.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 Mondayâs 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.
Meanwhile, production costs rose 12% between 2020 and the previous year to $75.9m. This added to Cairn Energyâs 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 âremained strong throughout the year.â 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
Tuesdayâs 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 âthe divestment of these assets, as they fall into natural decline, will further strengthen our ability to pursue Cairn’s strategic goals.â
The company also announced it plans to acquire âa portfolio of upstream oil and gas production, development and exploration interestsâ from Royal Dutch Shell with fellow fossil fuel explorer Cheiron.
The assets — which are located in Egyptâs 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 âoffers low cost production, near-term development and exploration potential, provides immediate operating cashflow contribution and adjusts our overall hydrocarbon split towards gas.â
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.