Interim Results
Cairn Energy PLC
02 September 2002
EMBARGOED UNTIL 0700
2 September 2002
CAIRN ENERGY PLC
INTERIM RESULTS ANNOUNCEMENT
HIGHLIGHTS
Financial
• Average production 21,272 boepd (H1 2001: 19,962 boepd)
• Average price received per boe $20.01 (H1 2001: $22.54 per boe)
• Turnover £53.7m (H1 2001: £56.8m)
• Profit after tax £15.6m (H1 2001: £22.8m)
• Operating cash flow £39.8m (H1 2001: £40.2m)
Operational
• Acquisition of remaining 50% interest in Block RJ-ON-90/1 onshore
Rajasthan
• Lakshmi gas development progressed - first gas Q3/Q4 2002
• Oil discovery at Lakshmi on Block CB/OS-2 offshore Gujarat in Western
India
• Gauri gas field on Block CB/OS-2 declared commercial
• Significant progress made in technical analysis of Krishna-Godavari
Basin deep water potential offshore Andhra Pradesh in Eastern India
Bill Gammell, Chief Executive, commented:
'The first half of 2002 was characterised by strong financial results and an
intensive programme to develop the commercial potential of our recent
exploration successes. During the second half we intend to concentrate
operational activities on our acreage in Western India and are planning a
multi-well drilling programme both offshore Gujarat and onshore Rajasthan.
I am also pleased to announce today Cairn's acquisition of Shell India's 50%
interest in Rajasthan Block RJ-ON-90/1. We anticipate significant additional
hydrocarbon potential in this area and with a 100% interest, will now be
accelerating exploration and appraisal drilling on the block.'
Enquiries to:
Cairn Energy PLC:
Bill Gammell, Chief Executive Tel: 07785 557 310
Kevin Hart, Finance Director Tel: 07771 934 974
Dr Mike Watts, Exploration Director Tel: 07768 631 328
Brunswick Group Limited:
Patrick Handley, Catherine Bertwistle, Mark Antelme Tel: 0207 404 5959
CHAIRMAN'S STATEMENT
OVERVIEW
Cairn has consistently sought to add and realise value for its shareholders
through exploration success. This focus on exploration has been further defined
by concentrating on a single geographic region - the Indian subcontinent.
Amongst the international oil companies, Cairn has developed a pre-eminent
industry position in this region. The Group has material exploration and
production interests in Bangladesh and both the west and east coasts of India.
Demand for energy in India remains unfulfilled; the Group's interests in India
and Bangladesh are strategically placed to assist in the supply of this large
and growing energy market.
Cairn's strategy of seeking to add shareholder value through exploration was
successfully rewarded during 2001 and the first half of 2002 by the Group making
ten hydrocarbon discoveries. Of these, four (Gauri, Ambe, Parvati and Lakshmi
oil) were made offshore in the shallow water depths of Gujarat Block CB/OS-2 and
one (Saraswati) was made onshore in Rajasthan Block RJ-ON-90/1. The other five
discoveries were all made in deep water offshore Andhra Pradesh in the
Krishna-Godavari Basin Block KG-DWN-98/2. The discoveries have the potential to
add significantly to the Group's existing proved plus probable booked reserves.
A subsequent technical and commercial evaluation to rank the Group's discoveries
has prioritised Saraswati, Lakshmi oil and Gauri gas, all located in Western
India, as the projects closest to commerciality in the near term. Further
technical evaluation of the discoveries in Eastern India is required prior to
additional drilling in the Krishna-Godavari Basin deep water.
I am pleased to announce that the Group has agreed to acquire Shell India's 50%
interest in Block RJ-ON-90/1 onshore Rajasthan. Cairn has also secured a three
year extension to the exploration term of the block, on which there have been
two previous oil discoveries (including the potentially commercial Saraswati
discovery). This key acquisition reflects Cairn's view that significant
additional hydrocarbon potential exists on the block. As a consequence of this
transaction Cairn is now able to focus on an accelerated exploration and
appraisal drilling programme on the block. This initial programme is due to
commence in Q4 2002 and will comprise appraisal drilling on Saraswati, an
exploration well in the Greater Saraswati area and an additional exploration
well on the central basin high.
