FT - Kraken coverage Cairn Results10 Sep 2019 09:10
Cairn raises output guidance after improvements at ‘Kraken’ field
Independent energy group had been hit by extraction issues at North Sea oilfield
Nathalie Thomas in Edinburgh
September 10, 2019 7:05 am
Cairn Energy has upgraded its production guidance for 2019 following improvements at the Kraken field in the North Sea which had been dogged by problems with a vessel used to extract oil.
The Edinburgh-based independent oil explorer and producer said on Tuesday that it expected full year production to average between 21,000 and 23,000 barrels of oil per day, up from previous guidance of 19,000-22,000 barrels/day. It also expects average costs per barrel to be lower than at expected, at $18 per barrel, down from $20/barrel.
Cairn attributed the forecast change to improvements at the Kraken oilfield in the North Sea, in which it holds a 29.5 per cent interest, with the rest held by fellow London-listed independent EnQuest. It also cited “exceptional uptime” at the Catcher field in the North Sea, which is operated by Premier Oil and in which Cairn has a 20 per cent interest.
In the first half, Cairn’s production averaged 23,700 barrels of oil equivalent/per day, a 15 per cent increase on the previous six months.
Cairn had earlier this year downgraded its forecasts of how much oil the Kraken field was likely to yield over its lifetime, although EnQuest had not lowered its own expectations in an unusual difference of opinion between two partners.
In its half-year results on Tuesday, Cairn said there had been “significantly improved facilities performance” at Kraken, referring to the field’s floating production storage and offloading (FPSO) vessel which is used to extract oil at field. The project, which produced its first oil in 2017, has long been hampered by problems with the vessel.
Cairn posted a $43.4m pre-tax profit for the first half, a turnround from a $602.9m loss a year earlier, when it booked significant impairments, on revenue of $270.3m, up from $182.4m at the same point in 2018.
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