Yesterday's half-way figures to June, showing net profits cut from pounds 47m to pounds 26m, provide little guidance on these matters. However, cash flow, up 16 per cent to pounds 164m, remains strong, suggesting the $730m cost of buying and developing the Dacion area of Venezuela over the next few years will be easily met. Production from that area of 13,000 barrels of oil a day is expected to rise to 90,000 barrels by 2001.
Another area which should continue to spice up Lasmo's portfolio is Algeria. The group's fields there represented 128 million barrels out of a group total of 729 million last December, a figure that is certain to rise after five of the seven wells drilled in the first half resulted in discoveries.
By 2001, Lasmo's production is expected to have risen from 171,000 barrels a day in the first half to 250,000 barrels. On top of that is Pakistan, where a discovery announced in April could amount to between 1.5 and 2 trillion cubic feet of gas. By 2001, that could be adding the equivalent of 12,000 barrels to daily production.
Add in cost-cutting and a management team strengthened by the appointment of Chris Wright from BP, and Lasmo looks to have bags of potential. Even after yesterday's 10.5p rise to 279p, the shares stand on a modest premium to NatWest Securities' net asset value estimate of 272p. Good value.Reuse content