RNS Number:2069P
Cairn Energy PLC
01 September 2003
EMBARGOED UNTIL 0700
1 September 2003
CAIRN ENERGY PLC
INTERIM RESULTS ANNOUNCEMENT
HIGHLIGHTS
Financial
* Record production of 30,625 boepd (H1 2002: 21,272 boepd)
* Average price received per boe $22.44 (H1 2002: $20.01 per boe)
* Profit before tax up 86% to #38.4m (H1 2002: #20.6m)
* Profit after tax up 69% to #26.3m (H1 2002: #15.6m)
* Operating cash flow up 59% to #63.2m (H1 2002: #39.8m)
* Gearing at 4% (H1 2002: 15%)
Operational
* Extensive exploration, appraisal and development campaign ongoing in India
* Gauri gas development progressed and Gauri GA-3 well tested oil at 5,270 bopd
* Saraswati appraisal and testing programme commenced
* Two further rigs contracted for multi-well exploration programme in Rajasthan
* Proposed acquisition of Shell's upstream assets in Bangladesh
* Five new exploration blocks in Nepal under negotiation
Bill Gammell, Chief Executive, commented:
"The first half of 2003 was characterised by record production, strong financial
results and continuous operations focused on advancing the commercialisation of
our interests in Gujarat and Rajasthan.
The Gauri gas development is progressing on schedule with gas production
expected to commence in the first half of 2004 and an extensive exploration and
appraisal drilling programme in Rajasthan is underway. The proposed acquisition
of Shell's upstream assets in Bangladesh will provide Cairn with significant
additional reserves, production and revenues from the Sangu gas field.
Cairn continues to be confident in the investment potential of South Asia."
Enquiries to:
Cairn Energy PLC:
Bill Gammell, Chief Executive Tel: 07785 557 310
Kevin Hart, Finance Director Tel: 07771 934 974
Dr Mike Watts, Exploration Director Tel: 07768 631 328
Brunswick Group Limited:
Patrick Handley, Catherine Bertwistle, Mark Antelme Tel: 0207 404 5959
CHAIRMAN'S STATEMENT
OVERVIEW
Cairn's declared strategy is to achieve commercial reserves from material
positions in high potential exploration plays in order to create and deliver
shareholder value. This strategy is further defined by concentrating our
efforts and activities on South Asia, where the Group holds significant
exploration and production positions in both India and Bangladesh.
During the first half of 2003 Cairn's operational activity has been
predominantly focused in Western India on its oil and gas interests in Gujarat
and Rajasthan.
Gujarat
In Gujarat, the Lakshmi gas field has been on production since November 2002 and
the Gauri gas development project is progressing well with first gas production
expected in the first half of 2004. Development drilling at Gauri has been
successfully integrated with a plan to appraise the underlying oil reservoirs in
the field. Four gas development wells were drilled, one of which (GA-3) tested
oil at a rate of 5,270 bopd in August 2003. The GA-3 well has now been
re-designated as an oil producer and a replacement gas well (GA-5) is currently
operating.
In addition, three appraisal wells were drilled on the Lakshmi field during the
first half of 2003 to evaluate further the oil potential. A phased development
programme for Gauri and Lakshmi oil is being considered with initial oil
production from one or two wells to be flowed through the gas system. Subsequent
oil development phases will depend on the success of these wells.
An onshore exploration prospect has emerged from the evaluation of the 2003
seismic survey acquired in the eastern part of Block CB/OS-2. It is planned to
drill this onshore prospect, which lies only a few kilometres from the Suvali
processing plant, in late 2003 or early 2004. The seismic also confirmed a
likely small extension of the Gauri field north of the Hazira block and options
for drilling this extension are currently under consideration.
Rajasthan
In Rajasthan, Cairn's extensive exploration and appraisal programme continues at
pace. Over 30 additional exploration prospects have been identified on Block
RJ-ON-90/1 following seismic interpretation. Cairn has contracted two medium
depth drilling rigs for a minimum period of one year to accelerate the
multi-well drilling campaign on the block.