The Lakshmi gas field on Block CB/OS-2 offshore Western India is under
development, with first gas expected Q3/Q4 2002. In addition, Cairn has received
formal Government approval of the commerciality of the Gauri gas field and
intends to proceed to further delineate and develop Gauri gas. Development wells
on Gauri will be deepened to appraise the oil reservoirs.
Oil zones beneath Lakshmi were discovered in April 2002 and flowed at a
cumulative rate of 10,446 bopd on test. A three well appraisal drilling campaign
to determine the commerciality of Lakshmi oil is scheduled for Q4 2002/Q1 2003.
If successful, this campaign is expected to lead to an initial development with
one or two horizontal wells before proceeding with a full development. The oil
zones discovered beneath the gas reservoirs at Gauri could also potentially form
another separate development.
Further exploration and appraisal drilling will be required to evaluate the
overall oil and gas potential on Block CB/OS-2. The Directors believe that
significant oil potential could exist not only beneath Lakshmi and Gauri, but on
the block as a whole. Particular emphasis will be placed on exploring the
eastern portion of the block, where thicker reservoirs are known to occur. A
seismic survey is planned over this area in Q1 2003 with the expectation that
this will form the basis for a multi-well onshore exploration programme in 2003
and 2004.
In the Krishna-Godavari Basin offshore Eastern India the Group made five
hydrocarbon discoveries in 2001. A detailed technical evaluation of these
discoveries has been ongoing in the first half of 2002 to assess the potential
for commercial volumes and to highlight additional potential in nearby
prospects. An exploration and appraisal drilling programme is planned for 2003/
2004 on Blocks KG-DWN-98/2 and KG-OS/6, subject to the results of the technical
evaluation.
Cairn's strategy is to add to its Indian portfolio by acquiring promising
exploration acreage on attractive terms. The Group has bid for further
exploration acreage in the third round of India's New Exploration Licensing
Policy, which closed on 28 August 2002. The results of the bid round are
expected to be announced by the end of 2002.
Annual offtake from the Sangu gas field in Bangladesh has risen steadily since
it commenced production in 1998. However, offtake continues to be below the
field's production capacity, indicating a saturated domestic market. This year
has seen a stabilisation in payments for Sangu gas and a long term contractual
dispute has been settled via an expert procedure in the joint venture's favour.
Export of gas from Bangladesh continues to be discussed at the political level
and a Government decision is awaited.
RESULTS AND FINANCIAL PERFORMANCE
Near record levels of production and a sustained strong product price
environment have enabled Cairn to progress the Lakshmi gas development without
compromising the Group's robust financial position.
% Increase/
Key Statistics H1 2002 H1 2001 (Decrease)
Production (boepd) 21,272 19,962 7
Average price per boe ($) 20.01 22.54 (11)
Turnover (£m) 53.7 56.8 (5)
Average production costs per boe (£) 3.70 3.80 (3)
Profit before tax (£m) 20.6 32.7 (37)
Profit after tax (£m) 15.6 22.8 (32)
Operating cashflow (£m) 39.8 40.2 (1)
Average daily production was 21,272 boepd representing a 7% increase year on
year (H1 2001: 19,962). The average oil price realised for the first half of
2002 was $20.01 per boe compared with $22.54 per boe for the equivalent period
in 2001.
As a result of the lower average oil price realised, turnover decreased by 5%
year on year to £53.7m (H1 2001: £56.8m). The Group generated a profit before
tax of £20.6m (H1 2001: £32.7m). Average production costs for the period were
£3.70 per boe (H1 2001: £3.80 per boe).
