BU5575

2015

Circle Oil plc vs tullow oil plc financial analysis and recommendationDjabbarov, Saidjaffar

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Table of ContentsOil and Gas Industry Context...............................................................................................................................4

Internal Context Tullow..........................................................................................................................................4

Industry Position...................................................................................................................................................4

Internal Context Circle............................................................................................................................................4

Industry Position and Business Strategy......................................................................................................4

Overview......................................................................................................................................................................4

Tullow [Appendix Table 1].................................................................................................................................4

Circle [Appendix Table 2]...................................................................................................................................4

Ratio Analysis.............................................................................................................................................................5

Performance Tullow [Appendix Table 3].......................................................................................................5

Performance Circle [Appendix Table 4]........................................................................................................5

Working Capital Tullow [Appendix Table 3, Bar Chart 1].......................................................................5

Working Capital Circle [Appendix Table 4, Bar Chart 2].........................................................................5

Liquidity and Solvency Tullow [Appendix Table 3]...................................................................................5

Liquidity and Solvency Circle [Appendix Table 4].....................................................................................5

Shareholder Ratios Tullow [Appendix Table 4, Table 7].........................................................................5

Shareholder Ratios Circle [Appendix Table 4, Table 7]...........................................................................6

Oil Industry Ratios Tullow and Circle [Appendix Table 8].......................................................................6

Decomposition and Comparative Analysis......................................................................................................6

Decomposition and Comparative Analysis Tullow [Appendix Table 5, Radar Chart 1]................6

Decomposition and Comparative Analysis Circle [Appendix Table 6, Radar Chart 2].................6

Analysis Time Lag [Appendix Graph 1 – 3]......................................................................................................6

Review and Recommendation.............................................................................................................................6

Appendix.........................................................................................................................................................................8

Table 1 - Tullow Oil Performance Overview 2012-2013..................................................................................................9

Table 2 - Circle Oil Performance Overview 2012-2013.............................................................................10

Table 3 - Tullow Oil Performance, Liquidity and Solvency Ratios 2012-2013................................................................11

Bar Chart 1 - Tullow Oil Working Capital Gap 2012-2013..............................................................................................12

Table 4 - Circle Oil Performance, Liquidity and Solvency Ratios 2012-2013..................................................................13

Bar Chart 2 - Working Capital Gap Circle Oil plc............................................................................................................14

Table 5 - Tullow Oil Decomposition Ratios....................................................................................................................15

Table 6 - Decomposition Ratios Circle Oil plc................................................................................................................16

Radar Chart 1 - Tullow Oil plc........................................................................................................................................17

Radar Chart 2 - Circle Oil plc..........................................................................................................................................18

Table 7 - Shareholder Ratios Tullow Oil plc and Circle Oil plc 2012-2013......................................................................19

Table 8 - Oil Industry Ratios Tullow Oil plc and Circle Oil plc 2012-2013.......................................................................20

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Graph 1 - Tullow Oil plc Share Price against Brent Crude Price.....................................................................................21

Graph 2 - Circle Oil plc Share Price against Brent Crude Price.......................................................................................22

Graph 3 - Tullow Oil plc Share Price against Circle Oil plc Share Price...........................................................................23

References....................................................................................................................................................................24

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Executive Summary

This report evaluates whether Circle Oil plc (Circle) or its benchmark/competitor company Tullow Oil plc (Tullow) should be considered for investment. To cut straight to the chase neither of the two should be chosen. With the recent crash of the oil prices both Circle and Tullow have had a negative impact on their financials. However, Tullow has been underperforming ever since 2012, due to its decommissioning recognition. In contrast, Circle does not have considerable assets and operates a different business strategy in comparison to Tullow whereby it does not heavily specialise in the costly development of wells and production of oil but generates value from renting out its licensed reserve acreage. If the oil price crash had not happened it is likely that Circle would outperform Tullow between 2012 and now. Although Circle has issues with its working capital gap, it is nothing compare to the $2.2bn write offs Tullow had to go through (BBC 2015).

