Discovering Hidden Value

Transcription

1 Discovering Hidden Value Jefferies 2013 Global Energy Conference - Dr Mike Watts Houston, 12 th -13 th November 2013

2 Disclaimer These materials contain forward-looking statements regarding Cairn, our corporate plans, future financial condition, future results of operations, future business plans and strategies. All such forward-looking statements are based on our management's assumptions and beliefs in the light of information available to them at this time. These forward-looking statements are, by their nature, subject to significant risks and uncertainties and actual results, performance and achievements may be materially different from those expressed in such statements. Factors that may cause actual results, performance or achievements to differ from expectations include, but are not limited to, regulatory changes, future levels of industry product supply, demand and pricing, weather and weather related impacts, wars and acts of terrorism, development and use of technology, acts of competitors and other changes to business conditions. Cairn undertakes no obligation to revise any such forward-looking statements to reflect any changes in Cairn's expectations with regard thereto or any change in circumstances or events after the date hereof. Jefferies 2013 Global Energy Conference, 12 th -13 th November

3 Creating Value Through Exploration Led Growth Experienced exploration and production (E&P) operator FTSE 250 London listed Company (CNE) post $4.5billion sale of majority stake in Indian business Listed on the London Stock Exchange 1988 Business model Continue to create value and opportunities through exploration-led growth Exposure to transformational exploration potential in frontier basins Full cycle capabilities to deliver value from well balanced exploration, appraisal and development portfolio of assets enhanced by recent acquisitions Strong balance sheet from which to allocate capital to growth opportunities Delivery of safe and efficient operations Jefferies 2013 Global Energy Conference, 12 th -13 th November

4 Strategic Delivery Exploration led growth Significant gearing to exploration success Atlantic Margin, Mediterranean, North Sea; >$300 million exploration spend per annum Frontier wells targeting >4 billion boe of mean unrisked gross prospective resource in 2013 / 2014 Full cycle E&P capability with funding strength and flexibility Balance Sheet strength Funded to deliver drilling and development programme Target sustainable production to deliver exploration capital from cash flows Create and realise value Focus on value not scale with active portfolio management Returned $4.5 billion to shareholders in last 5 years Programme to repurchase up to US$300 million (m) of ordinary shares in the company to be reviewed by the Board on a quarterly basis Jefferies 2013 Global Energy Conference, 12 th -13 th November

5 Exploration Strategy Frontier Basin Exploration Frontier and potentially high impact exploration plays of the Atlantic Margin (,, Greenland, Ireland, Mauritania and Spain) To seek hidden value through transformational exploration potential Ireland UK Norway Mature Basin Exploration New plays and prospectivity close to existing pre-development projects in the UK North Sea and Norwegian continental shelf Spain West Greenland South Greenland India Residual CIL shareholding Mauritania Growing Prospect and Lead inventory to provide sustainable exploration activity into the future Currently 62 prospects and 144 leads Near-term exploration drilling programme targets top ~10% of prospects Jefferies 2013 Global Energy Conference, 12 th -13 th November

6 Geological Focus North Atlantic Margin Play fairways associated with super-continental break-up West Greenland UK and Ireland Norway Greenland South Greenland Norway Ireland Spain ~175Ma Middle Jurassic Plate reconstruction (PLATES/UTIG, 2009) Mauritania Mauritania Spain Jefferies 2013 Global Energy Conference, 12 th -13 th November

7 Frontier Exploration North Atlantic Margin Different Geographies Similar Geology Schematic Key proven oil data points: CJ AC RD Deepwater Drilling Moratorium B RD AC Cap Juby () Aigrette-1 / Chinguetti (Mauritania) Rufisque dome () Burren (Ireland) Majors Enter Nova Scotia Deepwater Dec 2012 CJ NW Africa impending industry deepwater and frontier exploration activity G N G WS NS N B WS Newfoundland oil province Cairn Alpha well, Disko Bay West of Shetland North Sea Rift Basins NS True frontier province with proven Jurassic and Cretaceous oil prone source rocks in incipient rift and restricted marine basin settings Diachronous geological processes along margin Key proven data points indicate oil potential Deep-water margin off the US east coast has had a drilling moratorium since 1982 and remains unexplored Multiple industry players are becoming increasingly active along accessible frontier parts of the north Atlantic Margin (NW Africa, Canada, Ireland and Greenland) The majors entered deep-water Canada off the coast of Nova Scotia in Dec 2012 Cairn is actively pioneering exploration along the margin and has secured a growing acreage footprint using its knowledge and operational edge Jefferies 2013 Global Energy Conference, 12 th -13 th November