Payments for Sangu gas remain six months in arrears. The net amount currently
overdue to Cairn is £26.4m.
Average cost of sales were £6.58 per boe, up 18% on the same period last year
(H1 2001: £5.60 per boe) due largely to an increased depletion charge as a
consequence of booking Lakshmi reserves.
Administrative expenses for the period were £6.1m (H1 2001: £5.3m). Net
interest payable was £1.2m (H1 2001: net receivable £1.3m), including a foreign
currency exchange loss of £0.1m (H1 2001: gain of £0.4m).
The results include an exceptional write-down of £0.8m relating to the reversal
of a prior conditional transfer of the Group's interest in Papua New Guinea.
A tax charge of £5.0m (H1 2001: £9.9m) arises on profits in India and the UK.
The tax charge includes a credit of £5.1m resulting from a reduction in the
effective rate of tax in India from 48% to 42%. The tax charge also includes a
£1.8m charge for H1 2002 and a prior year adjustment of £9.5m as a result of the
move to full provisioning pursuant to FRS 19 Deferred Taxation.
Profit after tax and exceptional items for the period was £15.6m (H1 2001:
£22.8m).
The Group's operating cash flow remained strong over the period at £39.8m (H1
2001: £40.2m). Cash outflow from capital expenditure during the first half
totalled £54.7m (H1 2001: £56.3m), the majority of which was development spend
in respect of the Lakshmi gas field.
As a consequence of the capital expenditure undertaken, the Group had drawn
$88.6m under its existing facilities as at 30 June 2002, resulting in Group net
debt of £49.4m at the half year (H1 2001: net cash £4.3m). This represents
gearing of 15%.
OPERATIONS
INDIA
Eastern India - Krishna-Godavari ('KG') Basin
Production
Ravva (Cairn 22.5% and operator)
Average gross daily production from Ravva for the first half of 2002 was 51,391
bopd and 66 mmscfd (H1 2001: 46,600 bopd and 25 mmscfd).
In May 2002 the Ravva joint venture completed an exploration well (RX-7) in the
extreme north-east of the block. The well encountered oil shows in the early
Miocene section and a drill stem test was conducted, however no flow of
formation fluids was established and the well was plugged and abandoned. The
results of the well have been integrated into the 3D seismic interpretation over
the entire block. This interpretation has identified a large number of leads
and prospects of which 18 have been high graded for further evaluation. Further
exploration drilling is anticipated in 2003/2004.
Exploration
Block KG-DWN-98/2 (Cairn 100% and operator)
During 2001, Cairn completed a very successful initial exploration programme on
this deep water block, achieving five hydrocarbon discoveries from five
exploration wells drilled in the Plio-Pleistocene age turbidite reservoirs.
These comprised the 'N' and 'R' (Annapurna) gas discoveries and the 'P' (Kanaka
Durga), 'M' (Padmavati) and 'Q' oil and gas discoveries. The 'Q' well
encountered only a thin oil and gas column but extended the occurrence of known
oil further into the offshore basin.
Cairn's technical team is reviewing and evaluating the data acquired in last
year's successful drilling programme and, subject to the results of the
technical review, it is anticipated that further exploration/appraisal wells
will be drilled in the KG Basin during 2003/2004.
Block KG-OS/6 (Cairn 50% and operator)
The Government of India has approved a one year extension to the current
exploration phase of the block, effective from 30 June 2002. Following this
approval, the Group plans to conduct further exploration drilling during 2003/
2004, subject to the results of the technical review.
Western India
Block CB/OS-2, Cambay Basin
Cairn holds a 75% exploration interest and is operator for the CB/OS-2 joint
venture, which includes TATA (15%) and ONGC (10%). ONGC has a right to increase
its stake by 30% in the event of a commercial discovery on the block and has
exercised this right in respect of the ring-fenced Lakshmi development area. The
equity holdings for the Lakshmi development area are therefore Cairn 50%, TATA
10% and ONGC 40%.