An exploration well is currently operating on prospect N-Q, which has deep
targets and is located ten kilometres to the west of the existing Saraswati
discovery. The well has already encountered and logged hydrocarbons at a
relatively shallow depth out-with structural closure in what appears to be a
stratigraphic trap. Importantly, the previous Raageshwari and Guda discoveries
also found hydrocarbons at this shallow level. There is the potential for a
large stratigraphic play across much of the central part of the basin and this
play concept will be tested by new exploration and appraisal drilling.
Cairn also commenced an extended well test on the Saraswati field in August
2003. The first interval to be tested (the Fatehgarh) was flowed for thirteen
days at an average stabilised rate of 470 bopd with no water and the produced
oil was sold at the wellhead. The second interval (the Barmer Hill), which
previously tested at 1,400 bopd, will also be the subject of an extended well
test to be carried out in September 2003.
KG Basin
In Eastern India, the Ravva field continues to produce on plateau and two
exploration wells are planned on Ravva during 2004, subject to partner
approvals. An exploration well on Block KG-OS/6 is planned for late 2003 to
re-drill prospect 6, subject to confirmation of an extension to the final
exploration phase of the block. Cairn continues to seek a partner for Block
KG-DWN-98/2.
Nepal
In July 2003 Cairn submitted bids on a 100% basis for five exploration blocks in
Nepal. These bids have been accepted and are under negotiation. All of the
blocks are located within the Terai plains that lie adjacent to Nepal's BORDER=
"0" with India.
Transactions
Cairn's operational achievements this year have been significantly augmented by
two recent corporate transactions firstly to significantly increase the Group's
position in Bangladesh and secondly to dispose of the Group's non-core Dutch
interests.
Cairn announced in early August 2003 that it had entered into a non-legally
binding Letter of Intent with Shell to acquire its upstream interests in
Bangladesh. The acquisition remains subject to shareholder approval and the
consent of the Government of Bangladesh. This key transaction is expected to
provide strong financial returns to the Group as well as materially enhancing
shareholder value. Production from the Sangu gas field continues to increase and
averaged 156 mmscfd during the first half of 2003, excluding a 15 day shut-in
period.
Cairn also disposed of its interests in the Dutch sector of the North Sea to
Dyas B.V. during August 2003. The disposal of these interests will further
reduce borrowings and provide the Group with additional working capital to
progress projects in its core area of South Asia.
RESULTS AND FINANCIAL PERFORMANCE
Record levels of production, buoyant product prices and low production costs
have contributed to strong cash flow and profitability during the period which,
combined with low levels of gearing, continue to ensure that the Group has a
robust financial base to support its extensive operational activities.
% Increase/
Key Statistics H1 2003 H1 2002 (Decrease)
Production (boepd) 30,625 21,272 44
Average price per boe ($) 22.44 20.01 12
Turnover (#m) 78.6 53.7 46
Average production costs per boe (#) 2.49 3.70 (33)
Profit before tax (#m) 38.4 20.6 86
Profit after tax (#m) 26.3 15.6 69
Earnings per share - diluted (p) 17.9 10.7 67
Operating cash flow (#m) 63.2 39.8 59
Gearing (%) 4 15 (73)
Average daily production was a record 30,625 boepd representing a 44% increase
year on year (H1 2002: 21,272). The average oil price realised for the first
half of 2003 was $22.44 per boe compared with $20.01 per boe for the equivalent
period in 2002.
Turnover increased by 46% year on year to #78.6m (H1 2002: #53.7m). The Group
generated a profit before tax of #38.4m (H1 2002: #20.6m). Average production
costs for the period were #2.49 per boe (H1 2002: #3.70 per boe).
