Cairn is an independent oil and gas exploration and production company. The main area of focus is South Asia.

            Red = 25 day moving average.           Green = 200 day moving average.

Cairn Energy (LSE: CNE.L - news) , which added 11.7 to 356.6p as two brokers upped their price target for the oil explorer after adjusting for a special dividend payment and share consolidation on Monday.

Having met with management last week, UBS (NYSEArca: DJCI - news) analysts added they were more comfortable with the Cairn story, but they still did not see a compelling enough reason to buy the stock and kept their “neutral” rating.

Time to climb aboard the ride back up!

StockMarketWire.com
Cairn Energy has confirmed that the FAN-1 exploration well, offshore Senegal, has discovered oil. The well, located in 1,427 metres (m) water depth and approximately 100 kilometres offshore in the Sangomar Deep block, has reached a Target Depth (TD) of 4,927 m and was targeting multiple stacked deepwater fans. Preliminary analysis indicates: - 29m of net oil bearing reservoir in Cretaceous sandstones

- No water contact was encountered in a gross oil bearing interval of more than 500m

- Distinct oils types ranging from 28° API up to 41° API indicated so far from a number of oil samples recovered to surface

- Initial gross STOIIP estimates for the FAN-1 well range from P90, 250 mmbbls, P50, 950 mmbbls to P10, 2,500 mmbbls and are broadly in line with pre-drill STOIIP estimates

As stated prior to the commencement of operations there are no plans for immediate well testing. Further evaluation will now be required to calibrate the well with the existing 3D seismic in order to determine future plans and optimal follow up locations to determine the extent of the discovered resource. Once operations are completed on the FAN-1 well, the rig will move to complete the second well, SNE-1 where the top hole has been drilled pending re-entry. This Shelf Edge Prospect targeting a dual objective in 1,100m water depth is in the Sangomar Deep block. The FAN-1 well was drilled using the semi-submersible drilling unit "Cajun Express". It is the third well in Cairn's North West Africa programme and first in Senegal. Cairn has a 40% Working Interest (WI) in three blocks offshore Senegal (Sangomar Deep, Sangomar Offshore and Rusifique) ConocoPhillips has 35% WI, FAR Ltd 15% WI and Petrosen, the national oil company of Senegal 10% WI. The three blocks cover 7,490 km2.

Chief executive Simon Thomson said: "The oil discovered in the FAN-1 prospect is an important event for Senegal and the Joint Venture.

"£We have encountered a very substantial oil bearing interval which may have significant potential as a standalone discovery. Furthermore, this result materially upgrades the prospectivity of the block with a proven petroleum system and a number of deep fan and shelf prospects established.

"Work is already under way with the joint venture partners to determine follow up activity which is targeted for 2015 onwards.

"Cairn looks forward to working with the Government of Senegal and our partners to realise the full potential from this large acreage position off the West coast of Senegal."

RBC comment:
"FAN-1 Discovers Oil: Cairn Energy announced that the FAN-1 well on the Sangomar Deep Block (Cairn 40%, Conoco 35%, FAR 15%, Petrosen 10%) offshore Senegal has discovered oil. The well drilled in 1,427m water depth reached 4,927m targeting multiple stacked deepwater fans finding 500m gross oil column (no oil/water contact was encountered) with 29m net oil-bearing reservoir in Cretaceous sandstones (significantly there is one main 10-15m reservoir). Oil types recovered ranged from 28-41API with samples already sent for further lab tests. The initial gross oil in place ranges from P90 of 250mmbbls to P10 2,500mmbbls with a P50 case of 950mmbbls (~300mmbbls recoverable). No well test is planned and calibration work will continue using the existing 3D dataset to determine follow-on locations. Following this result we upgrade the stock to Outperform and increase our price target to 250p/share.
Follow-on Potential: The well result today, where light/medium oil and good quality reservoir was encountered, has derisked four similar Cretaceous fan systems (see Exhibit 2) identified on 3D seismic across the ~7,490km2 acreage position. Although the 2015 exploration campaign is still to be confirmed we anticipate further appraisal/exploration activity next year. The next well, SNE-1, is closer to shore targeting the Shelf Edge 438mmbbls (mean unrisked prospective resources) prospect in a different play type albeit oil source has been derisked by the FAN-1 result. The well (-34/+137p/share risking) should restart shortly and reach TD through November.
Relatively Attractive Fiscal Terms: We value the FAN discovery at $9/bbl on a 2P NPV10 basis. This is based on a 300mmbbl model oil development partly using Tullow's Jubilee field as an analogy. We include a $102/bbl long-term oil price (based on RBCs long-term Brent forecast), first oil in 2022 (8 years to first oil vs. 4 years for Jubilee), capex of $12/bbl (in line with Jubilee) and due to remote location higher operating costs ($25/bbl). This generates a ~$1bn NPV10 valuation fully unrisked based on these relatively conservative assumptions.
Portfolio Management/Funding Flexibility: At the mid-year Cairn had about $1.1bn cash with around $400m of development and exploration spending planned through H2/14. Given the recent farm-down of Catcher (selling 10% to Dyas for a $182m carry) that reduced capex exposure on the project by $380m ahead of first oil in 2017, the company has increasing flexibility to maintain frontier exploration. We anticipate further details on 2015 drilling at the IMS on 30 October."

