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Cairn Energy shares suffer as net losses top $1bn

By Josh White

Date: Tuesday 12 Mar 2019

Cairn Energy shares suffer as net losses top $1bn

(Sharecast News) - Cairn Energy shares were in the red on Tuesday morning, after it reported combined net production for 2018 as averaging around 17,500 barrels of oil equivalent per day.
The FTSE 250 company said oil and gas sales revenue totalled $396m for the year ended 31 December, with the average realised price standing at $68 per barrel of oil equivalent, and the average production cost reaching $20.5 per barrel of oil equivalent.

Net cash inflow from oil and gas production was $229m, while its capital expenditure cash outflow totalled $252m.

Remaining cash outflows post year-end were $30m.

At year-end, Cairn said group cash totalled $66m, with $85m drawn under its $575m reserve-based lending facility.

Cairn reported an operating loss of $182m from the impairment of Kraken following its downward revision in reserves.

Its net loss after tax was $1.1bn, resulting primarily from the write down of the company's investments in India.

Looking ahead, the firm said its estimated net production for 2019 was between 19,000 and 22,000 barrels of oil per day, with an average production cost of $20 per barrel.

Forecast capital expenditure was $300m.

In Senegal, Cairn Energy said the first phase of the SNE field development was on schedule, targeting first oil in 2022, and gross production of 100,000 barrels of oil per day.

Cairn Energy said that in Norway, the development of Nova field was also on schedule, where it was targeting first oil in 2021, and peak gross production of 50,000 barrels of oil per day.

For the UK and Norway, up to four exploration wells - three being Cairn operated - were planned, targeting around 500 million barrels of oil equivalent.

The first well in the programme, Presto, was spudded on 1 March.

In Mexico, three exploration wells - two being Cairn operated - were planned targeting around 500 million barrels of oil equivalent.

Hearings for Cairn's arbitration claim against India concluded in 2018, with the drafting of the award by the tribunal said to be ongoing.

"Cairn plans a material exploration programme in 2019 targeting a billion barrels of gross resources, supported by cash flow from our production base," said Cairn Energy chief executive officer Simon Thomson.

"With active development projects within the portfolio, we look forward to additional sustained production and cash flow generation over the long term."

Thomson said Cairn offered shareholders "multiple catalysts" for value creation.

"Our financial flexibility and continued focus on capital discipline ensure that the company remains strongly positioned to deliver an active programme."

As at 1006 GMT, shares in Cairn Energy were down 3.76% at 168.13p.

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