London: UK's Cairn Energy plc on Tuesday reported a massive drop in its 2012 net profit as oil output fell, and said that it has bought stake in three oil block off Senegal in West Africa.
Net profit in 2012 was USD 72.6 million, compared with USD 4.56 billion profit in 2011, Cairn said in a statement.
The big profit in 2011 was mostly on account of the company selling majority stake in its Indian unit, Cairn India to mining group Vedanta Resources.
Cairn had net cash of about USD 1.6 billion at the end of last year. It still holds 10 percent of Cairn India, valued at about USD 1.1 billion.
"We are very happy with the balance we have created in the portfolio," Cairn Energy Chief Executive Officer Simon Thomson said. "We are well positioned to continue our strategy in 2013 and beyond."
Cairn said it bought a 65 percent working interest in three offshore blocks in Senegal from FAR Ltd and will become the operator.
The company plans to drill at least one well in the next 18 months in the area that has prospects of more than 1.5 billion barrels of oil.
The three contiguous blocks - Rufisque, Sangomar and Sangomar Deep - are currently operated by FAR with Senegal national oil company Petrosen. FAR is an independent Australian Securities Exchange listed oil and gas explorer with exploration interests which include West and East Africa.
"As part of the transaction Cairn will also pay 72.2 percent of costs incurred on the blocks by FAR to date, a total of about USD 10 million," the company said.
The three blocks cover an area of 7,490 sq km near shore to deep water exploration over the shelf, slope and basin floor of the Senegalese portion of the productive Mauritania- Senegal-Guinea-Bissau Basin.
The acreage is covered by a 2,050 sq km 3D seismic survey and a number of play types, leads and prospects have been identified.
While continuing to expand in the North Sea where it is drilling four wells this year, Cairn will drill two to four wells in Morocco.
The Edinburgh-based firm in 2011 sold its 40 percent stake in Cairn India to Vedanta in 2011, raising net proceeds of about USD 5.4 billion. That allowed it to return about USD 3.5 billion to shareholders in February 2012.
It subsequently sold another 11.5 percent of its Cairn India stake last year for a net cash consideration of USD 1.3 billion, taking its holding to a total of about 10 percent.
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.
First Published: Tuesday, March 19, 2013, 17:40