Oil and gas explorer Cairn Energy is to press ahead with more appraisal work in Senegal this year after hailing positive results from a recent test well.
The Edinburgh-based firm, which has been locked in a $1.6 billion (£1.1bn) dispute with India’s tax authorities for two years, also told investors that it has a “high level of confidence” in its case, which relates to former subsidiary Cairn India.
Cairn is due to release its annual results on 15 March, and in today’s trading update said it ended 2015 with a net cash balance of $603 million.
“Further appraisal activity this year will test the overall scale and extent of the resource base in Senegal, and is expected to lead to revision of the resource estimates,” said chief executive Simon Thomson.
“The company remains fully funded from existing financial resources to deliver its exploration and appraisal programme, as well as to take its North Sea developments through to free cashflow generation in 2017.”
Proceedings against the Indian government under a UK-India investment treaty have now begun in a bid to resolve the tax dispute over the group’s remaining 10 per cent stake in Cairn India, which it cannot sell while the case is ongoing. Its shareholding in the business was valued at $1bn at the end of 2013, but has since slumped in value to $384m.