2005 Analyst Day UK Business Unit Building a balanced portfolio of Exploration and Production Assets Introduction – Paul McDade 2005 Analyst Day – Bacton Gas Terminal The Tullow footprint NW Europe □Leading Gas Producer □Mature basin Operator □Growth through exploration, development and acquisition Africa □Pan-African E&P business □High impact exploration □Growth through exploration, development and acquisition Asia □Materiality through organic growth □High impact exploration □Growth through exploration and development 2005 Analyst Day – Bacton Gas Terminal Tullow Growth Strategy Exploitation and expansion of Tullow’s current reserve base PRODUCTION & 1H Reserve Replacement 97% before acquisitions DEVELOPMENT Ongoing development progress in Africa, UK and Asia 2005/6: Organic growth to over 70,000 boepd by end 2006 Broad portfolio with proven skills, knowledge and database H1 – Two successes from 3 wells in SNS, 1 success in Gabon on Niungo EXPLORATION Next – High impact programme due to start including Mauritania and Uganda. 2006 onwards - continuing to build a high impact portfolio Selective acquisitions within core areas 2001: £200 million of Southern North Sea assets acquired from BP ACQUISITIONS 2004: $570 million acquisition of Energy Africa 2005: £200 million acquisition of Schooner and Ketch in the S. North Sea Active Portfolio Management PORTFOLIO Focus on assets where we can add value and upside potential exists MANAGEMENT Build positions where we have a material influence 2005: Sale of UK oil and Congo (Brazzaville) offshore assets for total of $184 million 2005 Analyst Day – Bacton Gas Terminal Southern North Sea – Focussed Approach 2001 acquisition of infrastructure, fields & acreage delivered two focus areas: CMS Area □ CMS Area - Non-operated position - Established operator with no exit plan - Significant development and exploration upside - Infrastructure operating close to capacity □ Thames/Hewett/Bacton Corridor - Non-operated with minor operated position Hewett/Thames Area - No dominant operator - Significant development upside - Limited exploration potential - Infrastructure operating at ~30% of capacity - Unit operating costs becoming a key issue 2005 Analyst Day – Bacton Gas Terminal SNS Introduction – Alan Linn □ Management Team □ Business Framework □ Safety and Responsibility □ Business and Edge □ Agenda 2005 Analyst Day – Bacton Gas Terminal UK Business Unit – Organising for Growth BusinessBusiness UnitUnit ManagerManager –– UK UK AlanAlan LinnLinn Technical/TeamTechnical/Team AssistantAssistant CathyCathy EdgingtonEdgington RegionalRegional AssetAsset MgrMgr CommercialCommercial MgrMgr UKUK DevelopmentDevelopment Alan Marshall UKUK FinanceFinance UKUK DrillingDrilling ExplorationExploration AssetAsset ManagerManager Alan Marshall MikeMike SimpsonSimpson && EngineeringEngineering OperatedOperated AssetsAssets ManagerManager ManagerManager AssetsAssets SchoonerSchooner && KetchKetch JV Assets & Bus ManagerManager Bacton/HewettBacton/Hewett Rob White JV Assets & Bus Charlie Taylor Chris Flavell Peter Evans Rob White Mark Allen Charlie Taylor Chris Flavell Peter Evans Orwell/HorneOrwell/Horne && WrenWren DevelopmentDevelopment Mark Allen BUSINESSBUSINESS UNITUNIT SUPPORTSUPPORT FUNCTIONSFUNCTIONS ContractsContracts && Data/ITData/IT DrillingDrilling GeoscientistsGeoscientists CommercialCommercial EH&SEH&S FinanceFinance LegalLegal EngineeringEngineering BusBus DevDev ProcurementProcurement TechnologyTechnology 2005 Analyst Day – Bacton Gas Terminal Tullow Integrated Management System (IMS) □ Tullow Corporate IMS sets 18 standards and guidelines to Tullow support operations IMS Framework □ Assets meet defined standards through local compliance Tullow documents. Corporate Guidelines □ Internal and External audits for compliance provide assurance at Local Compliance Document corporate level. Operational/Local Procedures 2005 Analyst Day – Bacton Gas Terminal Environment , Health and Safety (EH&S) □ Our EH&S policy sets the standard for performance □ Add value by investing & empowering our people and those we work alongside. □ In practice, this means: - Implementing safe systems of work - Horne and Wren development and Bacton, Hewett, Schooner and Ketch transitions - Certification of our Environmental Management System to ISO14001 in UK - Relationship building through UKOOA and other industry forums - Building strong working relationships with Partners and Contractors 2005 Analyst Day – Bacton Gas Terminal Corporate Social Responsibility (CSR) □ Proactive commitment to conduct our business with high standards of integrity. □ Corporate CSR report in 2006 to publicly report our 2005 performance. □ Provide support for Tullow personnel and external sponsorship for projects which benefit local communities Bacton : Environmental Liaison Committee – forum where Local Council Members, Police and Environmental Agency can participate and actively consult on terminal activity. 