Average cost of sales were #6.11 per boe, down 7% on the same period last year
(H1 2002: #6.58 per boe) due to an overall reduction in production costs per
boe, which is partially offset by an increased depletion charge following the
transfer of certain historic exploration costs to the depletable cost pool.
Administrative expenses for the period were #5.3m (H1 2002: #6.1m). Net
interest payable was #1.0m (H1 2002: #1.2m), including a foreign currency
exchange loss of #0.2m (H1 2002: #0.1m).
The majority of the #12.1m tax charge (H1 2002: #5.0m) arises on profits in
India. Profit after tax for the period was #26.3m (H1 2002: #15.6m).
The Group's operating cash flow was very strong over the period at #63.2m (H1
2002: #39.8m). Cash outflow from capital expenditure during the first half
totalled #39.5m (H1 2002: #54.7m), comprising #19.0m exploration expenditure,
#20.0m development expenditure and #0.5m other expenditure.
As a consequence of the capital expenditure undertaken, the Group had drawn
$47.5m under its existing facilities as at 30 June 2003, resulting in Group net
debt of #12.8m (H1 2002: #49.4m). This represents gearing of 4% at 30 June 2003.
OPERATIONS
INDIA
Western India
Production
Lakshmi & Gauri Developments, Block CB/OS-2 (Cairn 50% and operator)
The Lakshmi gas field commenced production in November 2002 and average sales
from the field for the first half of 2003 were 106 mmscfd. Development of the
neighbouring satellite Gauri gas field is progressing according to schedule. The
offshore Gauri jacket was installed in April and the development drilling
programme is almost complete.
Gas production from Gauri is expected to commence in the first half of 2004 via
the Lakshmi gas gathering system. Gauri gas can therefore be sold under the
existing gas sales contracts with GTCL and GPEC in respect of Lakshmi. In
addition, the plateau period of the gas sales contract with GPEC has been
extended from three years to five years.
Exploration and Appraisal (Cairn 75% and operator)
The Gauri gas development drilling programme incorporated the deepening of
development wells in order to appraise the underlying oil reservoir. In
particular, the GA-3 well discovered oil bearing sands which subsequently tested
at 5,270 bopd. As a consequence, this well has been re-designated as an oil
producer and a replacement gas development well, GA-5, is currently operating.
On Lakshmi, three oil appraisal wells were drilled during the first half of 2003
in the extreme north and west of the field. The results of these wells have
indicated the presence of numerous oil reservoirs with gas caps but have
highlighted the complexity of the reservoirs.
A phased oil development programme for Gauri and Lakshmi is currently being
considered with initial production from the Gauri GA-3 well and a re-drill of
the Lakshmi LA-2 well, which tested at a cumulative rate of 10,500 bopd. The
produced oil from Gauri will be co-mingled with gas and flowed through a planned
12 inch gas pipeline from Gauri to Lakshmi. The combined oil from Gauri and
Lakshmi will then flow through the 24 inch gas pipeline to Suvali. In the event
of continued success from these phase one oil wells, the development programme
will be expanded to incorporate further phases and ultimately, if warranted, a
dedicated oil pipeline to shore will be constructed.
An exploration well on the western margin of the block was plugged and abandoned
in April after encountering thick reservoir sands with only residual oil
saturations. Cairn's exploration programme is now entirely focused on the
established hydrocarbon producing and more prospective eastern margin of the
block.
The 2003 seismic programme has confirmed an extension of the Gauri field north
of the Hazira block in the area of the Shell LNG terminal which is currently
under construction. Options for the drilling of this extension are currently
being considered. The seismic has also demonstrated an onshore prospect located
four kilometres from Suvali and up-dip from the producing Bandhut oil field. It
is planned to drill this onshore exploration prospect in late 2003 or early
2004.
Block RJ-ON-90/1, Rajasthan Basin (Cairn 100% and operator)
In Rajasthan, exploration and appraisal activity continues in parallel.
The 2003 2D seismic programme has identified a number of prospects in the
northern half of the block, bringing the total number of prospects identified in
the basin to date to over 30.
