Cairn's new direction

The company will hand shareholders a special dividend of around $250m (£192m) once the Sangomar deal completes and continue with its explore-develop-sell model. 

Production in the first half was down slightly on last year, at 22,886 barrels of oil equivalent per day (boepd), and average sales price per barrel (bbl) tumbled from $68 to $48, including a $7.91/bbl gain from hedging. The price crash saw net cash inflow from operating activities fall 21 per cent to $136m.

On the back of $240m in impairment charges, Cairn made a loss of $324m. The write-offs largely relate to a forecasted loss on disposal from the Senegal assets, totalling $207m. There were also the usual exploration write-offs as two wells in Mexico (50 per cent and 30 per cent owned) were plugged in the first half. 

When oil plunged in March, Cairn said it would try and cut capital spending by over 20 per cent. It has more than managed this, helped by the asset sales. Full-year capex is forecast at $135m, down from $215m. 

Now that the Sangomar sale is out of the way, the next major catalyst is the India arbitration award. The company has asked for $1.4bn in restitution. A ruling is now coming “after the end of the summer” – a decision was previously expected to come "in summer 2020". 

Consensus estimates compiled by FactSet gives full-year cash flow from operations at $223m, down from $407m last year.