Cairn Energy wants to see more production data before it changes its opinion of reserves at the challenging Kraken heavy oilfield in the UK North Sea after it downgraded its own figures earlier this year in conflict with operator Enquest.

Releasing first-half results this week, Cairn said Kraken’s recent performance had “significantly improved”, but it would not yet make positive revisions to its reserves figures.

In March, Cairn cut by about 20% its estimate of the field’s proven and probable reserves by 6.8 million barrels of oil equivalent to 29 million boe.

Cairn said at the time that last year’s production from Kraken, where it has a 29.5% stake, had been below expectations, although Enquest responded by insisting its estimates remained “materially unchanged”.

Speaking on a call to analysts this week, Cairn’s chief operating officer Paul Mayland said: “We fully respect all the views in the Kraken family ...we are all striving to improve production potential and maximise economic recovery.”

It should be recognised that “reserves are estimated, they are never determined,” he pointed out.

“We carry a range of estimates — P90, P50 and P10 — and, of course, we chose and believed it was prudent at the time and remains prudent to reduce our P50 estimates, which we did back in March,” he said.

“We would like to see longer production data in terms of water-cut trend and overall performance in the field before we make any revisions ...which we would do as a matter of the normal course of business on a six-monthly basis.”

At Kraken, average gross production in the six months to the end of June was more than 32,700 boepd.

As well as the improved facilities performance, new wells — at DC4 — have come online, resulting in “more continuous periods with production rates above 40,000 boepd being achieved”.

Cairn noted that additional drilling was coming into range in the western part of the Kraken field where drilling of a producer-injector pair of wells is planned for 2020.

In the first six months of 2019, Cairn’s total production from all assets averaged 23,700 barrels of oil equivalent per day, up 15% on the previous six months. Cairn said so far in the third quarter there has been “significantly improved facilities performance” at Kraken and “exceptional uptime” at Premier Oil’s Catcher asset in the UK, where it is also a partner.

As a result, it has upgraded its full-year production guidance to 21,000 to 23,000 boepd compared to 19,000 to 22,000 boepd previously.

Analyst Ilkin Karimli at Berenberg said in a note: “Recall that Cairn wrote off 19% of reserves at Kraken at the end of 2018 due to weak operational performance. We believe Cairn may revise its reserve estimate higher if good operational performance continues.”

Analysts at Davy said: “Cairn Energy delivered a very solid first half, beating expectations on a number of fronts and also scoring highly on performance metrics.”

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Cairn to wait and see over Kraken resources