The UK & Norway is a core region for Cairn and we have built a strong position in the region’s mature and emerging basins by acquiring exploration, appraisal and development assets and participating in licence rounds.
Cairn has qualified as an operator in both the UK & Norway and has an exploration drilling campaign currently underway with four wells in 2019, three of which will be operated by Cairn.
In 2012 we acquired non-operated interests in two of the largest developments in the UK North Sea, Kraken and Catcher. During 2017 both projects achieved first oil production.
Cairn also holds a 20% non-operated interest in the Nova development (formerly Skarfjell) in the Norwegian North Sea, located ~17km south west of the Gjøa field in Norway. Nova is expected to deliver peak production of 50,000 barrels of oil per day (bopd) (10,000 bopd net to Cairn) with first oil targeted in 2021. Contracts have been awarded for both the subsea production systems and the drilling rig and the Plan for Development and Operation has been submitted to the Norwegian Ministry of Petroleum and Energy and approved.
Cairn holds a 20% non-operated interest in the Catcher development and a 29.5% non-operated interest in the Kraken development. Along with future production from the Nova development, these projects will provide production and cash flow to Cairn.
Net production to Cairn from the Catcher and Kraken fields in 2018 averaged ~17,500* boepd. 2019 net production is estimated to be 19,000-22,000 bopd*.
Gross production from the Catcher Area (comprising the Catcher, Varadero and Burgman fields) averaged 43,000 boepd in 2018. This reflected the field’s ramp-up to plateau production rates in May following gas export commissioning and significantly increased plant availability during the second half of the year. Oil production from the Catcher FPSO continues to exceed nameplate capacity (60,000 bopd) and the Joint Venture has agreed with the FPSO provider to increase production from 60,000 bopd to 66,000 bopd (gross) on a reasonable endeavours basis. Reservoir performance to date has been good and analysis at year end 2018 has resulted in a slight increase in 2P reserves.
Cairn is working with the rest of the Catcher Joint Venture to optimise further investment in the Catcher area, including consideration of in-fill drilling and near-field opportunities to extend plateau production. A firm commitment has been made to drill an additional Varadero producer in 2020, with additional optional rig slots available for two further wells.
Kraken is a large heavy oil accumulation, located in the East Shetland basin, ~125km east of the Shetland Islands.
Gross production from Kraken averaged 30,300 boepd in 2018, which was below expectations. Production levels were most significantly affected by production system outages on the FPSO, weather-related incidents and higher water-cut than originally expected. Cairn is working with the field operator and FPSO contractor to achieve improvements in the uptime of the FPSO and a planned shut-down is scheduled later in 2019. Reservoir performance has been evaluated and at year end, Cairn’s estimation of Kraken 2P reserves has been reduced to reflect current performance. This has resulted in an impairment of US$166.3m in the carrying value of the Kraken asset. The JV is evaluating further investment opportunities in the Kraken area to provide new drilling opportunities in 2020.
The DC4 subsea infrastructure was successfully installed in H2 2018. The three-well DC4 drilling programme is ongoing and remains on schedule with production onstream from the first DC4 well.
*Before FlowStream’s production entitlement of ~1,360 bopd in 2018; expected to be 1,350 to 1,575 bopd in 2019