Yes, that really is an earnings multiple you can see in the table below for Cairn Energy (CNE). And no, the swing to reported profit bears little connection to its new twin sources of revenue: its working interests in Catcher and Kraken fields, which could provide the mid-tier E&P with revenues from the sale of up to 20,000 barrels of oil per day (bopd) in 2018.
Instead, the $263m (£189m) profit generated in 2017 was largely due to the $403m net gain recognised in the group’s former stake in Cairn India – the subject of a final arbitration hearing in August – an accounting charge first realised in the half-year results.
Amidst such distractions and large swings in the income statement, it can be hard for Cairn investors to know where to look. Ask management, and Senegal remains the priority. The SNE field is now fully appraised, major invitations to tender have been issued, and the government is expected to rubber stamp the exploitation plan by the end of this year. Yet the group appears to be planning for slippage: first oil isn’t expected until as late as 2023, which could eventually test the reserves-based lending facility, given the group’s massive exploration appetite. Mexico, the North Sea and Senegal are all big targets.
Analysts are guiding for an adjusted pre-tax profit of $56m and EPS of 6.8¢ in 2018, compared with estimates of $238m and 41.6¢ last year.
| CAIRN ENERGY (CNE) | ||||
| ORD PRICE: | 213p | MARKET VALUE: | £ 1.24bn | |
| TOUCH: | 212-213p | 12-MONTH HIGH: | 237p | LOW: 164p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 7 | |
| NET ASSET VALUE: | 428¢* | NET CASH: | $57m** | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | nil | -1.10 | -93.2 | nil |
| 2014 | nil | -0.56 | -66.5 | nil |
| 2015 | nil | -0.50 | -90.3 | nil |
| 2016 | nil | -0.15 | -16.6 | nil |
| 2017 | 33.3 | 0.26 | 45.6 | nil |
| % change | - | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.39. *Includes intangible assets of $748m, or 128¢ a share. **Doesn't include $168m in non-current finance lease liabilities. | ||||
