Tullow Oil plc Announces Record Interim Results.

LONDON -- Tullow Oil plc ("Tullow") (LSE: TLW), today announces its interim results for the six months ended 30 June 2005. These interim results are prepared under International Financial Reporting Standards (IFRS) including the prospective adoption of IAS 39 from 1 January 2005. All comparisons are based on an IFRS restatement of 2004 UK GAAP financial information, which was announced on 12 August 2005, and is available on the Group's website at www.tullowoil.com.

Interim Results Analysis

The exceptionally strong oil and gas pricing environment, the benefit of the inclusion of Energy Africa for a full six months, a three month contribution from Schooner and Ketch, combined with steady growth in Group production resulted in a record performance for Tullow in the first half of 2005.

Financial Highlights
----------------------------------------------------------------------
                                                    H1 2005   H1 2004
                                                   GBP '000  GBP '000
----------------------------------------------------------------------
Revenue increased GBP 124.9 million, up 163%        201,434    76,533
----------------------------------------------------------------------
Operating profit before exploration activities
 increased GBP 82.5 million, up 318%                108,404    25,887
----------------------------------------------------------------------
Exploration Costs Written Off                        (4,019)   (4,430)
----------------------------------------------------------------------
Net Interest                                         (7,416)   (4,122)
----------------------------------------------------------------------
Profit before Tax increased GBP 74.0 million, up
 427%                                                91,377    17,335
----------------------------------------------------------------------
Taxation                                            (28,291)   (8,998)
----------------------------------------------------------------------
Profit for the period increased GBP 54.7 million, up
 660%                                                63,086     8,337
======================================================================
                                                      Pence     Pence
Basic earnings per share                               9.82      1.98
----------------------------------------------------------------------
Operating cash flow before working capital per share  18.11      7.74
----------------------------------------------------------------------
Dividend per share                                      1.0       0.5
======================================================================

Operational Highlights

--In 2004 the Group successfully completed the full integration of Energy Africa, which doubled the size of Tullow. The new management and organisation structures are working well, resulting in a strong first half performance.

--During the period, material development programmes included two projects in the UK Southern North Sea (SNS) and over 30 wells in West Africa, delivering steady organic production and reserve growth.

--In March Tullow completed the acquisition of the Schooner and Ketch fields and a redevelopment programme is currently ahead of schedule.

--Tullow's net UK gas production reached an all time high of 180 mmscfd in the first half and first gas was achieved from the Horne & Wren development.

--Weighted average working interest production was 57,350 boepd, more than double that of the same period last year and is forecast to average 60,000 boepd in the second half of the year.

--Group reserve replacement was 97%, led by Gabon, which now accounts for 30% of the Group's total production.

--A successful exploration programme in the SNS and Gabon led to three discoveries close to Tullow infrastructure

--Good progress was made in relation to the commercialisation of the giant Kudu gas field offshore Namibia with the completion of the FEED study, preparation for invitations to bid for construction are getting underway and progressive approvals in regulatory arrangements.

--As part of ongoing portfolio management, the disposal of the non-core Alba and Caledonia assets was completed in June, with a profit on disposal of GBP 33.2 million. The Congo (Brazzaville) offshore asset disposal was completed in August. Total proceeds from these disposals amounted to $184 million.

2005 Outlook

2005 continues to be another exciting year for Tullow and the industry. Oil and gas prices are exceptionally strong and are forecast to remain so in the current supply environment. In the first half the Group has successfully integrated the major acquisitions of the last 12 months and has begun adding significant value to those assets through sound management and technical and development excellence. Performance throughout the Group is encouraging, with material upside potential for Tullow in Kudu, Schooner and Ketch redevelopment and the imminent high impact exploration wells in Uganda and Mauritania.

Commenting today, Aidan Heavey, Chief Executive, Tullow Oil plc, said:

"The record first half performance announced today demonstrates the continuing progress of our business. The deals completed in recent years have been successfully integrated, our assets are showing strong organic growth and we have developed an exploration portfolio which combines lower risk "snuggle" projects with exciting high impact opportunities. I believe that these attributes will continue to deliver long term growth and superior performance for the Group."

About Tullow Oil plc

Tullow is a leading independent oil and gas, exploration and production group, quoted on the London and Irish Stock Exchanges (symbol: TLW) and is a constituent of the FTSE 250 Index. The Group has interests in over 90 production and exploration licences in 15 countries and focuses on three core areas: NW Europe, West Africa and South Asia.

For further information please refer to our website at www.tullowoil.com

2005 Interim Statement

Results for the six months ended 30 June 2005

Finance Review

Tullow Oil had a very good first half of 2005, achieving record results. This performance was underpinned by focused execution across all aspects of the business and exceptionally strong oil and gas pricing.

Operating Performance

Working interest production averaged 57,350 boepd, while sales volumes averaged 54,200 boepd. These production figures are 106% above the corresponding period in 2004. This increase was driven by a full period contribution from the Energy Africa assets (acquired May 2004) supplemented by a three month contribution from Schooner and Ketch (acquisition completed 31 March 2005).

Average prices realised during the period were $41.7/bbl (post hedging) (1H 2004: $34.2/bbl) for oil and 28.8p/therm for UK gas (1H 2004: 23.0p/therm). Tullow's oil production sold at an average discount of 12% to Brent during the period. The combination of the positive price and volume influences meant that revenue amounted to GBP 201.4 million (2004: GBP 76.5 million), an increase of 163% over the corresponding period in 2004.

First Half Revenue by Core Area (GBP million)
----------------------------------------------------------
                         Oil      Gas    Total  % of Total
----------------------------------------------------------
NW Europe (UK)          17.6     66.7     84.3         42%
----------------------------------------------------------
West Africa            116.6        -    116.6         57%
----------------------------------------------------------
South Asia                 -      0.5      0.5          1%
----------------------------------------------------------
Total                  134.2     67.2    201.4
----------------------------------------------------------
% of Total                67%      33%
----------------------------------------------------------

Operating profit before exploration activities amounted to GBP 108.4 million (1H 2004: GBP 25.9 million), an increase of 318%, reflecting the strong growth in Group production and pricing as set out above. While underlying cash operating costs within the portfolio amounted to GBP 45.5 million (GBP 4.38/boe) and are expected to remain steady over the remainder of 2005, reported cost of sales before depreciation, depletion and amortisation (operating costs) for the period of GBP 64.9 million (1H 2004: GBP 20.3 million) are distorted by the inclusion at market value of GBP 14.0 million associated with overlifted volumes at 30 June and GBP 5.5 million of overlift associated with the disposal of Alba and Caledonia. Under and overlift positions arise when partners elect not to share all field liftings in proportion; they have no impact on the economics of the business.

Depreciation, depletion and amortisation for the period amounted to GBP 60.4 million (GBP 5.82/boe). This amount includes GBP 3.9 million (GBP 0.37/boe) associated with the provision of deferred tax in relation to the fair values of the assets acquired through the Energy Africa acquisition as required by IAS 12; this amount is offset in full by a related tax credit within the Group's tax charge. Depreciation also includes a total of GBP 4.5 million of impairment costs associated with Tullow's producing interests in Pakistan (GBP 2.4 m) and offshore Congo interest held for resale (GBP 2.1 m) at 30 June.

