Cairn Energy engaging with India as future focus moved to North Sea

19th Aug 2014 11:54

Although it continues to be dogged by a tax dispute in India, Cairn Energy completed the first half of year with $1.1bn of cash in the bank and said it remained fully funded through to delivery of free cash flow from 2017.The FTSE 250 group said it continues to seek resolution of a tax issue in India, where its 9.8%-owned Cairn Energy subsidiary is operator of India's biggest onshore oilfield.Chief executive Simon Thomson said the company was "focusing every effort on continuing engagement" with the new Indian government, which set up a panel to review retroactive tax claims, and that it "will take all necessary steps to protect shareholders' interests".Speaking to media on a conference call, Thomson added: "There were some provisions in that budget in respect to dealing with the retrospective tax issue. We are waiting for clarification on those provisions."Away from India, the company has an active programme of exploration and appraisal wells to be drilled over the next twelve months, but all drilling beyond the current frontier operations will instead begin to target mature and emerging basins in the North Sea."In line with this strategy the farm-in to the Statoil-operated Ensis prospect in the Barents Sea commences a planned entry to this emerging region," Thomson said. "In the meantime, the company is addressing its organisational size to ensure it has the appropriate structure to deliver the future work programme."In the second half the FTSE 250 company said it foresees $300m of capital expenditure on development and exploration, with a preliminary 2015 exploration programme capex estimate of $110m, focused on mature and emerging basins in North West Europe.Broker Liberum said it valued the company's Cairn India stake at zero while the tax dispute continues. While analysts acknowledged that development projects were on track, a combination of risked value ascribed to the current well offshore Senegal and the maturity of the North Sea make Cairn "less attractive" than other oil exploration and production plays.Shares in Cairn were down 2% to 183.6p at 1:46 on Tuesday. OH