Cairn Energy PLC (LON:CNE) is sticking to its guidance for 2020, but, has told investors it is proactively reviewing each of its assets and evaluating initiatives to reduce capital spending.
The London-listed oiler, in a statement, said significant capex reductions and deferrals have already been identified for the 2020 programme, representing around 23% of previously envisaged spending for the year.
Capex is now anticipated below US$45mln in 2020 for Cairn’s producing assets as a result of saving and deferrals at the Catcher field.
Net development capex at the Sangomar joint venture project is now expected to be below US$330mln for the year, down from US$400mln.
READ: Cairn Energy emphasised “strong” cash flow two weeks ago
Meanwhile, all forward exploration spending has been deferred with the non-operated Ehecatl well in Mexico being the only exception. Cairn now expects to will spend US$100mln of capex on exploration, down from US$150mln previously.
Further initiatives in the forward programme are under active discussion with joint venture partners and other stakeholders, Cairn added.
Chief executive Simon Thomson said: “We have also moved quickly to adjust our forward capital programme to current market conditions.
“Our balance sheet remains strong and we are proactively reviewing options for further capital expenditure savings and deferrals, whilst retaining the financial flexibility to add value on an ongoing basis."
Cairn noted it opened 2020 with US$255mln of cash, and, it has around US$575mln of undrawn reserves-based lending facilities, with an “accordion” option for up to US$425mln of extra financing with the inclusion of Sangomar into the borrowing base.
It anticipates production from UK operation to be between 19,000 to 23,000 barrels of oil per day, with around 36% hedged at US$62 per barrel, and production costs are due to be below US$20 per barrel.