oil-oil-oilTRADING STATEMENT AND OPERATIONAL UPDATEOutstanding...

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TRADING STATEMENT AND OPERATIONAL UPDATE

Outstanding exploration success leads to Reserves Replacement of over 500% in 2008

Two world-class basins now being fast-tracked

Debt refinancing on schedule; Additional funding from equity placing1




21 January 2009 - Tullow Oil plc (Tullow) issues this Trading Statement in respect of its financial year to 31 December 2008. This is in advance of the Group's Full Year Results, which are scheduled for release on 11 March 2009. The Operational Update is in respect of recent Production, Development and Exploration activities. The information contained herein has not been audited and is subject to further review.







HIGHLIGHTS

100% exploration success in 2008 in Ghana and Uganda. 17 discoveries from 22 wells in overall drilling programme;

In Ghana, Jubilee field appraisal confirms major resource potential of up to 1.8 billion barrels and a most-likely case of up to 1.2 billion barrels. Phase 1 development first oil on target for 2H 2010;

Major world class discoveries in Uganda, including the recent 300 mmbo Buffalo-Giraffe field in the Butiaba region. Commercial threshold for Lake Albert Rift basin development significantly exceeded;

Reserves and Resources upgrade from 551 to circa 800 mmboe expected at year-end;

Working interest production averaged 66,600 boepd for 2008, in line with previous guidance;

High impact exploration wells, Tweneboa and Teak in Ghana and Ngassa in Uganda, are targeting over 1.5 billion barrels of gross upside potential and will commence drilling in the first quarter 2009;

In line with Tullow's business strategy, active profitable portfolio management is ongoing and £285 million was raised from the sale of non-core assets in 2008. The proposed divestment of M'Boundi, announced in January 2008, will not now be concluded as government approvals for the transfer of the asset have not been received within a reasonable timeframe; and

The Group's debt refinancing is on schedule for close in February with 60% of approvals already received and remaining banks well advanced for the balance. In addition, a placing of circa 10% equity is announced today to fund further growth opportunities following successful 2008 drilling campaigns.

1 Full details in separate Stock Exchange Announcement.