7th Sep 2021 09:28
(Alliance News) - Cairn Energy PLC on Tuesday reported revenue in the first half of 2021 more than doubled, as the Scottish oil and gas company made progress in resolving its Indian tax dispute.
It made revenue of GBP500,000 for the six months to June 30, up from GBP200,000 from a year prior.
Revenue from its UK producing assets - classed as discontinued operations in its half-year results - rose to USD256.6 million from USD214.7 million a year ago. It expects the sale of its UK producing assets, Catcher and Kraken, to conclude in the fourth quarter of this year.
The company's pretax loss widened to GBP87.4 million from GBP83.8 million, alongside finance costs which widened to USD49.0 million from USD3.4 million. However, unsuccessful exploration costs slimmed to USD14.9 million from USD67.6 million.
"We intend to use our differentiated financial flexibility to add further scale to our production base and look forward to the next phase of strategic delivery," said Chief Executive Simon Thomson.
The Edinburgh-based company noted that its North Sea producing assets delivered an average of 19,215 barrels of oil per day in the first-half, which it says is at the top end of expectations.
Its full year production expectations for the UK producing assets are within a narrowed range of 17,000 to 19,000 barrels of oil per day.
Also on Tuesday, Cairn said it has made progress in resolving its Indian tax dispute, and plans to return part of the anticipated USD1.06 billion rebate to shareholders.
Cairn proposed a capital return to shareholders of up to USD700 million, conditional on resolution. The return would be made up of a USD500 million special dividend and USD200 million in share buybacks.
"The remainder of the proceeds would be allocated to further expansion of the low cost, sustainable production base," the company said.
The FTSE 250 company has been involved in a long-running battle with India which stemmed from a 2012 law. In 2014, Indian tax authorities used the new legislation to claim unpaid taxes from Cairn India's 2006 corporate reorganisation.
In response, Cairn commenced arbitration proceedings against the Indian government. It received a favourable ruling at the end of 2020, but has since struggled to extract the damages it was due.
Cairn identified the inability to repatriate the full amount of refund due under Indian legislation as one of its principal risks at the end of the first-half, alongside volatile oil and gas prices.
"Progress in resolving our Indian tax issue and active portfolio management leave Cairn well-positioned to deliver growth from a sustainable business, focused on generating further value and returns for shareholders," said CEO Thomson.
Thomson added: "Our significant acquisition in Egypt, which we expect to complete shortly, adds material gas-weighted production, low-cost, near-term growth and attractive exploration potential, in a region with strong demand trends."
Shares in Cairn were up 1.6% at 198.10 pence in London early Tuesday.
By Josie O'Brien; [email protected]
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