INVESTOR PRESENTATION Cairn Energy PLC March 2020
DISCLAIMER These materials contain for orward-lo lookin ing statements reg egarding Cair Cairn, , our our cor orporate pla plans, s, fu futu ture fin financial conditio ion, fu future resu esults of of ope operations, s, fu futu ture bu busin iness s pla plans an and strategies. . All l suc such for orward-lo lookin ing statements ar are base based on on our our management's ass assumptions s an and be belie liefs in n the light of of informatio ion avail ilable to to them at t this is tim ime. These for orward-looking statements s ar are, e, by y their na nature, , su subject to to si significant ri risks s an and un uncertainties s an and act actual l res esults, s, per perfor ormance an and ach achie ievements may be be materially dif different fr from om those expressed in n suc such statements. s. Fac actors that may cause act actual res esult lts, per performance or or ach achievements to to dif differ fr from expectations include, , bu but ar are e no not t lim imited to to, , reg egulatory chan changes, s, fu futu ture levels of of industr try pr product sup supply, de demand an and pr pric icing, g, wea eather an and wea eather rela elated impacts, war ars an and act acts of of te terroris ism, de development an and use use of of te technology, ac acts ts of of com ompetitors an and ot other ch changes to to bu business s conditio ions. Cairn un Cair undertakes no no ob obli ligation to to revis ise an any suc such for orward-lo lookin ing statements to to refle lect an any ch changes in Cai Cairn's expectations wit ith reg egard thereto or or an any ch change in n ci circumstances or or events after the da date her hereof. Investor Presentation, March 2020 2
Introduction Strategic Execution ➢ Strong production performance Operational ➢ Final Investment Decision (FID) on Senegal development ➢ Reserve additions from Senegal, Kraken and Catcher Delivery ➢ Mexico exploration success with ENI ➢ Cash flow generation at upper end of guidance Financial ➢ Net cash ➢ Undrawn RBL debt facility Flexibility ➢ Continued fiscal discipline ➢ Norway sale Capital ➢ Ireland and Nicaragua exits ➢ UK North Sea – South of Nelson swap Allocation ➢ India arbitration award expected summer 2020 Investor Presentation, March 2020 3
Introduction Asset Base UK ISRAEL MAURITANIA MEXICO SENEGAL SURINAME CÔTE D’IVOIRE Exploration Development Production We hold emerging acreage in Senegal, We hold an interest in the Sangomar We hold non-operated interests in two Mexico, Israel and Mauritania; frontier Field (Senegal) development project. production assets in the UK North Sea, acreage in Suriname and Côte d’Ivoire This was an exploration asset which Catcher and Kraken, which delivered and mature acreage in the UK. we have progressed into development. first oil in 2017. Investor Presentation, March 2020 4
Introduction Executing Strategy Responsibly – ESG Our Approach RESPECT RELATIONSHIPS RESPONSIBILITY RESILIENCE BEHAVING BEHAVING BEHAVING RESPONSIBLY RESPONSIBLE RESPONSIBLY RESPONSIBLY TOWARDS THE GOVERNANCE TO PEOPLE TO SOCIETY ENVIRONMENT ➢ ➢ Make positive social impact ➢ KPI linkage between greenhouse ➢ Global energy transition Engaged with operating partners in UKCS to ensure compliance and support UN sustainable gas emissions and remuneration identified as a principal risk with EUETS requirements development goals ➢ Compliance with and publication ➢ Portfolio tested under different ➢ ➢ Programmes to build local economic scenarios – resilient Cairn committed to supporting of all taxes and payments to UK Government’s target of capacity, participation and governments to transition impacts reducing greenhouse gas mobilisation of communities, ➢ Zero tolerance of Anti Bribery ➢ Aligned with TCFD emissions to net zero by 2050 including climate adaption and Corruption matters recommendations projects ➢ Identify and pursue opportunities to reduce carbon intensity and greenhouse gas emissions throughout supply chain Committed to Working to Key External Standards Investor Presentation, March 2020 5
