Cairn Continues to Focus on Portfolio Balancing
UK-based oil and gas independent Cairn Energy said Tuesday that it would continue to target assets that keep its portfolio in balance between lower-risk exploration and more "transformational opportunities" in frontier areas.
Announcing its half-year results, Cairn added that it plans to introduce debt funding for its North Sea developments in order to unlock value in the assets it owns there.
In the Greater Catcher area of the North Sea, where Cairn has a 30-percent interest in Blocks 28/9a and 28/10c, the firm said that it was currently working "very closely" with operator Premier Oil on the sub-surface interpretation of discoveries and exploration prospects there as well as development concepts.
At the Kraken development Cairn confirmed that high quality reservoirs and recent test at the 5Z well show the mobility and high deliverability potential of the heavy oil found there.
Meanwhile, at Mariner – a heavy oil field that is one of the largest undeveloped fields in the UK North Sea, where Cairn has a six-percent stake – the firm noted that the field may extend to the south into its block 9/11c. Block 9/11c is operated by Cairn, which holds an 80-percent interest in it.
Cairn confirmed that it now holds interests in 27 offshore licenses in the UK and Norway and that, during the next 16 months, it plans to participate in up to 15 North Sea exploration and appraisal wells.
In Greenland, where Cairn had a succession of failures in 2011, the firm is persisting with exploration. Cairn is currently working with Statoil on the Pitu block in the undrilled Baffin Bay Basin and, depending on the evaluation of 3D seismic data acquired here, the partners hope to begin exploration drilling of one or more Pitu prospects in 2014.
Cairn's results also coincided with an announcement that it is acquiring a 50-percent stake in Foum Draa, offshore Morocco. The firm already holds a 37.5-percent interest in the nearby Cap Juby offshore license.
During the six months to June 30 Cairn made an operating loss of $76.7 million, which was an improvement on 1H 2011 when the firm's operations lost $128.8 million.
Oil analysts at US investment house Bernstein commented that the $76.7 million operating loss "cannot have come as a significant surprise" with the firm lacking production as it rebalances its portfolio after its disappointments in Greenland.
Meanwhile, Bernstein sees Cairn's farming into the frontier acreage offshore Morocco as the third phase in this portfolio rebalancing and noted that San Leon – a stakeholder in the Foum Draa block – had previously highlighted its acreage in the country as having "step change" resource potential.
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