SNE larger but phased
Cairn Energy’s interim report revealed higher contingent resources at SNE of 563mmbbl, but a phased development plan targeting the lower reservoirs initially. Lower capex to first oil is balanced by a lower (and longer) plateau period of 75-125mb/d. Other offshore projects indicate that phase one will have low production rates (of perhaps 80mb/d), while we expect further phases to increase over time. As a result of these changes, and a number of other adjustments throughout our modelling (not least for the commissioning issues seen at Kraken), our contingent valuation remains broadly flat at 195p, but our RENAV increases to 205p (from 200p).Cairn Energy is an oil and gas exploration and development company. Co. has three groups of business unit: Senegal, which focuses on appraising the discoveries offshore Senegal and to identify further exploration prospects for drilling; U.K and Norway, which includes exploration activities in the North Sea, Norwegian Sea and Barents Sea and management of Co.'s development assets in the U.K. North Sea; and International, which consists of all other regions where Co. holds exploration licenses, including Greenland, Ireland, Morocco, Western Sahara, Mauritania and the Mediterranean. As at Dec 31 2016, Co. had total proved plus probable reserves of 51.5 million barrels of oil equivalent.
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