Magoosh GRE

Cairn Energy Plc Analysis

| March 26, 2015

INTRODUCTION
Cairn Energy Plc (“Cairn”) is an Edinburgh based publicly traded Oil & Gas Exploratory & Production (E&P) company dealing primarily within its operated assets in India, Bangladesh, Nepal and Greenland (Cairn, 2009). Major products sold are crude oil and natural gas, produced from both offshore and onshore drilling blocks (Hoovers, 2009b).

Cairn was founded in 1984 by Sir Bill Gammell with initial operations in the US. Following its IPO in 1988, Cairn is now publicly traded on the London Stock Exchange with 2008 revenues of $299.3 million and operating profit of $440.9 million – due to sales of assets and financing profit (Cairn, 2009).

BUSINESS SEGMENTS
Cairn’s businesses are divided broadly into two segments namely:

Cairn Energy Plc holds a controlling interest of 62.39% in Cairn India. Since its first oil major oil discovery in the Rajasthan fields of 2004, which was the biggest exploratory discovery in India since 1985, Cairn has focused exclusively on the acquisition of oil blocks and continuing exploration in the country (Cairn Financial Report, 2009).

Capricorn Oil Group is Cairn’s exploratory division that primarily focuses on the exploration of undiscovered oil fields, and is 90% owned by Cairn. Capricorn’s primary focus is on India and the discovery of new oil fields in the country. However Capricorn currently owns exploratory lease-agreements to 7 oil-blocks in Greenland, which are currently pending regulatory approval for oil production (Cairn Financial Report, 2009).
PESTEL

The following table is a macro economical analysis of how political, economical, socio-cultural, technological, environmental and legal factors affect the exploration and production (E&P) industry. The extent to which these factors affect the E&P industry is outlined on a cognitive rating scale from -2 to +2. -2 represents a strong negative effect, while +2 represents a strong positive effect on the E&P industry operating within those regions.afcadnaffacisaplabl

SUCCESS AND SURVIVAL FACTORS IN THE E&P INDUSTRY

The overall threat to the exploration and production industry, as a whole, is huge globally. Therefore any company in the industry seeking to gain competitive advantage against competitors, and survive in times of hardship – which may be caused by a drastic drop in oil prices, or severe terrorist activities – must adhere to these success and survival factors.

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REFERENCES
ABC News (2008) Greenland the focus of global oil hunt, www.abc.net.au, (date accessed 07/10/2009)

Bindemann, K. (1999) Production-Sharing Agreements: An Economic Analysis. Oxford Institute for Energy Studies. WPM 25

Cairn Financial Report (2009), Half-Yearly Report 2009, www.cairnenergy.com/investors, (accessed 08/10/2009)
Cairn (2009) Cairn: About Us, www.cairnenergy.com/aboutus, (accessed: 06/10/2009)
Chicago Tribune (2009) Cheap oil, but at what cost? www.chicagotribune.com/features, (date accessed 06/10/2009)

Datamonitor (2009) Oil & Gas Exploration & Production Industry Profile: Global, www.esbscohost.net, (accessed 08/10/2009)

Economic Times (2009) India’s Oil and Gas story – The turning point, www.blogs.economictimes.com, (date accessed 07/10/2009)

EnergyDigital (2008a) Cairn Energy to lead commercial oil production in Greenland. www.energydigital.com, (date accessed 8/10/2009)

EnergyDigital (2008b) Chevron and Cairn sign with Bangladesh. www.energydigital.com, (date accessed 8/10/2009)

Herald Scotland (2009) Profitable oil deal by Cairn subsidiary boost shares, www.heraldscotland.com, (date accessed 08/10/2009)

Hindustan Times (2009) – Deora to review safety of Oil and Gas sites, www.hindustantimes.com, (accessed 09/10/2009)
Hoovers (2009a) Oil and Gas Exploration and Production Industry, www.hoovers.com, (date accessed: 06/10/2009)

Hoovers (2009b) – Cairn Energy Plc, www.hoovers.com (date accessed 06/10/2009)

Marketwatch (2009) Cairn Energy swings to loss after charge, MarketWatch: Energy, Oct2009, Vol. 8 Issue 10, p10-11, 2p

Proactive Investors UK (2009) Crude Oil Rebounds, Dragon Oil, Petrofac and Cairn respond. www.proactiveinvestors.co.uk, (date accessed 08/10/2009)
Reuters (2009) India expects joint foreign/local energy bids. www.in.reuters.com, (date accessed: 7/10/2009)

Rigzone (2009) Tough time for India Licensing Round, www.rigzone.com, (accessed 09/10/2009)
Saic (2009) Exploration & Production. www.saic.com/energy. (date accessed: 08/10/2009)

Wall Street Journal (2009) Lower costs give oil firms breathing room, www.online.wsj.com, (date accessed 07/10/2009)

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