Cairn Energy: Exploration Setbacks, But Shares Backed By Core
Edison | Aug 15, 2017 05:52AM ET
We update our valuation to reflect the Druid and SNE North well results and lower long-term oil price assumption. We look forward to the half-year results on 21 August when Cairn Energ (OTC:CRNCY) plans to update the market on reserves estimates and the development concept for SNE, which will help to firm up potential value for the field. After adjustments and accounting for our lower long-term oil price assumption, the contingent NAV falls to 196p (from 225p/share).
Wells did not deliver as hoped
The large, primary target of Druid (we had modelled around 600mmboe) was water-bearing and the SNE North well was a technical discovery, but did not show connection to the main structure. The company is studying its potential commerciality – it could bode well for further exploration in the north of the block. As a result, the only exploration catalyst is the smaller, deeper Drombeg cretaceous fan target (1,000m below Druid) in Ireland, which Providence estimates could contain 1.9bnbbls OIP (we model 250mmboe recoverable), although lack of hydrocarbons in Druid may imply a lower chance of success.
To read the entire report Please click on the pdf File Below:
Cairn Energy - Exploration Setbacks, But Shares Backed By Core
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.