SCOTTISH OIL and gas exploration firm Cairn Energy saw losses narrow to $194.2 million last year and said it was embarking on a move into an emerging African market.
Pre-tax losses from continuing operations dropped 83% during the year to December 31, down from $1.2 billion at the end of 2011.
On a profit after tax basis, the Edinburgh group reported a profit of almost $73m, which included a credit on continuing operations amounting to £266.8m.
The figure included $145m as a result of the sale of 11.5% of its holding in Cairn India Limited.
Ultimately, the group ended the year with net cash of $1.6bn and with Cairn’s remaining 10% stake in CIL valued at $1.1bn.
The company said it had made progress during the year and was now fit and ready to pursue growth through 2013 and 2014.
As part of its growth strategy, Cairn confirmed a new farm-in agreement to explore a new frontier off the coast of Senegal.
The tie-up with FAR Limited and its joint venture partner Petrosen will see Cairn assume operatorship and acquire a 65% working interest in three blocks off the coast of the West African country.
The firm said it was also pushing ahead with its operations in the North Sea including interests in the pre-development oil fields at Catcher, Kraken and Mariner.
Chief executive Simon Thomson said the company was in a ‘cash rich’ position which enabled it to forge ahead with plans to create significant value through an exploration led growth strategy.
“The farm-in to acreage offshore Senegal is a further new country entry for Cairn and represents a highly attractive addition to our existing Atlantic Margin portfolio alongside our exploration interests in Morocco and Greenland,” he said.
“By developing an increased strategic presence in the under-explored but highly prospective region of North West Africa, we can generate both operational and geological synergies and fully apply our frontier exploration skills.”
Cairn also said it was targeting between two and four exploration wells off the coast of Morocco and was also targeting a new development plus a well off the coast of Greenland, subject to necessary approvals.
The company has been strongly criticised by environmentalists for operations in Greenland’s waters.
It will have to wait until summer next year before re-starting its drilling efforts in the country’s Pitu field, but this has not stopped Cairn from increasing its forecast for the number of barrels of oil it expects from its overall Greenland operations.
Announcing an upgrade on prospective resources, from 700 million barrels to about three billion barrels, Cairn said it was still confident of success in the region and elsewhere across its portfolio.
Mr Thomson said: “Our clear focus is to operate exploration positions and opportunities which we believe have the most organic growth potential and where we have the experience, ability and knowledge to add most value.
“As a consequence, we are planning an extendable programme to drill multiple frontier exploration wells over the coming 18 months.”
Matthew Lambourne, equity analyst at Jefferies, said: “With a strong portfolio of development assets, growing suite of exploration acreage and strong balance sheet, we continue to see Cairn as having greater upside than is reflected in the current share price.”
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