Exploration (Cairn 75% and operator)
Exploration drilling by the joint venture on this block has resulted in five
hydrocarbon discoveries since 2000 - Lakshmi gas, Lakshmi oil, Gauri (gas and
oil), Ambe (gas and oil) and Parvati (oil). The Lakshmi oil discovery was made
in April 2002 and flowed at a cumulative rate of 10,446 bopd on test. Current
oil in place estimates for Lakshmi oil are between 100 and 300 mmbbls, with
estimated mean recoverable reserves of approximately 66 mmbbls. Further
appraisal drilling to delineate the potential oil development area beneath the
Lakshmi gas field is planned to commence in Q4 2002, with a possible view to
implementing an early oil production system.
The Gauri gas field was declared commercial July 2002 and ONGC has subsequently
exercised its 30% back-in right in respect of Gauri. It is considered that some
of the Gauri reservoirs are in communication with the adjacent producing Hazira
field, operated by Niko. Current recoverable reserve estimates for Gauri gas are
in the 60 to 200 bcf range. Development plan options, anticipating an initial
40 mmscfd plateau are under consideration by the joint venture.
Oil has also been discovered beneath the gas reservoirs at Gauri, for which
further appraisal will be required to evaluate the potential. This can be
achieved as part of the gas development drilling programme planned for 2003.
A seismic survey is planned in the east of Block CB/OS-2 early in 2003. Further
exploration drilling in the east and west of the block will also be required to
evaluate the overall oil and gas potential.
Lakshmi Development Area and GSCs (Cairn 50% and operator)
The development of the Lakshmi gas field is nearing completion, with first gas
expected in Q3/Q4 2002.
Two GSCs were signed by the CB/OS-2 joint venture in May 2001 with GPEC and GGCL
respectively, for the sale of gas from Lakshmi into the industrialised Gujarat
market. The Lakshmi facilities will initially have a maximum processing capacity
of 150 mmscfd of sales gas.
The two GSCs are specific to Lakshmi and exclude the other gas discoveries on
the block, namely Gauri and Ambe. Cairn anticipates additional gas sales
arrangements being entered into in due course in respect of these other
discoveries.
Block RJ-ON-90/1, Rajasthan Basin (Cairn 100% and operator)
Cairn has reached agreement with Shell India to acquire its 50% working interest
in Rajasthan, thereby increasing Cairn's interest to 100%, subject to required
approvals.
The RJ-H-1 exploration well drilled near the basin flank in November 2001 flowed
at a cumulative rate of 2,020 bopd from two separate intervals. Initial
estimates for the discovery, named Saraswati, put mean recoverable reserves of
oil at approximately 34 mmbbls. Appraisal drilling on the Saraswati structure is
planned for Q4 2002. In addition, a number of leads and prospects have been
identified in the basin and Cairn plans to commence exploration drilling in Q4
2002.
ONGC has a right to a 30% equity interest in the event of a commercial discovery
on the block, which if exercised would mean that Cairn's interest in any
development area would reduce from 100% to 70%.
New Exploration Licensing Policy - Third Bid Round (NELP-III)
Cairn has submitted bids for further exploration acreage pursuant to the third
round of India's New Exploration Licensing Policy, which closed on 28 August
2002. There were 27 acreage blocks on offer in NELP-III and awards of these
blocks are expected to be made by the end of 2002.
BANGLADESH
Production
Sangu Development Area (Shell Bangladesh operator, Cairn 37.5%)
During the first half of 2002, gross daily offtake from the Sangu gas field
averaged 135 mmscfd (H1 2001: 144 mmscfd). The realised gas price for the period
was $2.92/mcf (H1 2001: $2.91/mcf). Notwithstanding the lower average for H1
2002, annual production from the field has risen steadily since its inception in
1998 and this trend is expected to continue.
