Offshore rig - Photo by Jan-Rune Smenes Reite
Photo by Jan-Rune Smenes Reite
Scotland-based oil and gas firm Cairn Energy is to reduce its stake in the Nova project in the the Norwegian North Sea in a bid to cut operational costs. The firm, based in Edinburgh, divested 10% of its interest in Nova to One-Dyas Norge for €53.1-million.
The deal still leaves Cairn with a non-operating 10% interest in the Nova development, which is operated by German oil and gas producer, Wintershall. Cairn has said that the deal will lead to a reduction in costs amounting to $110-million at the end of 2021. The announcement saw the company's shares rising.
Cairn said that the proceeds would be used to fund exploration and development. The company has assets in the North Sea, primarily in the Catcher and Kraken fields, as well as exploration interests in Mexico, Suriname, and Senegal.
The transaction between Cairns and One-Dyas Norge remains subject to consent by Norway's Ministry of Petroleum and Energy.
The Nova field development plan was submitted and approved in mid-2018 by the Norwegian Petroleum Directorate. Nova is expected to deliver peak production of 50,000 barrels of oil per day, with first oil targeted in 2021. Wintershall DEA is the operator of the project.
Cairn's major remaining North Sea interests, Catcher and Kraken both began oil production in 2017. The company holds a 20% stake in Catcher and a 29.5% stake in Kraken, both on a non-operational basis. While the valuation of the Kraken field east of the Shetland Isles was cut by €148-million, following a cut in reserve estimates, Cairns has said that the shortfall will be offset by the Catcher field east of Aberdeen.
The firm is also looking to begin production in Senegal in 2022 following a major discovery there.
Analysts at Numis said: “We have previously forecast Cairn is well funded for its existing share of the Senegal development project through to the end of next year, before the capex ramp-up starts to exert pressure on the balance sheet. This transaction provides management with further headroom to decide the best time/price to monetise a stake in [Senegal].”
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