Cairn Energy reaches an agreement with the government of Senegal over a development plan that includes an initial program of six exploration and appraisal wells.
Cairn Energy plc announced Tuesday that it has reached an agreement with the government of Senegal for an exploration and development plan that includes an initial program of three firm and three optional exploration and appraisal wells. Reporting its first-half results for 2015, Cairn also confirmed that its Catcher and Kraken field developments in the UK North Sea remain on budget and on schedule.
As part of its deal with the government of Senegal, Cairn plans a 3D seismic data acquisition program that will start during the third quarter of 2015. The firm also plans to begin drilling offshore Senegal in the acreage around the SNE-1 discovery well in the fourth quarter. Cairn Energy discovered oil offshore Senegal at the FAN-1 and the SNE-1 wells late last year.
Cairn Energy Chief Executive Simon Thomson commented in a company statement:
"We are delighted to have agreement from the government of Senegal for our extensive evaluation plan which commences shortly with a 3D seismic survey and continues later this year with a multi-well exploration and appraisal program. Cairn estimates that the two discoveries made in 4Q 2014, and the currently identified prospects and leads, have a gross mean risked resource base of more than one billion barrels. Our aim is to maximize the value of our Senegal asset within a balanced, well-funded company. Cairn is well placed to take advantage of this exciting opportunity as we build on the success of last year's discoveries."
In its half-year results, Cairn reported a loss after tax of $230 million for the six months to June 30, compared with $60 million in 1H 2014. The company said it had cash of $725 million as of June 30, 2015, compared to $1.1 billion as of June 30, 2014.
Cairn said that it plans to spend up to $170 million on its current program of exploration and appraisals, which will be mainly accounted for by drilling in Senegal during 2H 2015 and 1H 2016. The firm also confirmed that it expects to spend $615 million on the development of the Catcher and Kraken projects in the UK North Sea. Both Catcher and Kraken are expected to produce first oil during 2017.
Cairn had a total of 47.2 million barrels of oil equivalent booked as 2P (proved and probable) reserves as of June 30, 2015.
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