The dividend cut accompanied a pounds 385m after-tax loss, compared with a pounds 4m deficit in the previous year, despite a surge in group turnover from pounds 281m to pounds 621m.
The company's problems stem from weak oil prices and the ill-fated pounds 1bn takeover of its rival, Ultramar, two years ago, which led a jump in Lasmo's debts to well over pounds 1.5bn.
The problems led to the resignation of Chris Greentree as chief executive earlier this year, fuelling speculation that Lasmo would be forced to cut its final dividend. Mr Greentree was replaced by a fellow director, Joe Darby, who admitted yesterday that the company's strategy had backfired.
'The business had been grown through acquisitions against a background of oil prices which were too optimistic,' he said.
However, the company now believes that oil prices are unlikely to rise significantly in the medium term. 'In the light of this factor, the current profitability, cash-flow of the group and future capital commitments, the board does not believe it to be financially prudent to maintain its 1992 dividend,' it said.
Lasmo was also hit by exceptional write-offs amounting to pounds 154m against exploration costs and a mark- down in the value of some North Sea assets due to lower oil prices.
In addition, there was a pounds 280m loss on the sale of Ultramar's refining and shipping assets. Although the disposals raised about pounds 732m in cash, the group's debt at the year-end amounted to pounds 1.1bn, equivalent to 111 per cent of its net assets. Since then, it has made further disposals, which have reduced gearing to about 88 per cent.
However, the company is aiming to cut its group borrowings by further assets sales and yesterday formally put its one-third stake in the Markham gas field, which straddles the UK and Dutch sectors of the North Sea, on the block.
The company is also planning to raise new money from a US ADR listing later this year. Analysts believe that Lasmo's debts could fall to about 60 per cent of shareholders' funds this year.
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