Two appraisal wells have been drilled on the Saraswati field during 2003, one
down-dip in the same compartment as the discovery well and one in a small fault
block to the north. These wells have extended the known oil column in the field
to more than 300 metres, although they did encounter poorer or tighter
reservoirs than in the original discovery well.
An extended well test commenced on the S-1 discovery well during August 2003.
The first interval to be tested was the Fatehgarh which produced stable oil flow
for thirteen days at a rate of 470 bopd with no water prior to being shut-in for
pressure testing. The oil produced was sold at the wellhead and trucked by the
buyer. The second interval, which is to be tested during September 2003, is the
Barmer Hill section. This previously flowed 1,400 bopd of 42 degree API oil in
the discovery well. A stimulation programme, including fraccing, will be carried
out on the S-2 appraisal well during October 2003. If this stimulation is
successful, a similar programme will be carried out on the S-3 appraisal well. A
3D seismic survey has recently been acquired over the Saraswati field in order
to plan for further appraisal drilling.
In February 2003, an exploration well in the centre of the basin discovered the
Raageshwari oil and gas field. The discovery well tested at a cumulative rate of
200 bopd and was followed by a successful oil step-out well in March 2003. The
oil down to has so far established a 120 metre oil column and further appraisal
drilling is planned to commence in Q4 2003.
Additional exploration drilling this year has included a well on a prospect
located on the eastern flank of the basin, which was plugged and abandoned as a
dry hole in July and a subsequent well on the N-Q prospect in the centre of the
basin. The N-Q well, which is located ten kilometres to the west of S-1, is
currently operating. This well has already encountered and logged hydrocarbons
at the Thumbli level which occurs at a relatively shallow depth outside of
structural closure. The previous Raageshwari and Guda discoveries also found
hydrocarbons at the Thumbli level, but within structural closure. There is the
potential for a large stratigraphic play across much of the central part of the
basin and this play concept will be tested by new exploration and further
appraisal wells.
Two medium depth drilling rigs are scheduled to arrive early in Q4 2003 to
accelerate the multi-well drilling campaign already underway on the block.
Additional rigs may be contracted in 2004 in the event of continued drilling
success.
Eastern India - Krishna-Godavari Basin
Production
Ravva (Cairn 22.5% and operator)
The Ravva oil and gas field remains on plateau production and average gross
daily production for the first half of 2003 was 50,598 bopd and 71 mmscfd (H1
2002: 51,391 bopd and 66 mmscfd). The highest daily offtake to date was 72,754
boepd, taken on 3 July 2003.
Exploration
Ravva (Cairn 22.5% and operator)
The interpretation of the 2001/2002 3D seismic over Ravva has high graded 13
exploration prospects. In order to test some of these prospects two exploration
wells are planned for 2004, one to be drilled as a deviated well from an onshore
location and one as a vertical offshore well.
Block KG-OS/6 (Cairn 50% and operator)
The Government of India has indicated that it will grant an extension to the
final exploration phase of Block KG-OS/6 and it is currently intended that
prospect 6, a Miocene tilted fault block similar to those producing at Ravva,
will be re-drilled during the period of the extension.
Block KG-DWN-98/2 (Cairn 100% and operator)
Following a successful exploration programme in 2001, Cairn is currently seeking
to bring in a value adding partner to optimise forward plans for Block KG-DWN-98
/2. It is anticipated that exploration and appraisal drilling on this block
will resume in 2004.
NELP-IV
The Indian Government commenced the fourth round of its new exploration
licensing policy this year with a bid submission deadline of 30 September 2003.
Cairn expects to bid for additional exploration acreage in NELP-IV.
BANGLADESH
Further information on the proposed acquisition of Shell's upstream assets in
Bangladesh will be included in a circular to shareholders to be posted following
signature of legally binding agreements between Cairn and Shell. It is currently
anticipated that this will occur during September 2003. The circular will
contain a Competent Person's Report prepared by Reservoir Management Limited
including estimated remaining proven and proven plus probable reserves and
associated valuations in respect of Shell's 37.5% interest in Sangu.
