Cairn Energy comfortable with outlook after first half

Cairn Energy released its half-year report for the six months to 30 June on Tuesday, reporting oil sales revenue of $172m at an average realised price of $66.97 per barre, or $67.81 before hedging costs.

The FTSE 250 company said group cash stood at $75m as at 30 June, with its reserves based lending facility $65m drawn.

It reported the extension of its existing $575m reserves based lending maturity from 2021 to 2025 had been agreed, in order to incorporate expected Nova cash flows into the debt capacity calculation and create additional flexibility.

The company had a Norway exploration tax receivable of $62m as at 30 June, and $59m was drawn under the Norway exploration finance facility.

Cash outflow on the Kraken, Catcher, Senegal and Nova developments reached $86m in the first half, and was forecast at around $124m for the second half.

Exploration cash outflow across the portfolio was $48m in the period, and expected to be around $72m in the second half, net of its Norwegian exploration tax rebate.

Cairn also reported that the launch of SNE project finance was expected in the fourth quarter.

Looking at production, Cairn said Catcher - where it has a 20% working interest - averaged 27,000 barrels of oil equivalent per day gross in the first half, which it said reflected constrained production as commissioning was completing and ramp-up continued.

It was producing up to 60,000 barrels of oil per day gross in August.

At Kraken, where Cairn has a 29.5% working interest, production averaged 30,700 bopd gross in the period, which was said to be primarily the result of planned and unplanned production downtime.

Kraken was producing between 35,000 and 40,000 bopd gross in August.

Combined net production to Cairn from the fields in the first half averaged 14,400 boepd, with production in June averaging 19,700 boepd.

Cairn said combined net production in the second half was expected to average between 20,500 and 22,000 boepd net to the company.

“Cairn has made strong progress across its balanced portfolio,” said Cairn Energy chief executive Simon Thomson.

“Cash flow from the North Sea is now established and development projects in Senegal and Norway are well advanced to support the production base over the long term.”

Thomson said the board was also “delighted” to have enhanced Cairn’s exploration portfolio with “potentially high impact” opportunities across frontier and emerging basins.

“This additional acreage supplements our existing active programmes in the UK, Norway and Mexico.

“This continued strategic delivery, together with our strong balance sheet, ensures Cairn remains well-positioned to access material value growth potential.”