Cairn Energy slumps as first-half loss widens on impairment charge

Shares in Cairn Energy fell sharply after the oil and gas exploration group posted a wider-than-expected first-half loss after tax on the back of a $177m impairment charge.

Cairn, which has no revenue as its focus is purely on exploration work, posted a loss after tax of $230m from $62m in the first half of last year as it booked an impairment on its remaining investment in Cairn India.

Group cash at 30 June was $725m, down from $869m at the end of last year.

Societe Generale said the loss was significantly bigger than consensus expectations of $37m as the group marks-to-market the value of its 10% stake in Cairn India.

The bank said net cash was also below both its and consensus expectations of $780m.

Cairn also said on Tuesday that it expects to begin drilling operations at its oilfield in Senegal in the fourth quarter.

Chief executive Simon Thomson said: “We are delighted to have agreement from the Government of Senegal for our extensive evaluation plan which commences shortly with a 3D seismic survey and continues later this year with a multi-well exploration and appraisal programme.

“Cairn estimates that the two discoveries made in Q4 2014 and the currently identified prospects and leads have a gross mean risked resource base of more than one billion barrels.”

The company said it is fully funded to fulfil the committed exploration and appraisal programme in Senegal, building on last year’s exploration success and to continue towards first oil and free cash flow production from the two North Sea development projects.

Exploration and appraisal capex for the forthcoming programme is expected to be around $170m over the second half of 2015 and first half of next year, with spend predominantly in Senegal, Cairn said.

At 1126 BST, Cairn shares were down 4.7% at 147.20p.