Cairn Energy plc

03/09/2021 | Press release | Distributed by Public on 03/09/2021 01:03

Full Year Results 2020

Simon Thomson, Chief Executive, Cairn Energy PLC said:

'As we continue to live and work with the consequences of the global pandemic, we have focused on keeping our people safe while maintaining momentum on business priorities and returning value to shareholders.

The proposed acquisition of Shell's Western Desert assets in Egypt is an important step in our strategic ambition to expand and diversify our producing asset base, bringing material reserve and production additions and offering exploration potential in a country with significant oil and gas growth opportunities. Our Joint Venture with established Egyptian operator Cheiron Petroleum Corporation creates a strong partnership with extensive experience and complementary skill sets.

We are also announcing today the proposed sale of our interests in the UK Catcher and Kraken fields. The divestment of these assets, as they fall into natural decline, will further strengthen our ability to pursue Cairn's strategic goals.

Following the unanimous arbitration decision under the UK-India Investment Treaty to award Cairn US$1.2 billion plus interest, we have engaged with the Government of India regarding adherence to the ruling and we are pursuing all avenues to protect our shareholders' rights to the value of the award.'

2020 Summary

  • The impact of COVID-19 has been managed safely across the business
  • India Arbitration Tribunal award in December 2020 of US$1.2bn plus interest and costs
  • Completion of sale of interests in Norway and Senegal
  • Year-end Group cash US$570m with no drawn debt, US$250m subsequently returned to shareholders by special dividend
  • Net oil production averaged just over 21,0001 bopd, in line with guidance (2019: 23,000 bopd)
  • Oil and gas sales revenue of US$324m (2019:US$504m): average realised oil price of US$42.56/bbl (before hedging gains of US$7.27/bbl): (average production cost US$20/boe)
  • Net cash inflow from oil and gas production US$239m
  • Capital expenditure on continuing operations was US$125m, in line with guidance
  • Operating loss US$67m (2019: US$155m operating profit)
  • Loss after tax of US$394m (2019: profit of US$94m), including loss on disposals of US$276m; no recognition of gain on arbitration award, held as contingent asset

2021 Outlook

  • Completion of proposed acquisition of Shell's Western Desert assets in Egypt for consideration of US$323m2, adding forecast Cairn WI 2021 production of 33,000-38,000 boepd (66% gas)
  • Completion of proposed sale of interests in UK Catcher and Kraken fields for a firm consideration of US$460m2 plus contingent consideration linked to oil price and production performance, further strengthening the balance sheet to deliver additional portfolio growth
  • Continued engagement with the Government of India regarding the arbitration award of US$1.2bn plus interest and costs, whilst all necessary steps are being taken to ensure access to the value of the award for our shareholders
  • Estimated exploration and appraisal capital expenditure (excluding Egypt and Catcher and Kraken) of US$90m, including exploration wells planned in Mexico and the UK North Sea

1 Based on 20% Catcher production and 29.5% of Kraken production before deducting FlowStream's entitlement to Kraken volumes during the year of 1,012 boepd (2019: 1,460 boepd)
 2 Consideration as at effective date of 1 January 2020, to be adjusted for working capital and interim period cashflows

Enquiries:

Analysts/Investors
David Nisbet, Corporate Affairs
Tel: 0131 475 3000

Media
Jonathan Milne, Linda Bain, Corporate Affairs
Tel: 0131 475 3000

Patrick Handley, David Litterick, Brunswick Group LLP
Tel: 0207 404 5959

Webcast
There will be a live audio webcast of the results presentation with Q&A available to view on the website (www.cairnenergy.com) at 9am GMT. This can be viewed on PC, Mac, iPad, iPhone and Android mobile devices.

An 'on demand' version of the webcast will be available on the website as soon as possible after the event. This can be viewed on PC, Mac, iPad, iPhone and Android mobile devices.

Presentation
The results presentation slides will be available on the website from 7:00am GMT.

Conference call
You can listen to the results presentation by dialling in to a listen onlyconference call at 9am GMT using the below dial-in details.

Dial-in details:
UK, local: +44 (0)330 336 9125
Code: 2525120

Transcript
A transcript of the results presentation will be available on the website as soon as possible after the event.

Related information

DOWNLOAD ANNOUNCEMENT PDF

DOWNLOAD presentation PDF