Production
Sangu Development Area, Block 16 (Shell operator, Cairn 37.5%)
During the first half of 2003, gross daily offtake from the Sangu gas field
averaged 136 mmscfd (H1 2002: 135 mmscfd). Production was shut-in for 15 days
for remedial pipeline activity and average production excluding this period was
156 mmscfd. The realised gas price for the period was $2.92/mcf (H1 2002: $2.92/
mcf). Annual production from the field has risen steadily since its inception in
1998 and this trend is expected to continue.
Block 16 exploration rights have expired and discussions are ongoing with
Petrobangla and the Government of Bangladesh with a view to extending the
exploration period for certain parts of the block. The Sangu Development Area is
retained for 30 years from January 1997, the anniversary of the approval of the
development plan.
Exploration
Blocks 5 and 10 (Shell Bangladesh operator, Cairn 45%)
Production sharing contracts for Blocks 5 and 10 were entered into in July 2001.
It has been agreed with the Government of Bangladesh that, during the first five
years following signature, commitment exploration wells will not have to be
drilled on the blocks until there is a demonstrable market for any gas that may
be discovered. It is intended that a seismic programme will be carried out over
both blocks commencing later in 2003.
NORTH SEA
Average net production from Cairn's non-core interests in the North Sea during
the first half of 2003 was 2,238 boepd (H1 2002: 3,117 boepd).
Cairn announced in August 2003 that it had disposed of its interests in the
Dutch North Sea. The Group continues to hold a 10% interest in the Gryphon field
in the UK North Sea.
RESERVES
An additional 7 mmboe of reserves were booked at 30 June 2002 in respect of
Gauri. The table below shows the movement in reserves, incorporating
production, on a direct entitlement basis for the Group since 31 December 2002.
Reserves as at Reserves as at
30 June 2003 31 December 2002
mmboe mmboe
North Sea 3.6 3.8
South Asia 83.5 83.2
Total 87.1 87.0
On a direct working interest basis, reserves as at 30 June 2003 totalled 127.6
mmboe, compared to 126.3 mmboe at 31 December 2002.
SCHEME OF ARRANGEMENT
The scheme of arrangement to introduce a new holding company to the Group became
effective on 19 February 2003. The new holding company was originally called
New Cairn Energy PLC and was renamed Cairn Energy PLC when the scheme became
effective. The former Cairn Energy PLC was renamed Cairn Energy Bangladesh PLC
at the same time.
BOARD OF DIRECTORS
I am pleased to report that Todd Hunt was appointed to the Board as a
non-executive director in May 2003. His appointment has provided invaluable
additional onshore operational expertise to the organisation.
OUTLOOK
The primary source of value creation for Cairn remains successful exploration in
its key focus area of South Asia and the Group will continue to focus on
opportunities in this region which have the potential for material shareholder
value addition. In particular, the ongoing drilling programme in Western India
has the potential to substantially increase Group oil and gas reserves in the
short term.
Finally, the Group has achieved extremely robust financial results during the
first half and the financial outlook for the second half of 2003 is very
positive.
