Simon Thomson: important step

Edinburgh oil and gas explorer Cairn Energy is acquiring Shell’s Western Desert assets in Egypt in a $323m deal and selling its UK Catcher and Kraken fields for $460m to Waldorf Production.

CEO Simon Thomson describes the Shell deal as an important step in its strategic ambition to expand and diversify its producing asset base.

“Our Joint Venture with established Egyptian operator Cheiron Petroleum Corporation creates a strong partnership with extensive experience and complementary skill sets.

“We are also announcing today the proposed sale of our interests in the UK Catcher and Kraken fields. The divestment of these assets, as they fall into natural decline, will further strengthen our ability to pursue Cairn’s strategic goals.

“Following the unanimous arbitration decision under the UK-India Investment Treaty to award Cairn US$1.2 billion plus interest, we have engaged with the Government of India regarding adherence to the ruling and we are pursuing all avenues to protect our shareholders’ rights to the value of the award.”

The company swung to an operating loss of $67m for 2020 (2019: US$155m operating profit).

In January the company reported that full-year oil production from its Catcher and Kraken fields was in line with guidance.

Combined 2020 oil production net to Cairn from the Catcher and Kraken fields averaged just over 21,000 barrels of oil per day, while 2021 oil production was estimated to be between 16,000 and 19,000 barrels per day.

However, the FTSE 250-listed firm did flag up that both fields were expected to enter into their natural decline phase during 2021.

At 9am Cairn Energy shares were trading 6.4% lower at 186p.

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