Tullow’s African assets have transformed the Group’s business in the last 12 months, driven by exceptional exploration success in Ghana and Uganda and strong production growth, particularly in Equatorial Guinea.

Key producing assets

Country	Activities	Producing field (Tullow %)	2007 Working interest production (boepd)
Congo (Brazzaville)		M’Boundi (11%)1	5,130
Côte d’Ivoire		Espoir (21.33%)	6,280
Equatorial Guinea		Ceiba (14.25%)	6,090
		Okume Complex (14.25%)	5,240
Gabon		Etame/Avouma (7.5%)	1,530
		Niungo (40%)	5,380
		Tchatamba (25%)	5,250
		Others (3.75% - 40%)	2,580
Mauritania		Chinguetti (19.01%)	2,820

Activities in other countries

Angola , Congo (DRC) , Cameroon² , Ghana , Madagascar , Nambia , Senegal , Tanzania , Uganda

Notes:

¹

Tullow has agreed the sale of this asset to Korea National Oil Company.

²

Tullow has agreed the sale of its Cameroon assets to MOL.

Key: Exploration =   Development =   Production =

2007 Highlights

• Production averaged 40,300 boepd, 21% above 2006 levels;
• World class oil discovery offshore Ghana; over one billion barrels of upside potential;
• 100% success in Uganda with four discoveries; significant programme in progress to appraise billion barrel potential; and
• Strong production growth from the Equatorial Guinea assets, which exceeded 115,000 bopd gross production in January 2008.

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Market environment

Tullow has been active in Africa for over 20 years. Since its first development project in Senegal in 1987 the Group has developed strong relationships and gained valuable commercial and geological experience in basins across the continent. In the last five years Tullow has built on this experience and has rapidly expanded in Africa through acquisitions, licensing rounds and successful exploration. The Group now has production of over 40,000 boepd from five countries, has interests in 50 exploration and production licences and plans to drill approximately 20 exploration wells in 2008.

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Ghana

Tullow has interests in three exploration blocks in Ghana – Shallow Water Tano, Deepwater Tano and West Cape Three Points. One well was drilled in each block during 2007. These were the first wells in an extensive regional exploration campaign across the West Africa Transform Margin and yielded exceptional results.

In the deepwater Tano Basin, the Mahogany-1 well was drilled on the West Cape Three Points block in June, followed by the Hyedua-1 well on the adjacent Deepwater Tano block in August. Both wells intersected excellent quality stacked reservoir sandstones with very significant net hydrocarbon pay. Logging and pressure test results suggest that the discoveries form a large continuous accumulation across the two licences. In total these discoveries encountered combined hydrocarbon columns of 361 metres of light, sweet oil and make this a world class discovery which was subsequently named the Jubilee field.

Based on the technical work undertaken to date, the proven recoverable resources of the field are estimated at 170 million barrels, which exceeds the commercial threshold for development. The ultimate upside potential of the discovery is now estimated to be in excess of one billion barrels and an accelerated appraisal programme targeting early development of this asset is under way. A high resolution 3D/4D survey of over 900 sq km covering the entire structure was conducted in late 2007 to assist in building a detailed field model. Up to five appraisal wells are also planned for the field in 2008 using two of the rigs under contract. The purpose of these wells is to prove up the resources and to provide additional information to assist in development. The first appraisal well, Mahogany-2, commenced in March 2008.

Development options are currently being assessed by the partners, with Tullow as the field operator. With the support of the Government of Ghana, a phased development is planned with a first oil target of 2010. Screening studies indicate that the development scheme is likely to involve FPSO facilities highly suited to fast-track development. In February 2008, Tullow contracted a fifth generation semi-submersible rig, the Eirik Raude, for up to five years of development drilling, scheduled to start in late 2008.

The Jubilee field discovery has opened up a new hydrocarbon province, in which Tullow has established a commanding position and plans to drill further exploration wells in 2008. The first well was drilled in February 2008 on the Odum prospect in the West Cape Three Points block. The well encountered a 60 metre oil column which, located only 13 km from the Jubilee field, is considered a commercial discovery. Further high impact prospects have been identified in the deepwater region and at least two of these, Teak and Tweneboa, are planned for drilling within the next 12 months.

In addition to the deep water programme, Tullow is committed to drilling two wells on the Shallow Water Tano licence. The first well was drilled in September 2007 but was unsuccessful and was plugged and abandoned. The second well is planned for 2008 and is to target a geological play similar to the Odum discovery. Back to top

Uganda

Tullow’s exploration in the Lake Albert Rift Basin continues to yield material success, with all four wells drilled in 2007 encountering oil. The knowledge and confidence generated by our success to date have led to an aggressive campaign for 2008 which includes drilling, seismic surveys and the anticipated sanction of an EPS. Overall, this programme is targeting significant oil resources with the ultimate aim of exceeding the threshold required for full development and export to international markets via a pipeline to Mombasa. Following Tullow’s successful exploration campaign in the onshore Kaiso-Tonya region of Block 2, the Group is now working closely with the Ugandan Government to commence production from the region via an EPS in late 2009. A successful appraisal programme, comprising 3D seismic acquisition and three appraisal wells, was completed in December. The data collected are now being integrated into the subsurface evaluation to support the sanction of the EPS in the second quarter of 2008. The planned EPS will produce 4,000 bopd to a new-build processing and power generation facility to supply the local area with oil product and power.

