About us

Strategy

Our strategy is to deliver value for stakeholders from a balanced portfolio of exploration, development and production assets.

We set strategic objectives annually which monitor delivery of strategy and which are measured by Key Performance Indicators (KPIs) set by the Board. Our risk management process identifies the principal risks to the delivery of our strategic objectives. Working responsibly is a key part of our business model and our KPIs directly measure our ability to work responsibly.

Strategic objective: Deliver exploration success

Grow the reserves and resources base to provide a basis for future growth

2018 KPI

Mature prospects to drill ready status.
Secure funds and JV support for drilling.
Execute exploration drilling, to deliver potentially commercial volumes to add to our Group Reserves and Resources (2P and 2C).

Measurement

Mature six or more prospects with all internal reviews completed.
Drill four or more exploration wells before year end 2018.
Efficiently discover commercial quantities of hydrocarbons in line with pre-drill estimates at an attractive Group finding efficiency rate including estimated subsequent appraisal requirements.

2018 Performance

Prospects successfully matured, assured and recommended during 2018 for drilling in 2018 or 2019 including two prospects in Block 9, Mexico; one prospect in Block 7, Mexico; the Agar-Plantain prospect in the UK (drilled 2018); the Chimera prospect in the UK; and the Godalen prospect in Norway.
Wells on Ekland and Agar-Plantain, each in the UK, were drilled in 2018 with an oil discovery made on Agar-Plantain. 2C volumes discovered were lower than pre-drill estimates.

2019 KPI

Successfully drill and evaluate a programme of six exploration wells across our portfolio.
Discover potentially commercial hydrocarbons in line with pre-drill expectations.
Mature up to six new independent exploration prospects with JV support for drilling in the period 2020-2021.

Key risks to the delivery of this objective

Lack of exploration success.
Strategic objective: Mature developments

Progress Senegal and Nova development projects

2018 KPI

Mature the Senegal SNE development and funding plans for presentation to the Government of Senegal.
Mature the Nova development project in Norway to Final Investment Decision.

Measurement

Timely submission of the SNE Area Evaluation Report, Exploitation Plan and associated Environmental and Social Impact Assessment.
Approval of the SNE Exploitation Plan and associated Exploitation Area by the end of the production sharing contract (PSC) term and finalisation and approval of joint venture financing plan.
Submission of the Nova Plan of Development to Norwegian authorities in H1 2018 and all internal approvals in place to complete a Final Investment Decision and approve the operator entering into acceptable contractual commitments on behalf of the joint venture during 2018.

2018 Performance

The SNE Area Evaluation Report was submitted to the Ministry of Energy in July 2018.
The SNE Field Development Phase 1 environmental and social impact assessment was submitted to the authorities in June 2018 and approved in January 2019.
The SNE Exploitation Plan was submitted to the authorities in October 2018 and is technically approved, subject to finalisation of the front end engineering design. The joint venture financing plan is underway and expected to be concluded during 2019.
The Final Investment Decision was taken on the Nova development in H1 2018 and the Plan of Development submitted to the Norwegian authorities also in H1 2018.

2019 KPI

Mature the SNE field development project in Senegal to Final Investment Decision.
Progress the Nova development project against key predefined project milestones.

Key risks to the delivery of this objective

Delay in Senegal development plan.
Reliance on JV operators for asset performance.
Strategic Objective: Portfolio management

Portfolio optimisation and replenishment

2018 KPI

Secure two or more new exploration opportunities that enhance our portfolio, meet corporate hurdles and offer exploration drilling in the near to medium term.

Measurement

Each new exploration opportunity secured will be measured against tests of:
(i) control;
(ii) commercial robustness based on success case Pmean economics; and.
(iii) materiality based on documented NPV10 thresholds.

2018 Performance

Awarded five licences in the UK 30th Offshore Exploration Licence Round, operating two of the awards.
Completed one farm-in in the UK with the option to operate.
Secured one block in the Mexico Licence Round 3.1, as operator.
Secured one block offshore Suriname, as operator.

