"WTI $61.36 -68c, Brent $64.95 -54c, Diff -$3.59 +14c, NG $2.78 +5cAs I mentioned yesterday, crude oil was marked back first thing and never recovered, probably ahead of an uncertain week of inventory stats. At this time of year analysts are ..."
Cairn Energy was boosted as Morgan Stanley hiked its rating to 'overweight' with a 300p target. Analysts see more potential in its SNE offshore Senegal project than the market seems to be attributing. A 5% stake in Vedanta Resources could be worth nothing or up to 100p per share depending on the result of arbitration on a tax claim made by the Indian government.
"Assuming a $65 a barrel real Brent price, the SNE project in Senegal could be worth around 160p or 80% of the share price. We believe the market is only rewarding for 60 per cent of that value. Cairn has been making steady progress on SNE and a final investment decision is now less than a year away in end-2018."
Bloomberg report that daily oil consumption will rise from current level of approx 98 million bbls per day to 120 million per day by 2030.
Current oil consumption is equivalent to 35 billion bbls per day.
New oil discoveries are a small fraction of 35 billion bbls.
With exploration activity decimated in the last five years, it looks like we will go into another oil price super cycle.
Great for those with reserves or production
Talk by ND over at providence that cairn are the company who have agreed commercial terms to farm into the barryroe oilfield in Ireland. It has 340 million bbls of proven undeveloped independent reported reserves.
The deals looks like drilling a well and sidetrack and back costs , cost of Circa $90 million to get 50% of field .
Final investment decision to develop field after these wells.
Opex on the field is $25 per bbl and only 25% corporation tax .
So huge potential value here if indeed cairn are confirmed as the farm in partner who have agreed terms with pvr.
I don't seem to be getting RNS news in my 'research account', are you experiencing the same issue?
I have missed a couple of updates over the last few days as I generally just have a quick look at my portfolio in the 'research account' as I log in on all manner of devices and prefer to log into my trading account from trusted devices only.
I would appreciate hearing if you are having the same problem too before I go crying to Interactive Investor.
For those who have not seen it yet, here's the update from yesterday.
Oil coming out of our ears and revenue beginning to flow (just in the nick of time)
India... Everything I have read seems to support our case but India seem determined not to pay. If it goes our way how long before they pay up? maybe this is why the first oil Senegal estimate is so wide.
Very happy with the update and willing to add more <180p.
For Immediate Release 23 January 2018
CAIRN ENERGY PLC
("Cairn" or "the Company")
Cairn intends to announce its preliminary results for the year to 31 December 2017 on Tuesday 13 March 2018. In advance of these results, Cairn is providing an update on recent operations and the Group's trading performance in 2017 together with guidance for 2018. This information is unaudited and is subject to further review.
Simon Thomson, Chief Executive, Cairn Energy PLC said:
"Over the last twelve months, Cairn has achieved several strategic milestones and is well positioned to deliver on its strategy in 2018. Both the Kraken and Catcher developments in the UK North Sea have delivered first oil production. In Senegal, Cairn completed a successful third phase of drilling with the joint venture now targeting development approval for the world class SNE field by the end of 2018.
This year, we will begin a sustained drilling campaign in the UK and Norway where Cairn has built an extensive portfolio. We also expect development sanction for the Skarfjell discovery in the first half of the year.
Cairn is funded in respect of all capital commitments with a strong balance sheet and growing production cash flows. We continue actively to assess and pursue new ventures within the context of a balanced exploration and production portfolio. We are excited by the potential of the recently awarded blocks offshore Mexico where we anticipate the start of exploration drilling in 2019."
Ø The Catcher (Cairn 20% working interest (WI)) and Kraken (Cairn 29.5% WI) developments in the UK North Sea both achieved first oil in 2017 and are ramping up to plateau production, following which they are expected to deliver significant cash flows for reinvestment.
Ø First oil from the Catcher Area development was successfully delivered in late December. The Operator has reported that the first two production wells from the field have been tested at rates in excess of 20,000 barrels of oil per day (bopd) each, in-line with expectations and reflecting the high productivity from initial flush production. As planned, production levels are being held at ~20,000 bopd while commissioning of the full gas processing modules and the water injection systems on the FPSO are carried out. Production will continue to ramp up in phases over the next few months with full production of 60,000 bopd targeted in H1 2018. Total project capex is forecast by the Operator to be ~30% less than the original project sanction estimate.
Ø First oil from Kraken was achieved during H1 2017. On the basis of current well performance and subject to continued progress on plant uptime, the Operator expects production to reach 50,000 bopd gross during H1 2018. Full cycle gross Kraken project capex is forecast to be ~25% less than the original sanctioned project cost.
Ø Full year production, net to Cairn, for 2018 is estimated to be 17,000 to 20,000 bopd with plateau production
Well reaist, you were quite correct about the Arbitration Board having to accept that the final outcome will be put back until August and it also appears from today's news that the Indians have not yet paid the $53m already awarded for loss of earnings, dividends and the effect on Cairn's SP. The page about this matter makes pretty shocking reading and shows just what kind of robbery the Indian Gov are capable of.
