Shares in oil company Cairn Energy rose on Tuesday after it raised its estimate of the resources it believes can be recovered from a key offshore project in Senegal and started producing oil again for the first time since 2011.
The Edinburgh-headquartered group increased its estimate of recoverable resources at its deepwater “SNE” field in Senegal – which was the biggest global oil discovery in 2014 – to 563 million barrels, up from a previous forecast of 473 million.
Cairn expects to make a final investment decision on the project, in which it has a 40 per cent stake, at the end of 2018 and is aiming for first oil in 2021-2023 if it goes ahead.
Simon Thomson, chief executive of Cairn, said the project would break even in the "low $30s" a barrel and said there were "no concerns" among its joint venture partners – which include Australia's Woodside and FAR – regarding the development, despite an expectation among most companies and analysts that oil prices will remain low for an extended period.
Cairn returned to being an oil producer as well as an explorer in the first half of the year after the Kraken project in the UK North Sea, which is operated by EnQuest but in which Cairn has a 29.5 per cent interest, produced its first crude. The company has been rebuilding since its decision in 2011 to sell a majority stake in its Cairn India business.
Another major North Sea development, Catcher, operated by Premier Oil, is also expected to produce its first oil in the fourth quarter. Cairn has a 20 per cent stake in the Catcher field.
- (Copyright The Financial Times Limited 2017)
