Cairn Energy rebounds into first-half net profit

24th August 2010, Comments 0 comments

Scottish oil and gas explorer Cairn Energy, which recently agreed to sell a majority stake in its Indian division to rival Vedanta, said Tuesday that it bounced back into net profit in the first half.

Net profits stood at 27.7 million dollars (21.0 million euros) in the six months to the end of June, which compared with a net loss of 76.1 million dollars in the same period of the previous year.

Cairn added that it has discovered gas in its first well in offshore Greenland, with indications that there may be other hydrocarbon resources in the area.

The company added that the Cairn India deal would allow it to pursue activities in Greenland.

"In line with Cairn's long-held strategy of adding and realising value, the transaction with Vedanta will result in a substantial return of cash to shareholders whilst ensuring the company has the financial flexibility to pursue its multi-basin exploration strategy in Greenland," said Cairn chief executive Bill Gammell in the earnings release.

"I am encouraged that we have early indications of a working hydrocarbon system with our first well in Greenland, confirming our belief in the exploration potential. We look forward to assessing the results of the remainder of the 2010 drilling programme."

Vedanta Resources had agreed last week to pay up to 9.6 billion dollars for a 51-60 percent stake in Cairn India, whose most important asset is the oil-rich Mangala field in the western state of Rajasthan.

However, in earlier Mumbai trading on Tuesday, Cairn India's share price surged by nearly 6.0 percent on speculation that state-run fuel firms may counterbid against Vedanta's offer.

© 2010 AFP

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