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Cairn Energy: Recent Share Price Decline Provides 80% Upside

(Editor's Note: Shares of Cairn Energy trade with limited liquidity under CRNCY. The company's London Listing CNE.L offers enhanced liquidity.)

Business Model

Cairn Energy (OTCPK:CRNCY) operates a so-called asset-play business model - identifying and exploring assets, confirming any reserves/ resources through initial stages of exploration and development and then finding ways of releasing the value of these assets either through divesture or sale, rather than running the wells itself. Company's strategy is to focus on frontier basin potential (e.g. Greenland basin) as well as overlooked plays in more mature basins (e.g. North Sea). The company tends to form Joint Ventures to minimize exploration risk and capex.

Due to its business model structure, Cairn Energy income statement hardly sees...

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