Cairn Energy has lowered recovery estimates from Kraken oilfield, an offshore field located in the UK sector of the North Sea.
In its annual results, the company downgraded its estimate of Kraken’s reserves by 6.8 million barrel of oil equivalent (Mboe) or 19%. It has also booked $166.3m non-cash impairment against the offshore asset.
In 2018, gross production from the Kraken oilfield averaged around 30,300boe/d, below expected production levels.
In a statement, Cairn said that the production was affected due to weather-related incidents and issues with the floating production storage and offloading (FPSO) vessel used to recover oil at the field.
Cairn holds a 29.5% stake in the Kraken field, with EnQuest holding the remaining interest.
Though Cairn has downgraded the Kraken’s reserves, EnQuest said its estimate of the field’s reserves is ‘materially unchanged’.
The contradicting reports were primarily attributed to the different technical approaches used by EnQuest and Cairn to predict the Kraken production.
With the auditing of the company’s 2018 financial results yet to be completed, EnQuest did not recognise any impairment charge associated to the Kraken asset. The company is scheduled to report its financial results later this month.
Following the reports of downgrading Kraken oilfield reserves, the share prices of both the companies dropped combined with other factors.
Kraken is a subsea heavy-oil field project situated at a water depth of 120m in blocks 9/2b and 9/2c within the P1575 licence in the East Shetland basin.
The two companies are currently assessing further investment opportunities in the Kraken area to advance with new drilling opportunities next year.