Recent onshore drilling activity has focused on the high impact Ngassa well targeting the largest structure in the basin with upside potential of 800 million barrels. The well commenced in November 2007 using the Nabors 221 rig but drilling difficulties resulted in the well being suspended in February 2008 at a depth of 1,635 metres. The substantial primary and secondary oil objectives remain undrilled and it is now planned to drill Ngassa from an alternative location. Both onshore and offshore options are being considered.

In the onshore Butiaba region of Block 2 and Block 1, numerous prospects have been identified on the recently acquired 2D seismic. A light rig, the OGEC 750, has been contracted and a drilling campaign of approximately eight wells commenced in March 2008 with the drilling of the Taitai prospect. This campaign has gross upside potential of more than a billion barrels.

In Block 3A the Kingfisher prospect was drilled and tested in early 2007. The well intersected three significant oil-bearing intervals and tested a total of 14,000 bopd. The well did not reach the primary target, a prospect with 300 million barrel upside potential. Following the acquisition of 3D seismic over the structure, which has also identified a number of additional offshore prospects, the Kingfisher-2 appraisal well is expected to commence in the second quarter of 2008. The Nabors 221 rig is in the process of being mobilised from the Ngassa drill site.

Work is also at an advanced stage to contract a rig to drill the offshore prospects in Blocks 3A and Block 2. In addition to Ngassa and Kingfisher, the offshore Pelican prospect in Block 3A, recently covered by 3D seismic, is looking particularly encouraging with amplitude anomalies potentially indicative of hydrocarbons. It is expected that the first offshore well will spud in early 2009.

Tullow also has interests in two prospective blocks on the Congo (DRC) side of the Lake Albert Rift Basin, adjacent to the Group’s Ugandan acreage. Tullow is currently awaiting a Presidential Decree on these blocks before any exploration work can commence and the full potential of this acreage can be realised. The validity of the award of these licences is currently being disputed by the Congolese Oil Ministry; this is being vigorously defended by Tullow and its partner.

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Congo (Brazzaville)

In Congo (Brazzaville), Tullow is a partner in the M’Boundi field. During 2007, 12 producers and 14 water injectors were drilled and the field averaged 46,500 bopd gross production. ENI became operator of the field during 2007 and has commenced an active reservoir management programme designed to optimise long-term field recovery.

The M’Boundi field has made a significant contribution to the organic growth of the Group’s production and reserves but is now entering a new phase in its development at a time when Tullow is also looking to reallocate capital resources to projects where it has more material participation and influence. In January 2008, Tullow therefore announced the sale of its interest to the Korea National Oil Company (KNOC) for a total cash consideration of US$435 million (£218 million). The deal is subject to partner pre-emption and approval from the Government. The transaction is expected to complete by mid 2008.

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Equatorial Guinea

The Okume Complex in Equatorial Guinea achieved first oil ahead of schedule in December 2006. Since then, 22 wells have been drilled and production performance, particularly from the Elon field, has exceeded expectations. In 2008, the complex is expected to achieve an average annual gross production of over 60,000 bopd and an injection rate in excess of 100,000 bwpd.

On the Ceiba field, four wells were drilled in 2007 and gross annual production averaged 44,000 bopd. Production from both Okume and Ceiba is blended and exported via the Ceiba Floating Production Storage and Offtake vessel [FPSO] and in January 2008, gross oil production through the processing facilities exceeded 115,000 bopd for the first time.

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Côte d’Ivoire

In Côte d’Ivoire Tullow has exploration, development and production interests in six offshore blocks. This acreage forms part of the West African Transform Margin in which Tullow has enjoyed significant success with the discovery of the Jubilee field opening up a new geological play. The region has been identified as a key area for Tullow and during 2007 three new licences, CI-102, CI-103 and CI-105, were secured to complement the existing production from CI-26.

The CI-26 licence contains the producing East and West Espoir fields. Gross production from East Espoir averaged 20,000 boepd and total production from both fields is expected to be maintained at approximately 30,000 boepd gross production during 2008.

A two-year FPSO upgrade programme commenced in September 2007 and is expected to be completed by the end of 2009. In conjunction with an anticipated East Espoir 2009 infill drilling campaign, this upgrade should increase liquid and gas handling capacity and ensure optimum drainage and reservoir recovery from both reservoirs.

Current activity on Tullow’s exploration licences is focused on identifying the highest quality prospects for drilling in 2009 and 2010 and includes the acquisition and processing of large volumes of high quality 3D seismic data.

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Mauritania and Senegal

Tullow’s completion of the acquisition of Hardman Resources in early 2007 provided the Group with exposure to eight licences including the producing Chinguetti field.

