Oil exploration on hold
Cairn Energy is not conducting any activity in Malta at present and a spokesman said it had “no news to report” when asked by the Times of Malta about its plans for 2017.
In its report for 2016, the only reference to Malta was the $5.8 million due for the exploration licence.
Cairn Energy has to decide whether to commit to a 3D seismic survey of Area 3, saying it would first have to conclude the 2D seismic and geological evaluation.
Cairn is the operator for the area, the only one in Malta’s waters where any level of exploration is currently open – at least in theory.
Under the terms of the 2012 exploration study agreement, Cairn has to take a decision one way or the other before the end of 2018. Area 3 covers an area of 6,000 square kilometres, an area in the hands of Melita Exploration, a wholly-owned subsidiary of Rockhopper Exploration Plc.
Phoenicia Energy Company and Melita Exploration had pulled out of the concession for Area 4 in January 2015 after the first exploration phase, which involved the drilling of the Ħaġar Qim well.
Cairn spent $42.1 million in 2016 on unsuccessful explorations in its various operations. In its end-of-financial-year presentations, it referred only to Senegal, Morocco and Ireland as “emerging” areas, the Barents Sea and the Norwegian North Sea as “mature and emerging”. No forecasts or intentions for Malta were given.
The company ended 2016 with $335 million as cash reserves.
The reduction in oil companies’ profits as a result of the low cost of oil is hurting high-risk exploration more than it is production.
A PwC report on trends for 2016 noted that, as a response to the drop in the price of oil, companies were slashing outlays: “They are expected to cut capital expenditures by 30 per cent in 2016. Already, some $200 billion worth of projects have been cancelled or postponed,” it warned.