Cairn reports $82 million loss after Bangla reserves downgrade

Mumbai: British oil firm Cairn Energy posted a net loss of $82 million in 2006, after writing down the value of its Sangu field operations in Bangladesh.

The Edinburgh-based company, which floated its Indian arm, Cairn India, last December, made a post-tax loss of $82 million last year, compared with a profit of $79 million in 2005.

This was primarily due to a $71.5 write-down on the value of its reserves in Sangu, Bangladesh, and costs associated with its Indian IPO.

Sangu, which yielded a steady supply of gas since production started in 1998, is now on the wane and Cairn has been forced to reduce its forecast its gas reserves there by 26 billion cubic feet.

Cairn's production of oil and gas fell by 13.2 per cent last year, although its revenues rose by 9 per cent thanks to the increase in oil prices.

Cairn also raised $1.98 million (£1 billion) in an initial public offer for its Indian operations of which £481 million is being returned to shareholders. Cairn, which retained 69.5 per cent of Cairn India, plans to declare an expected gain of $1.1 billion from the IPO in its 2007 results.