Cairn Defers Capital Plans for Exploration, Appraisal Activity
Cairn Energy Plc announced that it is reviewing each of its assets and related capital spend for 2020. Reductions and deferrals have already been identified for the year, representing a 23% reduction in capital expenditures.
According to the company, capital expenditure on its UK producing assets is now expected to be below US$45 million, down from the original forecast of US$65 million as a result of cost savings and deferring certain activities planned for the Catcher fields.
In addition, the Sangomar joint venture partnership is working to assess several initiatives to reduce and re-phase capital expenditure on the Sangomar Development Project. At this stage, Cairn’s expectation is that net capital expenditure on Sangomar in 2020 will be below US$330 million, down from US$400 million.
All spend on exploration and appraisal activity is now deferred with the exception of ongoing operations on the Eni operated Ehecatl well in Mexico, according to the company. Exploration capex in 2020 is now anticipated to be US$100 million, down from US$150 million.
The company’s current financial position includes:
- A 2020 opening cash position of US$255 million.
- Cashflows from UK production, which is expected to be in the range of 19,000-23,000 bopd in 2020 with 36% of mid case production hedged at US$62/bbl Brent and a targeted all-in production cost of below US$20/boe.
- An undrawn US$575 million reserves-based lending facility, which includes an option to increase lending commitments by up to an additional US$425 million on the inclusion of Sangomar in the borrowing base assets.
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