Norman Murray
Chairman
1 September 2003
GLOSSARY OF TERMS
The following are the main terms and abbreviations used in the Chairman's
Statement:-
Corporate
Board the Board of Directors of Cairn Energy PLC
Cairn the Company and/or its subsidiaries as appropriate
Company Cairn Energy PLC
GTCL Gujarat Gas Trading Company Limited
GPEC Gujarat Powergen Energy Corporation Limited
Group the Company and/or its subsidiaries as appropriate
ONGC Oil & Natural Gas Corporation Ltd. (Indian state oil and gas
company)
Petrobangla Bangladesh Oil, Gas & Mineral Corporation
(Bangladesh state oil and gas company)
Shell Shell International Exploration and Development B.V. and/or its
affiliates as appropriate
Technical
API American Petroleum Institute units as a measure of oil specific
gravity
boe barrels of oil equivalent
boepd barrels of oil equivalent per day
bopd barrels of oil per day
LNG liquefied natural gas
/mcf per thousand cubic feet of gas
mmscfd million standard cubic feet of gas per day
Notes:
This announcement contains forward looking statements which reflect Cairn's
expectations regarding future events. Forward looking statements involve risks
and uncertainties. Actual events could differ materially from those projected
herein and depend on a number of factors including the uncertainties relating to
oil and gas exploration and production and sale of oil and gas.
An interim results presentation to be given to analysts and shareholders by the
Executive Directors will be made available on the Company's website at
www.cairn-energy.plc.uk as soon as possible after the release of this
announcement.
Consolidated Profit and Loss Account (Unaudited)
For the six months to 30 June 2003
------------------------- ------ ---------- --------- ----------
Six Six Year
months months ended
to 30 to 30 31
June June December
2003 2002 2002
Notes #'000 #'000 #'000
------------------------- ------ ---------- --------- ----------
Turnover 78,586 53,669 109,878
Cost of sales
Production costs (13,797) (13,956) (28,285)
Depletion (19,370) (10,848) (24,215)
Decommissioning charge (683) (233) (917)
------------------------- ------ ---------- --------- ----------
Gross profit 44,736 28,632 56,461
Exceptional write (off)/back of oil - (787) 1,146
and gas assets
Administrative expenses (5,321) (6,062) (11,930)
------------------------- ------ ---------- --------- ----------
Operating profit 39,415 21,783 45,677
Interest receivable and similar 201 366 1,110
income
Interest payable and similar charges (1,228) (1,573) (2,983)
------------------------- ------ ---------- --------- ----------
Profit on ordinary activities before 38,388 20,576 43,804
taxation
Taxation on profit on ordinary activities
- current (2,189) (1,527) (4,459)
- deferred (9,940) (3,447) (12,861)
------------------------- ------ ---------- --------- ----------
(12,129) (4,974) (17,320)
Profit for the period 26,259 15,602 26,484
------------------------- ------ ---------- --------- ----------
Earnings per ordinary share - basic 1 17.93p 10.79p 18.25p
Earnings per ordinary share - 2 17.86p 10.72p 18.16p
diluted
------------------------- ------ ---------- --------- ----------
Notes:
1. The basic earnings per ordinary share is calculated on a profit of
#26,259,000 (H1 2002: #15,602,000) on a weighted average of
146,472,002 (H1 2002: 144,625,284) ordinary shares.
2. The diluted earnings per ordinary share is calculated on a
profit of #26,259,000 (H1 2002: #15,602,000) on 146,988,039 (H1 2002:
145,481,560) ordinary shares, being the basic weighted average of 146,472,002
(H1 2002: 144,625,284) ordinary shares and the dilutive potential ordinary
shares of 516,037 (H1 2002: 856,276) ordinary shares relating to share options.
