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Cairn Energy posts slumping 2012 net profits

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(Globalpost/GlobalPost)

British oil and gas explorer Cairn Energy said on Tuesday that net profits slumped last year as income from oil output fell sharply after the group slashed its stake in Cairn India.

Edinburgh-based Cairn said in a statement that earnings after taxation sank to $72.6 million (56.1 million euros) in 2012.

That compared with a far larger net profit of $4.1 billion in 2011 following the agreed sale of the majority of its Indian division to Vedanta Resources.

Cairn had agreed to sell its 40-percent stake to Vedanta in 2011, raising net proceeds of about $5.4 billion. That allowed it to return about $3.5 billion to shareholders in February 2012.

The group subsequently sold another 11.5 percent of its Cairn India stake last year for a net cash consideration of $1.3 billion, taking its holding to a total of about ten percent.

"During 2012 Cairn delivered on its main strategic goal of positioning the company for future growth," it said in the earnings release.

"The distribution of $3.5 billion to shareholders early in the year marked the culmination of a $4.5 billion capital return to shareholders over the past five years.

"The distribution also reduced the company's equity base, re-gearing it to frontier exploration success."

Cairn said that its 2012 profit after tax also reflected foreign exchange gains and other finance income, and the net profit on the disposal of financial assets. This was partly offset by costs of unsuccessful exploration activities and administration costs.

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http://www.globalpost.com/dispatch/news/afp/130319/cairn-energy-posts-slumping-2012-net-profits