another SA article about several African oil producers: http://seekingalpha.com/article/2566935-how-much-does-it-cost-to-produce-1-barrel-of-oil-african-oil-producers-2013?ifp=0
18 Oct '14
Telegraph article 2014
The below article is from Jan 2014 when the share price was around 263.
18 Oct '14
Part 1 http://www.telegraph.co.uk/f
Doing some research and found this article very good read if you haven't read it already SHARES in oil explorer Cairn Energy could double this year as it comes to terms with “difficult second album” syndrome. The FTSE 250-listed oil explorer would sympathise with a dilemma usually attributed to rock bands – after more than a decade of drilling triumphs, the company is now trying to repeat its earlier success. The independent Scottish oil and gas explorer has been one of the biggest investment success stories of the past decade. Founded by former rugby player Sir Bill Gammell in 1981, the company built a reputation after a steady number of discoveries across Asia and India. The shares almost quadrupled from lows of 31p in early 2003 to about 120p in late 2008.When the company struck oil onshore in the Mangala area in Rajasthan, north west India, its fortunes were transformed. The shares soared to more than 550p in late 2010, valuing the company at about £6.5bn. Cairn has always focused on oil and gas exploration in frontier regions and eschewed a big role in the running of wells once the oil is flowing. The business model for Cairn is that once oil discoveries are made and developed they are then sold off and the cash returned to shareholders. The company sold a majority stake in Cairn India to Vedanta resources in 2010 and then returned $3.5bn (£2.1bn) to shareholders last year. Frontier exploration is higher risk but also offers higher rewards if successful.
18 Oct '14
During the coming 12 months the company has one of the busiest drilling programmes in its history. Nine new wells will be drilled this year, with five in frontier regions and four in the North Sea, up from only five wells last year. Investors don’t have long to wait for the first results. Drilling is already under way at Cap Juby Maritime III, offshore Morocco, in which Cairn owns a 38pc interest, and results are expected by early March. Oil has already been found here 20 years ago by Esso, but it was heavy oil. Cairn is using new technology to go deeper and hopefully find higher-quality and more valuable light sweet crude. The more exciting prospects are offshore Senegal and drilling is expected by March or early April, and, finally, some wells offshore Ireland that will be drilled in May. All of these projects, when combined and if successful, could add up to 390p to the shares, according to estimates from house broker JP Morgan Cazenove. Frontier drilling is high risk, though. The odds of discovery are as low as about 1 in 8, says JP Morgan Cazenove. The costs of drilling offshore are also higher, with each well costing up to $80m, compared with about $20m for onshore, according to Cairn. The jewel in the crown could be Greenland. A discovery in the massive Pitu block, offshore north west Greenland, could add anything up to 800p to the shares; however, progress has been slow as Cairn’s drilling partner, Total, is yet to fully back a new well. The attraction of Cairn is that investors have some protection if no oil discoveries are made. The company still has a 10pc stake in Cairn India worth $1bn, and cash on the balance sheet worth $1.25bn. Oil fields in the North Sea bring the total to $2.5bn in assets, or about 256p per share. Another way of looking at it is that investors get all the potential discoveries for free at the moment. Shares in Cairn Energy represent a high-risk option for investors. During the next 12 months it will undoubtedly be a bumpy ride. On balance, though, the risk reward looks favourable from the current price. Cairn has an excellent track record of being one of the best frontier exploration companies in the world. The City is also resolutely positive on Cairn; 18 analysts believe it is a buy, 12 think the shares a hold and there is only one sell recommendation, according to a Bloomberg poll of 31 City analysts. The target price for the shares is also more than 30pc higher, at about 350p. Questor likes these odds. Buy.
15 Oct '14
Mauritania and Morocco Exposure
Given CNE's significant exposure in Mauritania and Morocco, this is a must read analysis from Seeking Alpha about many oil producers in Africa, Middle East and Latin America: http://seekingalpha.com/article/2562065-petroamerica-oil-welcome-to-the-cheapest-oil-producer-worldwide-part-2
15 Oct '14
oil price decline
This a short term thing and will turn around once supply is reduced which it will be soon and demand picks up which will also happen but not as quickly. Not good for oil companies etc in the short term but with petrol etc falling this will reduce distribution costs and leave the consumer much better off which should in turn fuel ( excuse the pun!) spending and growth. its an ill wind and all that!!!
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