As we suggested it might when we tipped the company at the end of June, Cairn Energy (CNE) used its half-year results to upgrade the resource estimate for its highly anticipated SNE discovery offshore Senegal. Gross contingent (2C) resources now stand at 473m barrels, an increase of 23 per cent on the figure booked at the end of 2015, while so-called "associated 2C oil in place" sits at more than 2.7bn barrels.
This led to a 5 per cent bounce in Cairn's shares, although some observers may have been expecting more. That's because Australian explorer Woodside estimated that the SNE field contains 560m barrels of recoverable oil when it acquired ConocoPhillips' 35 per cent working interest in the field for $350m (£268m) in July. Cairn's figure - based on an independent report by consultant ERC Equipoise - may be cautious, but the Edinburgh-headquartered company believes a third phase drilling programme could still add a further 500m barrels of gross risked resources.
Future SNE appraisal drilling is expected to eat up an additional $80m of capital expenditure, although the $315m earmarked for the last stretch development of the Kraken and Catcher fields in the North Sea should result in free cash flow by the end of 2017.
Analysts at Numis are forecasting a full-year pre-tax loss of $91m and an adjusted loss per share of 16¢, against losses of $498m and 90¢ in 2015.
| CAIRN ENERGY (CNE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 204p | MARKET VALUE: | £1.18bn | |
| TOUCH: | 203.9-204p | 12-MONTH HIGH: | 232p | LOW: 125p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 349¢* | NET CASH: | $414m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | nil | -235 | -40.4 | nil |
| 2016 | nil | -57.0 | -6.61 | nil |
| % change | - | - | - | - |
| *Includes intangible assets of $624m, or 108¢ a share £1=$1.30 | ||||