Other Income and Expenditure

At 30 June Tullow's portfolio of hedges and derivatives had a negative mark to market value of GBP 141.3 million. While the bulk of these arrangements qualify for hedge accounting and will consequently be largely reflected in the Income Statement as the related contracts mature, IAS 39 (adopted 1 January 2005) also requires the establishment of a high degree of effective correlation between the valuation of the hedge instrument and the underlying physical commodity being hedged, with any hedge ineffectiveness being reflected as a charge to income during the period. Realised oil prices from Tullow's portfolio are predominantly priced off Brent; however, the variations in crude oil discounts and gas nomination patterns for Tullow have led to a degree of hedge ineffectiveness and accordingly a charge of GBP 5.6 million has been recognised in the Income Statement for the period.

Exploration costs written off were GBP 4.0 million (1H 2004: GBP 4.4 million), in accordance with the Group's "successful efforts" accounting policy which requires that all costs associated with unsuccessful exploration are written off to the Income Statement.

In June, in keeping with its strategy of active management of its portfolio of assets, the Group completed the disposal of Alba and Caledonia offshore assets, which were non-core to the longer term development of Tullow. The profit on disposal amounted to GBP 33.2 million, which includes some GBP 5.5 million of overlift outlined above. Additional income of GBP 5.6 million has also been recognised in relation to incremental consideration receivable based on reserves and performance of the Horne and Wren fields, which commenced production in June. During the period the Group also agreed terms for the disposal of its offshore Congo interests, with this transaction completing in August. These assets have thus been classified as "held for resale" under IFRS 5 and the anticipated loss on disposal of GBP 2.1 million recognised as an impairment charge as set out above.

The net interest charge for the half year was GBP 7.4 million (1H 2004: GBP 4.1 million). The increase reflects higher levels of net debt arising from acquisitions and the increased working capital requirements of the enlarged Group.

Taxation

The tax charge of GBP 28.3 million (1H 2004: GBP 9.0 million) is associated with the Group's North Sea and Gabonese activities. After adjusting for exploration costs and non-recurring items associated with overlift and profit on asset disposals, the Group's overall effective tax rate for the period is 38%.

Dividend

Financial and operating performance in the first half has been exceptionally strong. The Group's capital expenditure programmes are comfortably funded from operating cash flow and gearing is comparatively modest. Against this background the Board has recommended an interim dividend of 1p per share (1H 2004: 0.5p). The dividend will be paid on 9 November to shareholders on the register at 7 October.

Schooner and Ketch Acquisition

During the period Tullow completed the acquisition of the Schooner and Ketch assets for a net cash payment on completion of GBP 189.3 million. A purchase price allocation exercise has been undertaken on these assets incorporating the fair value of all reserves, costs and contractual arrangements acquired, resulting in a total acquisition cost of GBP 218.0 million. A creditor of GBP 31.3 million in respect of the gas contracts which were out of the money as at 31 March 2005 has also been recognised. Based on proven and probable reserves at the date of acquisition, this has resulted in a depreciation charge for Schooner and Ketch of GBP 6.89/boe.

Cash Flow and Financing Activities

The strong pricing environment, allied to increasing production and effective control of underlying operating costs, led to record operating cash flow before working capital movements of GBP 116.4 million, over 130% ahead of 1H 2004.

Tullow invested a total of GBP 73.4 million in exploration and development activities over the period. Of this total, over 80% was associated with ongoing development and production enhancement projects in the UK, Gabon, Congo, Equatorial Guinea and Cote d'Ivoire. The current oil price environment has resulted in a number of incremental infill and development projects being sanctioned during the year, along with the extension of existing programmes in Gabon and Equatorial Guinea. Accordingly, Tullow now anticipates total capital expenditure of the order of GBP 175 million for the full year.

Over the last five years Tullow has undertaken a range of acquisitions and field developments, all of which have been wholly or partly debt financed. During 2005 the Group has undertaken a refinancing exercise to consolidate existing borrowings into a single facility to create a more efficient Group financing structure, reduce cash collateralisation obligations and create flexibility for future growth both in the UK and internationally. This $850 million refinancing is now substantially complete with the syndication process significantly oversubscribed.

IFRS

In common with all fully listed companies, Tullow has adopted IFRS with effect from 1 January 2004, with the exception of IAS 39, which has been adopted effective 1 January 2005. While IFRS has no impact on the commercial substance or cash flows of the business, it does amend UK GAAP accounting treatment and disclosures in a number of important respects. Tullow has accounted for its oil and gas interests under the successful efforts method for many years and consequently the adoption of IFRS 6 has had no impact on reported results.

First Half Summary Impact of IFRS Adoption on Interim Results, as
compared to the UK GAAP Accounting Policies applied by Tullow in
2004(1)
----------------------------------------------------------------------
                                         Income Statement   Net Assets
                                              GBP million  GBP million
IAS 2: Share Based Payments                         (0.2)         0.4
----------------------------------------------------------------------
IAS 3: Deferred Tax on Business
        Combinations                                   -            -
----------------------------------------------------------------------
IAS 12: Income Taxes                                 0.2         (4.3)
----------------------------------------------------------------------
IAS 16: Depreciation                                 0.2         (8.1)
----------------------------------------------------------------------
IAS 17: Leases                                      (0.1)        (0.3)
----------------------------------------------------------------------
IAS 39: Financial Instruments                       (4.8)      (115.3)
----------------------------------------------------------------------
Total                                               (4.7)      (127.6)
======================================================================

(1) Information relating to the impact of IFRS adoption on Interim
Results does not form part of Deloitte and Touche LLP's Review Report.
The IFRS Restatement of 2004 UK GAAP Financial Statements, together
with Deloitte and Touche LLP's related Audit and Review Reports are
available the Group's website, www.tullowoil.com.

Operations Review

Tullow has activities in 15 countries and interests in over 90 licences. The Group's core areas of operation are NW Europe, Africa and South Asia with a balanced portfolio of oil and gas, and exploration and production assets.

NW Europe - Leading producer and operator in the UK gas market

During 2005 a number of successful development projects and the acquisition of Schooner and Ketch have led to net UK gas production reaching an all time high of 180 mmscfd. The UK gas supply/demand characteristics have led to a continued improvement in gas pricing during the period and the forward curve is currently at record levels.

Since 2001, Tullow has built a strategic position in the UK SNS, accumulating an outstanding portfolio of acreage and infrastructure, which continues to provide production growth and significant development and exploration opportunities. Over the next 12 months Tullow plans to drill a minimum of 10 exploration, appraisal and development wells to enhance production and further extend the Group's exposure to uncontracted gas over the years ahead.

Thames/Hewett Area

First gas from the Horne & Wren fields, Tullow's first operated development in the UK, was achieved on 9 June, less than 12 months after project sanction. The fields, developed from a minimal facilities platform, have a combined production of 90 mmscfd through two horizontal wells with gas being exported through the Tullow owned Thames and Bacton infrastrucure.

The third party field, Arthur, was also brought on stream via the Thames and Bacton infrastructure in early January with a second well coming onstream in mid July. The Arthur field is exporting over 130 mmscfd contributing to cost sharing and adding significant tariff income at both Thames and Bacton. The overall increase in throughput at Thames, up from 50 mmscfd to over 200 mmscfd, has significantly reduced the unit operating costs of this infrastructure thereby further extending its economic life. The original Hewett, Thames and Orwell fields all continue to produce above expectation.

