City File: Hefty dividend cut and write-offs for Lasmo

THE shock of Lasmo's hefty dividend cut and write-offs last month was short-lived. It seems that the chief executive, Joe Darby, is to be given the benefit of the doubt, and increasingly the oil group is being touted as an attractive recovery play.

Mr Darby took over in January and was given the perfect chance to present himself as the new broom. He has not missed his chance. Memories in the City of the pounds 385m pre-tax loss and 10 per cent decline in the share price have been supplanted by a new mood. Smith New Court was a buyer at 157p, with the shares good value on asset and cash-flow grounds.

Lasmo's high debt - pounds 1.14bn at the end of 1992 - is a worry. But a disposal programme should trim that to about pounds 800m by the end of this year.

Cutbacks on exploration expenditure to improve productivity are also expected. There will be little immediate impact on earnings, which will stay depressed in the short term. But Smith New Court is looking to a strong recovery in the mid 1990s as new fields in Liverpool Bay come on stream.