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Oil and Gas Industry ContextDue to an increased supply of oil from the US, global crude trading prices have fallen sharply. “A large company such as BP can at least play the long game” (Hotten 2014). Other mid-size and small companies would most likely have to adjust their business strategies. A price of oil of below $60/barrel is likely to turn some previously anticipated profits into marginal or even loss making investments. Equally a decrease in the price of oil has a damaging effect on the producers’ balance sheets. Companies become subject to much tighter credit conditions (Hume 2015). Trade volumes in credit risk transfers (Clark 2006) have reduced significantly as banks and investment funds became unwilling to bear higher risks that have clouded the oil and gas industry.

Internal Context TullowIndustry PositionTullow makes up the top 250 energy companies in the world (Platts 2014). The company’s current market capitalisation is measured at $3.71bn, which makes it the largest among its peers. Its main competitors in terms of market capitalisation are DCC plc, Genel Energy plc and Cairn Energy plc with values ranging between $3.25bn and $1.20bn (Financial Times 2015b). Worryingly Tullow is the only one amongst its mentioned peers that failed to generate a positive income over 2014. Majority of the company’s shareholders are Capital Group, who focus on long term investments (The Capital Group Companies, Inc. 2015) and Genesis Investment Management LLP, a company that looks into emerging markets (Genesis Investment Management 2015).

Internal Context CircleIndustry Position and Business StrategyCircle’s market capitalisation in 2013 was $112.00m. It competes with smaller industry operators such as BowLeven plc and IGAS Energy plc (Financial Times 2015a). Among its peers Circle is the only company that generates positive net income. Circle’s top shareholders include the Libyan Investment Authority, a company that has a portion of its capital frozen due to international resolutions (Libyan Investment Authority 2014). Circle’s main operations are based in North Africa and the Middle East, with oil and gas production in Egypt, gas production in Morocco and exploration assets in both countries. In its report, Circle mentions its choice of either exploiting its own assets or using “farm-outs” for developing production (Circle Oil PLC 2014). The company evidently operates through “farm-ins”/”farm-outs” either in terms of exploration blocks or drilling acreage to other parties. Depending on the agreement Circle is then paid an interest by the “farmees”, if oil and gas is discovered (Wright, Gallun 2008).

OverviewTullow [Appendix Table 1]Between 2012 and 2013 Tullow experienced an increase in turnover by approximately 13%. The gross profit figure reached $1.44bn. However, such improvements were not mirrored by the PBIT figure, which in 2013 fell by 67.9%. A huge fall in PBT is affected by the 55.3% rise in finance costs and a nearly doubled total debt value of $2.15bn between 2012 and 2013. The overall picture suggests that the company is going through a phase of declining profits and heavy restructuring. Although 2013 seemed a very successful year for Tullow in terms of its oil discoveries share price of £10.01 (Pfeifer 2013), it seems to be facing performance troubles that began in 2012.

Circle [Appendix Table 2] Sales revenue was up 27.40%, which carried most of itself into gross profit and PBIT increased by 16.24% and 14.75% respectively. PBT also grown in line with PBIT indicating that the company is not affected by significant finance costs. This can be supported by a drop of 19.78% for the entity’s interest charges between 2012 and 2013. However, Circle experienced an increase in current liabilities by 102.21%. The entity has employed one more member of staff and its capital employed values are not typical of its industry. Current assets posted a significant increase of 33.30% which was affected by the value of debtors.

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Ratio AnalysisPerformance Tullow [Appendix Table 3]Tullow’s huge reduction in net income is mainly driven by a 71.55% reduction in the company’s sales margin. This means that only 14.39 US cents in every US dollar get through to profit. As a result ROCE has dropped by an equally alarming 74.00%, which indicates poor performance in terms of company management. The large profits recognised on decommissioning of assets by the end of 2012 seem to have not been distributed efficiently through the business. It is also disturbing that the company’s debt has nearly doubled over 2013.

