HALF YEAR RESULTS PRESENTATION Cairn Energy PLC 29 th September 2020
DISCLAIMER Thes hese mat ater erial als s contai ain forw rwar ard-look oking g st statem emen ents s reg regarding g Cairn rn, our ur corporate pl plans, s, fut uture fina nancial cond ndition on, fut uture e re resu sults s of oper peration ons, s, fut uture bus business ss pl plans s and nd st strateg egies. es. All suc uch forw rwar ard-look oking g st stat atements s are re ba based sed on n our ur manag agement's 's assumption ons s and nd be beliefs s in n the he ligh ght of inf nfor ormation ava availab able e to them hem at at thi his s time. e. Thes hese forw rwar ard-look oking g st statem ements are, re, by by the heir na nature, subj ubject ct to sign gnificant risk sks s and nd uncer uncertainties s and nd act ctual re resu sults, pe perf rfor ormance and nd ach chievem emen ents s may y be be materi erially y di different from rom those hose ex expres essed sed in n suc uch st statem emen ents. s. Fact ctor ors that hat may y cause use act ctual al re resu sults, s, pe perf rform rman ance e or ach chiev evem emen ents to di differ er from om ex expec ectation ons inc nclude, but but are re no not limited ed to, o, re regu gulat atory ry ch changes es, fut uture lev evel els s of indu ndustry ry pr prod oduct sup upply, de deman and and nd pr pricing, g, weather er and nd weather er re related ed impac pacts, s, wars s and nd act cts s of terr rrori rism sm, dev devel elop opment and nd us use e of tech chnolog ogy, act cts s of compet etitors s and nd other er ch changes s to bus business ss cond ndition ons. s. Cairn rn und undert ertakes es no no obl bligation on to rev revise se any y suc uch forw rward-look oking g st statem emen ents s to ref reflect any y cha changes s in n Cairn rn's 's ex expec ectations s with h re regar ard ther hereto o or any y ch chang nge in n ci circ rcumstan ances es or even ents s after er the he dat date e he hereof of. Half Year Results Presentation, September 2020 2
Introduction SIMON THOMSON
Strategic Execution Capital Discipline High Grading VALUE GROWTH ACTIVE PORTFOLIO MANAGEMENT Balance Sheet Strength Transformational Monetisation Potential FINANCIAL FLEXIBILITY Liquidity Control Track Record SHAREHOLDER RETURNS Dividends Buy Backs Half Year Results Presentation, September 2020 4
Introduction Strategic Execution ➢ As a management team we continually assess the balance of risks SANGOMAR within the portfolio DEAL ➢ Is a delivery of strategy, having indicated a farm down of Sangomar at THE or around FID TRANSACTION ➢ Eliminates what would otherwise have been a significant capital allocation to a multi-year deep water project ➢ Strengthens strategic and financial flexibility and significantly reduces the risk profile ➢ Allows a significant capital return to shareholders consistent with long-term strategy ➢ Provides sufficient financial flexibility to consider potential additions to the portfolio Half Year Results Presentation, September 2020 5
Introduction Executing Strategy Responsibly – ESG Our Approach ➢ Cairn’s role in the energy transition is to responsibly produce hydrocarbons in support of UN Sustainable Development Goals ➢ Cairn will remain an oil and gas company, focused on driving down the emissions intensity of its production and activities and committed to the following; ➢ Dedicating human and financial resources to achievable routes to reduce emissions ➢ Identifying asset specific emissions reduction opportunities compatible with our business model ➢ Invest in proof of concept industrial Carbon Capture projects to facilitate large scale deployment, to capture emissions and mitigate expected increasing cost of offsetting Committed to Working to Key External Standards Half Year Results Presentation, September 2020 6
Finance JAMES SMITH
Finance Financial Performance ➢ H1 production: 22,400*bopd (upper end of guidance) Production ➢ Full year production: 21,000 - 23,000*bopd ➢ H1 revenues from production: $172m Revenue ➢ H1 realised oil price: $40.21/bbl plus $7.91/bbl hedging gains ➢ H2 hedges over 7,100bopd with average floor price of $60.60/bbl ➢ H1 opex: $18.3/boe underlying, less $2/boe prior year credits Opex ➢ Full year opex: targeting ~$18/boe Cashflow ➢ H1 cash inflow from oil and gas production: $132m * Before Flowstream entitlement to Kraken production: 4.5% up to May 2020, 1.35% thereafter Half Year Results Presentation, September 2020 8