The Oval prospect in Block 54/1a was spudded in mid-July but was plugged and abandoned having encountered water-bearing sands in the target interval.

CMS Area

Following the completion of the Schooner and Ketch acquisition in March 2005, Tullow has been working to enhance production from these fields through a concentrated campaign of facilities maintenance and well optimisation. The work has already resulted in an increase in average gross production, currently 50 to 60 mmscfd, and a material improvement in the performance and reliability of the facilities. Additionally, Tullow has secured the ENSCO 101 rig for a period of 18 months to actively pursue a series of development drilling and workover opportunities on both fields. Drilling is scheduled to commence at the beginning of November with the Schooner-10 development well. This will be followed by a programme of up to eight workovers and at least three new wells, one of which will target the undrilled NW Schooner Area. Rig modifications will allow the Group to simultaneously progress a programme of well interventions on existing producers on both fields, with the aim of further increasing production capacity in the short term. An independent review of reserves on Schooner and Ketch has been completed, with a total of 330 bcf of acquisition reserves confirmed, of which 246 bcf have been classified as Proven and Probable Reserves at 30 June.

First production from the Munro field commenced on 22 August 2005 with the capacity to deliver at up to 80 mmscfd. This project was completed six weeks ahead of schedule and 16 months after field discovery. The development well is tied back to the Tullow-owned CMS III and CMS infrastructure via a minimum facilities platform and a 5km sub sea pipeline.

The McAdam infill development well, an extension of the CMS III project, reached its target depth in late August with sand quality proving to be above expectations. The well will now be completed as a producer and is expected to commence production in October adding gross incremental production of approximately 40 mmscfd.

The Opal exploration well in Block 43/25a, close to the Tullow-owned CMS infrastructure, successfully encountered gas bearing reservoir sands. The well was suspended on 9 June 2005 and the extent of the accumulation is currently being evaluated. The K3 exploration well, currently being evaluated, has provided a second exploration success in the CMS area. This important discovery significantly upgrades a number of regional prospects which are expected to be drilled in 2006.

On 6th September, Tullow was awarded all 6 blocks for which it made applications in the UK 23rd Licensing Round. Blocks 44/28a and 49/3 (part) were awarded to Tullow 100%, with both development and exploration opportunities being identified on these blocks. Blocks 43/30b, 48/5 (part) and 49/1 (part) will be operated by GDF Britain, with Tullow holding a 33.33% interest. Tullow has also been awarded a 50% interest in a promote licence, Block 43/23b, operated by Endeavour UK. All the blocks awarded are in the area surrounding the Schooner and Ketch Fields.

Africa - A diversified pan-African oil and gas business

In Africa, Tullow has production and development interests in Gabon, Cote d'Ivoire, Congo (Brazzaville), Equatorial Guinea and Namibia and exploration interests in Morocco, Mauritania, Senegal, Cameroon, Uganda, Equatorial Guinea and Cote d'Ivoire. Tullow is also in negotiations to participate in additional material development and exploration projects in West Africa.

Gabon

Production in Gabon continues to be enhanced through a combination of appraisal and development drilling, workovers and upgrades to existing facilities. Working interest production has averaged over 18,000 bopd during the period contributing over 30% of the Group's total production. A further upward revision in commercial reserves of 6.8 mmbo has been booked at mid year bringing the total reserves revisions in Gabon since acquisition to 16.3 mmbo, a replacement ratio of 250%.

On the Niungo field, eight appraisal and development wells have been drilled this year of which 6 are already on stream, maintaining gross production rates at close to 15,000 bopd, with a plateau of 16,000 bopd expected by year end. While these wells successfully tested and appraised the northern limits of the field, an exploration well was drilled in a separate fault block and has established a northern extension of the field. The current phase of drilling has ended and the partners are now considering a programme of up to 12 further infill and appraisal wells during 2006.

The Tchatamba field has been maintained at a gross rate of approximately 33,000 bopd, through a successful programme of well and facilities optimisation.

In the Etame licence area, the Etame field production has increased to 22,000 bopd following the successful completion of the Etame 6 well. In addition, the Government has approved the development of the Avouma/North Tchibala discovery, and work is ongoing to achieve first oil in the second half of 2006. Through its back-in rights in this licence, Tullow is entitled to obtain a 7.5% interest in the field from the commencement of production.

A three-well exploration drilling programme in the Tullow-operated Akoum and Kiarsseny licences is expected to begin in mid-November. Two wells in Akoum are targeting prospects in the vicinity of the existing Tchatamba field while the well in Kiarsseny will evaluate the undeveloped Equata discovery with a view to future development.

Congo (Brazzaville)

The four rig development drilling programme on the M'Boundi field is continuing with 14 successful wells drilled since January. These wells have extended the field limits and, in the northeast, intersected a higher productivity reservoir. A new seismic survey, to evaluate further extensions of the field, has been completed and is currently being interpreted. Average gross field production has increased from 35,000 bopd in January to the current rate of 44,000 bopd, with 30 producing wells on production. Engineering work is in progress at the export terminal to facilitate the blending and export of M'Boundi crude with the higher quality N'Kossa blend, this is expected to significantly reduce the M'Boundi crude discount to Brent by year-end. The upgrade of the production facilities to 60,000 bopd has been completed and a further expansion to 90,000 bopd has been approved by partners.

Equatorial Guinea

Production from the Ceiba field continued to increase as a result of an ongoing infill drilling programme and active reservoir management. During the period, two infill production wells, a work-over and two injection wells were successfully completed. Average gross field production has increased from approximately 38,000 bopd in January to around 44,000 bopd at present. A minimum of one further production well is planned before year end and the infill drilling programme will continue throughout 2006.

The Okume Complex development, which comprises the Okume, Oveng, Ebano and Elon fields, remains on budget and on schedule for first oil in late December 2006. Two deep water Tension Leg Platforms are being constructed in Korea and the shallow water Central Processing Facility is being constructed on the US Gulf Coast. The construction of these facilities has not been materially impacted in the aftermath of Hurricane Katrina. The development drilling will commence in Q2 2006 following the installation of these facilities.

Cote d'Ivoire

Two new infill production wells have been completed on the East Espoir field, increasing production from 18,500 boepd to the current rate of 25,000 boepd. This programme is ongoing, with two further wells planned. The West Espoir development is progressing well and the project is on target for the installation of the jacket, well head tower and pipeline hook-up in the final quarter of 2005 leading to first oil, on schedule, in Q2 2006.

Namibia

Good progress has been made in relation to the commercialisation of the giant Kudu gas field offshore Namibia via a gas-to-power generation project. The FEED study for a four well subsea development and onshore gas conditioning plant has been completed and invitations to bid for the various construction contracts are being prepared and are expected to be issued in early 2006. In addition to technical preparations, advances have been made on the commercial and regulatory arrangements, the Gas Sales Agreement negotiations are underway, in parallel with Power Purchase Agreement negotiations between Nampower and Eskom. The Environmental Impact Assessment study for the upstream development has also been approved by the Ministry of Mines and Energy. While the Kudu power generation project remains the key area of focus, Tullow is also committed to proving and commercialising the potentially significant reserves upside within the Kudu Field. To facilitate this, Tullow has initiated the planning for two appraisal wells on Kudu which are expected to be drilled during 2006.

