Cairn Energy swings to first-half loss as oil prices slide

The FTSE 250 company said oil and gas sales revenue totalled $172m (£133.64m) for the six months ended 30 June, down from $257m year-on-year.

Its average realised oil price fell to $40.21 per barrel from $67.84 a year earlier, with the firm also reporting hedging gains of $7.91 per barrel, while its average production cost slipped to $16.29 per barrel of oil equivalent from $16.78.

Net cash inflow from oil and gas production totalled $132m, falling from $176.6m a year earlier.

Its capital expenditure cash outflow was $121m excluding Norway and Senegal, the board said, of which $30m related to activity undertaken in 2019.

Group cash at period end otalled $84m, Cairn said, with no drawn debt.

It noted an impairment charge of $240m, with $207m against Senegal assets and $33m against UK producing assets, included in its loss for the period of $324m, swinging from a profit of $66.5m in the first half of 2019.

Looking ahead, Cairn said its full-year oil production guidance was for between 21,000 and 23,000 barrels of oil per day net, adding that it was targeting an average production cost of around $18 per barrel of oil equivalent.

Its full-year forecast capital expenditure was $135m, of which exploration and appraisal would be $95m, and development and production would be $40m, excluding Senegal.

The company noted the proposed sale of its Senegal interests, and the associated planned special dividend of $250m, by year-end.

It also confirmed the Arbitration Tribunal was expecting to issue its ruling on Cairn’s India tax case after the end of summer.

“We have successfully managed the business through a challenging external environment, always ensuring that the safety of our people is paramount,” said chief executive officer Simon Thomson.

“We took early action with significant reductions and deferrals to the capital programme. Alongside the sale of interests in both Norway and Senegal, we have realigned the portfolio and demonstrated Cairn's continued commitment to shareholder returns.

“With a strong net cash position and limited capital commitments, Cairn is well-positioned to deliver further value for shareholders.”

At 0853 BST, shares in Cairn Energy were down 2.42% at 137.1p.