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Cairn Energy shareholders given positive development update at AGM
Investors in Cairn Energy were promised a 2018 year that would be "just as active" as 2017 on Tuesday, as they gathered for the company's annual general meeting in Edinburgh.
The FTSE 250 firm, which achieved first oil from both the Catcher and Kraken developments in the North Sea, said both were now ramping up to achieve full-capacity production by mid-year.
Between 17,000 and 20,000 barrels of oil per day (bopd) was expected to Cairn over the 2018 year, with production continuing to grow into 2019, shareholders were told.
"Cairn's strategy is to create, add, and realise value for shareholders from a balanced portfolio of exploration, development and production assets," said chief executive Simon Thomson.
"Over recent years, we have rebuilt our company to deliver this strategy.
"Cairn today offers investors a fully-funded, full-cycle portfolio with an active development pipeline and a multi-year material exploration drilling programme."
In Senegal, Cairn said it had "successfully and safely" completed its third exploration and appraisal drilling campaign.
It had now fully appraised the SNE field, and selected its field development concept, targeting first oil between 2021 and 2023.
"Tenders for the floating production storage and offloading vessel (FPSO) and subsea infrastructure were issued in the first quarter, and responses are expected to be received by the end of May," Simon Thomson explained.
"We are targeting submission of the evaluation report to the Government of Senegal by the end of the second quarter.
"The transfer of operatorship to Woodside will follow thereafter."
Cairn expected to pass several key milestones in Senegal later in the year, Thomson said, adding that the company was working "hard" on the phased exploitation plan, which it would present to the Government of Senegal in the second half with a final investment decision to follow.
That plan would target production of around 100,000 bopd from the field.
"Meanwhile, we are excited about Nova in Norway where development planning work is ongoing and we expect to achieve first oil in 2021 with peak net production to Cairn of around 10,000 bopd.
"The plan for development and operation will be submitted imminently with approval expected in the third quarter."
Turning to exploration, Thomson said the company was planning to drill four wells in 2019-2020 in Mexico, where it had acquired new licences.
Those sat in "very attractive" acreage next to blocks where significant discoveries had recently been made, and the board had already identified several attractive prospects and leads.
Cairn was also said to be evaluating and actively examining further exploration activities to extend its portfolio, including Ireland and now Suriname, where it had been awarded a large, operated exploration block.
"This is particularly interesting as Suriname has a conjugate margin with Senegal where we have excellent proprietary insight and understanding.
"More immediately, we have a drill-ready portfolio in the UK and Norway and this year began an extensive exploration drilling campaign over 2018 and 2019, targeting more than 1 billion barrels gross of unrisked reserves," Simon Thomson added.
"In the third quarter, we expect to spud our first operated well in the region on the Ekland prospect."
All of that planned activity was fully funded, Thomson confirmed.
The company had "significant" funding headroom, and had already started to receive cash flows from Catcher and Kraken that ensure it retained its flexibility.
"We remain confident in our position regarding the Indian tax dispute.
"International arbitration proceedings are well advanced with the final hearing of our claim under the UK-India Bilateral Investment Treaty scheduled for August in The Hague with an outcome expected in the fourth quarter.
"Our platform for creating value therefore remains strong."