertaken with clear mitigation actions identified, including targeted employee training ------------------------------------------- ---------------------------------------------------- Risk of major cyber-attack (cyber risk) Risk details Risk mitigations ------------------------------------------- ---------------------------------------------------- The external cybersecurity threat -- Security Incident Event Management environment is continuously evolving (SIEM) system in place, supported and intensifying; therefore, the by an Advanced Security Operations risk of a major cyber-attack is Centre (SOC) providing 24/7 network an ongoing risk that requires constant and device monitoring, alerting and monitoring and management. response Tullow may suffer an external cyber-attack -- Security awareness programme in which could have far reaching consequences place supported by regular staff for the business. This could limit susceptibility phishing training our ability to operate, impact production, and testing. Annual mandatory security expose the Company to high ransomware awareness training for all staff demands or potentially trigger a -- An independent technical assurance major incident. This could result programme is in place in financial loss, loss of stakeholder confidence, loss of production, or additional cost by way of fines or resolution of service. ------------------------------------------- ----------------------------------------------------
Lines of defence
First line of defence Business management (ownership and management of risk) * Own and manage business risks. Implement and execute controls in business. Monitor risks and control at business level. * Assurance provided through self-reviews and focused assurance reviews. * Projects - implement and execute controls at site/project level. Monitor risks and controls at site/project level. ------------------------------------------------------------------------- Second line of defence Business leadership, risk management and compliance functions (oversight of risk management) * Set the framework and support embedding of effective risk management practices. * Provide oversight and management challenge to leadership on the identification and management of risk. * Monitor compliance with functional standards (minimum controls). * Provide assurance through periodic reporting and focused reviews. ------------------------------------------------------------------------- Third line of defence Internal Audit (independent assurance) * Provide independent assurance of respective governance, internal control systems and controls across all levels of the business. * Assurance provided through risk-based internal audit reviews. -------------------------------------------------------------------------
Internal control
A foundation of effective governance, risk management and control exists throughout the organisation. The effectiveness of the internal control framework is reviewed through the risk management process and challenged as described above. In addition to this, the Senior Leadership Team and Audit Committee perform an annual review of the effectiveness of internal control. This was last undertaken in February 2023 and reported to the Audit Committee and the Board on 28 February and 1 March, respectively.
Nature of assurance
-- Assurance activities are put in place across the three lines of defence to assure that control activities are effective in mitigating risks to the business. These specifically focus on areas where there are internal/external changes, control failures and historical issues.
-- Business management is the first line of defence and is responsible for ensuring their key risks have been identified and that adequate controls are in place to manage those risks.
-- Business leadership, risk management and compliance functions act as the second line of defence, providing support, oversight and challenge to the business in managing risks effectively, and providing assurance that compliance with functional standards is being met.
-- Internal Audit acts as the third line of defence and is responsible for providing independent assurance through its risk-based internal audit programme. The Internal Audit Plan and outputs are reviewed by the Audit Committee. Agreed actions for improving the control environment and managing risk are owned by assigned individuals and monitored through Tullow's actions tracking process. The Audit Committee monitors the implementation of actions.
-- Tullow's risk management and assurance processes provide the Board and the Management Team with reasonable, but not absolute, assurance that our assets and reputation are protected.
Appendix C: Viability statement
Assessment period
In accordance with the provisions of the UK Corporate Governance Code, the Board has assessed the prospects and the viability of the Group over a longer period than the 12 months required by the 'Going Concern' provision. The Board assesses the business over a number of time horizons for different reasons, including the following: Annual Corporate Budget (i.e. 2023), Corporate Business Plan (five years i.e. 2023-2027), long-term Business Plan (10 years). The Board's period of assessment for the purpose of the viability statement is five years considering maturity of bonds in 2025 and 2026.
Notwithstanding the assessment period selected for the viability statement the Group will continue to assess the business over all time horizons noted above.
Assessment of the Group's principal risks
In order to make an assessment of the Group's viability, the Directors have made a detailed assessment of the Group's principal risks, and the potential implications these risks could have on the Group's business delivery and liquidity over the assessment period. This assessment included, where appropriate, detailed cash flow analysis, and the Directors also considered a number of reasonably plausible downside scenarios, and combinations thereof, together with associated supporting analysis provided by the Group's Finance team. A summary of the key assumptions aligned to the Group's principal risks and reasonably plausible downside scenarios can be found below. It should be noted that some assumptions encompass multiple risks but have not been repeated to avoid unnecessary duplication.
