The Acquisition is in line with Cairn’s strategy of seeking to grow, diversify and extend its production base. The portfolio offers low cost production, near-term development and exploration potential, provides immediate operating cashflow contribution and adjusts our overall hydrocarbon split towards gas.
Transaction Highlights
- Adds working interest 2P reserves of 113 mmboe as at 31 December 2020
- Adds low-cost 2021 forecast working interest production of between 33,000-38,000 boepd with an opex/bbl of
- Significant Cashflow from Operations (CFFO) contribution: average CFFO(1) for previous three reported years (2017 – 2019) was ~US$140 million net to the interests being acquired by Cairn
- Enhances near-term growth opportunities with 2C contingent resources working interest of 49 mmboe as at 31 December 2020 to Cairn and significant exploration potential remaining
- Cairn, together with Cheiron, plans to finance the Acquisition with a new joint acquisition reserve-based lending facility of up to US$350 million, joint junior debt facility of US$100 million and existing cash on balance sheet
- The economic effective date of the Acquisition is 1 January 2020. Production for the assets being acquired averaged 83,000 boepd (Cairn working interest of 41,500 boepd) in 2020
(1) Cashflow from operations is a non-IFRS measure and excludes working capital movements. CFFO is presented in order for readers to understand the cash profitability.
Simon Thomson, Chief Executive of Cairn said:
"The proposed acquisition of Shell’s Western Desert assets in Egypt is an important step in our strategic ambition to expand and diversify our producing asset base, bringing material reserve and production additions and offering significant exploration potential.
We are delighted to be entering a country that has significant oil and gas growth opportunities where the Government has created an attractive environment for inward investment. Our Joint Venture with established Egyptian operator Cheiron creates a strong partnership with extensive experience and complementary strengths across the upstream value chain."
About Cairn Energy PLC
Cairn is one of Europe's leading independent energy companies and has been listed on the London Stock Exchange for 30 years. Cairn has explored, discovered, developed and produced oil and gas in a variety of locations throughout the world as an operator and partner in all stages of the oil and gas lifecycle.
Cairn's exploration activities have a geographical focus in the North Sea, West Africa and Latin America, underpinned by interests in production and development assets. Cairn has its headquarters in Edinburgh, Scotland supported by operational offices in London and Mexico.
About Cheiron
Cheiron is an independent exploration and production company focusing on revitalizing and optimizing production at medium-sized mature fields. Our interests span the range of oil and gas upstream activity — from exploitation to full field development planning and operations.
From its robust base in the Egyptian mature fields region, Cheiron is actively expanding into international markets in need of its particular brand of expertise, with operations and assets in Mexico and Romania.
About Royal Dutch Shell plc
Royal Dutch Shell plc (LSE: RDSA) is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. Shell companies have operations in more than 70 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects.
