Simon Thomson, Chief Executive, Cairn Energy PLC said:
"Cairn has made strong progress across its balanced portfolio. Cash flow from the North Sea is now established and development projects in Senegal and Norway are well advanced to support the production base over the long term.

We are also delighted to have enhanced our exploration portfolio with potentially high impact opportunities across frontier and emerging basins. This additional acreage supplements our existing active programmes in the UK, Norway and Mexico.

This continued strategic delivery, together with our strong balance sheet, ensures Cairn remains well-positioned to access material value growth potential."

HIGHLIGHTS

Production

• Catcher (Cairn 20% working interest (WI)) averaged ~27,000 barrels of oil equivalent per day (boepd) (gross) in H1, reflecting constrained production as commissioning was completing and ramp up continued. Producing up to 60,000 barrels of oil per day (bopd) (gross) in August.
• Kraken (Cairn 29.5% WI) averaged ~30,700 bopd (gross) in H1, primarily as a result of planned and unplanned production downtime. Producing 35,000 - 40,000 bopd (gross) in August.
• Combined net production to Cairn from the fields in H1 averaged ~14,400 boepd with production in June averaging ~19,700 boepd (respectively ~13,000 boepd and ~18,200 boepd, net of FlowStream entitlement).
• Combined net production in H2 is expected to average ~20,500 - 22,000 boepd net to Cairn (~18,500 - 20,000 boepd net of FlowStream entitlement).

Developments

Senegal 

Delivered key milestones for the SNE field development plan (Cairn Operator 40% WI): 

• Assessing tender responses for the Floating Production Storage and Offloading (FPSO) facility and subsea infrastructure ahead of the front end engineering and design (FEED) planned for Q4 2018
• Development and Exploitation Plan submission and approval targeted for H2 2018 with the Final Investment Decision (FID) to follow in 2019
• Formal Transfer of Operatorship (TOO) to Woodside expected in Q4 2018; key work streams already delegated
• Detailed work underway on project financing

Evaluation Report submitted to the Government of Senegal

• Multi-phase development plans for ~500 million of barrels of oil (mmbbls)
• Production 100,000 bopd (gross)

Norway

Nova development (Cairn 20% WI) in Norwegian North Sea, Plan for Development and Operation (PDO) submitted in H1. Expected to deliver plateau production of 50,000 bopd (10,000 bopd net to Cairn) from 2021

Exploration 

International 

• New country interests acquired across frontier and emerging basins in Suriname, Côte d’Ivoire and Mauritania:
• Suriname - awarded an operated exploration agreement (Cairn 100% WI) by the State Oil Company of Suriname (Staatsolie) on acreage in the offshore Demerara plateau with 2D seismic activity planned from Q4 2018
• Côte d’Ivoire - farm-in agreement with Tullow Oil for a 30% WI in seven onshore licences* with seismic activity planned in 2019
• Mauritania - option agreement to acquire 30% WI from Total to enter a large offshore exploration block** upon a well decision following ongoing seismic acquisition and evaluation programme
• Mexico - plans to progress the first two exploration wells on Block 9 (Cairn Operator, 65% WI) and one exploration well on Block 7 (Cairn 35% WI, ENI Operator) in H2 2019. Plans  to evaluate 3D seismic over the newly acquired Block 15 in the Tampico Mislanta basin 

*subject to Government approvals
**subject to Government and partner approvals 

UK & Norway 

• Exploration campaign underway with plans to drill up to ten wells (subject to partner approvals) in 2018-19 across a variety of play types:
• Two wells are currently operating: P2184 licence (Cairn Operator 45% WI) targeting the Ekland prospect in the UK North Sea using the Ensco 101 drilling rig and P1763 licence targeting the Plantain prospect and potentially the Agar discovery (Cairn 50% WI) in the UK North Sea using the Transocean Leader. (Cairn farmed into the licence (25% WI) with Azinor Catalyst in H1)
• Completed drilling in H1 on Tethys and Raudåsen prospects with a small oil discovery regarded as non-commercial and a dry well, respectively
• Upcoming Stjerneskudd well on PL885 (Cairn 30% WI) in the Norwegian Sea expected to spud in Q4
• Awarded five licences (three operated and two non-operated) in the UK 30th Licensing Round in H1 in existing core central North Sea areas
• Plans for 2019 exploration programme maturing with material prospects and equity interests; three to four wells expected, subject to partner approvals

Finance

• Oil sales revenue of US$172 million (m) at an average realised price of US$66.97/barrel (bbl) (US$67.81/bbl before hedging costs)
• Group cash at 30 June 2018 US$75m
• Reserves Based Lending (RBL) facility US$65m drawn at 30 June 2018
• Extension of existing US$575m RBL maturity from 2021 - 2025 agreed in order to incorporate expected Nova cashflows into the debt capacity calculation and create additional flexibility
• Norway exploration tax receivable of US$62m at 30 June 2018, US$59m drawn under the Norway Exploration Finance Facility
• Cash outflow on Kraken, Catcher, Senegal and Nova developments of US$86m in H1 and forecast at ~US$124m for H2 2018
• Exploration cash outflow across the portfolio of US$48m in H1 2018 and forecast at ~US$72m in H2 2018 (net of Norwegian exploration tax rebate)
• SNE project finance launch expected Q4 2018

India Tax Dispute

• Final hearing of Cairn’s claim under the UK-India Bilateral Investment Treaty (the Treaty) took place in August in The Hague; the Tribunal has stated that it will make appropriate arrangements to progress with the drafting of the award as expeditiously as possible
• During H1, the India Income Tax Department (IITD) instructed the sale of ~2% shareholding in Vedanta Limited (VL) held by Cairn, seizing proceeds of US$231m. Subsequent to H1, a further ~1% of shares were sold. The IITD has also seized US$162m dividends due from the VL shareholding plus a US$234m tax refund due.
• Following the disposal of the shareholding in VL and seizure of proceeds by the IITD, Cairn has recorded a loss on de-recognition of the shares sold of US$231m
• Cairn remains confident of its legal position; the Treaty affords strong provisions to enforce a  successful award