Chief executive Sir Bill Gammell emphasised that Cairn Energy remains "focused on Greenland, Greenland and Greenland" despite mixed drilling news that sent the shares lower. One of Cairn's two vanguard wells encountered only thin gas sands, while the second has struggled to drill through a difficult volcanic layer. That well is not now expected to reach target depth until mid-September, which risks the last of the four wells planned for this year slipping into 2011.
With each of the first four wells targeting prospects of around 1bn barrels of oil, this impacts the near-term exploration upside, although Sir Bill stressed that these wells form just part of a three-year campaign that is estimated to cost $1bn (£650m). Financing the Greenland campaign won't be an issue provided the proposed sale of a controlling stake in Cairn India to Vedanta completes. Cairn will retain an interest of 11-22 per cent in Cairn India and shareholders will receive a "substantial" cash return in the first half of next year.
Prior to these results, analysts were forecasting full-year pre-tax profits of $674m and EPS of 24¢.
| CAIRN ENERGY (CNE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 455p | MARKET VALUE: | £6.37bn | |
| TOUCH: | 455-456p | 12-MONTH HIGH: | 496p | LOW: 238p |
| DIVIDEND YIELD: | nil | PE RATIO: | 147 | |
| NET ASSET VALUE: | 141¢* | NET CASH: | $264m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 17 | -118 | -4.61 | nil |
| 2010 | 333 | 58 | -0.93 | nil |
| % change | +1,845 | - | - | - |
*Includes intangible assets of $562m, or 40¢ a share £1=$1.538 | ||||
