SCOTTISH oil and gas explorer Cairn Energy has revealed a year of solid progress with major developments in the North Sea set to provide a further boost.

Simon Thomson, chief executive of Cairn Energy, made an optimistic statement at the company’s AGM yesterday in Edinburgh.

He said its cash flows were in line for a “significant” boost when two of its North Sea projects come on stream.

Loading article content

The Edinburgh-based firm said the first oil from the Catcher and Kraken developments remains on schedule for this year, with costs on both projects running “significantly below their original budgets”.

Thomson said: “In the UK North Sea, both the Catcher and Kraken developments remain significantly below their original budgets and both are on schedule to target first oil this year.

“Together they will deliver around 25,000 barrels of oil a day on plateau net to Cairn, generating significant cash flows for reinvestment.

“Elsewhere, we have secured additional licences both in the North Sea and Barents Sea and farmed in to a number of interesting prospects offshore Ireland, where we plan to drill an exploration well in the Southern Porcupine basin this summer.”

Cairn has a 29.5 per cent stake in the Kraken project and 20 per cent in Catcher, which are operated by EnQuest and Premier respectively.

The group said it was fully funded to deliver its drilling programme in the North Sea and Barents Sea, with cash of about $254 million (£195m) on its balance sheet, as well as an undrawn reserves-based lending facility.

“We are fully funded to deliver this programme, and to meet all our commitments. We currently have $254 million cash on our balance sheet, while our reserves-based lending facility is undrawn.

“In the past year, we have made excellent progress on our strategic objectives. We have created a strong platform for future growth, with active positions in various geographies providing significant acreage positions of technical and commercial value,” he added.

Thomson also hailed the group’s “world-class” opportunities in Senegal, following the recent announcement of another successful appraisal well — its ninth in three years — as its drilling programme in West Africa begins to bear fruit.

He added: “In Senegal, we have confirmed the scale and potential of the world-class SNE field, having successfully drilled nine wells in three years. Following appraisal success in 2016 which saw us upgrade our resource estimates, we commenced the third phase of drilling in January and have drilled three successful wells this year with a further exploration well shortly commencing.

The near-term focus in Senegal is defining the scale and phasing of the overall SNE field development including the balance between the number of drilling centres, type and number of wells and the subsea infrastructure. As previously indicated, we aim to submit an exploitation plan to the government of Senegal in 2018 with a final investment decision within twelve months thereafter, and first oil in the period 2021 to 2023.

“Last year was a year of excellent progress, providing a strong platform for further activity in 2017. This year, we will commence production in the North Sea, progress the SNE field towards development, drill material exploration wells in Senegal and Ireland, and continue to work on new exploration and development opportunities.”