TIDMCNE
RNS Number : 6954N
Cairn Energy PLC
22 January 2019
FOR IMMEDIATE RELEASE 22 January 2019
CAIRN ENERGY PLC
Operational Update
("Cairn" or "the Company")
Ahead of announcing its preliminary results for the year to 31
December 2018 on 12 March 2019, Cairn today provides an update on
its operations and trading performance together with guidance for
2019. This information is unaudited and subject to further
review.
Simon Thomson, Chief Executive, Cairn Energy PLC said:
"Cairn enters 2019 with balance sheet strength and cash flow
from North Sea production to fund significant growth
opportunities.
The SNE and Nova development projects are progressing on track,
evaluation of the recent Agar discovery is ongoing and we look
forward to commencing a material exploration drilling programme in
2019 with up to seven wells offshore Mexico, the UK and Norway
targeting a total gross volume in excess of one billion
barrels.
We also expect a final international arbitration decision on our
India claim in the near term and we remain confident of our
position."
Production
Ø Combined production net to Cairn from the Catcher and Kraken
fields in 2018 averaged 17,500* boepd
Ø Catcher (Cairn 20% WI) averaged 43,000 boepd (gross) in
2018
Ø Kraken (Cairn 29.5% WI) averaged 30,300 boepd (gross) in
2018
Ø Full year production, net to Cairn, for 2019 is estimated to
be 19,000 to 22,000* boepd
Corporate and Finance
Ø Oil and gas sales revenue was US$395m at an average realised
price of US$68/boe (before hedging costs of US$1.34/boe)
Ø Average production cost was US$20 per boe
Ø Group cash at year end was US$66m
Ø Oil sales receivable at year end was US$39m
Ø Year end Norway exploration tax receivable was US$32m, with
US$27m drawn under the Norway Exploration Finance Facility
Ø The company's US$575m Reserves Based Lending facility was
US$85m drawn at year end: loan maturity now extended to 2025
Ø Capital expenditure during the year was US$335m, in line with
guidance;
Ø Cash outflows in respect of these activities in 2018 were
US$260m (US$170m development and pre-development expenditure,
US$90m exploration and appraisal expenditure)
Ø Remaining cash outflows in respect of these activities post
year end are expected to be US$75m
Ø Capital expenditure for 2019 is currently forecast at
US$305m;
Ø Kraken, Catcher, Nova and pre-FID costs in Senegal of
US$135m
Ø Current forecast exploration and appraisal expenditure of
US$170m
Ø To date, Cairn has hedged 2.7m barrels of 2019 oil production
using collar structures with a weighted average floor price of
US$67/bbl and a weighted average ceiling price of US$83/bbl
Developments
Ø In Senegal, the SNE Field Development (Cairn 40% WI) is on
track with the Final Investment Decision targeted for mid-2019. The
phased Field Development and Exploitation Plan has been submitted
to the Government of Senegal with first production targeted in
2022. Woodside has assumed the role of development operator as
planned and the project finance process has been successfully
launched.
Ø In Norway, the Nova Field Development (Cairn 20% WI) in the
Norwegian North Sea is on track with all key development contracts
awarded and execution activities commenced. Nova is expected to
deliver first oil from 2021 with peak production of 50,000 bopd
(10,000 bopd net to Cairn).
Ø In the UK, project sanction is targeted in 2019 for the
near-field Catcher discoveries identified as potential subsea
tie-backs to maintain and extend plateau production. Further
evaluation of the development options for the Agar discovery is
being undertaken during H1 by the partners to establish
commerciality of the discovery and broader exploration potential.
(Cairn has an option to take over Operatorship of the discovery
(50% WI).
Exploration
Ø In the UK and Norway, up to four exploration wells are planned
in 2019 across a variety of play types with material prospects and
equity interests: Presto (Cairn 30% WI) expected to spud shortly,
Lynhaug (Cairn Operator 50% WI), Godalen (Cairn Operator 40% WI)
and Chimera (Cairn Operator 60% WI) all expected to spud in Q3
2019.
Ø In Mexico, three exploration wells are planned in shallow
water Gulf of Mexico for Q3 and Q4 2019. In Block 9 (Cairn Operator
65% WI) drilling operations on the first well are expected to
commence in Q3, followed by the second well in Q4 2019. In Block 7,
(Cairn 30% WI) drilling is planned for Q3 2019.
Ø In Suriname (Cairn 100% WI) a 4,150km 2D seismic acquisition
commenced in January 2019 and in Côte d'Ivoire (Cairn 30% WI) 2D
seismic acquisition is expected to commence in Q3 2019.
India
Ø All submissions and procedural steps for the international
arbitration under the UK-India Bilateral Investment Treaty (the
"Treaty") are now complete
Ø Drafting of the final award by the Tribunal is ongoing
Ø Cairn's claim under the Treaty is for monetary compensation of
US$1.4 billion, the sum required to reinstate the company to the
position it would have been in, but for the actions of the Indian
Income Tax Department since January 2014
Ø Cairn continues to have a high level of confidence in the
merits of its claims in the arbitration
*FlowStream's production entitlement in 2018 averaged 1,360 bopd
and is expected to be 1,350 to 1,575 bopd in 2019
Enquiries to:
Analysts / Investors
David Nisbet, Corporate Affairs Tel: 0131 475 3000
Media
Linda Bain, Christian Goodbody Tel: 0131 475 3000
Cairn Energy PLC
Patrick Handley, David Litterick Tel: 0207 404 5959
Brunswick Group LLP
About Cairn Energy PLC
Cairn is one of Europe's leading independent oil and gas
exploration and development companies and has been listed on the
London Stock Exchange for 30 years. Cairn has explored, discovered,
developed and produced oil and gas in a variety of locations
throughout the world as an operator and partner in all stages of
the oil and gas lifecycle.
Cairn's exploration activities have a geographical focus in
North West Europe, West Africa and Latin America, underpinned by
interests in production and development assets in the North Sea.
Cairn has its headquarters in Edinburgh, Scotland supported by
operational offices in London, Norway, Senegal and Mexico.
For further information on Cairn please see:
www.cairnenergy.com
Glossary
bopd barrels of all per day
boepd barrels of oil equivalent per day
boe barrels of oil equivalent
bbl barrel of oil
WI working interest
m million
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END
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