Profit of $263.1m and cash flow is enhanced by output from the Kraken and Catcher fields in the North Sea which came on stream in June and December last year respectively. This helped boost net cash to $86m compared with the $56m pencilled in by analysts.
Both developments should make a fuller contribution in 2018 – yielding net production of between 17,000 to 20,000 barrels of oil equivalent per day (boepd).
Longer term the company is progressing the Nova and SNE projects in Norway and Senegal with targeted dates for first oil of 2021 and between 2021 and 2023. Nova is expected to deliver 10,000 boepd to Cairn while SNE could provide gross output of 100,000 boepd.
We highlighted the investment case at Cairn in July last year.
NEXT GROWTH PHASE
Davy analyst Job Langbroek has an ‘outperform’ rating on the stock and reckons there are signs of the ‘next growth phase’ emerging. Historic exploration success in India in the mid-noughties took Cairn from small cap status to the FTSE 100 but it has since retreated on expensive and ultimately disappointing drilling offshore Greenland and lower oil prices.
Lanbroek adds: ‘We believe that Cairn looks to be in good shape and should outperform. However, we think the market is still not quite sure whether it is time to move on past the balance sheet worry phase and look to buy growth.
‘Cairn remained insulated from much of the balance sheet repair issues of the last two years; however, in the absence of wholesale enthusiasm for exploration, we suspect the oil price will determine the short-term performance of E&P stocks.’