South Asia - Refocused and targeting high impact prospects

In South Asia, following the strategic review in late 2004, significant progress has been made in both targeting exploration licences with high impact prospectivity and creating value from existing discoveries.

Pakistan

The development of the Chachar gas field has been approved and detailed design and procurement work is underway to produce first gas by Q2 2006. The disposal of Tullow's interest in the Sara West discovery is currently awaiting Government approval. Average production for the Sara and Suri fields for the period amounted to 3 mmscfd net to Tullow.

Bangladesh

Significant progress was made during the first half in relation to the appraisal plan for the Bangora and Lalmai discoveries. Over the coming 12 months, Tullow will acquire 310km2 3D seismic and drill up to three appraisal wells along the 40km anticline connecting the discoveries to determine the ultimate reserve potential of the structure. Tullow has also received Government and partner approval to initiate production from Bangora under a long term test arrangement. This will supply much needed gas into the Block 9 market and provide valuable additional reservoir and geological data. First Gas from Bangora is targeted for early 2006 at an initial rate of up to 50 mmscfd.

Exploration

Exploration Strategy

While exploration activity in the first half of the year has been limited to 4 wells in the Southern North Sea and Gabon of which three have been discoveries, an exciting programme is planned for the next 12 months. In addition, Tullow has undertaken a major review of its exploration activities with a view to defining a high-impact exploration portfolio for 2006 and beyond. This project has been focused on increasing the Group's exposure to high potential opportunities in regions where Tullow has specialised knowledge or competitive advantage and accelerating work over existing acreage wherever possible. Pakistan and Cote d'Ivoire were identified as two such regions, with prospective acreage available on attractive terms. Since June 2004, the Group has added 6 licences in these two countries, and further opportunities remain under review.

Exploration Programme

Over the next 12 months Tullow expects to participate in up to 15 exploration wells, of which 3 will be operated by Tullow. Six of these wells are "snuggle exploration prospects" which will target reserves close to existing infrastructure, whilst the wells in Mauritania, Uganda, Equatorial Guinea and Romania, have the potential to add very significant reserves. Major 3-D seismic acquisition programmes are also planned in Bangladesh, Cameroon and Cote d'Ivoire with 2-D programs in Pakistan and India.

In November it is planned to spud a well to test the Faucon prospect in Mauritania Block 1. Tullow's share of potential reserves from this high risk prospect are material and success in proving a working petroleum system would have very positive implications for further exploration, not only for Block 1 but also for Block 2 and the St Louis Block in Senegal.

In Uganda, following the disappointing discovery of high CO2 gas in the Turaco-3 well in Block 3, geochemical studies have indicated that the CO2 risk is limited to the southern portion of the Albertine Graben. Additional seismic surveys in Blocks 2 and 3A have defined structures with potential for large oil reserves and a two well drilling programme on the shores of Lake Albert in Block 2 is planned later in 2005. As in Mauritania, any demonstration of a working petroleum system would have very positive implications for further exploration.

In Pakistan, a seismic programme was completed on the Nawabshah Block in the first half. A prospect, Shahpur, has been identified on trend with a discovery in the adjacent block and this well will be drilled in the final quarter of 2005. Tullow was recently awarded two exploration blocks (Kohat and Bannu West) in the Potwar-Kohat Basin adjacent to the exciting MOL oil and gas discoveries. Cross assignments have been made between these blocks and blocks held by OGDCL and Mari Gas in the Sulaiman Fold Belt, Kohlu and Kalchas areas, thereby further increasing the Group's acreage in these high potential regions. Seismic acquisition will start in the Kohat Block before year end.

In Romania Tullow operates the EPI-3 Brates concession where an exploration well, Costisa-1, was spudded in February 2005. This 4,100 metre well will evaluate a significant structural closure at Sarmatian, Badenian and Cretaceous levels, all of which are productive in offset wells. This geologically complex well is progressing steadily and is expected to penetrate the primary objectives during September. In the event of success, the Costisa location is close to well developed infrastructure and there is a ready market for gas or liquids in Romania.

2005 Second Half Exploration Activity

Country         Licence        Prospect       Interest   Spud Date

Mauritania      Block 1        Faucon -1      20%        November 2005
----------------------------------------------------------------------
Gabon           Kiarsseny      Equata -1      47.5%      November 2005
----------------------------------------------------------------------
Pakistan        Nawabshah      Shahpur -1     30%        November 2005
----------------------------------------------------------------------
Gabon           Akoum          Akoum West -1  100%       December 2005
----------------------------------------------------------------------
Uganda          Block 2        M'Puta -1      50%        December 2005
======================================================================

In Bangladesh, a new seismic survey is scheduled in the highly prospective Blocks 17/18 in the Bay of Bengal. Work will initially focus on oil prospects within the blocks, however recent discoveries in adjacent acreage enhance the gas prospectivity of several sizeable structures previously identified. Tullow is in advanced discussions with a view to farming out a portion of its equity in this licence to a major international oil company.

Looking ahead, 2006 will see further wells drilled on acreage awarded to Tullow in the UK's 20th and 21st licensing rounds and this is likely to include at least 3 wells in the CMS Area. Material progress has also been made in the evaluation of the CB-ON-1 Block in India, where recently reprocessed 2D seismic indicates potentially significant structures similar to those containing discoveries in adjacent acreage. These will be subject to further seismic over the coming months with a view to potentially undertaking a multi-well drilling programme during 2006.

2005 Outlook

2005 continues to be another exciting year for Tullow Oil and the industry. Oil and gas prices are exceptionally strong and are forecast to remain so in the current supply environment. In the first half the Group has successfully integrated the major acquisitions of the last 12 months and has begun adding significant value to those assets through sound management and technical and development excellence. Performance throughout the Group is encouraging, with material upside potential for Tullow in Kudu, Schooner and Ketch redevelopment and the imminent high impact exploration wells in Uganda and Mauritania.

Disclaimer

This announcement contains certain operational and financial information in relation to 2005, which is subject to final review and has not been audited. Furthermore, it contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil & gas exploration and production business. Whilst the Group believes the expectations reflected herein to be reasonable, the actual outcome may be materially different owing to factors either within or beyond the Group's control and accordingly no reliance may be placed on the figures contained in such forward looking statements.

Independent Review Report

To the Shareholders of Tullow Oil plc

We have been instructed by the company to review the financial information for the six months ended 30 June 2005 which comprises the Group income statement, the Group statement of changes in equity, the Group balance sheet, the Group cash flow statement and the related notes numbered 1 to 4. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.

International Financial Reporting Standards

As disclosed in Note 1, the next annual financial statements of the group will be prepared in accordance with International Financial Reporting Standards as adopted for use in the EU. The interim report has been prepared in accordance with the recognition and measurement criteria of IFRS and the disclosure requirements of the Listing Rules.

Review work performed

We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2005.

