Cairn Energy (CNE) revealed a widening earnings loss at the half-year mark, but the near-term focus remains on progress towards drilling at offshore discoveries on Senegal's Atlantic margin, in which the company holds a 40 per cent interest.
The FTSE 250 driller forecasts near-term exploration and appraisal expenditure of $170m (£109m) for its extensive frontier assets, the bulk of which is earmarked for 3D seismic surveying and drill-work in Senegal during the second half of 2015 and through the first half of next year. Cairn believes the Senegal discoveries point to a gross mean resource of around 1bn barrels, with an even chance of recovering 330m barrels.
Closer to home, capital expenditure for its North Sea Catcher and Kraken oil fields should amount to $615m from the second half of 2015 until Cairn achieves free cash flow by the end of 2017. The group has access to a $575m undrawn lending facility, along with net cash of $725m at the period end.
Cairn has also started international arbitration proceedings against the Indian government. The group holds a $526m stake in Cairn India - a former subsidiary - but is currently prevented from off-loading the stake until a tax dispute is resolved.
Edison initiated coverage in July: the broker has given a core NAV of 119p a share, primarily comprised of Cairn’s cash, the Catcher and Kraken projects, and the residual Cairn India stake.
| CAIRN ENERGY (CNE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 151p | MARKET VALUE: | £868m | |
| TOUCH: | 150-151p | 12-MONTH HIGH: | 210p | LOW: 141p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 424¢* | NET CASH: | $725m | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | nil | -120 | -10.8 | nil |
| 2015 | nil | -235 | -40.4 | nil |
| % change | - | - | - | - |
Ex-div:na Payment:na £1=$1.56 *Includes intangible assets of $574m, or 100¢ a share. | ||||
