Tuesday, Cairn Energy Plc (CNE.L), a Scotland-based oil and gas company with operations in India and Bangladesh, reported a 76% fall in profit for the fiscal year 2008, hurt by a plunge in exceptional gains. However, on an adjusted basis, the company reported a profit, compared to prior year's loss, boosted by strong revenues from Indian operations.
For the year, the company's profit plunged to $366.7 million from $1.56 billion a year ago. The company noted that prior-year results were restated as a result of changes in the accounting for deferred tax.
Profit attributable to equity holders of the parent fell to $348.8 million or 266.92 US cents per share from $1.54 billion or 1,135.94 US cents per share a year ago.
The results for 2008 included an exceptional pre-tax gain of $355.8 million on the deemed disposal of 4% of CIL to Petronas and Orient Global Tamarind Fund Pte Limited through an issue of shares. Meanwhile, the prior-year results included exceptional pre-tax gain of $1.579 billion, related to the disposal of 31% of CIL on its IPO and the disposal of a 10% interest in Capricorn to Dyas.
Excluding exceptional gains, profit for the year was $11 million, compared to prior year's loss of $23 million.
In the year, profit before tax fell 72% to $441 million from $1.59 billion a year earlier.
Annual revenues rose 4% to $299.3 million from $287.7 million last year, driven by growth in revenues of Cairn India Group to $282.4 million from last year's $237.5 million. The company noted that revenue from one customer in the Cairn India Group segment amounted to $127.4 million, from oil and gas contract sales. Meanwhile, Capricorn Group, operating in Bangladesh, generated revenues of $16.9 million, down from last year's $50.2 million.
In the year, Cairn's average gross production was 76,298 barrels of oil equivalent per day, or boepd, down from prior year's 87,031 boepd. Average entitlement production fell 35% to 12,801 boepd from 19,809 boepd in 2007.
The average realized price per barrel of oil equivalent for 2008 was $63.88, higher than $39.70 a year ago. The company noted that its current entitlement interest production is 46% gas and 54% oil.
Looking ahead, Cairn said the "Focus in 2009 is delivering production in Rajasthan on schedule and agreeing oil sales contracts with the buyers of the Rajasthan crude".
Sir Bill Gammell, Chief Executive, stated, "Cairn's Rajasthan development continues to grow in scope and scale as we approach first oil production in the second half of 2009. The Mangala terminal includes the phased construction of four planned processing trains with a combined production capacity of 205,000 bopd and potential for expansion. We have established a material frontier exploration position offshore west and south Greenland with 72,000 km2 under licence and the company continues to examine options for early drilling."
In the next two years, with a marked increase in production and cash flow, the company said it would continue to evaluate the strategic options for further creation of shareholder value.
CNE.L is currently trading at 2,092 pence on the London Stock Exchange, up 29 pence or 1.41%, on a volume of 82 thousand shares.
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