9th Mar 2021 10:46
(Alliance News) - Cairn Energy PLC on Tuesday said it swung to loss in 2020 amid lower volume and sales price of oil.
In a separate statement, Royal Dutch Shell PLC said it has agreed to sell upstream assets in Egypt's Western Desert to a consortium composed of Cairn Energy and Cheiron Petroleum. The disposal is for a base amount of USD646 million, with additional payments of up to USD280 million through 2024.
The package of assets consists of Shell Egypt's interest in 13 onshore concessions and its share in Badr El-Din Petroleum Co.
"It will enable Shell to concentrate on its offshore exploration and integrated value chain in Egypt, including seven new blocks in the Nile Delta, West Mediterranean and Red Sea. It will help Egypt maximize the potential of its onshore assets through new investment, helping secure energy and revenue for years to come," said Wael Sawan, Shell's Upstream director.
In turn, Cairn said this acquisition is in line with its strategy of seeking to grow, diversify and extend its production base. The portfolio in Egypt offers low cost production, near-term development and exploration potential, provides immediate operating cashflow contribution and adjusts our overall hydrocarbon split towards gas.
Shell A shares were trading 2.0% higher in London on Tuesday at 1,577.40 pence each, while the oil major's B shares were up 1.8% at 1,515.00p each. Cairn shares were trading 3.3% lower at 192.20p each.
Separately, Cairn said it has agreed to sell its 20% interest in the Catcher field and 29.5% interest in the Kraken field, both in the UK, to Waldorf Production for USD460 million in cash, plus additional payments contingent on oil prices through to the end of 2025. Completion of this disposal is currently expected in the second half of 2021.
"The divestment of our UK producing assets as they move into decline phase, will further strengthen our ability to pursue Cairn's strategic goals and position the company robustly for the decade ahead," explained Cairn Chief Executive Simon Thomson.
Turning back to Cairn's annual results, the company reported production of 21,350 barrels of oil equivalent per day for 2020, down from 23,739 barrels of oil equivalent per day reported for 2019.
Sales volumes in 2020 were also lower, at 20,993 barrels of oil equivalent per day compared to 21,412 barrels of oil equivalent per day a year earlier. Average price per barrel was USD42.56, down from USD65.70 in 2019.
Average production costs per barrel of oil equivalent grew to USD19.73 yea-on-year from USD17.38.
Revenue from production totalled USD324.5 million in 2020, down from UDS504.2 million in 2019. Net cash inflow from operating activities was USD257.9 million versus USD406.5 million the year prior.
Cairn said it swung to loss of USD117.4 million from USD119.5 million profit reported for 2019. The company noted a non-repeat of a gain recorded in 2019 of USD147.3 million as a reversal of impairment of property, plant & equipment.
"As we continue to live and work with the consequences of the global pandemic, we have focused on keeping our people safe while maintaining momentum on business priorities and returning value to shareholders," said Thomson.
By Evelina Grecenko; [email protected]
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