Finance HY 2020 Cashflows Total H1 Capital Expenditure $271m Opening Catcher Net Sangomar Catcher Exploration* Pre-award Admin Net Closing Cash and Norway and Costs and Financing Cash Kraken Disposal Kraken* and New Other Costs Cashflow Proceeds Ventures Costs * H1 Catcher, Kraken and Exploration cash outflows include $30m related to activities completed in 2019 Half Year Results Presentation, September 2020 9
Finance 2020 Capital Expenditure Full Year Guidance UK Catcher Kraken $40m Production $20m $20m Varadero production well and Worcester satellite development Catcher area subsea expansion Other West Africa Mexico $95m Exploration Exploration $25m $55m $15m Côte d’Ivoire 2D Seismic, Bitol well on Block 9, Ehecatl well on Block UK and Suriname G&G Mauritania farm-in 7, Saasken discovery well on Block 10 studies and well planning Senegal - Sangomar $300m Development $300m To be refunded on completion of sale to Woodside Forward capital programme adjusted Deferred: Catcher North and Laverda satellite development, exploration wells in Mexico and UK, and 3D seismic in Suriname to current market conditions * 2020 capital guidance excludes Norway capital expenditure refunded on completion Half Year Results Presentation, September 2020 10
Finance Balance Sheet Strength ➢ Mid year cash $84m: no drawn debt Maintained ➢ Strong H1 operating cashflows supported by hedging: $132m Net Cash in H1 ➢ Norway disposal proceeds received in H1: $105m Projected ➢ Completion of Senegal sale: $300m up front consideration plus Balance Sheet reimbursement of 2020 capex (full year expected $300m) Strengthening ➢ Strong projected Q4 cash position enabling $250m special dividend in Q4 Positioned ➢ Very limited capital commitments from existing assets for Portfolio ➢ Well positioned to fund growth and expansion of the portfolio Expansion and Further ➢ Result of the Indian arbitration expected after the end of the summer Returns Half Year Results Presentation, September 2020 11
Finance Strategic Priorities and Capital Allocation Portfolio Management ➢ Monetise for returns and reinvestment Shareholder Returns Sustainable ➢ Flexible and balanced capital allocation Cashflow Base ➢ Key differentiator ➢ Diversify and extend ➢ Competition for capital production base between reinvestment and returns ➢ Ensure low full-cycle break even economics All investment decisions assessed against multiple externally assured energy transition scenarios Selected Exploration Balance Sheet Flexibility ➢ Core area exploration to ➢ Capital structure resilient to sustain production price shocks ➢ Select transformational ➢ Controllable and flexible exploration capital programme Half Year Results Presentation, September 2020 12
Production & Development PAUL MAYLAND
Production & Development Kraken Kraken Area Gross Estimated Ultimate Recovery ➢ Average production efficiency > 85% (2P EUR) achieved with continued improvement 2P Reserves 99.9 mmbbls ➢ Reservoir monitoring and well testing continues to maximise oil production Production to date* ~33.6 mmbbls ➢ 26 wells available following the Worcester drilling: 14 producers and 12 injectors 50,000 45,000 ➢ Reserves upgrade on main field at mid- 40,000 year, further potential in western flank 35,000 30,000 25,000 ➢ Gas import remains under consideration 20,000 15,000 ➢ Crude continues to attract strong pricing 10,000 5,000 0 2017 2018 2019 2020 * Production to 30 th June 2020 Kraken Monthly Average Production Rate (bopd) Half Year Results Presentation, September 2020 14
Production & Development Catcher Catcher Area Gross Estimated Ultimate Recovery ➢ Plateau rate already increased and (2P EUR) lengthened compared to Field 2P Reserves Development Plan (FDP) 54.9 mmbbls ➢ 19 wells available, 3 fewer than Production to date* original FDP ~47.4 mmbbls ➢ Catcher North and Laverda wells deferred from 2020 programme 70,000 60,000 ➢ Low emissions FPSO facility 50,000 40,000 ➢ 4D seismic planned 2021 to help optimise future targets 30,000 20,000 ➢ Reserves upgrades possible through 10,000 improved sweep, both water and gas 0 2018 2019 2020 * Production to 30 th June 2020 Catcher Monthly Average Production Rate (bopd) Half Year Results Presentation, September 2020 15
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