Cairn Energy in $324m H1 loss amid impairments

Edinburgh-based international oil and gas company Cairn Energy said on Tuesday its first-half revenue fell 20% to $214.9 million and it swung to a loss of $324 million.

Cairn reported impairment charges of about $240 million, with $207 million of that against Senegal assets and $33 million against UK producing assets.

Cairn said in July it agreed to sell its Senegal interests for up to $400 million and intends to return at least $250 million to shareholders as a special dividend after the sale.

“The fall in revenue reflects the reduction in the oil price during the period due to oversupply from the ‘OPEC plus’ group of producers combined with demand destruction resulting from the global COVID-19 pandemic,” said Cairn.

Cairn said its net oil production during the first half of its year averaged 22,400 barrels of oil per day “at top end of full year guidance.”

Full year oil production guidance is for between 21,000 and 23,000 barrels of oil per day net.

On its long-running arbitration claim against the Government of India, Cairn said: “The Arbitral Tribunal has indicated that it expects to be in a position to issue a ruling after the end of the summer of this year …

“Cairn continues to have a high level of confidence in the merits of its claims in the arbitration and is seeking full restitution for losses of more than US$1.4 billion resulting from: the expropriation of its investments in India in 2014; continued attempts to enforce retrospective tax measures; and the failure to treat the company and its investments fairly and equitably.”

Cairn Energy CEO Simon Thomson said: “We have successfully managed the business through a challenging external environment, always ensuring that the safety of our people is paramount. 

“We took early action with significant reductions and deferrals to the capital programme. 

“Alongside the sale of interests in both Norway and Senegal, we have realigned the portfolio and demonstrated Cairn’s continued commitment to shareholder returns. 

“With a strong net cash position and limited capital commitments, Cairn is well-positioned to deliver further value for shareholders.”