Energy firm Cairn optimistic as key sites pick up speed

● Scottish business upbeat on forecast output for Catcher and Kraken fields

Oil and gas explorer and pro‑ ducer Cairn Energy pledged yesterday that it was poised to successfully push through its strategy over the coming 12 months.

The Edinburgh‑based busi‑ ness said it expects its net full‑year production for 2018 to reach between 17,000 to 20,000 barrels of oil per day (bopd) from the Catcher and Kraken oil fields in the UK North Sea.

Cairn Energy’s chief exec‑ utive Simon Thomson said: “Over the last 12 months, Cairn has achieved several strategic milestones and is well‑posi‑ tioned to deliver on its strate‑ gy in 2018.”

He said both the Kraken and Catcher developments have delivered first oil produc‑ tion, in the first half and late December respectively.

The firm said the two devel‑ opments are “ramping up to plateau production”, and are subsequently expected to deliver “significant” cash flows for reinvestment.

The company’s operational update came ahead of publish‑ ing its preliminary results for 2017 on 13 March.

On Kraken, Cairn said the operator expected production to reach 50,000 barrels of oil per day gross in the first half of this year, while full‑cycle gross project capital expenditure is forecast to be about a quarter less than the original sanc‑ tioned project cost.

On Senegal, where Cairn has completed a third phase of drilling, Thomson said that the joint venture was “now tar‑ geting development approval for the world‑class SNE field by the end of 2018”.

The aim is for the JV to have a government‑approved exploi‑ tation plan in place by the end of this year, targeting first oil in 2021 to 2023.

Thomson added: “This year, we will begin a sustained drill‑ ing campaign in the UK and Norway where Cairn has built an extensive portfolio. We also expect development sanction for the Skarfjell discovery in the first half of the year.”

Meanwhile, the group said that in Norway an “extensive” exploration drilling campaign is underway for 2018/19.

And the Skarfjell JV plan for development and operation is expected in the first half of this year, with first oil targeted in 2021 and expected plateau production of 50,000 bopd with about 10,000 bopd net to Cairn. Skarfjell, which has been renamed Nova, is located in the northeastern North Sea.

In the update, Cairn also highlighted the healthy state of its finances, saying it is “funded in respect of all capital commitments with a strong balance sheet and growing production cash flows”.

Group net cash was about $56 million (£40m) at 31 December while forecast Kraken and Catcher develop‑ ment spend for 2018 is about $125m, and currently commit‑ ted exploration and appraisal spend for this year is estimated at roughly $75m.

Cairn added that it contin‑ ued to “assess and pursue new ventures”. “We are excited by the potential of the recently awarded blocks offshore Mex‑ ico where we anticipate start of exploration drilling in 2019.”