Performance Circle [Appendix Table 4]Circle has not seen equally major changes in its performance between 2012 and 2013. Although the sales margin has been reduced by 9.9% the asset turnover has increased by 13.35%, which means that the business generates 34 US cents from every US dollar invested in the business. This is a much needed improvement from the 2012. The profit per employee has jumped up by 21.61% over 2013 showing good staff productivity.

Working Capital Tullow [Appendix Table 3, Bar Chart 1]There are no major changes in the working capital. Tullow seems to manage its working capital gap in efficiently. A 13.16% increase in debtor days indicates that the company sold more on credit. Inventory days have only decreased by 1, which means the company has not faced vast storage expenses over 2013. A slight increase in trade creditor days only means that Tullow takes 3 days longer to pay its suppliers.

Working Capital Circle [Appendix Table 4, Bar Chart 2]The business has significant trouble collecting funds from its debtors on time, indicated by a negative 20 day working capital gap over 2012. By 2013 it worsened to a negative 24 days since the company operates in a politically troubled regions of Egypt and Morocco. The company’s inventory days are comforting since a period of 1 day does not carry high expenses. If the company manages to change its working capital gap its reasonable financial performance would not be negatively compromised.

Liquidity and Solvency Tullow [Appendix Table 3]At the end of 2012 the value of the current assets barely manages to cover the current liabilities. Solvency is distressing, particularly the interest cover figure. It can only mean that much higher finance costs have been taken on by the end of 2013, if the value of the PBIT only manages to cover the interest payment 4.2 times as opposed to the much more convincing multiple of 20.09 in 2012.

Liquidity and Solvency Circle [Appendix Table 4]A 34.1% decrease in the quick ratio suggests that Circle carries more short term liabilities since it can only cover them 2.43 times using current assets. This is still better than Tullow. Business’s solvency supports these figures because the value of total debt went up by 60.25% over 2013. As a result gearing has also gone up by 41.38%. However, the company is generating a sufficient amount of PBIT, to cover its finance costs 7.68 times which is 43.04% better than over 2012.

Shareholder Ratios Tullow [Appendix Table 4, Table 7]A 68.31% decrease in the ROE evaporates shareholder confidence and dry cleans their pockets. What seemed like a healthy 12.52% return over 2012 now only generates one third of that. Dividends are under pressure so pension funds should avoid investing in Tullow because of their cash flow requirements. Market capitalisation of Tullow has fallen dramatically between 2012 and 2013 by over £3bn. This is a result of the reduction in the company’s share price from £12.61 in 2012 to £8.55 in 2013. Tullow could have attempted to buy back shares in order to minimise the impact. Since it did not, earnings per share were down 72.97%. Tullow’s price/earnings ratio has shot up to 79.164 by 2013. This value is too high for the industry standard, which is 5.88 (Hillier 2013). Such a high ratio measurement means it will take the company 79 years in order to benefit investors, if the profit stays the same. The company also reported a dividend of 12 pence per share in both 2012 and 2013 and the dividend yield increased to 1.40%. Dividend cover on the other hand had was dismal. A ratio of 1 would mean that all the available profits are going to the shareholders. Since 2013 Tullow’s dividend cover is 0.935, it means that not enough profits are being made to

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afford the existing dividend policy. It is not surprising that the company decided to scrap the dividend for the current financial year (Robinson 2015).

Shareholder Ratios Circle [Appendix Table 4, Table 7]Circle managed to maintain the same level of shareholder returns. It is not facing the same issues as Tullow. In contrast the market capitalisation of Circle has increased due to the 25% increase in the company’s share price between 2012 and 2013. Therefore, the market capitalisation also went up to £112.00m, which is a 25.19% jump from 2012. Since the profit attributable to the shareholders went up to $244.8m, Circle generated a much higher return per share in 2013 than Tullow. Although Circle made sufficient profits, its price/earnings ratio is below one, too low for an oil producer. This was as expected since the entity does not produce nearly as much as Tullow. The low price/earnings ratio means that the company should be invested into for the short term. Since it is not a mature, cash-rich corporation there is no dividend policy in place. As a result the share price will not be affected if the company suddenly decides not to pay a dividend.