StockMarketWire.com
Beaufort Securities upgrades Cairn Energy to buy from hold.

StockMarketWire.com
Cairn Energy has announced a discovery of high quality oil in the second well in the Senegal exploration programme.

The SNE-1 well is located in 1,100 metres water depth and approximately 100 kilometres (km) offshore in the Sangomar Offshore block with a target depth of ~3,000 m and targeting the Shelf Edge Prospect.

Intermediate logging of the SNE-1 well has confirmed hydrocarbons in the Cretaceous clastics objective which is of similar age to oil bearing sands found approximately 24 km away in FAN-1.

As operator, Cairn has now issued 'notices of discovery' for the SNE-1 well and FAN-1 well to the Government of Senegal on behalf of the joint venture.

Initial analysis of the SNE-1 well indicates:

- 95m gross oil bearing column with a gas cap

- Excellent reservoir sands with net oil pay of 36m

- Oil of 32 degrees API from samples of gas, oil and water recovered to surface

- Preliminary estimates of the Contingent Resource range from P90, 150 mmbbls, P50, 330 mmbbls and P10, 670 mmbbls recoverable

Further evaluation of this zone is continuing. The deeper target of karstified and fractured Lower Cretaceous shelf carbonates is yet to be reached. A further announcement will be issued once operations are completed on SNE-1

Watching.

Big faller today.

RBC note today:
"Our view: Contrary to recent indications from India's Finance Minister that 'The government has no intention of using the retrospective tax provision,' Cairn Energy has received a $1.6bn assessment from The Indian Tax Department relating to the 2007 IPO of Cairn India. We remain enthusiastic about the Senegal drilling programme H2/15 but downgrade the shares to Sector Perform (and reduce our price target to 220p) while the impact of this disappointment is absorbed.
• Waiting in vain: Any hope that Cairn Energy's remaining stake in Cairn India (currently worth $700m) could be sold in the short term appears to have been dashed. The company now has a $1.6bn capital gains tax (CGT) bill addressed to its Cairn UK Holding Limited subsidiary only (therefore limited to the Cairn India holding). Although it plans to contest this (and the loss in value since 2014) through a legal process outside India, clearly it will take time to resolve. This development has no impact on Cairn Energy's ability to fund ongoing activities. However, in the absence of this catalyst, we anticipate that some major shareholders will rotate out of the stock. As a result, we downgrade the shares to Sector Perform as the impact of this disappointment is fully absorbed.
• Taxing issue: The Indian Tax Department has presented Cairn Energy with a draft order for $1.6bn in respect of fiscal year 2006/7. The transactions/share transfers subject to the assessment were undertaken as part of the group reorganization to enable the IPO of Cairn India in 2007 (see Exhibit 2). This assessment was first outlined by the Indian Tax Department in a BSE announcement 22 January 2014 and comes from the retrospective capital gains tax introduced as part of the 2012 Finance Act. Cairn has instructed legal counsel to file a Notice of Dispute under UK-India Investment Treaty (International Jurisdiction ex-India) following the receipt of this order. The process starts with a 3- to 6-month negotiation to potentially find resolution before appointment/establishment of an International Arbitration proceeding begins. Management expects to be successful and no accounting provision has been made regarding the assessment.
• Say one thing, do another: Leading up to the assessment, Cairn had reported encouraging discussions with the Indian political heirachy around resolving this tax dispute, particularly as the 2012 retrospective tax law (effective from 2007) was established by the previous Congressled administration. Since the landslide election of Narendra Modi as Prime Minister in June, the government has pushed a pro-business/FDI stance. Specifically, Finance Minister Arun Jaitley has stated that the tax 'scared away investors' from India. Indeed, he was quoted recently as remarking that 'The government has no intention of using the retrospective tax provision.' There could be some political fallout from the Indian Tax Department announcement; however, we anticipate this creates more murk than clarity."

