Simon Thomson, Chief Executive, Cairn Energy PLC said:
"We are delighted to have agreement from the Government of Senegal for our extensive evaluation plan which commences shortly with a 3D seismic survey and continues later this year with a multi-well exploration and appraisal programme.
Cairn estimates that the two discoveries made in Q4 2014 and the currently identified prospects and leads have a gross mean risked resource base of more than one billion barrels.
Our aim is to maximise the value of our Senegal asset within a balanced, well-funded company. Cairn is well placed to take advantage of this exciting opportunity as we build on the success of last year's discoveries."
Senegal Exploration
Ø Government of Senegal agreement of an extensive evaluation plan submitted by the Joint Venture (JV) Q2 2015
Ø JV finalising the sequence, location and evaluation targets for three firm appraisal and exploration wells; with plans to core and test the appraisal wells
Ø 3D seismic acquisition programme expected to commence Q3 2015
Ø Drilling operations expected to commence Q4 2015
Ø Well programme and budget for further three optional wells will be presented to JV Q3 2015
Finance
Ø Group cash at 30 June 2015 of US$725m
Ø Seven year Reserve Based Lending bank facility up to US$575m remains undrawn
Ø Forecast exploration and appraisal expenditure for the committed programme of US$170m (predominantly Senegal drilling activity during H2 2015 and H1 2016)
Ø Forecast net development capex on Catcher and Kraken projects remain unchanged, with net cost to Cairn of US$615m from H2 2015 to expected free cash flow by year-end 2017, as adjusted for completion of the Catcher farm-out
Ø Cairn is currently unable to access the value of its ~10% residual shareholding in Cairn India Limited (CIL) valued at US$526m at 30 June 2015 having received a draft assessment order Q1 2015 relating to an internal group reorganisation completed in 2006
Ø Cairn strongly contests the basis of the draft assessment order and has commenced international arbitration proceedings with the Government of India under the UK-India Investment Treaty supported by detailed legal advice on the strength of the legal protections available to it under international law. In addition, Cairn will also seek restitution of losses resulting from the attachment of its CIL stake since 2014
Developments
Ø A total of 47.2mmboe booked as 2P Reserves at 30 June 2015 on a net working interest basis
Ø Catcher remains within budget and on schedule for first oil 2017. Fabrication of the FPSO hull and topsides is ongoing and subsea installation has commenced. The Ensco rig is on hire and development drilling has commenced (Cairn 20% WI)
Ø Kraken continues to be within budget and on schedule for first oil 2017. The drilling rig is at field location and batch drilling of the top-holes at the first drill centre has been completed. The FPSO vessel continues to be on track for delivery 2016 (Cairn 25% WI)
