Cairn Energy Shares Fall on Impairment at Kraken Field -- Update
12 Março 2019 - 8:45AM
Dow Jones News
--Cairn Energy booked an impairment after cutting its reserves
estimate at the Kraken field
--The company swung to a net loss on derecognition of an asset
after Indian tax authorities ordered it to sell its stake in
Vedanta Ltd.
--Cairn Energy sees 2019 production in a range of 19,000 to
22,000 barrels of oil a day
By Oliver Griffin
Shares in Cairn Energy PLC (CNE.LN) fell Tuesday after the
company said that it booked an impairment on the Kraken North Sea
field following cuts to the proved and probable reserves
estimate.
The U.K. oil-and-gas company said it reduced the proved and
probable reserves estimate, known as 2P reserves, following
reservoir underperformance.
As a result, Cairn Energy recognized a $166.3 million impairment
on its financial results for the year ended Dec. 31.
However, while analysts at Citi Research described the
impairment as disappointing, Kraken-field operator EnQuest PLC
(ENQ.LN) said its own methods for calculating the field's 2P
reserves differed to Cairn Energy's, and that its estimates were
unchanged.
For 2018, Cairn Energy said it swung to a net loss of $1.14
billion, compared with a net profit of $272.8 million in the
previous year.
As well as the impairment on the Kraken field, the company said
it also booked a loss worth $713.1 million on derecognition of an
asset after India's Income Tax Department ordered it to sell its
share in Vedanta Ltd. (VEDL).
The tax authority also seized dividends that were due to the
company from its shareholding in Vedanta worth $164 million.
Cairn Energy is locked in a dispute with the Indian tax
authorities, and is currently awaiting an arbitration decision.
Cairn said it is claiming compensation of $1.4 billion.
Revenue in 2018 soared to $410.3 million from $33.3 million in
2017, Cairn said.
While Cairn Energy faced difficulties during 2018, this year
looks to be more exciting for the company.
The company forecast that its capital expenditure in 2019 will
be around $300 million, up from $252 million in 2018, as an
exploration program targets a billion barrels of gross
resources.
Cairn Energy also said it expects production in a range of
19,000 to 22,000 barrels of oil a day in 2019.
Shares at 1040 GMT were down 4.6% at 166.70 pence. Shares in
EnQuest were down 9.3% at 16.76 pence.
Write to Oliver Griffin at oliver.griffin@dowjones.com;
@OliGGriffin
(END) Dow Jones Newswires
March 12, 2019 07:30 ET (11:30 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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