2005 Analyst Day – Bacton Gas Terminal SNS Business Background DTI – maximise indigenous supply from mature basin □ Fallow fields initiatives □ Annual licensing rounds to churn acreage □ Promote licences to attract “small players” □ Low Cost mature basin approach – initiative to attract GoM players □ Stewardship drive to maximise reserves recovery HSE - Recognition of changing environment □ Cost reduction does not have to compromise safety or the environment □ Openness to discuss “new concepts” Exit of Majors □ Mature basin - assets not material for the Majors and not attracting investment □ Acquisitions from BP, Shell, ExxonMobil, ENI, ConocoPhillips, ChevronTexaco 2005 Analyst Day – Bacton Gas Terminal SNS – Gas Pricing Background Gas Supply □ Transition from self-sufficiency to importation □ Increasing importance of indigenous gas Forward Curve Comparison 80 Arco Schooner / Ketch 30/09/2005 70 60 50 40 p/therm 30 20 10 0 Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 2005 Analyst Day – Bacton Gas Terminal Southern North Sea – Focussed Approach 2001 acquisition of infrastructure, fields & acreage delivered two focus areas: CMS Area □ CMS Area - Non-operated position - Established operator with no exit plan - Significant development and exploration upside - Infrastructure operating close to capacity □ Thames/Hewett/Bacton Corridor - Non-operated with minor operated position Hewett/Thames Area - No dominant operator - Significant development upside - Limited exploration potential - Infrastructure operating at ~30% of capacity - Unit operating costs becoming a key issue 2005 Analyst Day – Bacton Gas Terminal SNS Business Edge Tullow Oil is a full-cycle E&P Business Risk/EquityRisk/Equity ProfileProfile FastFast TrackTrack DevelopmentsDevelopments FieldField LifeLife ExtensionExtension Explore Appraise Develop Produce Abandon Infra-StructureInfra-Structure LeverageLeverage LowLow CostCost OperationOperation PortfolioPortfolio ManagementManagement AlternateAlternate UseUse Divest Acquire 2005 Analyst Day – Bacton Gas Terminal SNS Position in Tullow Portfolio □ 30% group commercial reserves and 20% of group contingent reserves □ Schooner and Ketch acquisition reserves confirmed at 330 bcf - Re-development moving ahead at pace - Material “early gains” from production stability □ SNS Gas production of 112mmscfd ytd 40% of group 2005 production (with Alba) □ Horne & Wren development completed in June and production exceeding expectation (110mmscfd gross/ 55 mscfd nett) □ Significant exploration potential in CMS area □ Working to further extend Hewett/Bacton economic life 2005 Analyst Day – Bacton Gas Terminal Summary – Strategy Implementation □ Tullow has built a significant platform for growth in the UK SNS □ Successfully pursuing Tullow’s four “value adding routes” - P&D, Exploration, Acquisitions & Portfolio management □ Continuing to leverage the team’s commercial, technical and operating skills □ Material activities in both SNS core areas in 2005 and beyond □ Opportunities to maximise benefits of favourable gas market □ Pursuing suitable opportunities to build a third core area (Dutch Sector?) The SNS is a key component of Tullow’s future 2005 Analyst Day – Bacton Gas Terminal Agenda Thames/Hewett Area - Cost Control and Consolidation (Alan Marshall) CMS Area - Preparing for Further Growth (Mike Simpson) Schooner and Ketch - Re-development Programme (Peter Evans) Exploration - Maximising Near Field Potential (Chris Flavell) UK Gas Market - Marketing and Hedging (Brian Williams) Q&A 2005 Analyst Day – Bacton Gas Terminal Thames/Hewett Area – Alan Marshall 2005 Analyst Day – Bacton Gas Terminal Thames/Hewett Corridor 2005 □ Thames-Hewett-Bacton infrastructure position purchased from BP – 2000/01 □ Series of Bolt-On Acquisitions and operatorships added □ Development, operatorships, and third party opportunities continue to be pursued Laps/Bacton Pipeline Thames/Bacton Pipeline Tullow Licensed Hewett/Bacton Pipeline non-operated acreage Tullow Open operated acreage 21 0 Kilometres 10 2005 Analyst Day – Bacton Gas Terminal Hewett/Bacton Case Study Hewett/Bacton □ Hewett Complex feeding into the Bacton terminal □ Terminal processes gas from the Hewett, Thames and LAPS complexes Tullow Progress □ 2000 – 20% non operated stake acquired from BP □ 2003 – Additional 19% acquired from ConocoPhillips □ 2003 - Operatorship transferred to Tullow - strategic importance - Establish Operator capabilities and credentials - Build foundations for other operated activities - Controlling influence