Pre-Close Update

RNS Number : 0367W

Cairn Energy PLC

22 January 2013

 



FOR IMMEDIATE RELEASE                                                                                            22 January 2013

CAIRN ENERGY PLC ("Cairn" or the "Group" or the "Company")

Pre-Close Update

Cairn intends to announce its preliminary results for the year to 31 December 2012 on Tuesday 19 March 2013. In advance of these results, Cairn is providing information on recent operations and guidance in respect of the Group's trading performance in 2012. This information is unaudited and is subject to further review.

Simon Thomson, Chief Executive, Cairn Energy PLC said:

"Cairn now offers increased gearing to exploration growth following our significant return of cash and consequent reduction in our equity base.

During 2012, the Company has established a balanced portfolio of development and exploration assets. Our balance sheet strength means we are funded for all planned exploration and development - whilst retaining the flexibility to consider further opportunities. Our North Sea properties, now at late pre-development stage (Catcher and Kraken) will, when on stream, provide cash flows to sustain future exploration programmes.

This solid foundation, combined with the Company's growing exploration portfolio, provides the basis for multi-year, and multi-well programmes. Operated exploration wells, commencing in H2 2013, will focus on frontier basins offering transformational potential whilst non-operated exploration drilling activity will focus on the North Sea where we bring a distinct knowledge edge.

We look forward to creating further shareholder value as we enter a period of sustained exploration activity."

Highlights

Exploration - Operated

Ø Completed 680km² of 3D seismic acquisition over the Juby Maritime block offshore Morocco

Ø Planning underway for a multi-well, multi-year exploration programme beginning in offshore Morocco in Q4 2013

Ø Key frontier exploration blocks across current portfolio target >4 billion barrels of Yet to Find potential

Exploration/Appraisal - Non-Operated

Ø Active 2013 North Sea exploration and appraisal programme planned with five wells confirmed H1 2013

Ø New interests in 10 licences acquired in recent UK and Norwegian North Sea License rounds

Finance

Ø Group net cash at 31 December 2012 of US$1.6 billion (bn)

Ø ~10% residual interest in Cairn India Limited (CIL) valued at US$1.1bn at 31 December 2012

Enquiries to:

Analysts / Investors

Simon Thomson, Chief Executive

Mike Watts, Deputy Chief Executive

Jann Brown, Managing Director and CFO

David Nisbet, Corporate Affairs                                                                              Tel: [phone]

Media

Patrick Handley, David Litterick

Brunswick Group LLP                                                                                           Tel: [phone]

FINANCE

At the end of the year, the Company's net cash balance stood at US$1.6bn.  During 2012, the Company twice sold down a portion of its holding in CIL and now holds an ~10% shareholding, the value of which at the year end was US$1.1bn.

The two acquisitions completed during the year saw the Company acquire 2C resources which it expects to convert to 2P reserves over time.  Once on production, the free cash flow generated from these reserves will continue to fund the Company's core exploration activities. 

Over the next five years the Company expects to spend US$1.5 - US$2bn on its development assets (which will be partially debt funded); plus a rolling average annual programme of exploration and appraisal to average between US$250 to US$300 million (net of any Norwegian tax refunds).

EXPLORATION

Mediterranean and North Africa

In the Mediterranean and North Africa region Cairn has interests offshore Morocco, Spain and Malta.  Cairn has developed a frontier exploration position in Morocco of ~8,500km² over two offshore permits Foum Draa and Juby Maritime with drilling targeted to commence in Q4 2013 once a suitable rig is available and all necessary approvals have been granted

·      The prospects in Foum Draa have been delineated on 3D seismic and drilling will target the Lower Cretaceous objective.

·      In Juby Maritime, Cairn has acquired 680km² of 3D seismic targeting exploration prospects close to existing discoveries of light and heavy oil with Jurassic carbonate reservoirs.    

·      In December 2012, Cairn entered into an Exploration Study Agreement (ESA) with the Government of Malta.  The blocks, which are in the Sicily channel, cover ~6,000km².

·      Cairn holds permits in the Valencia Basin, offshore Spain, where it is preparing to acquire 3D data in the next likely operations window, anticipated winter 2013/14, subject to Government approval

North Atlantic Margin

Cairn's activities in the North Atlantic Margin currently focus on its acreage offshore Greenland.  Industry activity in the region has increased over the last year with a number of operators acquiring seismic and core data. 

·      The interpretation of 3D seismic over the Pitu Baffin Bay block and southern Greenland acreage is well advanced.  Both Cairn and partners Statoil ASA and Nunaoil continue to be encouraged by the opportunity in Pitu and are targeting exploration drilling in 2014, subject to Government approval.

North West Europe (UK and Norway)

Following awards from the recent UK North Sea Oil and Gas and Norwegian APA Licensing rounds, Cairn now has interests in 40 licenses in North West Europe including the UK and Norwegian North Sea. 

·      Over the coming 12 months, Cairn expects to participate in multiple exploration and appraisal wells in the North Sea including the appraisal drilling in H1 2013 of the Skarfjell oil discovery. The firm programme currently includes three exploration wells and two appraisal wells (Skarfjell and Kraken), with additional opportunities under investigation.

·      Results from the Norwegian Continental Shelf APA 2012 Licensing Round resulted in the award of two new exploration blocks to Cairn.

·      In January 2013, Cairn agreed to acquire 30% of licence P1763 (UKCS).  Cairn and its partners are targeting an exploration well to test the Aragon Prospect in 2014/2015.

DEVELOPMENT

Cairn's pre-development and development assets are based in the North Sea, an area that has seen an increase in investment levels over recent years.

·      The Field Development Plans (FDP) for the Greater Catcher area (Cairn 30%) and Kraken fields (Cairn 25%) are under development and due to be submitted by the respective operators later in 2013.

·      The Mariner field (Cairn 6%) is one of the largest undeveloped fields in the UK North Sea.  At the end of 2012 the joint venture partners, led by operator Statoil, sanctioned the project to go ahead. 

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 603,260,800.

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 bopd.

Ø Cairn (including Capricorn) is run from Edinburgh with operational offices in London, Nuuk, Madrid and Stavanger.

Cairn in Greenland

Ø Cairn through its subsidiary, Capricorn, operates 11 blocks offshore Greenland.

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 UK and Norway

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.

Ø Cairn has exploration interests in Morocco.

Ø Cairn has interests in Area 3 in Malta

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 our Business Principles, which are available on the Cairn website at

http://www.cairnenergy.com/index.asp?pageid=282

Ø Cairn's approach to sustainability and performance in accordance with the Global Reporting Initiative Guidelines is detailed in our annual Corporate Responsibility Reports, available at: http://www.cairnenergy.com/index.asp?pageid=279&year=latest

For further information on Cairn please see: www.cairnenergy.com

 

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