Cairn Senegal comments transcript

Cairn Energy PLC
Half Year Results 2014
Tuesday 19th August 2014
Simon Thomson, Chief Executive

Moving now to our frontier operated deep water programme in Senegal. We have a large acreage position offshore Senegal, straddling the shelf and into the deep water. Oil is present in the shallow water here, as it is in many of the shallow water areas adjacent to our licence acreage around the North West African margin.

What we’re doing is stepping off into the deeper water where we know that extensive source rocks and Cretaceous fan sand systems extend into the deep water here. So these are very important wells trying to open up a new basin, and the key of these frontier wells is that should they come in then there is a huge amount of follow up potential.

The well has been delayed, we’ve had to undertake quite a lot of maintenance on the rig, but we are still operating and we expect the well to be fully completed sometime at around the end of this month, and until then we can’t really say too much more.

What I will remind you of is that this is a very large set of prospects, stacked systems in the Lower Cretaceous with very large volumes of potential resources, and this is the north fan here. In the event that this one comes in, there are a string of other similar lookalike prospects in the area. Any one of these levels that comes in, and there are others in addition to this, even within this well, and any one of these is on its own is commercially very attractive under Senegalese terms.

Once this well is finished sometime in early September, we’ll move the rig across and finish off the Shelf Edge well. We have done the top hole section on this, a bit, in a way, like Statoil are doing in their Barents programme as well. We have done the top hole, and again this is a multi-target, multi-stacked resource in here, and again, if this comes in then we do have a string of other follow-on possibilities.

The results of the two wells, there is some dependency, clearly a good result here will be helpful for the Shelf Edge prospect, but also the Shelf Edge prospect is dealing with different reservoirs and it also has the potential for feed from a slightly different number of source rocks as well, so there is some independence to it, but these are very exciting prospects.


The following is from the Q&A session ( I have edited out the parts that have nothing to do with Senegal)

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Question 2
James Thompson, JP Morgan Cazenove
Just three questions please. In terms of Senegal, I mean by my account you only needed to drill at sort of two, three meters an hour to reach the top reservoir since you resumed drilling on 28th July. Have there been other delays since then or have you reached the top reservoir? Maybe you’re not going to tell us but it seems strange that you haven’t hit reservoir just yet on such an important well.

Simon Thomson
And in Senegal, yes it’s a tight hole so we can’t say anything.

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Question 3
Michael Alsford, Citigroup
And then thirdly, just on the Senegal drilling, could you just remind us what the pre-drill risk is for the drilling of those two prospects? It doesn’t look like it’s in the presentation. Thanks.

Richard Heaton
And on the final point, I think on the risks on the Senegal wells it varies a little bit by layer but by and large on average they’re about one in six.

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Question 8
Jamie Maddock, Morgan Stanley
Okay. The second question then is with regards to Senegal. What gives you the confidence on the source, and that it’s a relatively low-risk attribute?

Richard Heaton
Essentially there is a deep sea drilling project well, admittedly a couple of hundred kilometres away further offshore but there are geophysical tie lines into that well. And that well confirms, even though it’s a long way offshore, that the Turonian and Cenomanian source rocks that are seen pretty much all around the Atlantic margin are indeed present that far out. And the geophysical tie demonstrates those tying into our area, and thickening up as it gets closer to the shore.

So the well that we’re currently drilling FAN-1, within that well profile we will drill through those source rocks. It is one of the reasons why we’re drilling the FAN well first. And confirmation of those source rocks and their maturity and richness obviously is an important piece of the well. Clearly the most important thing is to find some commercial hydrocarbons. But this being frontier drilling any information that you can get on source rocks and reservoirs has a huge impact upon the surrounding prospectivity. So we’re pretty confident that it’s there. What you can’t tell without drilling it though is how good, how much and just exactly where it is within the well. But this will tell us once we have finished.