Deloitte & Touche LLP

Chartered Accountants

13 September 2005

Group Income Statement
Six months ended 30 June 2005
                                   Six months  Six months   Year ended
                                     ended 30    ended 30  31 December
                                    June 2005   June 2004         2004
                                    Unaudited   Unaudited      Audited
                                     GBP '000    GBP '000     GBP '000

 Revenue                             201,434      76,533      225,256
 Cost of Sales                      (125,425)    (46,912)    (141,228)
                                   ----------  ----------  -----------
 Gross Profit                         76,009      29,621       84,028
 Administrative Expenses              (6,798)     (3,516)     (10,926)
 Profit on Sale of Oil and Gas
  Assets                              39,571           -        2,292
 Exploration Costs Written Off        (4,019)     (4,430)     (17,961)
 Other Expenses                         (378)       (218)        (647)
                                   ----------  ----------  -----------
 Operating Profit                    104,385      21,457       56,786
 Loss on Hedging Instruments          (5,592)          -            -
 Interest Receivable                   2,046       1,407        3,458
 Finance Costs                        (9,462)     (5,529)     (13,449)
                                   ----------  ----------  -----------
 Profit before Tax                    91,377      17,335       46,795
 Income Tax Expense                  (28,291)     (8,998)     (15,460)
                                   ----------  ----------  -----------
 Profit for the Period                63,086       8,337       31,335
                                   ==========  ==========  ===========
 Earnings per Ordinary Share           Stg p       Stg p        Stg p
 Basic                                  9.82        1.98         5.88
 Diluted                                9.69        1.95         5.81



Group Statement of Changes in Equity
Six Months ended 30 June 2005
                                     Six months Six months  Year ended
                                       ended 30   ended 30 31 December
                                      June 2005  June 2004        2004
                                      Unaudited  Unaudited     Audited
                                       GBP '000   GBP '000    GBP '000

Opening Equity                          375,467    113,363    113,363
IAS 39 Adjustment                       (29,256)         -         -
                                     ----------- ---------- ----------
Revised Opening Equity                  346,211    113,363    113,363
                                     ----------- ---------- ----------
Currency Translation Differences         17,314        303    (19,338)
Hedge Movement                          (81,246)         -          -
                                     ----------- ---------- ----------
Total Expense recognised directly
 in Equity                              (63,932)       303    (19,338)
                                     ----------- ---------- ----------
Profit for the Period                    63,086      8,337     31,335
                                     ----------- ---------- ----------
Total recognised Income for the
 Period                                  63,086      8,337     31,335
                                     ----------- ---------- ----------
Total recognised Income and Expense
 for the Period                            (846)     8,640     11,997

New Shares issued for Cash                    -    254,268    253,547
New Shares issued in respect of
 employee share options                     847        471      2,999
Share Based Payment Charges                 370        278        556
Dividend paid                                 -          -     (6,995)
                                     ----------- ---------- ----------
Closing Equity attributable to
 Company's Equity Holders               346,582    377,020    375,467
                                     =========== ========== ==========


Group Balance Sheet
As at 30 June 2005
                                   Six months  Six months   Year ended
                                     ended 30    ended 30  31 December
                                    June 2005   June 2004         2004
                                    Unaudited   Unaudited      Audited
                                     GBP '000    GBP '000     GBP '000
Assets
Non-Current Assets
Property, Plant and Equipment        693,749     542,538      545,527
Other Intangibles                    136,806     121,871      103,944
Investments                              496         496          496
                                   ----------  ----------  -----------
                                     831,051     664,905      649,967
                                   ----------  ----------  -----------
Current Assets
Inventories                            2,445       1,453        3,392
Trade Receivables                     39,145      21,637       37,156
Other Current Assets                  24,072      34,818       17,051
Assets Held for Resale                42,804           -            -
Cash and Cash Equivalents            122,913     113,431       85,070
                                   ----------  ----------  -----------
                                     231,379     171,339      142,669
                                   ----------  ----------  -----------
Total Assets                       1,062,430     836,244      792,636
                                   ----------  ----------  -----------
Liabilities
Non-Current Liabilities
Trade and Other Payables              23,245      14,932       13,014
Long-term Borrowings                 298,587     169,296      143,398
Deferred Tax                          27,236      76,188       68,803
Long-term Provisions                  82,450      80,442       70,679
Derivative Financial Instruments      83,915           -            -
                                   ----------  ----------  -----------
                                     515,433     340,858      295,894
                                   ----------  ----------  -----------
Current Liabilities
Trade and Other Payables              90,883      77,224      102,614
Current Portion of Long-term
 Borrowings                           23,140      25,589        5,302
Current Tax Payable                   23,183      15,553       13,359
Liabilities held for Resale            6,476           -            -
Derivative Financial Instruments      56,733           -            -
                                   ----------  ----------  -----------
                                     200,415     118,366      121,275
                                   ----------  ----------  -----------
Total Liabilities                    715,848     459,224      417,169
                                   ----------  ----------  -----------
Net Assets                           346,582     377,020      375,467
                                   ==========  ==========  ===========
Equity
Equity attributable to Equity
 Holders of Parent
Share Capital                         64,654      64,156       64,537
Share Premium                        122,385     120,230      121,656
Other Reserves                        55,774     168,232      148,591
Retained Earnings                    103,769      24,402       40,683
                                   ----------  ----------  -----------
Total Equity                         346,582     377,020      375,467
                                   ==========  ==========  ===========


Group Cash Flow Statement
for the 6 Months Ended 30 June 2005
                                     Six months Six months  Year ended
                                       ended 30   ended 30 31 December
                                      June 2005  June 2004        2004
                                      Unaudited  Unaudited     Audited
                                       GBP '000   GBP '000    GBP '000
Cash Flows from Operating Activities
Profit before Taxation                  91,377     17,335      46,795
Adjustments for:
Depletion, Depreciation and
 Amortisation                           60,811     28,216      81,098
Foreign Exchange Loss                     (242)      (248)     (3,489)
Exploration Costs                        4,019      4,430      17,961
Profit on Disposal of Oil and Gas
 Assets                                (39,571)         -      (2,292)
                                     ---------- ---------- -----------
Operating cashflow prior to working
 capital                               116,394     49,733     140,073
(Increase)/Decrease in Trade & Other
 Receivables                           (32,798)     2,425     (34,215)
Decrease/(Increase) in Inventories         947     (1,591)     (1,721)
Increase in Trade Payables              17,147      2,837      40,179
Hedge Ineffectiveness                    5,592          -           -
Interest Receivable                     (2,046)    (1,407)     (3,458)
Finance Costs Payable                    9,462      5,529      13,449
                                     ---------- ---------- -----------
Cash Generated from Operations         114,698     57,526     154,307
Income Tax Paid                        (25,381)    (6,206)    (14,497)
                                     ---------- ---------- -----------
Net Cash from Operating Activities      89,317     51,320     139,810
                                     ---------- ---------- -----------

Cash Flows from Investing Activities
Acquisition of Subsidiary - Energy
 Africa(1)                                   -   (166,384)   (166,055)
Disposal of Subsidiary                  58,487          -       4,730
Purchase of Property, Plant and
 Equipment                            (267,417)   (27,966)    (95,105)
Interest Received                        2,081      1,407       3,436
                                     ---------- ---------- -----------
Net Cash used in Investing
 Activities                           (206,849)  (192,943)   (252,994)
                                     ---------- ---------- -----------

