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Cairn Energy Cuts Capital Expenditure For FY20 Amid Covid-19; Stock Dips

Cairn Energy Plc (CNE.L) on Friday announced an overall 23 percent reduction in capital expenditure for the year 2020 in light of current market conditions amid Coronavirus or Covid-19. In London, Cairn Energy shares were trading down 3 percent in the morning trading.

Cairn said it is proactively reviewing each of its assets and related capital expenditure programmes, and have identified significant reductions and deferrals for the 2020 program.

The company's planned 2020 capital expenditure on the UK producing assets is now expected to be below $45 million, reduced from the original forecast of $65 million. This is a result of cost savings identified and the deferral of certain activities planned for the Catcher fields.

In the Development Assets, Cairn's expectation at this stage is that net capital expenditure on Sangomar in 2020 will be below $330 million, compared to original forecast of $400 million.

Capital expenditure on exploration in 2020 is now anticipated to be approximately $100 million, reduced from the original forecast of $150 million.

Cairn is in active discussion with joint venture partners and other stakeholders regarding further initiatives relating to the whole forward program. These changes are not expected to impact previously disclosed production and production cost guidance for 2020.

The Company remains well funded from existing sources of financing.

Simon Thomson, Chief Executive Officer, said, "Our balance sheet remains strong and we are proactively reviewing options for further capital expenditure savings and deferrals, whilst retaining the financial flexibility to add value on an ongoing basis."

In London, Cairn Energy shares were trading at 83.80 pence, down 2.90 percent.

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