Cairn cuts annual losses, but ups investment in Senegal oil exploration

Cairn EnergyEdinburgh-based Cairn Energy has managed to reduce its losses after tax last year to $381 million, compared to $565 million the year before.

But – in contrast to many of its bigger rivals – Cairn today announced a $75 million increase in its oil exploration budget to $185 million this year.

However, this will not be in its ‘home territory’ in the North Sea. Instead, Cairn has allocated  $135 million of this to drill more wells in Senegal following promising discoveries there last year.

Closer to home, Cairn has completed a farm out agreement to Dyas UK for the sale of 10% interest in the Catcher development in the North Sea.

Its Catcher and Kraken developments in the North Sea are on track for first oil from 2017, with a  targeted peak net production to Cairn of ~22,500 boepd;

Catcher

  • Field Development Plan approved Q2 2014 now in execution phase
  • Development drilling scheduled to commence in the middle of 2015
  • Construction of the FPSO hull started in Q1 2015

 Kraken

  • Development drilling scheduled to commence in the middle of 2015
  • FPSO construction continues in Singapore and fabrication of main process modules has started
  • Cairn also plugged and abandoned the Ensis and Aragon fields in the North Sea.

Simon Thomson, Chief Executive, Cairn Energy, said: “In the last 12 months, we have actively managed the portfolio and streamlined the business to provide continued financial flexibility to deliver our active exploration, appraisal and development programmes.

“We enter 2015 in a strong position with further drilling planned in Senegal to evaluate the scale of this world class asset, which has the ability to add substantial value for the company and all stakeholders.”

Meanwhile, Oil and Gas UK has told Shadow Chancellor Ed Balls about the urgent need for regulatory and fiscal reform and improvements in cost efficiency to restore the international competitiveness of the UK oil and gas industry.

A spokesman for the London-based trade association said: “The UK oil and gas industry is suffering from high costs, years of under-resourced regulation and a tax burden of between 60 and 80 per cent, with the impact on competitiveness exacerbated by the collapse in oil prices.

“Indeed, Oil & Gas UK’s Activity Survey 2015 shows that exploration has fallen to levels last seen in the 1970s and capital investment is now at risk of falling by £3-4 billion per year over the coming three years. 

“So we took the opportunity to advise Balls of the progress that’s being made on regulatory reform with the establishment of the Oil and Gas Authority, the actions being taken by industry to reduce its high cost base and the urgency of significant and permanent changes to the tax regime.”

 

 

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