Principle Base case assumptions Downside scenario risks Failure to Production is assumed to be 5% reduction in production in deliver production in line with the Corporate each year. targets Business Plan. ------------------------------------ --------------------------------------- Failure to The Group has assumed no cash The Group has included $72 million manage geopolitical outflow associated with tax for potential outflows related risks exposures and provisions. to settlement for legal claims in 2024. These are currently not deemed to be probable but whose likelihood is greater than remote. ------------------------------------ --------------------------------------- Failure to The key impact of climate The Directors have considered manage climate change on the Group's portfolio an oil price sensitivity in change risks of assets is reflected in line with the IEA 'Net Zero the oil price assumptions. by 2050 Scenario'; see below. See below. The Group has also assessed the impact of carbon pricing; refer to the TCFD disclosure. ------------------------------------ --------------------------------------- Risk of insufficient Oil price assumptions are The Group has analysed two downside liquidity based on the forward curve oil price scenarios; the first and funding at 31 December 2022 for two is based on the Directors' assessment capacity to years, followed by the Group's of a reasonably plausible downside sustain and Corporate Business Plan assumption scenario: 2023: $70/bbl 2024: grow the business from 2025 onwards: 2023: $84/bbl $70/bbl 2025: $65/bbl 2026: / failure 2024: $79/bbl 2025: $70/bbl $65/bbl 2027: $65/bbl. The second to deliver 2026: $70/bbl 2027: $70/bbl. is in line with the IEA "Net
a highly cash Operating costs and capital Zero by 2050 Scenario": 2023: generative investment are assumed to $61/bbl 2024: $58/bbl 2025: business be in line with the Corporate $54/bbl 2026: $50/bbl 2027: Business Plan. $46/bbl Operating cost are assumed to be 12% than those included in the Corporate Business Plan. ------------------------------------ ---------------------------------------
For detailed information on risk mitigation, assurance and progress in 2022 refer to the detailed discussion of risks in Appendix B.
For 'Risk of an asset integrity breach', 'Failure to unlock value', 'Risk of a major EHS accident and Security', 'Risk of a compliance or regulatory breach', 'Failure to develop, retain and attract capability', and 'Risk of major cyber-attack' the Group has assessed that there is no reasonably plausible scenario that can be modelled in isolation or in combination with other risks from a cash flow perspective.
Conclusion
The Group has $2.5 billion notes outstanding, maturing in 2025 and 2026. The Corporate Business Plan does not project sufficient free cash flow generation to allow the Group to fully repay these notes when they fall due, and therefore it will need to access debt markets within the viability assessment period.
In the base case, net debt and gearing are forecast to reduce sufficiently such that the Directors are confident that the Group will be able to secure the funding required to maintain adequate liquidity headroom throughout the viability assessment period.
Under the two downside scenarios, which assume all risks arise simultaneously, execution of a refinancing would be challenging. Management is focused on mitigating the risks around production, operating cost increases and potential outflows associated with disputes in order to reduce the likelihood of these risks materialising, or their impact in the event these risks materialise. Furthermore, the Directors have considered additional mitigating actions that may be available to the Group, such as incremental commodity hedging executed in periods of higher oil prices, alternative funding options, further rationalisation of the Group's cost base including cuts to discretionary capital expenditure, M&A, portfolio management and careful management of stakeholder relationships.
Based on the results of the analysis and the ability to mitigate some of the risks associated with the downside scenarios, the Board of Directors has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities, including through refinancing activities, as they fall due over the five-year period of their assessment.
Appendix D: Related party transactions
The following related party transactions are extracted from the Annual Report and Accounts (page 157).
The Directors of Tullow Oil plc are considered to be the only key management personnel as defined by IAS 24 Related Party Disclosures.
2022 2021 $m $m ------------------------------ ------ ------ Short term employee benefits 2.5 3.9 Post-employment benefits 0.1 0.3 Share-based payments 1.4 1.8 ------------------------------ ------ ------ 4.0 6.0 ------------------------------ ------ ------
Short-term employee benefits
These amounts comprise fees paid to the Directors in respect of salary and benefits earned during the relevant financial year, plus bonuses awarded for the year.
Post-employment benefits
These amounts comprise amounts paid into the pension schemes of the Directors.
Share-based payments
This is the cost to the Group of Directors' participation in share-based payment plans, as measured by the fair value of options and shares granted, accounted for in accordance with IFRS 2 Share-based Payment .
[END]
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