Cairn Energy will continue to target new plays within the UK North Sea and Norwegian continental shelf, the firm said Tuesday as it outlined plans to explore frontier basins in the Atlantic Margin and Mediterranean in its annual results statement.
Cairn will use cash generated from its share in various producing North Sea assets to fund several operated exploration wells offshore Morocco and Senegal, West Africa, during 2013 and 2014. It is also planning a 3D seismic campaign in the Gulf of Lion, offshore Spain, as well as conducting geological studies into opportunities offshore Malta.
The company also announced Tuesday farm-in into three blocks offshore Senegal. Cairn is taking a 65-percent working interest and operatorship of three blocks – Rufisque, Sangomar and Sangomar Deep – that are currently operated by Far Limited with Petrosen (the Senegalese national oil company) as a joint venture partner. In return it has agreed to fully fund the costs of one exploration well and to fund 72.2 percent of subsequent exploration costs.
In the UK and Norway, Cairn is involved in four non-operated exploration and appraisal wells during 2013, two of which are underway. It also has new interests in 10 licenses that have been acquired in recent licensing rounds.
Meanwhile, work continues on the North Sea's Greater Catcher area (where Cairn has a 30-percent, non-operated interest) and the Kraken oil field (25 percent). These fields are now a late pre-development stage and are expected to lead to first oil and cash flows in sometime around 2016/2017.
"With a strong cash position and a disciplined approach to capital expenditure, we look forward to the start of our multi-well, multi-year operated exploration program commencing in Q4 2013 targeting more than 3.5 billion barrels of oil equivalent," Cairn Chief Executive Simon Thomson commented in a company statement.
Oil analysts at London-based investment bank FirstEnergy was positive about Cairn's announcements Tuesday, noting that the farm-in offshore Senegal adds "further high-impact exploration potential to the portfolio".
Cairn reported a pre-tax loss for 2012 of $194.2 million (2011: $1.2 billion loss) and stated that it had cash at the end of December amounting to $1.6 billion. The firm also retains an approximately 10 percent residual shareholding in Cairn India.
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