Producer, developer, explorer

We refresh our view on Cairn Energy, focusing on key areas of interest for investors already familiar with the company. We examine a number of valuation approaches for SNE in Senegal, the potential for reserve upgrades and exploration value. We believe SNE is an outsized asset and assume Cairn seeks to farm-down. This will naturally affect long-term value upside, but would in our view drive a better balance of asset and financial risk. We also examine features of Catcher, Cairn’s cost of capital and look at the Indian tax dispute. After a long period of value stagnation (as cash was invested to develop Catcher/Kraken), coming years could be a time when investors see a path to this investment steadily bearing fruit. Our core contingent NAV is 225p/share and our RENAV is 255p/share.