8 Probability Of Commercial Success Probability of Commercial Success (PoCS) June 30 th Snapshot of Prospect Inventory PoCS vs. Gross Unrisked - Prospects PoCS vs. Gross Unrisked - All Prospects - Current 70% 60% 50% UK and Norway Ireland Spanish Point Field 62* Prospects (and 144 leads still being worked on but not shown) Greenland Pitu Py Prospect Marginal / Sub-Commercial More Work Needed Drillable / Commercial Spanish Point is a Discovery and not a prospect, but is shown for comparative purposes 40% Ireland Spanish Point Exploration post ConocoPhillips farm out Example of exploration lead yet to be matured as a prospect 30% 20% 10% 0% * Includes 3 prospects covered by 3D 5000 seismic in Southern Greenland extension Gross Unrisked Prospective Resources (MMBOE) area yet to be awarded Jefferies 2013 Global Energy Conference, 12 th -13 th November UK K Lead Deepwater Fan Greenland Bubble Size Proportional to Net To Cairn Risked Commercial Prospective Resources

9 Frontier Exploration Atlantic Margin Extensive industry focus on new play types Proven hydrocarbon systems Nova Scotia Offshore Activity Shell, BP, Chevron, Exxon, and EnCana Schematic Plate Reconstruction - After Luheshi 2012 Cairn has substantial acreage interests in > 38,000 km 2 (equivalent to ~168 North Sea blocks) Newfoundland Spain Spain Positive contractual and fiscal terms Exploration wells targeted 2013 / 2014 Mauritania Offshore Activity Cairn, BP, Chevron, Genel, Galp, Plains, Kosmos, Chariot, Total, Repsol and Teredo Jefferies 2013 Global Energy Conference, 12 th -13 th November

10 Cap Boujdour Contract Area and Planned Exploration Well (Q4 2014) Cairn to acquire a 20% non-operated interest through farm-in agreement with Kosmos Energy Kosmos Energy (55%, Operator) ONHYM (25%) Multi-billion bbl block potential along trend Gargaa prospect planned exploration well Q D seismic planned early ,050 km 2 existing 3D Cap Boujdour Acreage >29,500 km 2 Water Depths 1,000-2,000m Planned Gargaa Prospect Exploration Well Primary objective: Lower cretaceous turbidite reservoir 3D Seismic planned early 2014 Juby Maritime Mauritania Spain Jefferies 2013 Global Energy Conference, 12 th -13 th November

11 Frontier Exploration Proven hydrocarbon system Substantial acreage position > 7,490 km² (equivalent to ~33 UK North Sea blocks) 2,050 km² 3D seismic survey Water depths >1,000m Cairn will be the operator of these blocks with an interest of 40% Petrosen - 10% interest FAR - 15% interest ConocoPhillips - 35% interest The blocks (Rufisque, Sangomar, Sangomar Deep) are located in the ese portion of the productive Mauritania--Guinea-Bissau Basin Exploration drilling targeted for 2014 Shell 1977 Esso 1969 Esso 4 Rufisque wells Tiof Dome Flores Oil and Gea Chinguetti Faucon Sinapa Tevet Gambia Banda Mauritania Guinea Bissau Mauritania Conjugate Margin Plate Reconstruction Guinea Cairn has secured a contract with Transocean for the Cajun Express drilling rig Basin Gas Oil Jefferies 2013 Global Energy Conference, 12 th -13 th November

12 Ireland Planned Exploration Well (H1 2014) Spanish Point discovery located in the Porcupine Trough, first appraisal well targeted Q Total Acreage ~2,753km 2 FEL 4/08 Spanish Point and Burren Discoveries FEL 2/04 UK Frontier Exploration Licence (FEL) 2/04 covered by ~300km 2 3D seismic Licensing Option 11/02 Ireland Burren cretaceous oil discovery to be evaluated Porcupine Trough FEL 4/08 covered by ~220km 2 3D seismic WNW Potential follow-on appraisal well location First Appraisal Well Location ESE Increased industry exploration activity in the Porcupine Trough Primary Objective Upper Jurassic A-Sand Cairn Spanish Point Volumetric Estimates 1C 2C 3C GIIP 270 Bcf 620 Bcf 1.1 Tcf Reserves 172 Bcf 410 Bcf 690 Bcf Gas Reserves Independent CPR* (Competent Persons Report) 1C 2C 3C 210 Bcf 415 Bcf 862 Bcf Secondary Objectives Condensate Reserves 14 mmbbls 32 mmbbls 59 mmbbls Condensate Reserves 15.4 mmbbls 35.6 mmbbls 53.7 mmbbls * Numbers confirmed by Chevron & Statoil Regional Report 1997 Jefferies 2013 Global Energy Conference, 12 th -13 th November

13 Greenland Frontier Exploration Atlantic Margin First phase exploration completed: Extensive knowledge, database and operating capability 2D seismic ~85,000 km 2 x 3D seismic surveys 8 exploration wells geochemical, gravity and magnetic data Forward Work Programme Selective and focused investment phase: Focused on Pitu block in Melville sub-basin of Baffin Bay Farm out of % interest in Pitu block to Statoil ASA 3D seismic evaluation confirms 5 prospects Exploration drilling targeted 2014 Regional industry interest with extensive data gathered Southern Greenland Industry partner(s) required for further investment Continued evaluation of exploration potential and rationalisation Estimated gross mean YTF unrisked prospective resource >6 billion boe Primary area of focus Pitu Melville Basin Baffin Bay 5 wells in 2011/12 3 wells in 2011 THULE West Disko Blocks West Greenland Greenland UPERNAVIK Southern Greenland North East Bid Rounds 3 and 4 ILULISSAT AASIAAT Kangerlussuaq NUUK Round 2 Licence Holders Open Round Round 1 Licence Holders Secondary area of focus South Greenland Jefferies 2013 Global Energy Conference, 12 th -13 th November