sad to see the demise of this once market darling ..... TLW is trying to follow in its footsteps

.....Time to get out of CNE; Black Rock have just increased their holding. Am expecting big shorting period on SP.

DYOR
HAb

blackrock now hold just over 11%
though this isn't a stock in which i hold any interest, i fail to see why it should now be a target for shorting let alone aggressively

The SP will speak for itself to support my comments above; over the near term period.

SP already started to fall slightly, am expecting it to bounce around mid 165p level.

DYOR
HAb

hardly aggressive shorting then :-)

StockMarketWire.com
Cairn Energy is 'delighted' with positive flow tests on the SNE-2 appraisal well confirming the commercial deliverability of the SNE discovery.

Chief executive Simon Thomson said: "Further appraisal activity this year will test the overall scale and extent of the resource base in Senegal, and is expected to lead to revision of the resource estimates. Drilling operations on the next appraisal well, SNE-3, are now under way.

"The Company remains fully funded from existing financial resources to deliver its exploration and appraisal programme, as well as to take its North Sea developments through to free cashflow generation in 2017. International arbitration proceedings to resolve the retrospective tax issue in India have now formally commenced following the agreement between Cairn and the Government of India on the appointment of a panel of three international arbitrators under the terms of the UK-India Investment Treaty." The group also issued a corporate and finance update:

- Group net cash at 31 December 2015 of USD603 million

- Reserve Based Lending bank facility remains undrawn, with availability to fund North Sea development capex currently estimated at USD300m, subject to six monthly redeterminations in March and September

- Total cash expenditure for 2H 2015 was US$174m, principally comprising USD85m development expenditure and US$77m exploration and appraisal (E&A) expenditure including pre-award costs (US$50m E&A expenditure was in Senegal). A USD52m tax rebate in respect of previous Norwegian E&A activity was received in 2H 2015

-Forecast development expenditure for 2016 and 2017, taking the UK development projects through to cashflow generation, is USD492m; and remaining currently committed drilling and seismic E&A expenditure 2016 is estimated at US$122m, predominantly in Senegal. Outstanding Norwegian tax rebate receivables are US$32m

- Cairn remains unable to access the value in its ~10% residual shareholding in Cairn India Limited (CIL) valued at USD384m at 31 December 2015.

Credit Suisse comment today:
"Understanding risks presents opportunities
Positioning for a recovery in oil prices: Investors often look to the E&P sector as a way to play a recovery in the oil price, and we think some companies are smarter ways to play a recovery than others from a risk/reward perspective. When thinking of how to position for a recovery in oil prices, we analyse E&Ps through a five part framework involving: i) balancing oil price leverage with funding risk; ii) ability to refinance, iii) project execution risk, iv) exploration upside and v) M&A.

Cairn Energy (upgrade to Outperform from Neutral, TP 255p from 215p) is our top pick. It is on the verge of returning to production in 2017, re-establishing itself as a full-cycle E&P company that funds future exploration from organic cash flows. It also has exposure to an exciting oil discovery in Senegal, where the current ~500mmbbl resource has the potential to grow in size towards the large 2.74bn oil in place estimate."

This looks cheap at 185p.

StockMarketWire.com 19/05/17
Cairn Energy has a strong platform for further activity this year after excellent progress in 2016, shareholders at the annual general meeting today will be told.

