Cairn Energy shareholders revolt on remuneration

Almost 35% of shareholders of Edinburgh-based international oil and gas company Cairn Energy voted against the company’s remuneration report at its AGM on Tuesday.

“The board notes that, while all of the resolutions at today’s Annual General Meeting were passed with the requisite majority, Resolution 2 (Approval of the Remuneration Report) passed with 65.13% of votes in favour,” said Cairn.

Following the Annual General Meeting, Cairn will continue to engage with its shareholders and carefully consider all feedback.

“We will publish an update on that engagement within six months of the Annual General Meeting, in accordance with the UK Corporate Governance Code.”

Almost 19% of shareholders voted against the re-election of chair Nicoletta Giadrossi.

Cairn Energy CEO Simon Thomson told the AGM the company remains confident of success in its dispute with the Government of India after a tribunal found in Cairn’s favour and awarded the firm damages of $1.2 billion plus interest and costs.

“This ruling is binding and enforceable under international treaty law,” said Thomson.

“Whilst India has sought to challenge the basis of the award through set-aside proceedings in the Dutch courts, we remain confident of our position and continue constructive engagement with the Government of India whilst at the same time taking all necessary actions to protect our rights to the award and access the value of it as early as possible.”

Thomson told the virtual meeting: Despite the challenges the pandemic has presented, we have significantly enhanced the portfolio through proactive management, most recently with the proposed acquisition of Shell’s assets in Egypt’s Western Desert.

“Following the sale of our interests in Senegal, we also returned two hundred and fifty million dollars to shareholders, whilst strongly positioning Cairn’s business for the future.

This progress has been delivered through Cairn’s proven and tested strategy.

“We manage our portfolio to optimise capital allocation and retain flexibility, enabling us to return cash to shareholders and invest in the sustainability and growth of our cash-flow generating producing asset base.

“In turn, this funds exploration, which continues to provide the potential for transformational value, as well as shorter-cycle opportunities supporting future cash-flows.

“When we target resources, we ensure these are hydrocarbons that can have a competitive role in a changing global energy mix …

We are now positioned to deliver Cairn’s next stage of growth, with an important first building block being the proposed acquisition of Shell’s Western Desert Assets in Egypt.

“This expands and diversifies our producing base with low-cost, sustainable gas-weighted production close to growing markets, and adds significant development and exploration growth potential.

“We are tremendously excited about the potential of these assets.

Together with our joint venture partner, Cheiron, we are actively engaged with Shell on transition arrangements.

“We continue to expect the acquisition to be completed in the second half of 2021 and we very much look forward to delivering the significant value these assets offer.

Divestment of our interests in our Catcher and Kraken producing assets in the UK North Sea comes at the right point in the cycle and allows us to retain exposure to oil price and reservoir performance upside, whilst further supporting our ability to pursue our strategic goals. 

“We anticipate the sale to Waldorf Production to complete in the second half of 2021 with production from these assets expected within our annual guidance for 2021 of 16,000-19,000 barrels of oil per day.

Our exploration portfolio provides us with short-cycle, high-return opportunities and attractive frontier positions.

“This year, we are participating with our joint venture partners in near-term wells in Mexico and the UK North Sea.

“In Egypt, we have tremendous short-cycle, low-cost exploration potential in a proven hydrocarbon basin, with gross unrisked resources of around eight hundred million barrels in our operated licences alone.

“And since our last reporting date, we have further enhanced our frontier positions, with an exploration licence granted to Cairn for acreage that includes a material opportunity offshore Mauritania.

“This, alongside our existing acreage in Suriname, means we are invested in attractive areas with transformational value potential and flexibility around the capital programme.

Underpinning our production, development and exploration activity is a robust balance sheet, enabling our flexibility to fund the right choices, at the right time, and allowing us to further enhance the portfolio as Cairn continues to pursue sustainable growth …”

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Mark McSherry
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