Cairn Energy Preliminary Results Announcement

Cairn enters 2016 fully funded to complete an active exploration and appraisal drilling campaign focusing on Senegal, as well as to deliver first oil from the Kraken and Catcher development projects in the UK North Sea, which will generate cashflow for the Group from 2017.
As a result of actively managing its capital programme, reducing administrative expenditure and maintaining strong cash balances and undrawn debt facilities, the Group is in a strong financial position, able to withstand and deliver returns from a lower oil price environment.
Net funds and capital expenditure
At 31 December 2015, the Group held cash balances of US$603m (2014: US$869m). The Group’s Reserve-Based Lending facility remains undrawn with debt availability to fund UK development assets increasing with project progress and with availability expected to reach US$335m at peak and US$260m by 2017. An additional sum of US$175m is available in the form of Letters of Credit.
senegalThe Group is currently operating a three well exploration and appraisal campaign offshore Senegal with remaining costs forecast of US$100m. Cash expenditure on the Group’s development projects in the year was US$114m with forecast costs through to end 2017 of US$465m.
Simon Thomson, Chief Executive, Cairn Energy PLC said:

“We are delighted with the results to date of our multi-well evaluation programme offshore Senegal, which has confirmed the scale and extent of the significant resource base in this world class asset.
Cairn’s 2C current resource estimate for the SNE field has gone up by 20 percent and the positive results of the latest appraisal well provide the potential to further increase the size of the SNE field.
A combination of financial strength and continued exposure to material growth opportunities leaves Cairn well-placed to deliver additional value for shareholders from its balanced portfolio.”

    Financial Highlights

Ø US$603 million (m) Group net cash at 31 December 2015
Ø Reserve Based Lending bank facility remains undrawn; debt availability to fund UK development assets increasing with project progress, with availability expected to reach US$335m at peak and US$260m by 2017; additional US$175m available in the form of Letters of Credit
Ø A total of 49.5 mmboe booked as 2P reserves and 196.5 mmboe booked as 2C Contingent Resources on a net working interest basis at 31 December 2015

    Exploration Senegal

Ø Cairn resource estimates of the SNE-1 discovery in the Sangomar Deep Offshore block upgraded following the incorporation of SNE-2 well results to:
Ø P90 (1C) increased by 30% to 200 mmbbls
Ø P50 (2C) increased by 20% to 385 mmbbls
Ø P10 (3C) increased to 690 mmbbls
Ø Successful testing of SNE-2, the first appraisal well with positive results, announced in January 2016
Ø Successful testing of SNE-3, the second appraisal well, announced in March 2016
Ø BEL-1 exploration well commenced operations in March 2016
Ø Resource upgrade does not include results of the SNE-3 appraisal well where data analysis is ongoing. Any further resource revisions following full analysis of the results of SNE-3 and BEL-1 will be announced in due course

    North Sea

Ø Catcher and Kraken developments in the UK North Sea on track for first oil from 2017
Ø Additional 4.5% interest in Kraken acquired, after the year end, from First Oil bringing Cairn’s total working interest to 29.5%
Ø Peak net targeted production to Cairn for North Sea interests of ~25,000 boepd
Ø Five new licences awarded in Norway in Q1 2016, including one as Operator
Ø Kraken West, UK North Sea (EnQuest Operator, Cairn 29.5% WI) appraisal well confirmed the presence of oil with potential for upside. Further evaluation is ongoing
Ø Crossbill, Norwegian North Sea (Wintershall Operator, Cairn 20% WI) was a dry well. Operations were completed in Q2 and the well was permanently plugged and abandoned

    India Tax Dispute

Ø International arbitration proceedings have commenced to settle the Indian tax dispute, with Cairn claiming full compensation for the ~US$1 billion value of which its shareholders have been deprived
Ø The total assets of the Cairn subsidiary against which the Indian Tax Authorities are seeking to pursue a tax claim are US$477m (including principally the group’s ~10% shareholding in Cairn India Limited) and any recovery by the Indian authorities would be limited to such assets
For Full Press Release: Group Income Statement


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