3. No dividend has been declared.
Consolidated Statement of Total Recognised Gains and Losses (Unaudited)
For the six months to 30 June 2003
Six months Six months Year ended
to 30 June to 30 June 31
December
2003 2002 2002
#'000 #'000 #'000
------------------------- ---------- ----------- -----------
Profit for the period 26,259 15,602 26,484
Unrealised foreign exchange differences (8,363) (12,573) (26,994)
------------------------- ---------- ----------- -----------
Total recognised gains and losses 17,896 3,029 (510)
relating to the period
------------------------- ---------- ----------- -----------
Prior year adjustment - (9,465) (9,465)
------------------------- ---------- ----------- -----------
Total gains and losses recognised since 17,896 (6,436) (9,975)
last Annual Report
------------------------- ---------- ----------- -----------
Reconciliation of Movements in Shareholders' Funds (Unaudited)
For the six months to 30 June 2003
Six months Six months Year ended
to 30 June to 30 June 31
December
2003 2002 2002
#'000 #'000 #'000
Total recognised gains and losses 17,896 3,029 (510)
relating to the period
New shares issued in respect of employee 654 - -
share options
(Cairn Energy PLC)
New shares issued in respect of employee - 806 902
share options (Cairn Energy Bangladesh
Limited)
----------------------------------------- -------- ---------- ---------
Net additions to shareholders' funds 18,550 3,835 392
Opening shareholders' funds 326,782 326,390 326,390
----------------------------------------- -------- ---------- ---------
Closing shareholders' funds 345,332 330,225 326,782
----------------------------------------- -------- ---------- ---------
Notes:
1. Prior year adjustment in 2002 relates to the change in accounting
policy arising from the implementation of FRS19 Deferred Taxation.
2. The opening shareholders' funds at 1 January 2002, before deducting
the prior year adjustment of #9,465,000, were #335,855,000.
3. The comparative figures in the Reconciliation of Movements in Shareholders'
Funds have been restated in accordance with the principles of merger
accounting, due to the impact of the scheme of arrangement. This is fully
explained in the note to the accounts following the primary statements.
Consolidated Balance Sheet (Unaudited)
As at 30 June 2003
Six months Six months Year ended
to 30 June to 30 June 31
December
2003 2002 2002
#'000 #'000 #'000
Fixed assets
Exploration assets 173,038 217,233 207,106
Development/producing assets 244,718 200,459 193,554
Other fixed assets 1,924 1,949 1,915
Investments 4,775 5,582 5,229
----------------------------------- ------------ ----------- -----------
424,455 425,223 407,804
Current assets
Debtors 61,521 35,053 60,503
Cash at bank 15,989 9,380 13,494
----------------------------------- ------------ ----------- -----------
77,510 44,433 73,997
Creditors: amounts falling due within 49,183 37,130 43,199
one year
----------------------------------- ------------ ----------- -----------
Net current assets 28,327 7,303 30,798
----------------------------------- ------------ ----------- -----------
Total assets less current liabilities 452,782 432,526 438,602
Creditors: amounts falling due after 19,967 39,764 35,848
more than one year
Provisions for liabilities and charges 17,646 12,510 17,481
Deferred taxation 70,107 50,027 58,491
----------------------------------- ------------ ----------- -----------
Net assets 345,332 330,225 326,782
----------------------------------- ------------ ----------- -----------
Capital and reserves - equity
interests
Called-up share capital 14,942 14,891 14,891
Share premium 603 - -
Other reserves 98,637 98,541 98,637
Capital reserves - non distributable 26,231 26,231 26,231
Capital reserves - distributable 35,254 35,254 35,254
Profit and loss account 169,665 155,308 151,769
----------------------------------- ------------ ----------- -----------
Shareholders' funds 345,332 330,225 326,782
----------------------------------- ------------ ----------- -----------
Notes:
1. The disclosed figures are not statutory accounts in terms of section 240 of
the Companies Act 1985. Statutory accounts for the year ended 31 December
2002, on which the auditors gave an unqualified report, have been filed with
the Registrar of Companies.
2. The comparative figures in 'Capital and reserves' have been restated in
accordance with the principles of merger accounting, due to the impact of
the scheme of arrangement. This is fully explained in the note to the
accounts following the primary statements.
