Cairn funded for all planned exploration and development

Oil and gas producer Cairn Energy said Tuesday that it is funded for all of its planned exploration and development, with its North Sea properties expected to come on stream shortly, and in doing so provide cash flows to sustain future exploration programmes.

In a pre-close trading update, the firm said that at the end of December it had net cash of $1.6bn, and approximately a 10% residual interest in Cairn India, valued at $1.1bn at the same date.

The group said that over the next five years it expects to spend between $1.5bn and £2.0bn on its development assets, and will also carry out a rolling average annual programme of exploration and appraisal to average between $250m to $300m.

Simon Thomson, Chief Executive, said: "Cairn now offers increased gearing to exploration growth following our significant return of cash and consequent reduction in our equity base.

"[Our] 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."

Regionally, Cairn has developed a frontier exploration position in Morocco of around 8,500km2 over two offshore permits and plans to begin drilling in the fourth quarter of 2013 once a suitable rig is available and all necessary approvals have been granted.

In the North Atlantic Margin, industry activity has increased over the last year with a number of operators acquiring seismic and core data, the firm said. The interpretation of 3D seismic over the Pitu Baffin Bay block and southern Greenland acreage is well advanced, while 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.

Over the coming 12 months, Cairn expects to participate in multiple exploration and appraisal wells in the North Sea including the appraisal drilling in the first half of 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, it said.

The share price rose 0.46% to 285.30p by 08:40.

NR