The Motley Fool

Cairn Energy’s share price falls on full-year results, asset sales and acquisition news

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image of person checking their shares portfolio on mobile phone and computer
Image source: Getty Images.

.The Cairn Energy (LSE: CNE) share price has fallen in Tuesday trade so far following a string of market updates. The UK oil share has since pared gains but, at 192p per share, it remains 3% down from Monday’s close.

Cairn Energy announced today that revenues slumped 26% year-on-year in 2020 to $324.5m. This was due to the collapse in oil prices which accompanied the Covid-19 outbreak and the subsequent economic downturn. Cairn realised an average price of $42.56 a barrel last year versus the $65.70 it achieved back in 2019.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Meanwhile, production costs rose 12% between 2020 and the previous year to $75.9m. This added to Cairn Energy’s woes and, as a consequence, the company swung to a pre-tax loss of $117.5m. This compares with the profit of $119.2m the oilie reported back in 2019.

Production drops too

On the production front, Cairn Energy said that its net average was 21,350 barrels of oil equivalent per day in 2020. This was in line with guidance, but down from the 23,739 barrels which it reported in 2019.

The fossil fuel giant said production at its Kraken asset in the North Sea “remained strong throughout the year.” Production here averaged around 37,500 barrels of oil equivalent a day, up from approximately 35,600 barrels in 2019. But output at its offshore Catcher field was less impressive. Operational problems in the fourth quarter meant production here averaged around 51,200 barrels per day in 2020. This was down from around 67,200 a day the previous year.

Big changes at Cairn Energy

Tuesday’s been a busy day over at Cairn Energy. On top of those full-year results, the oil company announced big changes to its asset portfolio.

First off, Cairn announced its intention to sell its interests in Kraken and Catcher to Waldorf Production Limited for $460m. An additional contingent will be payable depending upon oil prices between now and 2025 too.

Cairn Energy said that “the divestment of these assets, as they fall into natural decline, will further strengthen our ability to pursue Cairn’s strategic goals.

Oil rig

The company also announced it plans to acquire “a portfolio of upstream oil and gas production, development and exploration interests” from Royal Dutch Shell with fellow fossil fuel explorer Cheiron.

The assets — which are located in Egypt’s Western Desert region — will initially cost a combined $646m. An additional $280m will be payable on certain requirements being met. Cairn and Cheiron will be liable for a 50/50 split on these amounts.

Cairn Energy said that the portfolio “offers low cost production, near-term development and exploration potential, provides immediate operating cashflow contribution and adjusts our overall hydrocarbon split towards gas.”

The company estimates that the assets will add between 33,000 and 38,000 barrels of oil equivalent a day to group production in 2021. Approximately two-thirds of this total is comprised of natural gas.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.