2019 KPI

Secure two new venture opportunities that meet corporate hurdles and have risk levels consistent with our Risk Appetite Statement. Measured against tests of control, materiality and commercial robustness.

Key risks to the delivery of this objective

Securing new venture opportunities.
Strategic Objective: Maintain licence to operate

Deliver value in a safe, secure and environmentally and socially responsible manner

2018 KPI

Demonstrate clear progress and achieve defined milestones in relation to health, safety, security, environment (HSSE)/ corporate responsibility (CR) objectives, split into four key categories: Society and Communities; People; the Environment; and Business Relationships.
Achieve lagging HSSE indicators set in line with the International Association of Oil and Gas Producers (IOGP) targets and guidelines.

Measurement

Achievements of leading indicators linked to the four key categories listed.
Lagging indicators set in line with IOGP targets and guidelines.

2018 Performance

Good progress against leading indicators – There were zero lost time injuries, recordable injuries or spills across Cairn operations.
Good progress made against leading indicators, including:
Inductions on the Code of Ethics completed by all new staff;
Anti-bribery and corruption assessment completed for all new assets;
Inclusion of Modern Slavery Act conditions in all relevant contracts and issue of the first Cairn Modern Slavery Act statement;
Outperformed our training plan for Crisis and Emergency Response Team training in preparedness for the UK operated well; and
Health and well-being, talent management and management development programmes all successfully developed and launched.

2019 KPI

Demonstrate clear progress and achieve defined milestones in relation to HSSE/ CR objectives, split into four key categories (Governance, Society, People and the Environment).
Achieve lagging HSSE indicators set in line with IOGP targets.

Key risks to the delivery of this objective

Health, safety, environment and security.
Fraud, bribery and corruption.
Reliance on JV operators for asset performance.
Strategic Objective: Deliver operational excellence

Maximise revenues through efficient operations

2018 KPI

Deliver target production volumes, operating costs and crude values from Kraken and Catcher at pre-determined levels.

Measurement

Measured against target net oil production volumes, operating costs per bbl targets, average crude realisation relative to brent targets and 1P/2P targets.

2018 Performance

Catcher – Target net oil production volumes were exceeded, at better than target operating costs and realised at a price within the expected target. Reserves at Catcher have been marginally upgraded.
Kraken – 2018 KPI target production volumes and operating costs were not met in 2018 but the price realised for the crude was better than target. Reserves at Kraken have been downgraded.

2019 KPI

Ensure production and operating cash flow from Kraken and Catcher are at or within guidance on net production volume and lifting cost per barrel.

Key risks to the delivery of this objective

Kraken and Catcher operational and project performance.
Reliance on JV operators for asset performance.
Strategic Objective: Deliver a sustainable business

Manage balance sheet strength

2018 KPI

Develop and implement a funding strategy that ensures that an executable funding plan is developed and that a minimum headroom cushion from existing sources of funding is maintained.
Success in the action under the UK – India bilateral treaty arbitration.

Measurement

Funding strategy implementation measured against four funding strategy criteria being met throughout the year.
Measured against positive progress achieved in the UK-India bilateral treaty arbitration and a successful award.

2018 Performance

Funding headroom was maintained throughout the year covering the Group’s committed forward capital expenditure.
Debt covenants were maintained with surplus in each quarter.
Liquidity was increased during the year to add material new exploration commitments in Mexico Suriname and UK/Norway.
All arbitration hearings have taken place. Whilst the award has not yet been made, recognition had been given for the progress made in the process and for the significant strategic planning that had been carried out for the result.

2019 KPI

Implement funding strategy to support exploration, appraisal and development activity and to mitigate any downside revenue scenarios.
Progress the UK-India bilateral treaty arbitration to conclusion and receipt of awarded sums in event of success.

Key risks to the delivery of this objective

Volatile oil and gas prices.
Political and fiscal uncertainties.
Access to debt markets.
Inability to secure or repatriate value from Indian assets.