Cairn Energy has said it is committed to its planned 2014 operations, but that spending beyond then is being looked at closely as its awaits resolution of tax issues in India.
The Edinburgh-based firm says spending beyond 2014 would depend on progress on the UK North Sea Catcher development through to project sanction; securing debt facilities for Catcher and the Kraken development, also in the North Sea; and the results of its 2014 drilling program.
The move comes as the firm waits resolution of an ongoing situation in India, where it has a 10% residual stake in Cairn India, valued at about US$1.0 billion, over historic income tax payments.
Cairn, which founded Cairn India (CIL), before selling most of its shares, says it was compliant with tax legislation in place at the time. While it waits for the issue to be resolved, it cannot sell its shares in Cairn India.
Cairn said: “Following the restriction imposed on our ability to access the value of our shareholding in CIL, Cairn is committed to all of its planned operations in 2014 while capital allocation for future program will depend primarily on…” North Sea development projects and exploration drilling results in 2014.
Simon Thomson, chief executive, Cairn Energy (pictured), said: "Cairn has an active drilling program in 2014, complemented and balanced by its sustainable development and production portfolio. Cairn is committed to resolving the Indian tax situation and in the meantime can, if required, adapt forward capital and equity exposures."
Cairn has got $1.25 billion in cash and the 10% shareholding in Cairn India, valued at about US$1.0 billion at 31 December 2013.
The company’s 2014 exploration program comprises four wells in the Atlantic margin (three operated), and three non-operated North Sea wells.
The JM-1 well (Cairn 37.5% working interest), offshore Morocco, was drilled to evaluate Upper Jurassic and Middle Jurassic objectives. It reached a total depth of 3711m TVDSS and has been plugged and abandoned without testing. Read more: http://www.oedigital.com/component/k2/item/5232-moroccan-heavy-oil-dampener
The first of two planned exploration wells offshore Senegal (Cairn 40% WI) will start in April, after operations in Morocco have completed.
Operations west of Ireland on the Spanish Point appraisal well are due to start Q2/Q3 2014 (Cairn 38% WI).
One exploration well is due to start on the Cap Boujdour contract area, offshore Morocco, in 2014, with Kosmos Energy (operator) and the Moroccan National Oil Company (ONHYM), (Cairn 20% WI) subject to Government approval.
Two non-operated North Sea exploration wells (Aragon and West of Kraken) are scheduled in 2014, with one further well (Tulla) scheduled for 2015
Partners on Skarfjell, in the Norwegian North Sea, are assessing development concepts following a successful appraisal well (Cairn 20% WI).
The Kraken field development plan (FDP) has been approved by the authorities and first oil is expected H2 2016/H1 2017. Peak forecast production is 50,000 bbl/d (12,500bopd net to Cairn) (Cairn 25% WI).
The Catcher FDP approval is expected by the operator in Q2 2014 (Cairn 30% WI).
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