Introduction Resilient Portfolio in Energy Transition Cairn will target only those resources capable of playing a part in the future global energy mix, when hydrocarbon demand is expected to be materially lower ➢ Capital allocation always a competition between: ➢ Sustaining a low-breakeven production base, ➢ Investing in compelling exploration opportunities, and ➢ Returns to shareholders ➢ Independent economic scenarios reflecting IEA Sustainable Development Scenario for <2°C temperature rise and halving of global oil demand by 2050 ➢ Various transition scenarios: smooth; undisciplined (consistent oversupply); and disruptive (market shocks resulting from accelerated change) ➢ Scenarios based on oil price, country risk and cost of capital impact ➢ Existing portfolio tested against all scenarios: each asset delivers at least 10% IRR Investor Presentation, March 2020 6
Finance Financial Overview 2019 Results 2020 Guidance ➢ Net oil production ~23,000 bopd*, at ➢ Net Production: 19,000 to 23,000 bopd upper end of guidance (2018: 17,500 ➢ Average production cost: bopd) targeting <$20/boe ➢ Oil and gas sales revenue: $504m ➢ Hedging strategy: ➢ Average realised oil sales price: H1 2020 hedging: ➢ $65.70/bbl (before $1.42/bbl hedging 5,478 bopd collars $64/bbl to $79/bbl**; gain) 2,547 bopd swaps at $62/bbl ➢ Average production cost: $17.4/boe H2 2020 hedging: ➢ 4,824 bopd collars $60/bbl and $70/bbl**; ➢ FY 2019 cash inflow from oil and gas 2,304 bopd swaps at $62/bbl production: $390m ➢ Operating profit from continuing operations: $87m (before non-recurring items) * Shown before deduction of FlowStream rights to production, currently at 4.5% Kraken volumes, stepping down to 1.35% in Q2 2020 ** Weighted average floor and ceiling prices Investor Presentation, March 2020 7
Finance Financial Overview Funding Position ➢ Cash at 31 December 2019: $147m ➢ $108m proceeds from Norway disposal received Q1 2020 ➢ $575m RBL remains undrawn ➢ Senegal – Sangomar Phase 1 development sanctioned, work underway to expand RBL facility ➢ Funding plan does not take account of any proceeds from result of Indian arbitration, expected in summer 2020 Investor Presentation, March 2020 8
Finance FY 2019 Cashflow Full year capex $263m ($215m net of Norway tax and Nova reimbursement)* Includes $21m of capex Reimbursed on completion of Nova disposal $373m after adjusting for opening and closing receivables Opening Kraken Norway Net Nova Nova Sangomar Catcher Exploration Pre-award RBL Admin Net Norway Closing Cash and Tax Disposal and Costs Repayment and Financing Cash Cash Catcher Refund Proceeds Kraken and New Other Costs Balances Cashflow Ventures Costs Classified as Held for Sale * Remaining cash outflows in respect of the previous year’s capital programme increased from $27m to $40m at the start of 202 0 Investor Presentation, March 2020 9
Finance 2020 Capital Expenditure Full Year Guidance UK Catcher Kraken $65m Production $35m $30m Further Varadero production well, Catcher Worcester satellite North and Laverda satellite developments development Senegal - Sangomar $400m Development $400m Phase 1 development spend Progress and milestone payments for FPSO and subsea facilities, long lead items for drilling materials Other West Africa Mexico $150m Exploration Exploration $40m $75m $35m Côte d’Ivoire 2D Seismic, Bitol well on Block 9, Ehecatl well on Suriname 3D seismic, Mauritania farm-in, Block 7 and one further well on each of UK well (Jaws) Senegal exploration planning Block 7 and Block 10 Investor Presentation, March 2020 10
Production & Development UK Production ➢ Net oil production ~23,000 bopd, at upper end of guidance (2018: 17,500 bopd) ➢ Focus on maximising production from both fields through FPSOs and maturing new opportunities ➢ Continue to look for opportunities to reduce emissions and improve overall HSE performance ➢ Production guidance for 2020 is 19,000 – 23,000 bopd net ➢ Both crudes currently realising strong market pricing Investor Presentation, March 2020 11
Production & Development Catcher ➢ Cumulative production ~40 mmbbls Laverda ➢ Production efficiency >90% and generally >95% Catcher ➢ 2020 drilling will deliver 3 new production North wells VP1 ➢ Water-cut is below FDP expectations, Burgman which has resulted in improved ultimate North Prod. recovery and a reserves increase of ~ 10% Catcher Injector (contingent) ➢ Small reserve additions associated with Burgman Catcher North and Laverda moved from Far East Prod Contingent Resources to Reserves 0 1 2 3 4 5 Km Bonneville DLL Prod Investor Presentation, March 2020 12
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