Sangu has the capacity to supply 250 mmscfd although production is constrained
by local demand. As a consequence, daily offtake fluctuates significantly as the
field is being used by Petrobangla as a swing producer to balance supply
shortfalls elsewhere in the Bangladeshi system.
Exploration
Block 16 (Shell Bangladesh operator, Cairn 50%)
The operator is continuing discussions with Petrobangla and the Government of
Bangladesh regarding an extension of the final exploration period which expired
in May 2001.
Block 15 (Shell Bangladesh operator, Cairn 50%)
The operator is continuing discussions with Petrobangla and the Government of
Bangladesh regarding entering the final extension of the exploration period
which expired in December 2000.
Blocks 5 and 10 (Shell Bangladesh operator, Cairn 45%)
Cairn and Shell Bangladesh signed PSCs for Blocks 5 and 10 in July 2001 and each
hold a 45% interest in these blocks, the remaining 10% being held by Bapex. It
has been agreed with the Government of Bangladesh that, for the first five years
following signature, commitment exploration wells will not have to be drilled on
the blocks until the joint venture opines that there is a demonstrable market
for any gas that may be discovered.
NORTH SEA
The Group holds small non-operated producing interests in the Gryphon field in
the UK North Sea and several producing interests in the Netherlands North Sea.
Average net production for these two areas during the first half of 2002 was
3,117 boepd (H1 2001: 2,987 boepd). Value continues to be added to these
interests through a combination of incremental developments and third party
tariff agreements.
The Gryphon co-venturers have reached agreement with the operators of the
Maclure and Tullich fields to route production from both fields via a tieback to
the Gryphon floating production, storage and offloading facility. Third party
production through Gryphon from Maclure commenced in July and Tullich in August.
In the Netherlands North Sea the P/6-D satellite gas field commenced production
from a single development well in October 2001, with gas being evacuated to the
P/6 main platform. In addition, the Markham gas field derives third party tariff
income from the neighbouring Windermere, KG/4a-D and KG/1a fields.
RESERVES
The Group's proved plus probable booked reserves at 30 June 2002 were 97 mmboe
on a net entitlement basis (equivalent to 132 mmboe on a working interest
basis), with 95% of these reserves located in the Indian subcontinent. In
comparison, proved plus probable booked reserves at 30 June 2001 were 89 mmboe
on a net entitlement basis and 124 mmboe on a working interest basis.
OUTLOOK
The outlook for the second half of 2002 is positive from both an operational and
financial perspective. The Group will continue to focus on opportunities which
the Directors believe have the potential for material shareholder value addition
and will prioritise further exploration, appraisal and development activity
accordingly.
With the Lakshmi gas field due onstream later this year, the Group will also
benefit from additional production and the resulting revenues.
BOARD OF DIRECTORS
Norman Lessels CBE retired as Chairman and as a Non-Executive Director at the
Annual General Meeting on 1 May 2002. Mr Lessels had been a Director of Cairn
for 13 years and Chairman for 10 years. I would like to take this opportunity to
thank him on behalf of all of the Directors for his excellent guidance and
significant contribution to the Board during his tenure.
Norman Murray
Chairman
2 September 2002
GLOSSARY OF TERMS
The following are the main terms and abbreviations used in the Chairman's
Statement:-
Corporate
Bapex Bangladesh Exploration Petroleum Co. Ltd.
Cairn the Company and/or its subsidiaries as appropriate
GGCL Gujarat Gas Company Limited
GPEC Gujarat Powergen Energy Corporation Limited
Niko Niko Resources Ltd.
ONGC Oil & Natural Gas Company Ltd.
(Indian state oil and gas company)
Petrobangla Bangladesh Oil, Gas & Mineral Corporation
(Bangladesh state oil and gas company)
Shell Bangladesh Shell Bangladesh Exploration and Development B.V.
Shell India Shell India Production and Development B.V.
