Cairn Energy Share Discussion Threads

[robs12] 21/1/2020 08:44

Yes, looked surprisingly good to me too, but Mr market seems not to care.

[frazboy] 21/1/2020 08:40

That's a stronger 2020 production forecast than I was expecting even allowing for infill drilling. I've got mid case forecasts of around 33.8k for Kraken and 55k for Catcher for 2020. I was expecting a few pence rise on the back of that, but Mr Market says no.

[stockstracker] 21/1/2020 07:44

CNE Cairn Energy confirms production at top end of guidance http://bit.ly/2u8QkvS

[frazboy] 20/1/2020 20:06

I hope Cairn get better terms than FAR: Https://far.live.irmau.com/irm/PDF/2509_0/SangomarFIDandUS300Munderwrittenseniorfacility Notably they’re paying roughly 4% prior to drawing the loan and around 9% when drawn.

[dunderheed] 20/1/2020 17:07

roger - 4038 I "think" that is the rationale behind buying the FPSO - it gives them to freedom to explore the FAN a bit more and work out that conundrum which probably is even more complicated than the Shelf discovery?

[ladywormer] 20/1/2020 16:45

Trading update tomorrow according to The Telegraph

[frazboy] 20/1/2020 14:31

Possible. I'm guessing that's not the case though - I doubt they would have sold Nova if they didn't need to preserve cash for the SNE development - presumably there's a sizeable upfront fee for the FPSO, as they're purchasing it.

[hsfinch] 20/1/2020 14:01

My assumption is that Cairn has sold out of SNE so brings cash to the table. But only a thought.

[rogerlin] 20/1/2020 11:44

https://uk.advfn.com/stock-market/london/cairn-energy-CNE/share-news/Cairn-Energy-PLC-Oil-discovered-offshore-Senegal/63943108 I wonder if there is more value in the original deep water discovery beyond the shelf. Some companies (notably Total) do not seem put off by deep water drilling at the moment.

[frazboy] 20/1/2020 11:29

I’m with Dunderhead on the merger with Premier. Makes no sense to Premier, they want to buy NS assets to use their tax losses, and invest in high impact activities which Cairn has a little of but not a lot. They don’t want to have a share in a field that has huge Capex and limited upside - they’ve already got Sea lion. By the way, by means of comparison, Zama has a Capex per barrel of $5. I appreciate that this isn’t the only metric to judge things by, but it gets it in context.

[frazboy] 20/1/2020 09:59

‘If you think about it as a 5 year high risk investment, where’s the reward?’ Totally agree!

[dunderheed] 20/1/2020 08:29

Dont agree re merger with Premier. Think they (PRM) are stronger company. Certainly not a 50 50 merger anyway.

[hsfinch] 20/1/2020 08:25

It is a lot of money but I think they'll need it fir their 40% just to get their money back. If you think about it as a 5 year high risk investment, where's the reward? It should be a two bagger but it won't be. Interesting to see what they do get, how they spin it and what they do with the money. Still liking my Premier merger idea by the way:)

[frazboy] 19/1/2020 20:21

hs, that's a pretty sum. It's one of those fields that may have been better off not being found. Current MC $1.5 bn ish. A value in the range $300m to $500m to CNE for their 40% stake seems a reasonable range. Other assets of value are Kraken/Catcher ($600m, maybe a bit more), Cash (following sale of Nova) ~$150m YE, and, the Indian tax dispute and Mexico (not worth a great deal in my opinion) and the G&A liabilities of $25m per year - ST has to be paid! I would love to see the analyst report with the £2.5 per share valuation. My analysis suggests you gotta be pretty optimistic on India to get there. I guess the key point, as I think you mentioned before, is there's not going to be a huge amount of news flow going forward - only Mexico drilling results and the arbitration outcome. Short term news on SNE financing in the next few weeks could add some sparkle. I'll watch from the sidelines and wait for an opportunity short/long.

[hsfinch] 18/1/2020 17:44

Apparently well over a billion has been spent on SNE since the discovery in 2014. And Petrosen was carried for its 10%. Let's say that Cairn has spent $500million. Assume a spend profile and cost of capital at say 6%, and I reckon they'll need to get around $600million for their 40% just to break even.

[frazboy] 18/1/2020 17:05

Isn’t it just! Corrected my post above, as even I thought that $38/bbl Capex was silly - it wouldn’t fly at that, to $26/bbl. Apologies for that. If I were farming-in I would want a number ideally below $20 or certainly not much higher. That would imply $200m for the farm out of 20%. Clearly, there’s lots of games you can play, but I wouldn’t expect a figure to be north of say $250m, with maybe half upfront and half carried or something along those lines. I seem to remember that Woodside paid about $350m for 35%. Things have moved on since then but not materially in terms of development spend - that’s about to come.

[dunderheed] 18/1/2020 11:11

Blimey that is quite a "generous" "package"!

[frazboy] 18/1/2020 10:56

Dunderhead, Not often I put in a link to the Herald: Https://www.heraldscotland.com/business_hq/17552807.edinburgh-oil-firm-boss-sees-total-pay-fall-25/ So, a slight exaggeration on my part, only £2.25m last year but £3m the year before. I think he’s been in the job for 9 ish years - would be interesting to go back and see his remuneration total during that time. Excellent work if you can get it.

[dunderheed] 18/1/2020 10:24

No obviously not which is why I personally am not that hopeful of a "stunning" FO. I've got to admit I only "trade" CNE and immaterially and am NOT a current holder. Infer from that what you want!!

[frazboy] 18/1/2020 10:14

Dunderhead - Capex for Phase I is $1.44 bn including 10% contingency for 40% (see FAR data) most of which (~80%?+) is pre-first oil. Let’s say they FO half of that for $500m. That means that the third party will have paid $1.2 bn for development of the the Phase 1 reserves. That’s about 46 MMbo. Or, about $26/bbl for Capex. I appreciate that you can tweak the numbers (knock off the contingency etc) and the payment arrangements (carried for $500m would improve the economics for the 3rd party) but does look like good business to you?

[dunderheed] 18/1/2020 10:12

I personally think / "prefer" Premier mgt team to Cairns except for Cairn FD who is very talented individual I believe and probably instrumental in "flattening" Cairn strategy. They seemed to have an almost suicidal strategy some years ago when blowing a billion in Greenland? I didn't think ST earned $3mm dollars a year either, which if true, does seem a little high? Unless great FO of Senegal or big Mexico results you're probably right in that a merger maybe required but probably not Premier?

[hsfinch] 18/1/2020 10:00

No. Don't know him from Adam. Just picking up on Frazboy's remark about his salary. Rock doctors' performance is clear for all to see. Just thinking about things, seems like a perfect fit. That's all.

[dunderheed] 18/1/2020 09:56

HS have you got a personal dislike of them?! Do you know ST out of interest? I really like Cairn attitude. They see an opportunity and go for it quickly! They have had a lot of NOR dusters but that was as a result of one of their acquisitions was it not?

[hsfinch] 18/1/2020 09:45

The more I think about it, the more I like the idea of a merger with Premier. Common ground in the North Sea and Mexico. Big savings on headcount and offices. Chunky production. Assuming that Cairn sells out of SNE, balance sheet would look a lot better. It's the only way you're gonna get shot of ST, his Edinburgh cronies and that team of hopeless rock doctors. What's not to like?

[dunderheed] 18/1/2020 00:38

I'm not sure it's going to make that much difference to share price but let's wait and see. Shouldn't be too long now?