Cairn ‘knows what needs to be done’ with North Sea Kraken field

Cairn Energy chief executive Simon Thomson at the Mangala Processing Terminal in India
Cairn Energy chief executive Simon Thomson at the Mangala Processing Terminal in India

Scottish oil firm Cairn Energy has said it has lived up to its production guidance for the first part of 2019 and hailed the performance of the North Sea Catcher field.

The Edinburgh-headquartered Cairn said on Friday that Catcher – operated by Premier Oil – was exceeding its expectations.

Cairn owns 20% of Catcher, which came on stream at the end of 2017 in the central North Sea.

The company also owns 29.5% of the EnQuest-operated Kraken field.

In March, Cairn said it had lowered the reserves estimate for the field by 6.8 million barrels of oil equivalent, or 19%, following an evaluation of reservoir performance.

EnQuest quickly responded, saying the two firms used different technical approaches to production forecasting and that its own estimate was “materially unchanged”.

Today, Cairn said that while it had reduced its forecast for Kraken, it “knows what needs to be done to improve the performance of the field”.

“We are working with the operator on several initiatives designed to increase the productivity of the assets on a sustainable basis,” Cairn said in a statement ahead of today’s annual general meeting.

In 2018, Catcher and Kraken together produced around 17,500 barrels of oil per day net to Cairn and around £310 million in revenue.

Group production remained within Cairn’s guidance of 19,000-22,000 barrels of oil per day for the first four months of 2019.

The company has a busy exploration programme slated for the second half of this year, targeting more than 800m barrels of gross resource.

The campaign includes six wells – three in the UK and Norway, and three in Mexico.

Cairn will operate five of these wells.

The UK North Sea well is called Chimera.

Cairn added that it has entered into a farm-in agreement with Equinor for a 35.1% non-operated interest in four exploration blocks offshore the Nicaragua Pacific coast ahead of a potential exploration drilling campaign in 2020.

The company is also awaiting an arbitration panel’s decision in its dispute with Indian tax authorities.