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City A.M

City A.M

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Scottish Oil Explorer Books $324 Million In First-Half Losses

Oil explorer Cairn Energy today booked a $324m (£251.8m) loss for the first half after it was hit by a hefty impairment charge related to its assets in Senegal.

However, the FTSE 250 firm said that it had safely managed the coronavirus crisis and was well-positioned to generate future growth.

The figures

In a challenging year for oil producers, the Edinburgh-based company reported an average net output of 22,400 barrels per day, at the top end of its guidance.

With oil prices currently more than a third lower than at the start of 2020, Cairn reported $172m in oil revenue at a price of $40.21 per barrel.

However, total impairment charges worth $240m, including $207m against its fields in Senegal, took the company to a $324m loss for the first six months of the year.

Cairn said its group cash at 30 June was $84m with no drawn down debt.

Shares in Cairn fell 1.2 percent as markets opened this morning.

Why it’s interesting

After a six month period, oil producers would rather forget, Cairn did at least manage to offload its Senegalese and Norwegian assets.

Related: Oil Bulls Return As OPEC+ Reassures Markets

The former deal will see Cairn sell its 40 percent interest in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore contract area to Russian firm Lukoil for $400m.

The sale is expected to complete in the final quarter of this year and will see shareholders get $250m in a one-off special dividend.

What Cairn said

Chief exec Simon Thomson said: “We have successfully managed the business through a challenging external environment, always ensuring that the safety of our people is paramount.

“We took early action with significant reductions and deferrals to the capital program.  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.”

By CityAM 

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