UK's Cairn Announces 23% Capex Cut

The UK's Cairn Energy has slashed its 2020 capital expenditure plan by 23% in response to the market downturn, it said on March 27. 

Capex on UK producing assets will be cut by over 30% to $45mn, by deferring activities at the Premier-operated Catcher field in the North Sea and making other savings. Cairn also aims to slash spending on the Sangomar field development off Senegal by 17.5% to $175mn.

All exploration and appraisal activity has been put on hold except for ongoing work at the Eni-operated Ehecatl well in Mexico, the company said. Exploration capex will be reduced to $100mn from an original forecast of $150mn.

Cairn is discussing additional measures regarding its plans going forward with joint venture partners and stakeholders, it said.

"Our balance sheet remains strong and we are proactively reviewing options for further capital expenditure savings and deferrals, whilst retaining the financial flexibility to add value on an ongoing basis," CEO Simon Thomson said.

Cairn began the year with $255mn in cash and it has $575mn of undrawn reserves-based lending facilities at hand, with an option for an extra $425mn of financing with the inclusion of Sangomar into the borrowing base.

The company's production guidance remains unchanged, it said, with average output of 19,000-23,000 barrels/day expected from its UK operations.