North Sea production ahead of hopes as Cairn Energy moves to profit

Cairn Energy, the Edinburgh-based energy explorer and producer, has swung back to the black in the first half and said production from its North Sea assets is ahead of expectations.

Cairn Energy has swung back to the black in the first half. Picture: Contributed

The group booked a profit before tax of $43.4 million (£35.2m) for the six months to the end of June, swinging from a hefty $602.9m loss the year before.

That latter figure had been swollen by sizeable losses on impairments and its investment in mining giant Vedanta.

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Cairn raised its oil production guidance for 2019 to between 21,000 and 23,000 barrels of oil per day (bopd), from between 19,000 and 22,000 bopd previously. Average production costs are expected to have fallen.

Chief executive Simon Thomson said: “As a full cycle E&P [energy and production] business Cairn has seen good progress in the first half of 2019 with the opportunity to develop and deliver multiple catalysts for future growth.

“Production performance from our North Sea assets is ahead of expectations, delivering significant cash flow to reinvest in the portfolio.”

John Moore, senior investment manager at Brewin Dolphin, said: "Sustained production at its Catcher Area development in the North Sea, as well as an improved outlook at Kraken will encourage investors in the short term.

"Looking ahead, Cairn has established a position in up to 14 wells next year, is about to start drilling offshore in Mexico, and its development in Senegal is on target.

"All of this makes for positive momentum for the company, which any further increase in the oil price would add to."