Notwithstanding heavy investment and exploration costs, Edinburgh-based Cairn Energy yesterday reported preliminary profits of $263.1 million for the year ending December 2017 – compared to losses of $95 million the year before.
During 2017, Cairn added 10 new licences to its exploration asset portfolio – seven in the UK and Norwegian North Sea (including three as operator), two new licences offshore Mexico and one offshore Ireland.
The work in advance of obtaining these new licences is reflected in the increased costs in the year to $44 million – which includes $23 million of seismic acquisitions in the North Sea
With the one unsuccessful exploration well drilled in the year and a further write-down of inventory, unsuccessful exploration costs relating to Ireland of $35 million was the largest component of the group’s 20 charge.
Other costs include $18 million on the relinquishment of licences in Western Sahara and Malta, within the International region, and $8 million on costs in the UK & Norway, where a number of licences were relinquished.
Chief executive Simon Thomson said: “With first oil production from our North Sea developments, 2017 was a successful year for Cairn as we achieved several important milestones and progressed our strategy as a full cycle exploration and production company.”
The Catcher and Kraken fields in the North Sea (in which Cairn Energy has a working interest of 20% and 29.5% respectively) achieved first-oil during the year, with total project cap-ex expenditure estimated to be around 30% and 25% respectively below original projections.
This year, full year production, net to Cairn, is estimated to be 17,000-20,000 bopd, with ongoing project commissioning on both fields expected to be completed in Summer 2018.
- A final international court hearing in Cairn’s long-running dispute over its alleged non-payment of taxes in India – which is still being pursued for enforcement by the Indian tax department – is scheduled for August this year in The Hague.
14 Mar 2018