All the details can be found in the publication today about the years results to be announced on 13th March.
If it is settled this time, you can see the substantial sums involved and if true to form, I would expect the shareholders to receive a special dividend as they did when the large part of the Rajasthan field was sold. I suggest that could be some recompense for our patience and for our losses also.
"WTI $63.57 +26c, Brent $69.03 +42c, Diff -$5.46 +22c, NG $3.22 +4cWhilst all those clowns play in the snow at Dav-oh the rest of the world is getting on with business, the real world you might say.In the real world, oil is going up and for a very ..."
I may be wrong but I seem to recall that, late last year, there was a report that International Trade Arbitration was expected to continue finding in CNE's favour after having forced the Indian Government to pay Cairn ~ £53m for lost revenue and share value caused by this unreasonable and false "TAX" claim.
It appeared that expectations were this could result in a settlement early in 2018 but there has been no news so far - only continued Indian intransigence.
IMHO, every company should beware of the huge level of corruption in the Indian Sub-Continent and invest elsewhere rather than risk what amounts to much more than daylight robbery.
I am disappointed the UK has not stated that any further Overseas Aid payments will be withheld until India stops playing silly beggars with a company who has helped their trade deficit by producing a major part of India's oil purchases from elsewhere.
Looks like 15 million shares traded to day, a huge increase from average with the price rising.
Could Cairn be the undeclared farmin partner who has reached commercial terms with providence and landsdowne to farm into the Barry roe oilfield with 340 million bbls of independent certified oil reserves of 2c undeveloped reserves?
Cairn are already partnered with pvr on Spanish point field, so they know each other well.
Watch for more high volume if its true.
SYDNEY/DAKAR (Reuters) - Oil exploration company Cairn Energy (CNE.L) is in talks with BP to sell a 30 percent stake in its deepwater SNE field offshore Senegal, which could be valued at around $600 million, banking sources and a Senegal oil ministry source said on Monday. We are aware that BP wants to acquire a stake in Cairn Energy, but they are awaiting validation by the state (of Senegal), an adviser to Senegals oil minister, who declined to be named, told Reuters by telephone.
I know this is like an old record, but I am still hearing that Cairn (CNE) are in the process of selling around 30% of their stake in their offshore Senegal discovery. My latest gossip, and that is all that it is, suggests that BP (BP.) will buy that stake and the operatorship of the project.
This may make Far Ltd and Woodside (WOPEY) to a lesser extent look very smart but who knows, time will tell I may be completely wrong!"
All very much speculation going on here....no mention of any sale price by him either.
IF any sale were at $300m it would be a steal for a proven resource of 2billionboe +
Bear in mind the group have worked up this license, shot seismic & drilled several prospects and follow on appraisal wells and also then tested them with costs in excess of this figure...so a sale at $300m would be underwhelming and suggest desperation to depart the project.
NB Chevron bailed out of this consortium selling it off to Woodside (if FAR don't stop the transaction for there own ends).
"WTI $54.54 +24c, Brent $60.62 +13c, Diff -$6.08 -11c, NG $2.93 +4cA sluggish start yesterday for the oil price; the inventory stats were fine, but the API had taken the kudos the day before, so it was a bit like after the Lord Mayor's Show. ..."
I believe the recent payment is not part of the much larger disputed value relating to the 10% of CIL shares being blocked by the Indian Government which is the real core of the dispute as has been pointed out here.
This recent amount is in respect of the losses from the market value of the share price and dividends so the much larger sum covering the 10% still blocked may now be a more realistic indication of the release of the embargo on that 10%of the CIL shares.
If I have been mistaken in my assessment of this unreasonable matter, please correct me.
I agree that the share price currently values the shares/dispute at negligible levels, but management appear very bullish and resolution is slated for early 2018 so I would have thought that the share price should start to price in some upside unless winning the dispute will not lead to resolution.
I'm no expert and have bought into Cairn based on the discoveries in Senegal & Norway being brought to production largely by receipts from Kraken and Catcher as well as existing cash. Sure, we are going to use the credit cards too, but there is a route to production here.
As regards the dispute with India; I look to the Vodafone dispute with India which I think followed the same arbitration route as us did it not?
Vodafone were vindicated and demands for monies were dropped.
If the board are right, and we are innocent, I am confident that we will get our withheld dividend payments and access to our shareholding in what was CIL.
For compensation I am not too sure how that will go. We are going to have to fight very hard and hopefully the UK Government will get involved like they did with Vodafone.
Tricky situation for them though whilst trying to negotiate trade deals with India.
Market has discounted the withheld assets, until things change one way or the other I am doing the same.
The total value of assets blocked by the Indian tax dispute is $930 million, which has been completely discounted in the share price, so any settlement of this matter will have a huge impact on the share price.
Reading the interims management appear bullish on winning the dispute. I am not clear as to whether the Indians will pay up. I was wondering whether anyone has any knowledge on the enforceability of international tribunals?
In my opinion a successful outcome could have a large upside
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