About us

Strategy

Our strategy is to work responsibly to create value by building a balanced business for the long term.

Today Cairn has a balanced portfolio of assets that delivers material cashflow from production to support an attractive opportunity set of investments across production, development and exploration. In recent years the asset base has provided multiple opportunities to realise value from portfolio management actions, and the business continues to provide further material value catalysts for the future.

Strategic objective: Deliver exploration success

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

2019 KPIs

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

Remuneration Committee Decision

Weighting (as % of allocated proportion of maximum opportunity): 25%
Bonus awarded: 11.33% (Partially achieved)

Progress

In 2019, three wells in Norway (Presto, Lynghaug and Godalen), one in the UK (Chimera) and two in Mexico (Alom and Saasken1) were successfully drilled. The Saasken well made a new oil discovery on Block 10, Mexico, and according to preliminary estimates, may contain between 200 and 300 million barrels of oil in place. All other wells were reported as dry and plugged and abandoned.
Prospects successfully matured and recommended during 2019 for drilling in 2020 or 2021 included the Duncan prospect in Norway; and the Diadem prospect in the UK with other prospects also successfully matured, assured and recommended for drilling, the details of which remain commercially sensitive at the date of this report.

2020 KPIs

Mature new exploration or appraisal targets with JV support for drilling in the period 2020-2022.
Successfully drill and evaluate the wells planned for the 2020 work programme.
Discover or add potentially commercial hydrocarbons with threshold, target and stretch levels identified for measurement.

Key risks to the delivery of this objective

Lack of exploration success.
Strategic objective: Progress developments

Progress Senegal development projects.

2019 KPIs

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

Remuneration Committee Decision

Weighting (as % of allocated proportion of maximum opportunity): 18%
Bonus awarded: 17% (Substantially achieved)

Progress

An updated SNE Exploitation and Development Plan was submitted in August 2019 and approved by the Ministry of Petroleum and Energy in December 2019.
Final Investment Decision was taken by the JV and granting of the 25-year exploitation licence by the Government of Senegal took place in January 2020.
The Nova development is on schedule with first oil targeted in 2021. In H1, with two subsea templates installed on the ocean floor. This unlocked the next phase of the field development with 65km of pipelines laid in preparation for tie-back to the nearby Gjøa platform. All pre-defined project milestones for the year were achieved.

2020 KPI

Achieve certain milestones on the Sangomar (formerly SNE) development in categories of subsurface, wells, subsea, FPSO and project controls.

Key risks to the delivery of this objective

Delay in Senegal production start-up schedule.
Misalignments with JV operators.
Strategic Objective: Portfolio management

Portfolio optimisation and replenishment

2019 KPIs

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.

Remuneration Committee Decision

Weighting (as % of allocated proportion of maximum opportunity): 8%
Bonus awarded: 7% (Substantially achieved)

Progress

In 2019, the Senegal JV successfully received the presidential decree for the two-year exploration and appraisal extension of FAN, SNE North and Spica.
Following applications in the 2019 Norwegian APA in September, Cairn was awarded three licences as operator: Mabbutt; Gough; and Fearless.
During 2019, Cairn also completed the farm-in to onshore Cote d’Ivoire, made a strategic swap of equity in B9 and B10, offshore Mexico, and completed a bid round licence application and was awarded operatorship in two zones in Israel in a joint venture with Pharos Energy plc and Ratio Oil Exploration.

2020 KPI

Secure new venture opportunities that meet the corporate hurdles and have risk levels consistent with our Risk Appetite Statement. Measured against tests of control, materiality and commercial robustness, with threshold, target and stretch levels identified for measurement where appropriate.

Key risks to the delivery of this objective

Failure to secure new venture opportunities.
Strategic Objective: Maintain licence to operate

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

2019 KPIs

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

Remuneration Committee Decision

Weighting (as % of allocated proportion of maximum opportunity): 15%
Bonus awarded: 12.9% (Substantially achieved)

Progress

The Group’s lost time injury frequency (LTIF) for operated activity in 2019 was 0 per million hours worked. Our total recordable injury rate (TRIR) for 2019 was 0.98 per million hours worked. There were no spills to the environment.
Good progress made against leading indicators, including:
Code of Ethics revised and issued to all staff (including Spanish version)
The Group’s Corporate Major Accident Prevention Policy (CMAPP) was independently reviewed in 2019.
A suite of training programmes was rolled out across the Group including topics such as bribery and corruption, CMAPP, human rights and modern slavery.

2020 KPIs

Achieve a number of specified leading indicators in relation to governance, people and society.
Achieve lagging HSSE indicators derived from IOGP targets, with threshold, target and stretch levels identified for measurement.
Influence JV partners in UK Continental Shelf including to target zero flaring during shutdowns.
Implement energy efficiency benchmarks for use in equipment selection for application in new operated drilling and seismic projects.
Focus on developing our people through talent management, organisational competency and employee engagement.

Key risks to the delivery of this objective

Lack of adherence to health, safety, environment and security policies.
Fraud, bribery and corruption.
Misalignments with JV operators.
Climate change policy and its impacts on energy transition.
Strategic Objective: Production Performance

Maximise revenues through efficient operations

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.

Remuneration Committee Decision

Weighting (as % of allocated proportion of maximum opportunity): 10%
Bonus awarded: 10% (Fully achieved)

Progress

Catcher- 'stretch' target net oil production volumes were exceeded, at better than target lifting costs.
Kraken- 'stretch' target net oil production volumes were exceeded, at better than target lifting costs.

2020 KPI

Deliver Group production in line with guidance for 2020, with threshold, target and stretch volumes of production identified for measurement.

Key risks to the delivery of this objective

Underperformance on Kraken and Catcher assets.
Misalignments with JV operators.
Volatile oil and gas prices.
Strategic Objective: Deliver a sustainable business

Manage balance sheet strength

2019 KPIs

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.

Remuneration Committee Decision

Weighting (as % of allocated proportion of maximum opportunity): 24%
Bonus awarded: 13% (Partially achieved)

Progress

Funding headroom was maintained throughout the year covering the Group’s committed forward capital expenditure.
The sale of 10% stake in Nova to Dyas in November 2019 and the disposal of Capricorn Norge AS, the Company’s wholly owned subsidiary in Norway, to Sval (previously known as Solveig Gas) in December 2019 enhanced Group liquidity at attractive metrics.
Arbitration proceedings under the UK-India Bilateral Investment Treaty were largely concluded in 2018. In 2019, however, the tribunal indicated that the issuance of the arbitration award would not be made until summer 2020.

2020 KPI

Arbitration proceedings under the UK-India Bilateral Investment Treaty were largely concluded in 2018. In 2019, however, the tribunal indicated that the issuance of the arbitration award would not be made until summer 2020.

Key risks to the delivery of this objective

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