Simon Thomson, Chief Executive, Cairn Energy PLC said:
"Cairn’s future programme of high quality development projects and material exploration drilling is fully funded through to delivery of free cash flow from 2017.
The Company is focused on creating value and shareholder returns from disciplined capital allocation across a balance of exploration and development assets.
Over the next twelve months, the Company has an active programme of exploration and appraisal wells with all drilling beyond the current frontier operations targeting mature and emerging basins. In line with this strategy the farm-in to the Statoil-operated Ensis prospect in the Barents Sea commences a planned entry to this emerging region. In the meantime the Company is addressing its organisational size to ensure it has the appropriate structure to deliver the future work programme.
Cairn continues to seek resolution of the tax issue in India and will take all necessary steps to protect shareholders’ interests.”
- Group cash at 30 June 2014 of US$1.1bn
- US$575m Reserve Based Lending bank facility agreement concluded by all parties in July 2014
- H2 2014 development and exploration capex US$300m; 2015 exploration programme capex preliminary estimate of US$110m, focused on mature and emerging basins in North West Europe; 2015 to 2017 capex on Catcher and Kraken US$1billion
- While interactions are ongoing with the Indian Income Tax Department, Cairn is currently unable to access the value in its ~10% residual shareholding in Cairn India Limited (CIL) valued at ~US$1.1bn at 30 June 2014. Cairn is continuing to take all necessary steps to protect shareholders’ interests
- Addressing the organisational structure to retain core technical skills with a strong senior leadership team but delivering a reduction in the central cost base
- A total of 56.1mmboe were booked as 2P Reserves at 30 June 2014 on a net working interest basis
- The Catcher Field Development Plan (FDP) received approval from the Department of Energy and Climate Change (DECC) in June with first oil targeted mid 2017. Consequently, Cairn has added 26.6 mmboe 2P reserves (Cairn 30% WI)
- The Kraken development is progressing on schedule with first oil expected 2016/2017 (Cairn 25% WI) and 2P net reserves of 29.5 mmboe
- 1.Seven exploration and appraisal wells are currently committed over the next twelve months:
- Drilling is ongoing on the FAN-1 well, in Senegal, following which operations will re-commence on the SNE-1 well
- In the Barents Sea, Cairn farmed in as non-operator to exploration block PL393B, which includes the Ensis prospect where a well is currently being drilled
- In the UK North Sea, drilling on the non operated Aragon well is underway. Elsewhere in the UK North Sea, the West of Kraken well is scheduled to start drilling in Q3/Q4 2014
- Plans are underway to source a rig for the Spanish Point appraisal well in 2015, subject to the necessary approvals; 3D seismic acquisition in the area is ongoing
- 5,100km2 of 3D seismic is being acquired and one exploration well is planned to commence on the Cap Boujdour Contract Area in Q4 2014
- 2.A number of further material contingent exploration wells, predominantly in the North Sea, will be subject to final investment decisions by partners during H2 2014
- 3.Future exploration expenditure will focus on mature and emerging basin opportunities. For the Group’s extensive frontier exploration acreage, no further capital is committed beyond the current drilling programme and Cairn retains the flexibility to leverage success, farm down and partner as appropriate