TATA TATA Petrodyne Limited
The Board the Board of Directors of Cairn Energy PLC
The Company Cairn Energy PLC
The Group the Company and its subsidiaries
Technical
2D two dimensional
3D three dimensional
bcf billion cubic feet
boe barrels of oil equivalent
boepd barrels of oil equivalent per day
bopd barrels of oil per day
GSC Gas Sales Contract
km kilometres
km2 square kilometres
/mcf per thousand cubic feet of gas
mmbbls million barrels of oil
mmscf million standard cubic feet of gas
mmscfd million standard cubic feet of gas per day
PSC Production Sharing Contract
Note:
This announcement contains forward looking statements that reflect Cairn's
expectations regarding future events. Forward looking statements involve risks
and uncertainties. Actual events could differ materially from those projected
herein and depend on a number of factors including the uncertainties relating to
oil and gas exploration and production and sale of oil and gas.
Consolidated Profit and Loss Account (Unaudited)
For the six months to 30 June 2002
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
Notes £'000 £'000 £'000
Turnover 53,669 56,788 107,427
Cost of sales
Production costs (13,956) (13,616) (24,708)
Depletion (10,848) (6,317) (20,704)
Decommissioning charge (233) (201) (225)
Gross profit 28,632 36,654 61,790
Administrative expenses (6,062) (5,290) (10,406)
Operating profit 22,570 31,364 51,384
Exceptional write-down of oil and gas assets (787) - -
Profit on ordinary activities before interest 21,783 31,364 51,384
Interest receivable and similar income 366 1,786 1,835
Interest payable and similar charges (1,573) (465) (1,193)
Profit on ordinary activities before taxation 20,576 32,685 52,026
Taxation on profit on ordinary activities
- current (1,527) 1,874 (3,601)
- deferred (3,447) (11,766) (14,815)
(4,974) (9,892) (18,416)
Profit for the period 15,602 22,793 33,610
Earnings per ordinary share - basic 1 10.79p 15.82p 23.29p
Earnings per ordinary share - diluted 2 10.72p 15.68p 23.10p
Notes:
1. The basic earnings per ordinary share is calculated on a
profit of £15,602,000 (H1 2001: £22,793,000) on a weighted average of
144,625,284 (H1 2001: 144,066,040) ordinary shares.
2. The diluted earnings per ordinary share is calculated on a
profit of £15,602,000 (H1 2001: £22,793,000) on 145,481,560 (H1 2001:
145,360,613) ordinary shares, being the basic weighted average of 144,625,284
(H1 2001: 144,066,040) ordinary shares and the dilutive potential ordinary
shares of 856,276 (H1 2001: 1,294,573) ordinary shares relating to share
options.
3. No dividend has been declared.
Consolidated Statement of Total Recognised Gains and Losses (Unaudited)
For the six months to 30 June 2002
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Profit for the period 15,602 22,793 33,610
Unrealised foreign exchange differences (12,573) 10,406 3,924
Total recognised gains and losses relating to the period 3,029 33,199 37,534
Prior year adjustment 1 (9,465)
Total gains and losses recognised since last Annual Report (6,436)
Reconciliation of Movements in Shareholders' Funds (Unaudited)
For the six months to 30 June 2002
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Total recognised gains and losses relating to the period 3,029 33,199 37,534
New shares issued in respect of employee share options 806 596 1,044
Total movements during the period 3,835 33,795 38,578
Opening shareholders' funds 2 326,390 297,277 297,277
Closing shareholders' funds 330,225 331,072 335,855
Note:
1. Prior year adjustment relates to the change in accounting policy
arising from the implementation of FRS19 Deferred Taxation.
2. The opening shareholders' funds at 1 January 2002, before
deducting the prior year adjustment of £9,465,000, were £335,855,000. The
opening shareholders' funds at 1 January 2001, before deducting the prior year
adjustment of £5,605,000 were £297,277,000.
