TIDMCNE
RNS Number : 3766A
Cairn Energy PLC
21 January 2020
FOR IMMEDIATE RELEASE 21 January 2020
CAIRN ENERGY PLC
Operational Update
("Cairn" or "the Company")
Ahead of announcing its preliminary results for the year to 31
December 2019 on 10 March 2020, Cairn today provides an update on
its operations and trading performance together with guidance for
2020. This information is unaudited and subject to further
review.
Simon Thomson, Chief Executive, Cairn Energy PLC said:
"Cairn's strong cash flow generation, active portfolio
management and year end net cash provide financial flexibility for
continued strategic delivery across our balanced portfolio.
We are delighted to have achieved FID in Senegal and we look
forward to the results of our exploration drilling programme in
Mexico. The sale of our Norwegian business through two
attractively-priced transactions demonstrates the company's
continued focus on capital discipline and monetisation."
Production
Ø Combined oil production net to Cairn from the Catcher and
Kraken fields in 2019 averaged 23,000 bopd, at upper end of
guidance of 21,000 to 23,000 bopd
Ø Catcher (Cairn 20% WI) averaged 63,600 bopd (gross)
Ø Kraken (Cairn 29.5% WI) averaged 35,600 bopd (gross)
Ø Full year oil production, net to Cairn, for 2020 is estimated
to be 19,000 to 23,000(1) bopd
Corporate and Finance
Ø Oil and gas sales revenue was US$504m at an average realised
price of US64.52/boe (before hedging gains of US$1.39/boe)
Ø Average production cost was US$17.5 per boe
Ø Group cash at year end was US$154m(2) , and excludes expected
proceeds from the sale of Capricorn Norge of US$100m
Ø Net oil sales receivable at year end was US$18m
Ø Company's US$575m RBL debt facility was undrawn at year
end
Ø Capital expenditure during the year was US$245m(3/4)
Ø Cash outflows in respect of development and pre-developments
activities were US$100m(3)
Ø Cash outflows in respect of exploration and appraisal
activities were US$125m(4)
Ø There was an increase in working capital relating to capex of
US$20m during the year (remaining cash outflows in respect of the
previous year's capital programme increased from US$25m at the
start of 2019 to US$45m at the start of 2020)
Ø Capital expenditure for 2020 is currently forecast at
US$595m:
Ø Kraken and Catcher near field developments of US$60m
Ø Senegal of US$400m (based on a 36.4% participating interest in
the Sangomar field(6) )
Ø Current forecast exploration and appraisal expenditure of
US$135m, predominantly related to Mexico, UK, Suriname and Côte
D'Ivoire
Ø To date, Cairn has hedged 2.8m barrels of 2020 oil production,
1.9m barrels using collar structures with a weighted average floor
price of US$62.09/bbl and a weighted average ceiling price of
US$74.89/bbl and 0.9m barrels using swaps with a weighted average
strike price of US$61.85/bbl
Production
Ø The Catcher Area fields continued to outperform during 2019
achieving excellent operating efficiency from the FPSO. On Kraken,
FPSO performance was significantly improved during H2 2019 and this
has continued. Planned shut-downs for maintenance and tie-ins of
new satellite wells on both Catcher and Kraken will occur during
2020. Both fields continue to realise prices in excess of
Brent.
Developments
Ø In Senegal, the JV has taken FID of the Sangomar Field
Development following receipt of the 25-year Exploitation
Authorisation from the Government of Senegal. Phase 1 of the
development will target estimated 2P recoverable oil reserves of
231mmbbls. Over the life of the field, total recoverable oil
resources are estimated to be 500mmbbls with the development also
planning gas export to shore. Operator Woodside has completed the
purchase contract for the FPSO facility and issued full notices to
proceed for the drilling and subsea construction and installation
contracts. The FPSO facility is expected to have a production
capacity of 100,000 bopd with first oil targeted in early 2023.
Ø In the UK, development of the two Catcher Area satellite oil
fields, Catcher North and Laverda, is progressing to plan and
scheduled to be drilled mid-2020, along with an additional Vardero
production well. First oil from both wells is targeted for H1 2021
and together with the infill well, will help to offset natural
decline from the Catcher Area.
Ø Two wells (a producer and injector pair) are planned to be
drilled on the western flank of the Kraken field (Worcester
accumulation) and be tied in and onstream before the year end.
Drilling operations are expected to commence in H1 2020.
Exploration
Ø In Mexico, drilling is ongoing on Cairn's operated Bitol-1
well (50% WI(5) ) in Block 9 and on the ENI operated Saasken-1
exploration well (Cairn 15% WI(5) ) in Block 10 in the Sureste
Basin. When these operations are complete, the Ensco 8505 rig will
drill the ENI operated Ehecatl-1 well in Block 7 (Cairn 30%
WI).
Ø In Suriname (Cairn 100% WI), the 4,500 km of 2D seismic data
acquired in H1 2019 has been fully processed and the products
received. Block-wide interpretations and an update of the prospect
inventory are ongoing, with a decision on future 3D seismic
acquisition to be made later this year and view to potential
drilling activity thereafter.
India
Ø The Arbitral Tribunal has indicated that it expects to be in a
position to issue the Award in the summer of 2020. Cairn continues
to have a high level of confidence in the merits of its claims in
the arbitration and is seeking full restitution for losses of more
than US$1.4 billion.
Norway asset disposals
Ø Completion of farm-out agreement for the sale of 10% interest
in the Nova development to ONE-Dyas AS for US$59.5m in Q4 2019.
Ø Agreement to dispose of the entire share capital of Capricorn
Norge AS to Solveig Gas Norway AS for US$100m plus working capital
adjustments. The transaction is effective from 1 January 2020 and
expected to complete in Q1 2020.
(1) FlowStream's production entitlement in 2019 averaged 1,600
bopd and is expected to be 1,350 to 1,700 bopd in 2020
(2) Group cash at year end includes cash held in Capricorn Norge
which will be accounted for in the carrying value of assets
held-
for-sale rather than group cash in the balance sheet
(3) Shown net of US$20m received from Dyas in December for their
share of 2019 Nova capex
(4) Shown net of Norway tax rebate
(5) Farm-in subject to final legal completion
(6) Cairn currently holds a 40% participating interest in the
project, which would reduce to 36.4% if Petrosen, the state oil
company,
exercises its right to increase its interest from 10% to 18%
during 2020
Enquiries to:
Analysts / Investors
David Nisbet, Corporate Affairs Tel: 0131 475 3000
Media
Linda Bain, Corporate Affairs Tel: 0131 475 3000
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 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,
[Norway], Senegal and Mexico.
For further information on Cairn please see:
www.cairnenergy.com
Glossary
bopd barrels of oil per day
boepd barrels of oil equivalent per day
boe barrels of oil equivalent
mmbbls million barrels
bbl barrel of oil
WI working interest
m million
FPSO Fixed Production Storage Offloading
FID Final Investment Decision
RBL Reserves Based Lending
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END
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