Cash Flows from Financing Activities
Net Proceeds from Issue of Share
 Capital                                   847    116,661     120,913
Debt Arrangement Fees                   (2,095)    (2,864)     (3,050)
Repayment of Existing Loans            (26,750)   (33,313)    (33,437)
Drawdown of Bank Loan                  191,476    145,327      98,620
Repayment of Bank Loans Acquired             -    (32,922)    (33,824)
Interest Paid                           (8,649)    (3,283)     (9,494)
Dividends Paid                               -          -      (6,995)
                                     ---------- ---------- -----------
Net Cash used in Financing
 Activities                            154,829    189,606     132,733
                                     ---------- ---------- -----------

Net Increase in Cash and  Cash
 Equivalents                            37,297     47,983      19,549
Cash and  Cash Equivalents at the
Beginning of the Period                 85,070     65,631      65,631
Translation Difference                     546       (183)       (110)
                                     ---------- ---------- -----------
Cash and Cash Equivalents at the End
of the Period(2)                       122,913    113,431      85,070
                                     ========== ========== ===========

(1) Net of Cash Acquired

(2) Includes restricted amounts at 30 June 2005 of GBP 43.9 million
    (30 June 2004 - GBP 36.9 million) in respect of decommissioning
    reserves on fixed term deposits and GBP 10.0 million (30 June
    2004 - GBP 10.6 million) held on deposit in connection with
    expected future payments under the Borrowing Base facility.

Notes to the Interim Financial Statements

1. Accounting Policies and Presentation of Financial Information

These June 2005 interim consolidated financial statements are for the six months ended 30 June 2005. The information for the year ended 31 December 2004 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year, which were prepared under UK Generally Accepted Accounting Policies (GAAP), has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified.

The reconciliations of equity at 1 January 2004 (date of transition to IFRS) and at 31 December 2004 (date of last UK GAAP financial statements) and the reconciliation of profit for 2004, as required by IFRS 1, including the significant accounting policies to 31 December 2004, have been published on the company's website, www.tullowoil.com, on 23 August 2005.

The reconciliation of equity at 30 June 2004 and the reconciliation of profit for the six months ended 30 June 2004 have been included on the company's website to enable a comparison of the 2005 interim figures with those published in the corresponding period of the previous financial year.

The accounting policies set out below have been adopted to prepare the interim 2005 financial information under International Financial Reporting Standards (IFRS). These will be the principal accounting policies used for Tullow's future financial statements.

(a) Basis of Accounting

The financial information has been prepared under the historical cost convention and using accounting policies consistent with IFRS.

(b) Basis of Consolidation

The consolidated financial statements consist of the financial statements of the Company and all its subsidiary undertakings. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Turnover and results of subsidiary undertakings are consolidated in the Group Income Statement from the dates on which control over the operating and financial decisions is obtained.

Acquisitions

On an acquisition that qualifies as a business combination, the assets and liabilities of a subsidiary are measured at their fair value as at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired is credited to the Income Statement in the period of acquisition.

Joint Ventures

The Group is engaged in oil and gas exploration, development and production through unincorporated joint ventures. The Group accounts for its share of the results and net assets of these joint ventures as jointly controlled assets. In addition, where Tullow acts as operator to the joint venture, the gross liabilities and receivables (including amounts due to or from non-operating partners) of the joint venture are included in the Group consolidated Balance Sheet.

(c) Revenue

Revenue represents the sales value, net of VAT and overriding royalties, of the Group's share of production in the period together with tariff income.

Revenues received under take-or-pay sales contracts in respect of undelivered volumes are accounted for as deferred income. Revenue is recognised when goods are delivered and title has passed.

(d) Over/Underlift

Lifting or offtake arrangements for oil and gas produced in certain of the Group's jointly owned operations are such that each participant may not receive and sell its precise share of the overall production in each period. The resulting imbalance between cumulative entitlement and cumulative production less stock is 'underlift' or 'overlift'. Underlift and overlift are valued at market value and included within debtors and creditors respectively. Movements during an accounting period are adjusted through Cost of Sales such that Gross Profit is recognised on an entitlements basis. The Group's share of any physical stock is accounted for at the lower of cost and net realisable value.

(e) Foreign Currencies

The Pound Sterling is the presentation and functional currency of the Group. Financial statements of foreign currency denominated subsidiaries are translated into Sterling whereby the results of the overseas operations are generally translated at the average rate of exchange for the period and their balance sheets at rates of exchange ruling at the Balance Sheet date. Currency translation adjustments arising on the restatement of opening net assets of foreign subsidiaries, together with differences between the subsidiaries' results translated at average rates versus closing rates, are taken directly to reserves. All resulting exchange differences are classified as equity until disposal of the subsidiary. On disposal the cumulative amounts of the exchange differences are recognised as income or expense.

Transactions in foreign currencies are recorded at the rates of exchange ruling at the transaction dates. Monetary assets and liabilities are translated into Sterling at the exchange rate ruling at the Balance Sheet date, with a corresponding charge or credit to the Income Statement. However, exchange gains and losses arising on long-term foreign currency borrowings, which are a hedge against the Group's overseas investments, are dealt with in reserves.

(f) Exploration, Evaluation and Production Assets

The Group adopts the successful efforts method of accounting for exploration and appraisal costs. All licence acquisition, exploration and evaluation costs are initially capitalised in cost centres by well, field or exploration area, as appropriate. Directly attributable administration costs and interest payable are capitalised insofar as they relate to specific exploration and development activities. Pre-licence costs are expensed in the period they are incurred. These costs are then written off unless commercial reserves have been established or the determination process has not been completed and there are no indications of impairment.

All field development costs are capitalised as property, plant and equipment. Property, plant and equipment related to production activities are amortised in accordance with the Group's Depletion and Amortisation accounting policy.

(g) Commercial Reserves

Commercial reserves are proven and probable oil and gas reserves, which are defined as the estimated quantities of crude oil, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from known reservoirs and which are considered commercially producible. There should be a 50 per cent statistical probability that the actual quantity of recoverable reserves will be more than the amount estimated as a proven and probable reserves and a 50 per cent statistical probability that it will be less.

(h) Depletion and Amortisation - Discovery Fields

All expenditure carried within each field is amortised from the commencement of production, on a unit of production basis, which is the ratio of oil and gas production in the period to the estimated quantities of commercial reserves at the end of the period plus the production in the period, on a field-by-field basis. Costs used in the unit of production calculation comprise the net book value of capitalised costs plus the estimated future field development costs. Changes in the estimates of commercial reserves or future field development costs are dealt with prospectively.

Where there has been a change in economic conditions that indicates a possible impairment in a discovery field, the recoverability of the net book value relating to that field is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future oil and gas prices and future costs. Any impairment identified is charged to the Income Statement as additional depreciation, depletion and amortisation. Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the Income Statement, net of any depreciation that would have been charged since the impairment.

(i) Decommissioning

Provision for decommissioning is recognised in full when the related facilities are installed. A corresponding amount equivalent to the provision is also recognised as part of the cost of the related property, plant and equipment. The amount recognised is the estimated cost of decommissioning, discounted to its net present value and is reassessed each year in accordance with local conditions and requirements. Changes in the estimated timing of decommissioning or decommissioning cost estimates are dealt with prospectively by recording an adjustment to the provision, and a corresponding adjustment to property, plant and equipment. The unwinding of the discount on the decommissioning provision is included as an interest expense.

(j) Property, Plant and Equipment

Property, plant and equipment is stated in the Balance Sheet at cost less accumulated depreciation. Depreciation on property, plant and equipment other than exploration and production assets, is provided at rates calculated to write off the cost less estimated residual value of each asset on a straight line basis over its expected useful economic life of between three and five years.