Consolidated Balance Sheet (Unaudited)
As at 30 June 2002
As at As at As at
30 June 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Fixed assets
Exploration assets 217,233 227,809 212,262
Development/producing assets 200,459 125,683 186,365
Other fixed assets 1,949 2,322 2,167
Investments 5,582 4,061 3,473
425,223 359,875 404,267
Current assets
Debtors 35,053 55,462 73,646
Cash at bank 9,380 11,375 5,927
44,433 66,837 79,573
Creditors: amounts falling due within one year 37,130 51,871 96,403
Net current assets/(liabilities) 7,303 14,966 (16,830)
Total assets less current liabilities 432,526 374,841 387,437
Creditors: amounts falling due after more than one
year 39,764 - -
Provisions for liabilities and charges 12,510 8,224 12,159
Deferred taxation 50,027 35,545 39,423
Net assets 330,225 331,072 335,855
Capital and reserves - equity interests
Called-up share capital 14,882 14,780 14,817
Share premium 74,294 73,142 73,553
Capital reserves - non distributable 50,487 50,487 50,487
Capital reserves - distributable 35,254 35,254 35,254
Profit and loss account 155,308 157,409 161,744
Shareholders' funds 330,225 331,072 335,855
Note:
1. The disclosed figures are not statutory accounts in terms of
section 240 of the Companies Act 1985. Statutory accounts for the year ended 31
December 2001, on which the auditors gave an unqualified report, have been filed
with the Registrar of Companies.
Consolidated Statement of Cash Flows (Unaudited)
For the six months to 30 June 2002
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Net cash inflow from operating activities 39,782 40,172 64,883
Returns on investments and servicing of finance
Interest received 366 1,394 1,844
Interest paid (1,051) (279) (700)
(685) 1,115 1,144
Taxation (1,718) 5,012 1,711
Capital expenditure and financial investment
Purchase of exploration assets (17,297) (41,704) (77,310)
Purchase of development/producing assets (33,455) (14,121) (37,722)
Purchase of other fixed assets (461) (489) (1,139)
Purchase of fixed asset investments (3,439) - -
Sale of fixed asset investments - - 102
Sale of other fixed assets - 29 29
(54,652) (56,285) (116,040)
Equity dividends paid - - -
Net cash outflow before use of liquid resources and (17,273) (9,986) (48,302)
financing
Management of liquid resources1
Cash on short term deposit (2,135) 4,631 9,932
Financing
Issue of shares 806 596 1,044
Debt draw-downs 19,952 7,112 39,962
20,758 7,708 41,006
Increase in cash in the period 1,350 2,353 2,636
Note:
1. Short term deposits of less than one year are disclosed as liquid
resources.
Reconciliation of Operating Profit to Operating Cashflows (Unaudited)
For the six months to 30 June 2002
Six months Six months Year ended
to 30 June to 30 June 31 December
2002 2001 2001
£'000 £'000 £'000
Operating profit 22,570 31,364 51,384
Depletion and depreciation 11,359 6,911 21,985
Decommissioning charge 230 201 225
Amortisation of long term incentive plan 1,280 1,309 1,948
Exceptional write-down of oil and gas assets (787) - -
Working capital movement 5,792 (2,076) (9,119)
Other provisions 404 791 (1,128)
Gain on sale of other fixed assets - (6) (5)
Foreign exchange differences (1,066) 1,678 (407)
Net cash inflow from operating activities 39,782 40,172 64,883
INDEPENDENT REVIEW REPORT TO CAIRN ENERGY PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2002 which comprises Consolidated Profit and Loss
Account, Consolidated Statement of Total Recognised Gains and Losses,
Reconciliation of Movements in Shareholders' Funds, Consolidated Balance Sheet,
and Consolidated Statement of Cash Flows. We have read the other information
contained in the Interim Report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The Interim Report, including the financial information contained therein is the
responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the Interim Report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information', issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
Ernst & Young LLP
Edinburgh
2 September 2002
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