Lasmo pleased despite loss on Ultramar assets

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The Independent Online
LASMO, the UK oil exploration and development company, lost pounds 291m on the sale of downstream assets acquired last year with its purchase of Ultramar, writes Gail Counsell.

Releasing better-than-expected interim results, Chris Greentree, Lasmo's chief exectutive, said: 'Clearly we would have liked a better price, but we did it faster than expected and took 3,500 people and dollars 150m of environmental liabilities off our books, so on balance we are pleased.'

In July the downstream assets were floated in New York and netted the company dollars 1bn ( pounds 530m), well under their book value.

The resulting loss, taken as an extraordinary item, was compensated for by a pounds 373m transfer from reserves relating to the valuation of the upstream business.

The low oil price and weak dollar have led to a cut in exploration spending, although ongoing activities mean production should have risen by about 40 per cent by 1996.

Average oil prices for the first six months were dollars 18.39 a barrel against dollars 19.45 in 1991. Mr Greentree expects winter demand to keep the current price of dollars 20-dollars 21 'firm'.

Ultramar's integration meant turnover rose to pounds 297m ( pounds 139m), cash flow to pounds 145m ( pounds 115m), and production to 184,200 barrels per day (88,900 bpd).

Lasmo's shares have fallen by more than a quarter in the past month, amid worries about the likelihood of a cut in the dividend and high gearing resulting from the Ultramar bid. They closed yesterday up 1p at 134p.