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Cairn Energy confirms production at top end of guidance

Net oil production for 2019 averaged 23,000 barrels per day (bopd) versus guidance of 21,000 to 23,000 bopd.

Cairn Energy PLC - Cairn Energy confirms production at top end of guidance

Cairn Energy PLC (LON:CNE) put the focus on cash flow in a trading update ahead of its preliminary results, due in March, as it reported production at the top end of guidance.

The FTSE 250-listed oiler, in a statement, said net production for 2019 averaged 23,000 barrels of oil per day (bopd) versus guidance of 21,000 to 23,000 bopd.

Revenue for the year amounted to US$504mln, with oil priced at an average of US$64.52 per barrel, and the company generated US$154mln of cash (excluding US$100mln from an asset sale).

"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,” said Simon Thomson.

READ: Cairn and partners greenlight Senegal oil field

He added: “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

Cairn’s 20% owned Catcher field yielded 63,600 bopd of gross production in 2019, while the 29.5% owned Kraken field produced 35,600 bopd gross.

The company described the performance of the Catcher field as “excellent”, driven by efficiency of the floating production storage and offloading vessel, while Kraken is said to have significantly improved during the second half of the year.

Output in the current year will be impacted by shutdowns, to allow maintenance and the tie-in of new wells at both Catcher and Kraken.

Looking to 2020, the company anticipates full-year production of 19,000 to 23,000 bopd.

Exploration and development

During the period, the company made the final investment decision (FID) for the Sangomar field development opening up a Phase 1 project that addresses 231mln barrels of reserves, with capacity for 100,000 bopd and ‘first oil’ anticipated in 2023.

Satellite projects, Catcher North and Laverda, are progressing to plan with well drilling slated for mid-2020 and ‘first oil’ due in the first half of 2021. Meanwhile, two additional wells are planned to expand the Kraken field.

Exploration work is ongoing with the Bitol-1 well and the Saasken-1 exploration well, in Mexico,  and in Suriname exploration plans are being drawn up following the analysis of seismic data captured in 2019.

Cairn India

Regarding its US$1.4bn arbitration dispute with the Indian authorities, the company said: “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$1.4bn.”

Quick facts: Cairn Energy PLC

Price: 139.1 GBX

LSE:CNE
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Market Cap: £820.07 m
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