Chinguetti field production declined gradually through the year to approximately 12,000 bopd gross by year-end. This was well below expectations and, following a review of reservoir performance, ultimate recoverable reserves have been significantly downgraded.

The 2007 work programme included the drilling of the C-18 infill well at the beginning of the year and interpretation of data from the high density 3D and 4D seismic surveys conducted in March. Utilising this data, work is now planned to commence in April 2008 to drill at least two new infill wells and to undertake remedial work which should increase oil production in existing wells.

During 2007 Tullow has been considering development options for Banda and other discoveries. Banda is primarily a gas discovery with a thin oil rim, and has been used for disposal of produced gas from Chinguetti by way of a gas injection well. Tullow has been investigating several approaches for commercialising the gas, and plans to drill the first appraisal well on the structure in April 2008.

The 2007 exploration work programme focused on the assessment of Tullow’s expanded portfolio covering both Cretaceous and Tertiary plays with the aim of selecting prospects for a drilling campaign which commenced in February 2008 with the Khop well in Block 6. This well is targeting Cretaceous reservoir intervals, and is potentially more material than the shallower Miocene plays previously drilled in the region.

State of the art seismic acquisition and processing will allow Tullow to drill deeper wells targeting these plays. In 2008 this work includes a 3D seismic survey straddling the border between Block 1 in Mauritania and the St. Louis block in Senegal as well as the reprocessing of seismic data acquired across Blocks 2 and 7.

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Gabon

Production from Tullow’s Gabon assets in 2007 averaged 14,800 bopd net and is currently over 15,000 bopd. The outlook for 2008 is positive, with two new fields, Onal and Ebouri, expected to come on stream, offsetting natural decline on the existing fields and thereby sustaining average production above 14,000 bopd.

On the onshore Niungo field, a five well development drilling programme was completed in March 2007. The field averaged 5,400 bopd net to Tullow for the year and potential for further infill drilling is currently being evaluated.

The offshore Tchatamba field is significant for Tullow, yielding an average of 5,200 bopd net to the Group in 2007 and plans are in place to improve field uptime and enhance production in 2008.

In the Etame field area the Avouma satellite field came on stream in January 2007 and is currently producing at 10,000 bopd. FPSO modifications and the addition of production from the Ebouri satellite field should increase gross production from the Etame area, from 22,000 to 25,000 bopd during 2008.

In late 2006, Tullow acquired interests in a package of licences comprising three producing fields and back-in rights to a further nine licences. These assets performed well through 2007 with the Tsiengui, Obangue and Oba fields now accounting for over 1,000 barrels of Tullow’s daily production in Gabon and are expected to be producing approximately 2,000 bopd net to Tullow by the end of 2008.

Tullow’s only exploration well in Gabon in 2007 was M’Pano-1 in the Nziembou licence adjacent to the Niungo field. The well found excellent quality reservoir but was dry. An extension of the exploration licence has been requested.

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Namibia

In 2007, Tullow farmed down its interest in the Kudu field from 90% to 70% and drilled a key appraisal well in the east of the Kudu area.

Agreement was reached in April to sell a 20% interest in the Kudu gas field to Itochu Corporation. Under the agreement, Itochu agreed to pay 40% of the cost of the Kudu-8 appraisal well and to make further payments conditional on the ultimate volume of reserves developed.

In September, the Kudu-8 appraisal well was drilled to test the Kudu East reservoir within the Greater Kudu field area. The well encountered gas bearing sands that were thicker and cleaner than similar sands intersected in the nearby Kudu-5 well. However, interpretation of wireline logs and data from cores indicated that the reservoir would not flow at commercial rates and the well was plugged and abandoned.

The result of the Kudu-8 well was a disappointment for both Tullow and its partners in the project. Although more technical work is required to determine the most appropriate future work programme, we remain committed to the Kudu project and optimistic as to the potential for additional gas to be discovered in the region.

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Angola

Seismic reprocessing of data from Block 1/06, offshore Angola, is in progress using the latest technology. This exercise will assist in the appraisal of the existing Pitangueira and Bananeira discoveries and will be instrumental in locating the first two wells to be drilled in early 2009.

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Cameroon

In early 2007, following a comprehensive analysis of the remaining prospectivity in the Ngosso concession offshore Cameroon, Tullow took a decision to dispose of this asset. A Sale and Purchase Agreement was signed with the Hungarian company MOL in November 2007.

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2008 Outlook

Tullow plans to invest over £325 million in its African business during 2008. Approximately 35% of this will be spent on the exploration, appraisal and development programme in the Group’s Ghanaian acreage with the aim of approving a phased field development in 2008. Activities in Uganda will focus on accelerated exploration and appraisal of the Butiaba area along with project sanction and the commencement of EPS development work and the drilling of the high impact Kingfisher well.

Elsewhere in Africa, ongoing seismic surveys and technical work are likely to lead to 2009 drilling in Tanzania, Madagascar, Mauritania, Angola and Gabon. 2008 production for Africa is expected to average approximately 42,000 boepd, before accounting for the M’Boundi field disposal, which is expected to be completed by mid-year 2008.

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