Scots oil group Cairn Energy has selved its share buyback programme after exploration costs saw it post more than £330million in losses last year.
The firm, which is one of the major partners in the plans to develop the £4billion Kraken field east of Shetland, saw increased costs for unsuccessful exploration work in the North Sea and beyond reach £128million last year.
Shares in the Scots company fell by as much as 8.1 percent to 180.6p this morning, the lowest since January 2004.
The news comes as the company, whose chairman Sir Bill Gammell will retire in May, continues to be probed over income taxes by the Indian financial authorities.
Cairn said its operations at its Indian subsidiary Cairn India were compliant with tax legislation, and insisted again it would take whatever steps were necessary.
Due to the investigation it is unable to sell the remaining £600million, 10% stake in Cairn India, and today said it was suspending the share purchase scheme as a result.
“The board has decided to suspend the previously announced share buy-back programme as of 21 March 2014 until the position regarding the CIL shareholding is resolved,” Cairn said in a statement.
“To date 25,180,201 shares for an aggregate consideration of US$94.7 million (£57m) have been repurchased as part of the buy-back programme.”
Despite the ongoing probe the Edinburgh-based oil firm said it was committed to its operations for 2014, with around $1.25billion in the bank to fund existing exploration and development work.
“The FDP approval by DECC for the Kraken development in November 2013 means reserves have been booked and discussions are well advanced to secure debt finance for this project,” said Gammell.
“Upon receiving FDP approval for Catcher we will similarly book Catcher reserves and progress debt financing to fund its development.”
That includes two wells this year, on the Aragon prospect and west of the Kraken field, along with drilling on Taqa’s Tulla prospect in early 2015. Wells will also be drilled on prospects in Ireland and Senegal.
Future project investment beyond 2014 would depend on the success of the Kraken and Catcher projects, along with oil sales from the Skarfjell discovery in the Norwegian North Sea where Cairn has a 20% working interest. A field development plan for Catcher is expected before the summer.
Oil reserves at the firm increased by 14.1million barrels of oil equivalent for 2013, following the sale of Cairn’s stake in the Mariner project and the confirmation of the Kraken field development plan.