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FAR 12.5¢

Cairn's RBC series quote

  1. Ya

    5,202 Posts.
    545
    Here's the quote from Cairn at the RBC Investor Series earlier in the month (15th Jan'15), which provides the 'missing link' to the future appraisal well drill costs for SNE.

    This is where the $30-$40mil per well & commerciality of Senegal at oil price of $50/bbl were mentioned.

    Hope they lodge the appraisal plans & 'spending' budget with the Ministry & lock in a rig for the spud in Q4. Here's the summary & the link.

    ------------------------------------------------------------------------------------------------------------------------------------

    https://www.rbcinsight.com/CM/ResearchTeam/Analyst/Blog/1955-16812afb_60d7_4259_abbc_93cd4def1ab6M-1

    CNE.L - 'Keep Exploring' CEO Investor Lunch Keypoints

    SPARC
    January 15, 2015 9:38 am ET
    Energy
    CNE

    Cairn Energy (CNE.L) 169p/share, Outperform, 230p PT

    At RBC's Investor Lunch Series Cairn's CEO Simon Thomson underlined the financial strength and flexibility of the company. They have the opportunity to increase exploration activity given declining rig rates particularly in their Senegal focus area.

    Rig Rates Falling: Given falling deepwater rig rates and the experience gained drilling offshore Senegal in 2014 Cairn believes wells could be drilled offshore Senegal at $30-40m (gross) / well (taking 30-40 days). They and their partners, ConocoPhillips and FAR, are motivated to begin a multi-well campaign Q4/15 (30-40 days/well). The programme (to be finalised late April) is likely to include two appraisal (on SNE) and one exploration well (with options for further drilling). The focus will be on the 330mmbbls SNE-1 discovery and look-a-like structures on the shelf area offshore Senegal (1bnbbl of potential in that play type). Further details will be provide at the Capital Markets Day in May. Offshore Ireland the company plans to drill the Spanish Point well H1/15, eight rigs have been offerred to them for the work with major savings expected.

    Senegal works at $50/bbl: The Senegalese fiscal terms lead to ~50% government take, assuming continued declines in service costs Cairn believes the SNE discovery would remain commercial at $50/bbl.

    Limited Debt Requirements: Cairn had $870m cash at end 14 with around $350-400m planned expenditure through 2015. This assumes the farm down on the Catcher field to Dyas completes (expected shortly) and the ($150-200m) carry from Enquest on the Kraken field. Cairn has a $575m undrawn RBL where the NPV is based on the projects that come onstream in 2017, therefore current oil prices do not impact the valuation (albeit the forward curve continues to move down).

    Indian Encouragement: The Indian budget is expected through February and the company believes this could provide a platform to resolve the issues that currently prevent Cairn from selling their remaining 10% stake in Cairn India (currently worth ~$650m).

    No Drilling in Greenland/Morocco: Cairn clarified that they have no plans to drill offshore Morocco or Greenland in the short term

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