Going concern

The Group closely monitors and manages its liquidity risk. Cash forecasts are regularly produced and sensitivities run for different scenarios including, but not limited to, changes in commodity prices and different production rates from the Group’s portfolio of producing fields. The Group normally seeks to ensure that it has a minimum ongoing capacity of £200 million for a period of at least 12 months to safeguard the Group’s ability to continue as a going concern.

Following the equity placing announced in January 2009 and securing the US$2 billion financing in March 2009, the Group’s forecasts and projections show that there is significant capacity and financial flexibility for the 12 months from the date of this Annual Report and Accounts.

Although there is considerable economic uncertainty at the present time, after taking account of the above, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

Further information which is relevant to the application of the going concern assumption is provided in Notes 16 and 17 to the Financial Statements and the sections related to funding within the Business Review.

Pat Plunkett
Chairman
10 March 2009