Cairn Energy PLC (CNE) - Interim Management Statement
RNS Number : 9429O
Cairn Energy PLC
18 October 2012
18 October 2012
CAIRN ENERGY PLC ("Cairn" or "the Company")
Interim Management Statement
Re-balancing the business to deliver exploration-led growth
Cairn Energy PLC is today issuing its Interim Management Statement in
accordance with the reporting requirements of the EU Transparency Directive.
Simon Thomson, Chief Executive, Cairn Energy PLC said:
"Cairn is pleased with the progress made this year in re-balancing the
portfolio for exploration-led growth underpinned by sustainable cash flow.
Cairn's balance sheet strength, entrepreneurial exploration skills and
operational capabilities allow it to target high impact wells across
transformational frontier and mature basins whilst accessing further growth
from the Company's development and production assets."
· Group cash at 30 September 2012 of ~US$1.6 billion (bn)
· On-market sales of an aggregate 11.5% shareholding in Cairn India Limited
(CIL) for a net cash consideration of ~US$1.3 bn. Cairn retains ~10%
shareholding in CIL with current market value of ~US$1.2 bn
· Acquired two operated frontier exploration blocks in Morocco with first
well targeted Q4 2013, subject to Government of Morocco approval
· In Greenland, interpretation of 3D seismic on the Pitu Baffin Bay block
and southern Greenland acreage well advanced. Targeting exploration drilling
in Pitu in 2014, subject to Government of Greenland approval
· Farm-down of a 30.625% interest in the Pitu block to Statoil ASA now
· Results expected by end 2012 on bids submitted in Cyprus and Trinidad&
Tobago licensing rounds
· Key frontier exploration blocks target >4 bn barrels of Yet to Find
UK and Norwegian North Sea
· Net 2C resources totaling ~130 million barrels of oil (mmbbls) from UK
and Norwegian North Sea (including Skarfjell oil discovery)
· Active North Sea development programme in next 12 months
· Over the next 12 months, Cairn expects to participate in multiple
exploration and appraisal wells in the North Sea
· Cairn submitted 18 bids in the UK 27^th Licensing Round earlier this
year and has participated in the Norwegian Continental Shelf APA 2012 Licence
Analysts / Investors
Simon Thomson, Chief Executive
Mike Watts, Deputy Chief Executive
Jann Brown, Managing Director and CFO
David Nisbet, Corporate
0131 475 3000
Patrick Handley, David Litterick
Tel: 0207 404 5959
FINANCE & CORPORATE
Cairn held ~US$1.6 bn in cash and cash equivalents as at 30 September 2012
which will be used to fund ongoing capital expenditure on its pre-development
and exploration assets, plus new business opportunities. This cash position
follows the return of ~US$3.5 bn to shareholders in February and April; the
net cash consideration paid for Agora Oil & Gas AS in May of ~US$196
million(m)* and Nautical Petroleum plc in August of ~US$558 m; and the sale of
an aggregate shareholding of 11.5% in CIL (3.5% in June and 8% in September)
for net proceeds of ~$1.3 bn. Cairn's residual ~10% shareholding in CIL has a
current market value of ~US$1.2 bn.
Cairn continues to seek to re-balance its business to deliver exploration-led
growth by building a series of high-impact, sustainable exploration
opportunities, underpinned by a cash flow growth engine. The Company is
currently focused on the Atlantic Margin, including Greenland and Morocco
along with the Mediterranean, as it builds significant exploration
The second phase of Cairn's exploration programme in Greenland is focused on
the Pitu block which is located in the Melville Basin, off the North-West
coast of Greenland, where there is extensive industry interest.
Interpretation of 3D seismic acquired over parts of Pitu in 2011 is well
advanced. Depending on the outcome of the mapping and technical evaluation,
exploration drilling of Pitu is currently targeted for 2014, subject to
Government of Greenland approval.
Cairn has participated this year in a joint regional and shallow (up to 800
metre) borehole drilling programme in Baffin Bay, operated by Shell on behalf
of an industry consortium which includes Conoco Phillips, GdF, Nunaoil, Maersk
and Statoil. This extensive core gathering programme has now completed 11
boreholes and is providing valuable information to help stratigraphic
correlations across the undrilled Melville Basin.
In South Greenland, where Cairn acquired a 3D seismic survey in 2011,
interpretation of the 3D seismic is ongoing. A seabed geochemical sampling
survey is completed and the results are on their way to laboratories to be
analysed. Work is planned for 2013 to find a farm-in partner before
considering any further significant activity.
