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Cairn Energy yesterday stopped its $300 million share buyback programme as it resolves a tax dispute with the authorities in India.
The Edinburgh-based oil and gas explorer also revealed it racked up losses of more than $1 billion last year as it wrote down the value of its assets and counted the cost of exploration in the North Sea and Morocco.
Cairn has returned almost $95m to investors through its share buyback programme, but is halting further purchases while talks continue with India’s income tax department. It has also been prevented from selling its 10 per cent stake in former subsidiary Cairn India, valued at about $1bn.
Chief executive Simon Thomson said “We instituted the buyback with the ambition of buying back up to $300m of stock, to be reviewed quarterly. We’d prefer to be buying stock, but it’s prudent for us, given the uncertainty of the tax issue in India, to suspend the buyback.”
The firm will next month send information requested by the tax authorities.
He added: “There’s a lot of work for us to gather that information, which dates back to 2006, and there’s a fairly fluid timescale in relation to how long the tax authorities may have to respond to that. We’re 100 per cent focused on getting this resolved ”
The suspension of the buyback programme sent Cairn’s shares downwards, and they ended the day down 14.4 per cent at 168.2p. The move came as Cairn revealed deeper pre-tax losses from continuing operations of $1.1bn for 2013, compared with $194.2m the previous year, as it suffered write-downs and increased costs of exploration.
On Monday, the firm said it had abandoned a well off the coast of Morocco, where failed exploration efforts cost it $107m last year. The firm also took an $81m hit from dry wells in the UK and Norwegian sectors of the North Sea.
Cairn, which has put its exploration plans in Greenland on ice to focus on the North Sea and Atlantic Margin,…Continue
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