Oil Industry Ratios Tullow and Circle [Appendix Table 8]Tullow has significantly high reserves and its daily (BOEPD) and annual (BOEPY) production figures experienced a slight increase (Tullow Oil plc 2014). An increase in the enterprise value/PBIT shows that the company’s profits have decreased and hence means that Tullow is overvalued by the end of 2013. In terms of enterprise value/2P reserves shows a decrease which is a good indicator in terms of the company’s prospects for the future.

Circle has been more stable in terms of its value. Since the company’s PBIT and the value of 2P reserves has not changed significantly, its ratios have not been affected.

Decomposition and Comparative AnalysisDecomposition and Comparative Analysis Tullow [Appendix Table 5, Radar Chart 1]What seemed to be very healthy assets by the end of 2012 did not carry through to 2013. A 74.00% decrease in the ROCE shows issues with operational management. It is clear that interest survivorship suffocates Tullow. Tax survivorship on the other hand has improved, but due to a large reduction in revenues. Tullow’s operating margin, asset turnover and the interest survivorship have negatively affected returns.

Decomposition and Comparative Analysis Circle [Appendix Table 6, Radar Chart 2]There are no significant changes apart from the little jump in the ROCE by 2.10%. This means that the company has been managed well given its unavailability of funds and assets to develop its oil reserves into production on its own. Since the business model has not been damaged in 2013 the tax survivorship has remained on the same level. The company’s asset turnover is the main driver of its untroubled performance in 2013. The company’s healthy asset turnover balances out the reduction in the operating margin.

Analysis Time Lag [Appendix Graph 1 – 3]Although financial performance for both Tullow and Circle is done for the period between 2012 and 2013 there is still over one fiscal year between now and this report’s main financial findings. Both entities have performed as expected. Tullow was in trouble ever since 2012 which is supported by its questionable decommissioning and heavy net losses. Circle does not directly compete with Tullow which is clearly seen from the share prices.

Review and RecommendationGiven the data illustrated in the Appendix and all the information compiled about Circle and its benchmark Tullow it is clear that both of the companies have struggled to be financially prudent. Tullow is affected by its decommissioning profits, which negatively affected the company’s financials for 2013. Circle on the other hand looks more financially stable, however, its working capital gap imposes a threat to its finance costs and its future operations. If the creditors are not paid on time and the debtors turn into bad debts, the company will be forced to

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source more funding in order to cover is short term business transactions. The existence of debt in the company’s current assets shows that Circle has already sourced funding to pay its creditors because its debtors have not paid on time. When a business takes out a loan to pay its loans, investors should not really be looking at the entity in search of stable returns. Tullow is in significant financial trouble. The extent of its share price drop makes it a very risky investment in the short term. However, the level of its reserves will allow the company to recover in the mid-long term.

Therefore, investors should only consider Tullow for the long term. It will take the entity between 5-7 years to generate a sufficient return. Circle on the other hand is likely to be more successful in the short term since it does not have many assets and therefore is not likely to have to write down large values. Its future prospects, however, are questionable.

