Oil and gas explorer Cairn Energy is eyeing an eventful year as it looks to start production in the North Sea and plans more drilling off the coast of west Africa.
With net cash of $335 million (£276m), the Edinburgh-based firm said it was fully funded for its capital commitments and continues to look at new opportunities to add to its portfolio of interests.
The next 12 months will be an eventful period for CairnSimon Thomson
Cairn is targeting first oil from the massive Kraken and Catcher fields in the North Sea this year. Later this month it will also embark on the third phase of drilling at the SNE discovery off the coast of Senegal where it has already drilled six successful wells.
In a trading update, chief executive Simon Thomson said: “The next 12 months will be an eventful period for Cairn.
“We will shortly embark on further exploration and appraisal drilling in Senegal and we continue to work towards first oil and cashflow from our North Sea assets.”
Thomson said the group’s African development was a “significant and growing resource base”.
He told investors: “The 2017 drilling programme aims to further define the SNE field for development and target additional exploration upside on the acreage. Cairn is fully funded in respect of all of our capital commitments and we continue to actively assess and pursue new ventures within the context of a balanced portfolio.”
Cairn has a 29.5 per cent stake in the Kraken project and a 20 per cent holding in Catcher, and expects net production from the developments to peak at about 25,000 barrels of oil equivalent per day. It said that total project capital expenditure for Catcher is now forecast at $1.6 billion, some $600m lower than original estimates.
The group also said that international arbitration proceedings are progressing in its bid to resolve a tax dispute with the Indian authorities, which has left it unable to sell the remaining 10 per cent stake in its former subsidiary Cairn India, currently valued at $656m.
Earlier this month analysts at Jefferies highlighted Cairn as one of its top picks for the sector, arguing that further drilling in Senegal and progress with its North Sea interests were share price catalysts.
Cairn is due to report its results for 2016 on 8 March.
Meanwhile, Scottish Enterprise has unveiled a new guide aimed at helping Scotland’s oil and gas supply chain diversify into other markets such as offshore wind and nuclear decommissioning amid the challenges posed by the low oil price.
Director of energy at Scottish Enterprise, Maggie McGinlay, said: “Whilst the North Sea will continue to have a long-term future for Scotland’s oil and gas sector, the current global challenges have highlighted the need for supply chain companies to leverage their skills and experience built up over the last 50 years to target opportunities in other sectors.”