14 UK North Sea and Norwegian Continental Shelf Asset Exchange & Portfolio Rationalisation Mariner divestment Acreage swap with Statoil includes Klara exploration well TAQA and Premier transaction Future Exploration and Appraisal Continued prospect generation Farm-ins, bid rounds and new opportunities Skarfjell (Cairn 20% non-operator) Second appraisal well Q Current volumes mmboe Stand-alone development with access to other nearby discoveries K Prospect Complex (Cairn 100% Operator) K gross unrisked prospective resource range estimate mmbbls Appraisal of Kraken may impact the evaluation of the K prospect Potential exploration well on K prospect 2014 Greater Catcher Area (Cairn 30%, Operator; Premier) Further exploration success Added opportunities in surrounding acreage K Prospect Complex 9/1a Aberdeen Edinburgh Tybalt 211/8c & 211/13c Timon 211/11b & 21/16b 210/25b & 211/21b & 211/26b 8/5 & 9/1b Aragon Mariner 9/15d, 9/14a & 9/9d Norfolk 12/16b & 12/17b Spaniards 15/21g Bardolph 20/7 Laverda 28/4 Sunbeam 28/8 211/19b & Grosbeak 211/24c Harden 35/12 35/10b & 31/1b 14/30c Buffalo 14/30a Norton 28-9b & 28/14 Kakelborg 33/5 & 33/6b Greater Catcher Area Huggorm 33/9 35/9b Hydra 3/27a Catcher 28/9 & 28/10c Vulcan 29/11 Klara 6507/3a Kraken 9/2b & 9/2c Geite 7/7, 7/8 & 7/112/1 Frode 2/1 Skarfjell 35/8f & 35/9b Stavanger Jefferies 2013 Global Energy Conference, 12 th -13 th November

15 Funding Platform for Ongoing Business Development Projects 9/1b Cairn 40% (Non-Op) 9/1a Cairn 100% (Op) 9/2b Cairn 25% (Non-Op) Kraken Project sanction expected H Operator s gross reserves ~137mmboe, Cairn 25% Operator anticipates second heavy oil allowance Carry of $150m - $240m based on reserves* K Prospect 9/2c Cairn 25% (Non-Op) Kraken Catcher Through concept selection phase 28/8 Cairn 46% (Non-Op) 28/9a Cairn 30% (Non-Op) Varadero Catcher 28/10c Cairn 30% (Non-Op) Draft FDP expected H Carnaby Burgman 28/9b Cairn 30% (Non-Op) Bonneville *reserves determined by a competent person during the development drilling phase Jefferies 2013 Global Energy Conference, 12 th -13 th November

16 Funding and Capital Allocation Funding Financial Assets at 30 September 2013 Financial assets in excess of $2.4bn* Debt finance to be secured Free cash flow from completed development projects Cash $1.4bn Cairn India (CIL) Stake ~10.3%) ~$1bn Allocation 2013 / 2014 combined E&A drilling programme includes more than 15 wells, totalling ~$700m Allocate capital to maximise shareholder returns over the cycle ~50% of available liquidity used to fund development capex Balance focussed on exploration and appraisal Financial Assets at 31 December 2012 Cash $1.6bn CIL Stake $1.1bn * As at 30 September 2013 Jefferies 2013 Global Energy Conference, 12 th -13 th November

17 North Sea and Norwegian Continental Shelf Transformational Exploration Programme Operational Targets Cajun Express 1 year contract Blackford Dolphin (Op) Foum Draa (Op) Cap Juby (Op) Deepwater Fan (Op) Shelf Prospect Ireland (Op) Greenland (Op) Pitu UK K Prospect 9/1a (Op) Future prospect generation Potential Future Exploration Spain Malta Mauritania Ireland Greenland New Ventures FDPs on North Sea Developments Kraken and Catcher Future prospect generation Farm-ins Bid Rounds New Opportunities North Sea Exploration and Appraisal Programme (Non-Op) ongoing ( target >4 wells per year ) Target timetable subject to necessary approvals Jefferies 2013 Global Energy Conference, 12 th -13 th November

18 Delivery of Strategy Balanced portfolio delivered Re-geared to drill bit frontier well programme commences September 2013 Cairn Business Today Value add partnerships; ConocoPhillips, Statoil Key field development projects Kraken and Catcher on-track Exploration Cairn India (Residual Shareholding) North Sea business reshaped to sustain forward exploration programme Funded to deliver Cash Catcher and Kraken Jefferies 2013 Global Energy Conference, 12 th -13 th November