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Appendix

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Table 1 - Tullow Oil Performance Overview 2012-2013(Tullow Oil plc 2014)

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Tullow OilOverview For the Year Ending 31/12/2013 31/12/2012 2012-2013  US ($m) US ($m) % ChangeSales Revenue 2,646.90 2,344.10 12.918%Gross Profit 1,440.40 1,344.80 7.109%Cost of Sales -1,206.50 -999.30 20.735%Profit before Interest and Tax (PBIT) 380.80 1,185.20 -67.870%Profit before Tax 313.20 1,115.90 -71.933%Profit for the Year 216.10 666.20 -67.562%Operating Cash Flow 1,901.00 1,777.00 6.978%Capital Employed (TA-CL) 10,076.30 8,153.00 23.590%Total debt 2,154.40 1,173.60 83.572%Inventories 193.90 163.70 18.448%Debtors 308.70 238.70 29.326%Creditors 1,070.50 878.70 21.828%Current Assets 2,069.30 1,294.20 59.890%Current Liabilities 1,432.30 1,228.80 16.561%Finance Cost (Interest Paid) 91.60 59.00 55.254%Total Debt (Long Term + Short Term) 2,154.40 1,173.60 83.572%Total Equity 5,446.40 5,321.60 2.345%         31/12/2013 31/12/2012 2012-2013  Number Number % ChangeEmployees (people) 1679 1353 24.095%

Table 2 - Circle Oil Performance Overview 2012-2013(Circle Oil PLC 2014)

Circle OilOverview For the Year Ending 31/12/2013 31/12/2012 2012-2013  US ($m) US ($m) % ChangeSales Revenue 93,343.00 73,270.00 27.396%Gross Profit 36,949.00 31,788.00 16.236%Cost of Sales -56,394.00 -41,482.00 35.948%Profit before Interest and Tax (PBIT) 32,348.00 28,189.00 14.754%Profit before Tax 28,857.00 25,252.00 14.276%Profit for the Year 28,823.00 25,243.00 14.182%Operating Cash Flow 53,338.00 42,241.00 26.271%Capital Employed (TA-CL) 274,918.00 244,605.00 12.393%Inventories 23.00 19.00 21.053%Debtors 42,260.00 39,769.00 6.264%Creditors 22,506.00 19,835.00 13.466%Current Assets 80,221.00 60,179.00 33.304%Current Liabilities 32,977.00 16,308.00 102.214%Finance Cost (Interest Paid) 4,211.00 5,249.00 -19.775%Total Debt (Long Term + Short Term) 39,262.00 24,501.00 60.247%Total Equity 244,798.00 215,975.00 13.346%         31/12/2013 31/12/2012    Number Number % ChangeEmployees (people) 22 21 4.762%

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Table 3 - Tullow Oil Performance, Liquidity and Solvency Ratios 2012-2013(Tullow Oil plc 2014)

Tullow OilPerformance For the Year Ending 31/12/2013 31/12/2012 % ChangeGross margin 54.42% 57.37% -5.144%Sales margin 14.39% 50.56% -71.546%Asset turnover .26 (x) .29 (x) -8.635%Return on Capital Employed 3.78% 14.54% -74.003%Sales per employee ($m) $1.58 $1.73 -9.007%Profit per employee ($m) $0.23 $0.88 -74.109% Working capital For the Year Ending 31/12/2013 31/12/2012 % ChangeInventory days 59 (Days) 60 (Days) -1.667%Debtor days 43 (Days) 38 (Days) 13.158%Trade creditor days 324 (Days) 321 (Days) 0.935%       Liquidity      For the Year Ending 31/12/2013 31/12/2012 % ChangeCurrent ratio 1.445 (x) 1.053 (x) 37.173%Acid test 1.309 (x) .92 (x) 42.322%       Solvency      For the Year Ending 31/12/2013 31/12/2012 % ChangeInterest cover 4.157 (x) 20.088 (x) -79.305%Gearing .396 (x) .221 (x) 79.366%       Shareholder's view      For the Year Ending 31/12/2013 31/12/2012 % ChangeReturn on equity 3.968% 12.519% -68.306%

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Bar Chart 1 - Tullow Oil Working Capital Gap 2012-2013(Tullow Oil plc 2014)

Inventory days

Debtor days

Trade creditor days

25 (Days) 75 (Days) 125 (Days) 175 (Days) 225 (Days) 275 (Days) 325 (Days)Inventory days Debtor days Trade creditor days

