The Oil Man: Cairn Energy

Cairn Energy

I will write more tomorrow, but worth saying a few words this morning, albeit from a platform at Victoria station!

Cairn has increased Senegal numbers but remains in the ultra conservative camp and is still lower than both Woodside and Far. 2C goes to 473 million barrels with stock tank oil initially in place of 2.7 billion barrels, and with further upside of another 500 million bible in third phase of drilling.

Of more interest is the reduction in break-even cost, down from $40 to $35. Net present value also revised up since cap markets day and 2C resources are guiding to a potential production rate of 120,000 barrels per day.

With Catcher and Kraken on track for next year and cash of $414 million (£319 million), Cairn probably doesn't need to raise any money, but don't rule it out - the India position is still a shambles but reserves-based lending has $260 million undrawn; a bit of an equity top-up at two quid a share might be just too tempting and advisors are hardly likely to demur...

Cairn is a key stock in the bucket list, as is Far, which stands to gain even more from the world class discovery in Senegal. Watch this space.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.