Cairn Energy PLC Operational Update (7610H)
March 27 2020 - 2:00AM
UK Regulatory
TIDMCNE
RNS Number : 7610H
Cairn Energy PLC
27 March 2020
FOR IMMEDIATE RELEASE 27 March 2020
CAIRN ENERGY PLC ("Cairn")
Operational Update - 2020 Reduced Capital Expenditure
Further to its Preliminary Results disclosure on March 10, 2020
and in light of current market conditions, Cairn is proactively
reviewing each of its assets and related capital expenditure
programmes. Significant reductions and deferrals have already been
identified for the 2020 programme, representing an overall 23%
reduction in capital expenditure for the year. Further initiatives
relating to the whole forward programme are under active discussion
with joint venture partners and other stakeholders. These changes
are not expected to impact our previously disclosed production and
production cost guidance for 2020.
Simon Thomson, Chief Executive Officer, Cairn Energy PLC
said;
"The health and safety of our staff and contractors remains our
primary focus in these challenging times. We have also moved
quickly to adjust our forward capital programme to current market
conditions.
Our balance sheet remains strong and we are proactively
reviewing options for further capital expenditure savings and
deferrals, whilst retaining the financial flexibility to add value
on an ongoing basis."
Producing Assets
Ø Planned 2020 capital expenditure on the UK producing assets is
expected to be below US$45 million, reduced from the original
forecast of US$65 million as a result of cost savings identified
and the deferral of certain activities planned for the Catcher
fields.
Development Assets
Ø The Sangomar joint venture partnership is working
collaboratively to assess several substantial initiatives to reduce
and re-phase capital expenditure on the Sangomar Development
Project. At this stage, based on initiatives already identified,
Cairn's expectation is that net capital expenditure on Sangomar in
2020 will be below US$330 million, reduced from the original
forecast of US$400 million. A broader review of capital expenditure
for 2020 and future years is ongoing with the joint venture, and an
update on the results of that will be provided in due course.
Exploration
Ø All forward capital expenditure on exploration and appraisal
activity is now deferred with the exception of ongoing operations
on the Eni operated Ehecatl well in Mexico. Capital expenditure on
exploration in 2020 is now anticipated to be approximately
US$100million, reduced from the original forecast of US$150
million.
The Company remains well funded from existing sources of
financing:
Ø 2020 opening cash position of US$255 million (proforma for the
sale of the Group's Norwegian subsidiary which completed in
February).
Ø Cashflows from UK production, which is expected to be in the
range of 19,000-23,000 bopd in 2020 with 36% of mid case production
hedged at US$62/bbl Brent and a targeted all-in production cost of
below US$20/boe.
Ø Undrawn US$575 million reserves-based lending facility, which
includes an "accordion" option to increase lending commitments by
up to an additional US$425 million on the inclusion of Sangomar in
the borrowing base assets. An update on the actual additional debt
capacity determined by the inclusion of Sangomar in the facility
will be provided as discussions with lenders progress.
Enquiries:
Analysts/Investors
Simon Thomson Chief Executive Officer
James Smith Chief Financial Officer
David Nisbet, Corporate Affairs Tel: 0131 475 3000
Media
Linda Bain, Corporate Affairs Tel: 0131 475 3000
Patrick Handley, David Litterick, Brunswick Tel: 0207 404 5959
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 the
North Sea, West Africa and Latin America, underpinned by interests
in production and development assets. Cairn has its headquarters in
Edinburgh, Scotland supported by operational offices in London,
Senegal and Mexico.
For further information on Cairn please see:
www.cairnenergy.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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