31/12/2013 59 43 324

31/12/2012 60 38 321

Tullow Oil (Working Capital Gap)

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Table 4 - Circle Oil Performance, Liquidity and Solvency Ratios 2012-2013(Circle Oil PLC 2014)

Circle OilPerformance For the Year Ending 31/12/2013 31/12/2012 % ChangeGross margin 39.584% 43.385% -8.760%Sales margin 34.655% 38.473% -9.923%Asset turnover .34 (x) .3 (x) 13.349%Return on Capital Employed 11.766% 11.524% 2.101%Sales per employee ($m) $4,242.86 $3,489.05 21.605%Profit per employee ($m) $1,470.36 $1,342.33 9.538% Working capital For the Year Ending 31/12/2013 31/12/2012 % ChangeInventory days 1 (Days) 1 (Days) 0.000%Debtor days 166 (Days) 199 (Days) -16.583%Trade creditor days 146 (Days) 175 (Days) -16.571%       Liquidity      For the Year Ending 31/12/2013 31/12/2012 % ChangeCurrent ratio 2.433 (x) 3.69 (x) -34.078%Acid test 2.432 (x) 3.689 (x) -34.076%       Solvency      For the Year Ending 31/12/2013 31/12/2012 % ChangeInterest cover 7.682 (x) 5.37 (x) 43.041%Gearing .16 (x) .113 (x) 41.379%       Shareholder's view      For the Year Ending 31/12/2013 31/12/2012 % ChangeReturn on equity 11.774% 11.688% 0.738%

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Bar Chart 2 - Working Capital Gap Circle Oil plc(Circle Oil PLC 2014)

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Inventory days

Debtor days

Trade creditor days

25 (Days) 75 (Days) 125 (Days) 175 (Days) 225 (Days)Inventory days Debtor days Trade creditor days

31/12/2013 1 166 146

31/12/2012 1 199 175

Circle Oil (Working Capital Gap)

Table 5 - Tullow Oil Decomposition Ratios(Tullow Oil plc 2014)

Tullow OilDecomposition Ratios 1      For the Year Ending 31/12/2013 31/12/2012 % ChangeReturn on Equity 3.968% 12.519% -68.306%Return on Capital Employed 3.779% 14.537% -74.003%Interest and Tax Survivorship .567 (x) .562 (x) 0.959%Equity Multiplier 1.85 (x) 1.532 (x) 20.758%Check (=RoE) 3.968% 12.519% -68.306%

Decomposition Ratios 2      For the Year Ending 31/12/2013 31/12/2012 % ChangeReturn on Equity 3.968% 12.519% -68.306%Operating Margin 14.387% 50.561% -71.546%Asset Turnover .26 (x) .29 (x) -8.635%Interest Survivorship .822 (x) .942 (x) -12.644%Tax Survivorship .69 (x) .597 (x) 15.572%Equity Multiplier 1.85 (x) 1.532 (x) 20.758%Check (=RoE) 3.968% 12.519% -68.306%

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Table 6 - Decomposition Ratios Circle Oil plc(Circle Oil PLC 2014)

Circle OilDecomposition Ratios 1      For the Year Ending 31/12/2013 31/12/2012 % ChangeReturn on Equity 11.774% 11.688% 0.738%Return on Capital Employed 11.766% 11.524% 2.101%Interest and Tax Survivorship .891 (x) .895 (x) -0.498%Equity Multiplier 1.123 (x) 1.133 (x) -0.841%Check (=RoE) 11.774% 11.688% 0.738%

Decomposition Ratios 2      For the Year Ending 31/12/2013 31/12/2012 % ChangeReturn on Equity 11.774% 11.688% 0.738%Operating Margin 34.655% 38.473% -9.923%Asset Turnover .34 (x) .3 (x) 13.349%Interest Survivorship .892 (x) .896 (x) -0.416%Tax Survivorship .999 (x) 1. (x) -0.082%Equity Multiplier 1.123 (x) 1.133 (x) -0.841%Check (=RoE) 11.774% 11.688% 0.738%

