10th Sep 2019 09:49
(Alliance News) - Cairn Energy PLC on Tuesday swung to profit in the first half of 2019 after sizeable losses on impairments and its investment in Vedanta Ltd the year before.
Shares in Cairn were up 6.0% at 188.00 pence each in London.
Cairn's pretax profit for the six months ended June 30 was USD43.4 million, swinging from a USD602.9 million loss the year before.
Cairn suffered a GBP230.8 million loss on its investment in Indian copper miner Vedanta Ltd the year before, which did not repeat. After Cairn sold its shares, the proceeds were seized by India.
Moreover, the company incurred only a USD1.0 million loss on financial assets at fair value in the period, a very small fraction of its USD319.4 million loss the year before.
Revenue rose 48% to USD270.3 million from USD182.4 million, helped by a rise in oil and gas production net to Cairn of 23,700 barrels of oil equivalent per day, having been 14,400 boepd in the first half of 2018.
Oil production guidance for 2019 has been upgraded to between 21,000 and 23,000 barrels of oil per day, previously expected to be between 19,000 and 22,000 bopd. Average production cost is also expected to fall to USD18 per barrel of oil equivalent - previously predicted at USD20 per barrel.
Cairn is forecasting its annual capital expenditure to be USD295 million and exploration and appraisal expense to be USD165 million net of a tax refund, with development and production expense to be USD130 million.
Chief Executive Simon Thomson said: "As a full cycle [energy and production] business Cairn has seen good progress in the first half of 2019 with the opportunity to develop and deliver multiple catalysts for future growth.
"Production performance from our North Sea assets is ahead of expectations, delivering significant cash flow to reinvest in the portfolio. The SNE development in Senegal, where [final investment decision] is expected in H2, remains on schedule for first oil in 2022.
"Our drilling programme is about to commence offshore Mexico, where Cairn has built a material footprint in one of the world's most prolific basins. Recent portfolio acreage additions provide line of sight to future high potential exploration prospects."
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