Investors in Cairn Energy (CNE) were already in a funk when the explorer-producer opened its books for 2018. A day before results landed, the market was told that a decision on Cairn’s legal case against Indian authorities might not arrive this year, dashing hopes that a $1.4bn (£1.06bn) claim could soon be awarded.
According to Cairn, the arbitration panel had initially expected to issue an award expeditiously following last August’s hearings. But the need to handle several new procedural matters and three years of submissions have since led the judges to remove specific timing guidance.
However, the delay hasn’t altered Cairn’s belief in the merits of its case. The same can’t be said of its stake in the EnQuest-operated Kraken field, where continued underperformance has led to a 19 per cent downgrade in proven and probable reserves and a $166m impairment. This – along with heavy capital expenditure and the change in accounting treatment of the legacy Cairn India stake – explains the heavy reported loss.
Numis forecasts adjusted pre-tax profit of $63.7m and earnings of 5.8¢ per share this year, against losses of $565m and 57.6¢ for 2018.
| CAIRN ENERGY (CNE) | ||||
| ORD PRICE: | 171p | MARKET VALUE: | £1.01bn | |
| TOUCH: | 170.5-171p | 12-MONTH HIGH: | 271p | LOW: 138p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 236¢* | NET DEBT: | 1% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2014 | nil | -0.56 | -66.5 | nil |
| 2015 | nil | -0.50 | -90.3 | nil |
| 2016 | nil | -0.15 | -16.6 | nil |
| 2017 | 33.3 | 0.27 | 37.7 | nil |
| 2018 | 410 | -1.27 | -196 | nil |
| % change | +1132 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.32. *Includes intangible assets of $729m, or 124¢ a share. | ||||