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Radar Chart 1 - Tullow Oil plc(Tullow Oil plc 2014)

Return on Equity

Operating Margin

Asset Turnover

Interest Survivorship

Tax Survivorship

Equity Multiplier

0.000

1.000

2.000

Tullow Oil

2013/2012Parity

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Radar Chart 2 - Circle Oil plc(Circle Oil PLC 2014)

Return on Equity

Operating Margin

Asset Turnover

Interest Survivorship

Tax Survivorship

Equity Multiplier

-0.200

0.100

0.400

0.700

1.000

1.300

1.600

Circle Oil

2013/2012Parity

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Table 7 - Shareholder Ratios Tullow Oil plc and Circle Oil plc 2012-2013(Tullow Oil plc 2014, Circle Oil PLC 2014)

Shareholder Ratio Data Exchange Rate

  Tullow   Circle Oil  31/12/201

331/12/201

2Y/E Date 2013 2012 2013 2012 1 USD: 1 USD:

Profit for the Year Attributable to Equity Shareholders (US $'000) 169,000.00 624,300.00 244,798.00 215,975.00 £0.603 £0.615Share Price (Pence Sterling) 855.00 1,261.00 19.88 15.88No of Shares Outstanding (m) 908.32 906.83 563.353486 563.353486Dividend (Pence Sterling) 12.00 12.00 no dividend no dividend

Shareholder Ratio Calculations Tullow   Circle Oil  Y/E Date 2013 2012 2013 2012Market Capitalisation (£m) £7,766.121 £11,435.065 £111.995 £89.461Earnings per Share (US Cents) 18.606 68.845 43.454 38.337Price/Earnings Ratio (x) 76.164 (x) 29.781 (x) .758 (x) .673 (x)Dividend Yield (%) 1.404% 0.952% N/A N/ADividend Cover (x) .935 (x) 3.528 (x) N/A N/A

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Table 8 - Oil Industry Ratios Tullow Oil plc and Circle Oil plc 2012-2013(Tullow Oil plc 2014, Circle Oil PLC 2014)

Oil Assets and Production Tullow Oil   Circle Oil    2013 2012 2013 2012

2P Reserves 382,400,000.0

0388,000,000.0

033,980,000.0

040,000,000.0

0BOEPD 84,200.00 79,200.00 12,577.00 8,673.00BOEPY 30,733,000.00 28,908,000.00 4,590,605.00 3,165,645.00

Oil Industry Specific Ratios Tullow Oil   Circle Oil  Y/E Date 2013 2012 2013 2012Cash Flow Yield 6.771 (x) 10.463 (x) 10.666 (x) 3.414 (x)*Enterprise Value / PBIT 25.125 (x) 10.36 (x) 3.503 (x) 3.319 (x)*Enterprise Value / 2P Reserves 25.02 (x) 31.646 (x) 3.335 (x) 2.339 (x)*Enterprise Value / DACF 7.912 (x) 10.923 (x) -.879 (x) -1.141 (x)*Enterprise Value / BOPY 311.314 (x) 424.743 (x) 24.685 (x) 29.558 (x)

Years Reserves Last (Existing Production Figures) 13 (Years) 14 (Years) 8 (Years) 13 (Years)Reserve Life Index .08 (x) .075 (x) .135 (x) .079 (x)Depletion Rate 7.439% 6.934% 11.902% 7.334%

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Graph 1 - Tullow Oil plc Share Price against Brent Crude Price(Thomson Reuters 2015)

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Graph 2 - Circle Oil plc Share Price against Brent Crude Price(Thomson Reuters 2015)

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Graph 3 - Tullow Oil plc Share Price against Circle Oil plc Share Price(Thomson Reuters 2015)

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