(Preliminary Results Announcement) PDF 0.71MB - Cairn Energy PLC

Chairman & CEO StatementCorporate OverviewDuring 2012 Cairn delivered on its main strategic goal of positioning the Company for futuregrowth.The distribution of ~US$3.5bn to shareholders early in the year marked the culmination of a~US$4.5bn capital return to shareholders over the past five years. The distribution alsoreduced the Company’s equity base, re-gearing it to frontier exploration success. Additionalproceeds were realised from subsequent share sales of our residual CIL shareholdingthroughout the year. These additional proceeds were retained as working capital to furtherstrengthen the Company’s cash position, fund the two corporate acquisitions made duringthe year and to build then take forward the frontier exploration portfolio. The demonstrationof market liquidity of the CIL shareholding as a financial asset is relevant when it isconsidered that our remaining ~10% interest had a year-end market value of US$1.1bn.The Company has remained focused on its vision to create an exploration led andsustainable cash generative oil and gas business offering shareholders exposure to materialcapital growth potential. By constructing a balanced portfolio of growth opportunities, whilstretaining a strong balance sheet, we are well placed to repeat the cycle of creating, addingand realising shareholder value.The profit after tax for the year of $73 million (m) reflects foreign exchange gains and otherfinance income, offset against the costs of unsuccessful exploration activities.The Company is in a strong position with Group net cash at 31 December 2012 of US$1.6bnand an ~10% residual shareholding in CIL valued at US$1.1bn.The areas we have chosen for our exploration focus include the frontier basins along theAtlantic Margin and in the Mediterranean, as well as targeting new plays within the moremature UK North Sea and Norwegian continental shelf.The corporate acquisitions during 2012 have provided non-operated interests in the predevelopmentKraken, Catcher and Mariner oil fields located in the UK North Sea and havesecured future long term cash flows.Our clear focus is to operate exploration positions and opportunities which we believe havethe most organic growth potential and where we have the experience, ability and knowledgeto add most value. As a consequence, we are planning an extendable programme to drillmultiple frontier exploration wells over the coming 18 months which will target > 3.5 bn boeof mean un-risked gross prospective resource within a total of “Yet to Find” potential inexcess of 8.5 bn boe.3