Cairn Energy eyes '˜significant' boost from North Sea

Oil and gas explorer Cairn Energy today said its cash flows were in line for 'significant' boost when two of its North Sea projects come on stream.
Cairn is on track for first oil this year from its Kraken and Catcher projects in the North Sea. Picture: ContributedCairn is on track for first oil this year from its Kraken and Catcher projects in the North Sea. Picture: Contributed
Cairn is on track for first oil this year from its Kraken and Catcher projects in the North Sea. Picture: Contributed

The Edinburgh-based firm said first oil from the Catcher and Kraken developments remains on schedule for this year, with costs on both projects running “significantly below their original budgets”.

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In a trading update ahead of today’s annual meeting, Cairn chief executive Simon Thomson said: “Together they will deliver around 25,000 barrels of oil a day on plateau net to Cairn, generating significant cash flows for reinvestment.”

Cairn has a 29.5 per cent stake in the Kraken project and 20 per cent in Catcher, which are operated by EnQuest and Premier respectively.

The group said it was fully funded to deliver its drilling programme in the North Sea and Barents Sea, with cash of about $254 million (£195m) on its balance sheet, as well as an undrawn reserves-based lending facility.

Thomson also hailed the group’s “world-class” opportunities in Senegal, following yesterday’s announcement of another successful appraisal well – its ninth in three years – as its drilling programme in West Africa begins to bear fruit.

Cairn said that rig performance continued to be “excellent” with operations completed safely and successfully, “ahead of schedule and under budget”.

Analysts at Jefferies noted that the results from the SNE-6 well were “certainly an incremental positive alongside yet more encouraging flow rates.”

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Stephane Foucaud at GMP FirstEnergy added: “We view this set of results as very encouraging.”

Meanwhile, Cairn is looking forward to an end to its long-running tax dispute with the Indian authorities, which has left the firm unable to sell its remaining 10 per cent stake in former subsidiary Cairn India, valued at about $656m. A final and binding ruling from an international arbitration panel is due in January and Thomson said the group remains “confident in our position”.

He added: “To conclude, 2016 was a year of excellent progress, providing a strong platform for further activity in 2017.

“This year, we will commence production in the North Sea, progress the SNE field towards development, drill material exploration wells in Senegal and Ireland, and continue to work on new exploration and development opportunities both from the existing asset base and from new ventures.”

Plexus Holdings, the Aberdeen-based oil and gas technology company, has landed an initial £700,000 order from Norway’s largest independent petroleum producer, Aker BP, to deploy its wellhead equipment at two offshore wells.

“There is the potential for the contract to be extended to include additional wells in the future,” said Plexus, which develops wellhead systems aimed at preventing the type of blowout behind the 2010 Gulf of Mexico disaster.

Aim-quoted Plexus, led by chief executive Ben van Bilderbeek, said in March that its headcount had almost halved over the past year to 70 as it aims to keep costs under control amid “adverse” trading conditions in the energy market.