(k) Finance Costs and Debt

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Finance costs of debt are allocated to periods over the term of the related debt at a constant rate on the carrying amount. Arrangement fees and issue costs are deducted from the debt proceeds and are amortised and charged to the Income Statement as finance costs over the term of the debt.

(l) Share Issue Expenses and Share Premium Account

Costs of share issues are written off against the premium arising on the issues of share capital.

(m) Taxation

Current and deferred tax, including UK corporation tax and overseas corporation tax, are provided at amounts expected to be paid using the tax rates and laws that have been enacted or substantially enacted by the Balance Sheet date.

Deferred corporation taxation is recognised on all temporary differences that have originated but not reversed at the Balance Sheet date where transactions or events that result in an obligation to pay more, or right to pay less tax in the future have occurred at balance sheet date. Deferred tax assets are recognised only to the extent that it is considered more likely than not that there will be suitable taxable profits from which the underlying temporary differences can be deducted. Deferred tax is measured on a non-discounted basis.

Deferred tax is provided on temporary differences arising on acquisitions that are categorised as Business Combinations. Deferred tax is recognised at acquisition as part of the assessment of the fair value of assets and liabilities acquired. Any deferred tax is charged or credited in the income statement as the underlying temporary difference is reversed.

Petroleum Revenue Tax (PRT) is treated as an income tax and deferred PRT is accounted for under the temporary difference method. Current UK PRT is charged as a tax expense on chargeable field profits included in the Income Statement and is deductible for UK corporation tax.

(n) Pensions

Contributions to the Group's defined contribution pension schemes are charged to operating profit on an accruals basis.

(o) Derivative Financial Instruments

The Group uses derivative financial instruments to manage its exposure to fluctuations in foreign exchange rates, interest rates and movements in oil and gas prices.

Derivative financial instruments are stated at fair value.

The purpose for which a derivative is used is established at inception. To qualify for hedge accounting, the derivative must be highly effective in achieving its objective and this effectiveness must be documented at inception and throughout the period of the instrument.

For the purpose of hedge accounting, hedges are classified as either fair value hedges, when they hedge the exposure to changes in the fair value of a recognised asset or liability, or cash flow hedges, where they hedge exposure to variability in cash floes that is either attributable to a particular risk associated with a recognised asset or liability or forecasted transaction.

In relation to fair value hedges which meet the conditions for hedge accounting, any gain or loss from re-measuring the derivative and the hedged item at fair value is recognised immediately in the income statement. Any gain or loss on the hedged item attributable to the hedged risk is adjusted against the carrying amount of the hedged item and recognised in the income statement.

For cash flow hedges, the portion of the gains and losses on the hedging instrument that is determined to be an effective hedge is taken to equity and the ineffective portion is recognised in the income statement. The gains and losses taken to equity are subsequently transferred to the income statement during the period in which the hedged transaction affects the income statement or if the hedge is subsequently deemed to be ineffective.

Gains or losses on derivatives that do not qualify for hedge accounting treatment (either from inception or during the life of the instrument) are taken directly to the income statement in the period.

(p) Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases and are charged to the Income Statement on a straight-line basis over the term of the lease.

Assets held under finance leases are recognised as assets of the group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the group's general policy on borrowing costs.

(q) Share Based Payments

The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2004.

The Group issues equity-settled and cash-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest.

Fair value is measured by use of an actuarial binomial model. The expected life used in the model has been adjusted, on the basis of management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

For cash-settled share-based payments, a liability is recognised based on the current fair value determined at each Balance Sheet date and that portion of the employees' services to which the payment relates that has been received by the Balance Sheet date.

2. Earnings per Ordinary Share

The Calculation of basic earnings per ordinary share is based on the profit for the period after taxation of GBP 63,086,455 (first half 2004 - GBP 8,337,436) and a weighted average number of shares in issue of 642,685,021 (first half 2004 - 422,516,777).

The calculation of diluted earnings per share is based on the profit for the period after taxation as for basic earnings per share. The number of shares is adjusted to show the potential dilution if employee and other share options are converted into ordinary shares. The weighted average number of shares in issue is increased to 651,235,398 (first half 2004 - 427,087,202).

3. Assets held for Resale

The sale of the Congo (Brazzaville) offshore assets was completed on 18 August 2005. As the net assets carrying amount was recovered through a sale transaction and at 30 June 2005 the sale was highly probable, the assets meet the criteria included in IFRS 5 - non-current assets held for sale and discontinued assets. Accordingly the assets and liabilities are disclosed as an asset held for resale and included within current assets and current liabilities.

IFRS 5 requires that an impairment loss is recognised if the carrying value of the asset is lower than the sale proceeds, and consequently a charge of GBP 2.1m has been recorded within depreciation in the income statement.

4. Dividends

The Company's shareholders approved a dividend payment of 1.25p per share at the Annual General Meeting on 29 June 2005. This amount was paid on 8 July 2005 to shareholders on the register of members of the Company on 3 June 2005.

The board have recommended an interim dividend of 1.0p per share in the half year to 30 June 2005 to be paid on 9 November 2005 to shareholders on the register of members of the Company on 7 October 2005 (2004 - 0.5p per share).

5. Approval of accounts

These interim accounts (unaudited) were approved by the Board of Directors on 13 September 2005.

6. Proven and Probable Reserves Summary on a Working Interest Basis(1)

----------------------------------------------------------------------
                      NW Europe         West Africa       South Asia
----------------------------------------------------------------------
Commercial           Oil      Gas      Oil      Gas      Oil      Gas
                   mmbbl      bcf    mmbbl      bcf    mmbbl      bcf
----------------------------------------------------------------------
At 01.01.2005      14.60   131.95   116.07    28.00        -    96.20
----------------------------------------------------------------------
Revisions              -     3.24     8.79        -        -        -
----------------------------------------------------------------------
Acquisitions/
Disposals
 (net)            (13.81)  250.74        -        -        -        -
----------------------------------------------------------------------
Production         (0.79)  (20.52)   (6.08)   (0.18)       -    (0.54)
----------------------------------------------------------------------
At 30.06.2005          -   365.41   118.78    27.82        -    95.66
----------------------------------------------------------------------

                       -----------------------------------------------
                                                    Total
                       -----------------------------------------------
                       Commercial           Oil        Gas  Petroleum
                                          mmbbl        bcf      Mmboe
                       -----------------------------------------------
                       At 01.01.2005     130.67     256.15     173.36
                       -----------------------------------------------
                       Revisions           8.79       3.24       9.33
                       -----------------------------------------------
                       Acquisitions/
                       Disposals (net)   (13.81)    250.74      27.98
                       -----------------------------------------------
                       Production         (6.87)    (21.24)    (10.41)
                       -----------------------------------------------
                       At 30.06.2005     118.78     488.89     200.26
                       -----------------------------------------------


----------------------------------------------------------------------
                      NW Europe         West Africa       South Asia
----------------------------------------------------------------------
Contingent           Oil      Gas      Oil      Gas      Oil      Gas
                   mmbbl      bcf    mmbbl      bcf    mmbbl      bcf
----------------------------------------------------------------------
At 30.06.2005          -   208.30        -   781.20        -    16.20
----------------------------------------------------------------------
                       -----------------------------------------------
                                                    Total
                       -----------------------------------------------
                       Contingent           Oil        Gas  Petroleum
                                          mmbbl        bcf      Mmboe
                       -----------------------------------------------
                       At 30.06.2005          -   1,005.70     167.62
                       -----------------------------------------------