Consolidated Statement of Cash Flows (Unaudited)
For the six months to 30 June 2003
Six months Six months Year ended
to 30 June to 30 June 31
December
2003 2002 2002
#'000 #'000 #'000
Net cash inflow from operating 63,168 39,782 72,097
activities ----------- ----------- -----------
Returns on investments and servicing of
finance
Interest received 201 366 745
Interest paid (602) (1,051) (2,163)
----------- ----------- -----------
(401) (685) (1,418)
Taxation (2,913) (1,718) (4,488)
Capital expenditure and financial
investment
Purchase of exploration assets (18,961) (17,297) (28,814)
Purchase of development/producing (20,047) (33,455) (40,016)
assets
Purchase of other fixed assets (477) (461) (1,127)
Purchase of fixed asset investments - (3,439) (3,439)
Sale of other fixed assets 6 - 36
----------- ----------- -----------
(39,479) (54,652) (73,360)
Equity dividends paid - - -
----------- ----------- -----------
Net cash inflow/(outflow) before use of 20,375 (17,273) (7,169)
liquid resources and financing
Management of liquid resources1
Cash on short term deposit (3,481) (2,135) (1,806)
Financing
Issue of shares 654 806 902
Debt draw-downs 12,636 19,952 67,172
Repayment of debt (31,130) - (52,724)
----------- ----------- -----------
(17,840) 20,758 15,350
----------- ----------- -----------
(Decrease)/increase in cash in the (946) 1,350 6,375
period ----------- ----------- -----------
Note:
1.Short term deposits of less than one year are disclosed as liquid resources.
Reconciliation of Operating Profit to Operating Cashflows (Unaudited)
For the six months to 30 June 2003
Six months Six months Year ended
to 30 June to 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Operating profit 39,415 21,783 45,677
Depletion and depreciation 19,847 11,359 25,368
Decommissioning charge 683 233 917
Amortisation of long term incentive plan 451 1,280 1,678
Exceptional write-off/(back) of oil and - 787 (1,146)
gas assets
Working capital movement 3,230 5,792 (2,588)
Other provisions 355 404 4,693
Gain on sale of other fixed assets (1) - (12)
Foreign exchange differences (812) (1,856) (2,490)
---------- ----------- -----------
Net cash inflow from operating 63,168 39,782 72,097
activities ---------- ----------- -----------
Notes to the Accounts (Unaudited)
For the six months to 30 June 2003
1. Accounting Policies
The scheme of arrangement to introduce a new holding company to the Group became
effective on 19 February 2003 ("the scheme date"). Accordingly, Cairn Energy PLC
(formerly New Cairn Energy PLC) became the ultimate parent company in the Group,
having acquired 100% of the issued share capital of Cairn Energy Bangladesh
Limited (formerly Cairn Energy PLC and Cairn Energy Bangladesh PLC).
The scheme of arrangement has been accounted for in accordance with the
principles of merger accounting and the requirement under section 227(6) of the
Companies Act 1985 that the accounts give a true and fair view of the Group's
results. The consolidated accounts are presented as if the scheme of
arrangement had been effected on 1 January 2002, and correspondingly the
comparatives have been adjusted to reflect this change. In the Balance Sheet
comparatives, share capital has been restated to the share capital as at the
scheme date (#14,891,260.90) and the share premium and capital redemption
reserve of Cairn Energy Bangladesh Limited have been re-classified as 'Other
reserves' in accordance with the principles of merger accounting. The overall
total values of shareholders' funds in the comparatives have not changed from
those previously disclosed.
INDEPENDENT REVIEW REPORT TO CAIRN ENERGY PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2003 which comprises Consolidated Profit and Loss
Account, Consolidated Statement of Total Recognised Gains and Losses,
Reconciliation of Movements in Shareholders' Funds, Consolidated Balance Sheet,
and Consolidated Statement of Cash Flows. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the Company in accordance with guidance Bulletin
1999/4 'Review of interim financial information' issued by the Auditing
Practices Board. To the fullest extent permitted by the law, we do not accept or
assume responsibility to anyone other than the Company, for our work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information', issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and based thereon, assessing
whether the accounting policies and presentation have been consistently applied
unless other wise disclosed. A review excludes audit procedures such as the
test of controls and verification of assets, liabilities and transactions. It
is substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
Ernst & Young LLP
London
1 September 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UKOWROORWUAR