12th May 2016 11:07
LONDON (Alliance News) - The chief executive of Cairn Energy PLC Thursday said it is fully funded over the next couple of years as the company builds on its successful drilling in Senegal and edges closer to completing its major development projects in the UK North Sea.
Speaking ahead of the annual general meeting later Thursday, Simon Thomson said its drilling programme in Senegal is under budget and ahead of schedule after drilling six wells on the SNE field over the last 18 months.
The first five wells have proved successful so far and the results for the most recent well, SNE-4, are expected shortly. Cairn updated its resources in March to take the new wells into account, which led to a 30% rise to the contingent resources within the field to 200.0 million barrels of oil.
Cairn plans to update he resource again, publishing the results in its first half results which will be published sometime in August. The SNE-3, BEL-1 and SNE-4 wells will be included in that update as they are not included in the current estimate.
"Operations in Senegal are ahead of schedule and substantially under budget. The three year evaluation period approved at the beginning of the year by the Government of Senegal allows the joint venture sufficient time to properly appraise the SNE discovery and to pursue further exploration on the block," said Thomson.
"We have gathered a very large volume of data from operations to date and we look forward to progressing our long-term, multi-field, multi-phase exploitation plan to maximise value in Senegal. We see clear potential to access additional cost savings from the current lower operating environment in respect of planned future activity," he added.
Cairn also has two major development projects in the UK North Sea, Catcher and Kraken. Both of those projects are also under budget and on schedule to begin producing in 2017. Cairn has also bolstered its North Sea portfolio after being awarded five licences in offshore Norway, one of which will operated by Cairn.
The company is well funded with USD502.0 million in cash and USD575.0 million worth of facilities that have not be touched. Cairn said it expects to have drawndown USD260.0 million of those facilities by the end of 2017, when its major development projects will have been completed.
That means Cairn has funds to invest in new opportunities.
"In summary, Cairn's strategy of providing exploration-led growth from a fully-funded, balanced portfolio remains central to our strategic delivery. Key to this strategy is the creation, addition and realisation of value across the portfolio," said Thomson.
"When we look at our emerging and frontier basin positions we are always seeking to access large acreage interests which offer the potential for follow on in the event of success and are also technically and commercially attractive in a lower oil price environment," he added.
Thomson also touched upon Cairn India, in which it holds a 10% stake that it cannot currently access. The company has valued its shareholding in the company and accrued dividends, which it has not been receiving, and said this is valued at around USD445.0 million.
"We have filed a claim under the UK-India Investment Treaty and a formal arbitration process is now underway with a view to resolving the matter. As we have previously stated, the issue is confined to our Indian assets," said Thomson.
Cairn shares were up 2.7% to 212.90 pence per share on Thursday.
By Joshua Warner; [email protected]; @JoshAlliance
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