This frontier acreage is a significant addition to Cairn's exploration
portfolio and the drilling of one deep water exploration well in the Foum Draa
blocks is targeted for Q4 2013. These blocks are adjacent to and north of the
Juby Maritime I - III blocks, which Cairn now operates and where a 3D seismic
programme is planned for Q4 2012.
Cairn and its partner, Trinity Exploration and Production, have submitted a
bid in the recent Trinidad& Tobago licence round (Cairn - Operator 80%).
This is a competitive licence round with a number of other international
companies seeking acreage. Results are expected later in 2012.
Cairn plans to participate in the offshore Lebanon bid round, expected to be
announced later this year with bids in 2013. In Cyprus, the company is
participating, along with consortium partners, including Marathon Oil Company,
in the current offshore competitive bid round. Awards are expected towards the
end of 2012. Cairn also holds licences in the Valencia Basin, offshore
UK AND NORWEGIAN NORTH SEA EXPLORATION
Over the next 12 months, Cairn expects to participate in multiple North Sea
exploration and appraisal wells. In seeking to build on its North Sea edge
and prospective block inventory (27 offshore licences in the UK and Norway),
while providing a portfolio of lower risk exploration opportunities, Cairn
submitted 18 bids in the UK 27^th Licensing Round earlier this year and
participated in the Norwegian Continental Shelf APA 2012 Licence Round. During
2012, six wells have been drilled and three are currently operating.
UK AND NORWEGIAN NORTH SEA PRE-DEVELOPMENT
· Greater Catcher area (Cairn 30%) The field comprises excellent quality
injectite reservoir sands. New 3D seismic data is being interpreted and, in
view of its material position, Cairn is presently working very closely with
the operator, Premier Oil, and other joint venture partners on the sub-surface
interpretation and the development concept selection process ahead of
submitting a Field Development Plan (FDP).
· Kraken development (Cairn 25%) The Kraken oil sands are very high
quality reservoirs. Cairn and the operator, EnQuest, currently estimate gross
2C resources of 160 mmbbls with further appraisal drilling required to better
define the field size. A FDP is planned for submission in 2013.
· Mariner (Cairn 6%) The field is one of the largest undeveloped fields
in the UK North Sea. It is a heavy oil field with high well deliverability
and the operator, Statoil, is working towards Project Sanction in 2012/13.
Cairn's interest in block 9/11 is 6%, but the Company has an 80% operated
interest in block 9/11c to the south into which Mariner may extend.
NOTES TO EDITORS
Cairn Energy PLC
Ø Cairn Energy PLC ("Cairn") is an Edinburgh-based oil and gas exploration and
production company listed on the London Stock Exchange.
Ø "Cairn" where referred to in this release means Cairn Energy PLC and/or its
subsidiaries as appropriate.
Ø The current issued share capital of Cairn is 602,417,020.
Ø Cairn currently holds approximately 10% of the issued share capital of Cairn
India Limited (CIL). Production from CIL's Rajasthan operations is 175,000
Ø Cairn (including Capricorn) is run from Edinburgh with operational offices
in London, Nuuk, Madrid, Stavanger and Kathmandu.
Cairn in Greenland
Ø Cairn through its subsidiary, Capricorn, operates 11 blocks offshore
Ø A total of 14 exploration wells have been drilled offshore Greenland to
date, five of which were drilled in the 1970s, one in 2000, three in 2010 by
Cairn and five by Cairn in 2011.
Cairn in North West Europe
Ø Cairn has non-operated and operated exploration, appraisal and development
assets in the UK and Norwegian North Sea.
Cairn in the Mediterranean area
Ø Cairn is in the early stages of carrying out frontier exploration in Spain
and expects to participate in the offshore Lebanon bid round later this year.
Ø Cairn is participating along with consortium partners in the current bid
round offshore Cyprus.
Ø Cairn has exploration interests in Morocco with drilling targeted for Q4
Cairn and Corporate Responsibility
Ø Cairn is a signatory to the UN Global Compact and our core values of
respect, responsibility, relationships and our commitments towards people, the
environment and society are enshrined in the Business Principles, which are
available on the Cairn website at
Ø Cairn's approach to sustainability and performance in accordance with the
Global Reporting Initiative Guidelines is detailed in the annual Corporate
Responsibility (CR) Reports, available at
For further information on Cairn please see: www.cairnenergy.com
* = total consideration was approximately US$453 m, which included 47,662,603
ordinary Cairn shares
This information is provided by RNS
The company news service from the London Stock Exchange
IMSLLFIRISLDLIF -0- Oct/18/2012 06:00 GMT
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