Chief executive Simon Thomson will say: "Cairn's strategy is to deliver sustainable value growth for shareholders from a balanced portfolio of exploration, development and production assets.

"Our exploration focus is on acreage in frontier and emerging basins which offer the greatest value potential, funded from production assets and balance sheet strength.

"In the past year, we have made excellent progress on our strategic objectives.

"We have created a strong platform for future growth, with active positions in various geographies providing significant acreage positions of technical and commercial value.

"In Senegal, we have confirmed the scale and potential of the world class SNE field, having successfully drilled nine wells in three years.

"Following appraisal success in 2016 which saw us upgrade our resource estimates, we commenced the third phase of drilling in January and have drilled three successful wells this year with a further exploration well shortly commencing.

"The near-term focus in Senegal is defining the scale and phasing of the overall SNE field development including the balance between the number of drilling centres, type and number of wells and the subsea infrastructure.

"As previously indicated, we aim to submit an Exploitation Plan to the Government of Senegal in 2018 with a Final Investment Decision within twelve months thereafter and first oil in the period 2021 to 2023.

"Cairn currently anticipates providing an update on contingent resource estimates at the half year in August when the results of the latest wells will be further analysed and incorporated into the design and development plan for the SNE field.

"In the UK North Sea, both the Catcher and Kraken developments remain significantly below their original budgets and both are on schedule to target first oil this year.

"Together they will deliver around 25,000 barrels of oil a day on plateau net to Cairn, generating significant cash flows for reinvestment.

"Elsewhere, we have secured additional licences both in the North Sea and Barents Sea and farmed in to a number of interesting prospects offshore Ireland, where we plan to drill an exploration well in the Southern Porcupine basin this summer.

"We are fully funded to deliver this programme, and meet all our commitments.

"We currently have ~US$254 million cash on our balance sheet, while our Reserve Based Lending facility is undrawn.

"International arbitration proceedings are progressing in respect of Cairn's claim under the UK-India Bilateral Investment Treaty for the restitution of c. US$1billion of assets frozen in 2014, with a date set for the final arbitration hearing in January 2018.

"We expect a ruling soon thereafter and remain confident in our position.

"To conclude, 2016 was a year of excellent progress, providing a strong platform for further activity in 2017.

"This year, we will commence production in the North Sea, progress the SNE field towards development, drill material exploration wells in Senegal and Ireland, and continue to work on new exploration and development opportunities both from the existing asset base and from new ventures."

Macquarie today reaffirms its outperform investment rating on Cairn Energy PLC (LON:CNE) and raised its price target to 270p (from 246p).

StockMarketWire.com
Cairn Energy has issued an update on the tax dispute in India and said it had a high level of confidence in its claim under the UK-India Bilateral Investment Treaty.

Cairn announced in March that it had received confirmation from the Government of India (GoI) via the international arbitration tribunal that dividends of US$53m due from Cairn India Limited were no longer restricted, and Cairn requested the immediate release of that sum from CIL.

On 9 June, the tribunal issued a formal order memorialising the numerous confirmations from the GoI that the dividends were no longer restricted and authorising that order to be provided to CIL (now named Vedanta Limited following the merger of CIL and VIL). An update said: "However, on 16 June the Indian Income Tax Department (IITD) issued an order to VIL directing it to pay over any sums due to Cairn.

"Sums due to Cairn from VIL now total US$104m, including historical dividends of US$53m and a further dividend of US$51m after the merger of CIL and VIL.

"Notwithstanding this action by the GoI, international arbitration proceedings are progressing in respect of the group's claim under the UK-India Bilateral Investment Treaty."

Cairn said it was seeking full restitution for treaty breaches resulting from the expropriation of its investments in India in 2014, the attempts to enforce retrospective tax measures and the failure to treat the company and its investments fairly and equitably.

Cairn added that it "has a high level of confidence in its case under the Treaty and, in addition to resolution of the retrospective tax dispute, its claim seeks damages equal to the value of the group's residual shareholding in CIL at the time it was attached (approximately US$1bn)".

The seat of the arbitration is The Hague in the Netherlands and final hearings for the tribunal are scheduled for January 2018.