----------------------------------------------------------------------
                      NW Europe         West Africa       South Asia
----------------------------------------------------------------------
Total                Oil      Gas      Oil      Gas      Oil      Gas
                   mmbbl      bcf    mmbbl      bcf    mmbbl      bcf
----------------------------------------------------------------------
At 30.06.2005          -   573.71   118.78   809.02        -   111.86
----------------------------------------------------------------------
                       -----------------------------------------------
                                                    Total
                       -----------------------------------------------
                       Total                Oil        Gas  Petroleum
                                          mmbbl        bcf      Mmboe
                       -----------------------------------------------
                       At 30.06.2005     118.78   1,494.59     367.88
                       -----------------------------------------------

(1) Not reviewed by the Auditors

Proven and probable commercial reserves are based on a Group reserves report produced by an independent engineer. Proven and probable contingent reserves are based on both Tullow's estimates and the Group reserves report produced by an independent engineer.

The Group provides for depletion and amortisation of oil and gas assets within plant, property and equipment on a net entitlements basis, which reflects the terms of the Production Sharing Contracts related to each field. Total net entitlement reserves were 169.01 mmboe at 30 June 2005 (149.99 mmboe - 31 December 2004).

Contingent reserves relate to reserves in respect of which development plans are in the course of preparation or further evaluation is underway with a view to development within the foreseeable future.

7. Reconciliation of IFRS to UK GAAP

Group Income Statement(1)
For the six months ended 30 June 2005

                     IFRS                                      UK GAAP
                                IFRS 5  IAS 12 IAS 39 Other
                     Six months                             Six months
                     ended 30                                 ended 30
                     June 2005                               June 2005
                     (Unaudited)                           (Unaudited)
                         GBP     GBP    GBP   GBP    GBP      GBP
                         '000    '000   '000  '000   '000     '000
----------------------------------------------------------------------
Revenue                 201,434                               201,434
Cost of Sales          (125,425)       3,860          (512)  (122,077)
                     -------------------------------------------------

Gross Profit             76,009     -  3,860      -   (512)    79,357

Administrative
 Expenses                (6,798)                       370     (6,428)
Profit on Sale of
 Subsidiaries            39,571                                39,571
Exploration Cost
 Written Off             (4,019)                               (4,019)
Other Expenses             (378)                                 (378)
                     -------------------------------------------------

Operating Profit        104,385     -  3,860      -   (142)   108,103

Loss on Hedging
 Instruments             (5,592)              5,592                 -
Interest Receivable       2,046                                 2,046
Finance Costs            (9,462)                       216     (9,246)
                     -------------------------------------------------

Profit before Tax        91,377     -  3,860  5,592     74    100,903

Income Tax Expense      (28,291)      (4,098)  (743)     1    (33,131)
                     -------------------------------------------------

Profit for the Period    63,086     -   (238) 4,849     75     67,772
                     =================================================

                          Stg p Stg p  Stg p  Stg p  Stg p      Stg p
Earnings per Ordinary
 Share
Basic                      9.82     -  (0.04)  0.75   0.01      10.55
Diluted                    9.69     -  (0.04)  0.74   0.01      10.41

(1) Not reviewed by Auditors



7. Reconciliation of IFRS to UK GAAP (contd)

Group Balance Sheet(1)
As at 30 June 2005
                             IFRS
                                     IFRS 5  IAS 12  IAS 39   Other
                          Six months
                            ended 30
                           June 2005
                          (Unaudited)
                               GBP    GBP     GBP     GBP     GBP
                               '000   '000    '000    '000    '000
                         ---------------------------------------------
Assets
Non-Current Assets
Property, Plant and
 Equipment                   693,749  40,149 (44,768)              70
Other Intangibles            136,806   2,547    (632)
Investments                      496
                         ---------------------------------------------
                             831,051  42,696 (45,400)       -      70
                         ---------------------------------------------
Current Assets
Inventories                    2,445     108
Trade Receivables             39,145
Other Current Assets          24,072
Assets Held for Resale        42,804 (42,804)
Cash and Cash Equivalents    122,913
                         ---------------------------------------------
                             231,379 (42,696)      -        -       -
                         ---------------------------------------------

Total Assets               1,062,430       - (45,400)       -      70

Liabilities
Non-Current Liabilities
Trade and Other Payables      23,245
Long-term Borrowings         298,587
Deferred Tax                  27,236         (49,723)  18,296   5,781
Long-term Provisions          82,450   1,185
Derivative Financial
 Instruments                  83,915                  (83,915)
                         ---------------------------------------------
                             515,433   1,185 (49,723) (65,619)  5,781
                         ---------------------------------------------
Current Liabilities
Trade and Other Payables      90,883   5,291                  (13,628)
Current Portion of Long
 Term Borrowings              23,140
Current Tax Payable           23,183
Liabilities held for
 Resale                        6,476  (6,476)
Derivative Financial
 Instruments                  56,733                  (49,731)
                         ---------------------------------------------
                             200,415  (1,185)      -  (49,731)(13,628)
                         ---------------------------------------------

Total Liabilities            715,848       - (49,723)(115,350) (7,847)
                         ---------------------------------------------
Net Assets                   346,582       -   4,323  115,350   7,917
                         =============================================

Equity
Equity Attributable to
 Equity Holders of Parent
Share Capital                 64,654
Share Premium                122,385
Other Reserves                55,774                  110,501
Retained Earnings            103,769           4,323    4,849   7,917
                         ---------------------------------------------
Total Equity                 346,582       -   4,323  115,350   7,917
                         =============================================


                           UK GAAP

                          Six months
                            ended 30
                           June 2005
                          (Unaudited)
                            GBP  '000
                         ------------
Assets
Non-Current Assets
Property, Plant and
 Equipment                   689,200
Other Intangibles            138,721
Investments                      496
                         ------------
                             828,417
                         ------------
Current Assets
Inventories                    2,553
Trade Receivables             39,145
Other Current Assets          24,072
Assets Held for Resale             -
Cash and Cash Equivalents    122,913
                         ------------
                             188,683
                         ------------

Total Assets               1,017,100

Liabilities
Non-Current Liabilities
Trade and Other Payables      23,245
Long-term Borrowings         298,587
Deferred Tax                   1,590
Long-term Provisions          83,635
Derivative Financial
 Instruments                       -
                         ------------
                             407,057
                         ------------
Current Liabilities
Trade and Other Payables      82,546
Current Portion of Long
 Term Borrowings              23,140
Current Tax Payable           23,183
Liabilities held for
 Resale                            -
Derivative Financial
 Instruments                   7,002
                         ------------
                             135,871
                         ------------

Total Liabilities            542,928
                         ------------
Net Assets                   474,172
                         ============

Equity
Equity Attributable to
 Equity Holders of Parent
Share Capital                 64,654
Share Premium                122,385
Other Reserves               166,275
Retained Earnings            120,858
                         ------------
Total Equity                 474,172
                         ============

(1) Not reviewed by Auditors