Lasmo to reveal cost-cutting programme: Enterprise says pounds 1.2bn bid target will refrain from making profit forecast and try to pump up assets

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The Independent Online
LASMO will tomorrow publish financial details it claims will underline its ability to finance investment programmes and cut debt in the next three years.

The document, part of its fight against a pounds 1.2bn bid from Enterprise Oil, will also contain an asset valuation by DeGolyer MacNaughton, a leading petroleum consultant.

But Enterprise said: 'They (Lasmo) won't be making a profit forecast because Lasmo is making losses. They won't be making a dividend forecast because they have already said they can only pay a token 1p dividend. So they will be trying to pump the asset value as far as they can.'

Enterprise yesterday published its latest document, which tried to spell out the benefits of a combined exploration and production company. 'The combined cash flows will leave it well placed to finance long-term development projects without the need to sell assets,' said Graham Hearne, chairman and chief executive.

The assets of the two companies were complementary in location, stage of development and risk profile.

'Areas where Enterprise can add value include use of enhanced technical information, sharing of infrastructure, eliminating duplicate functions and the financial flexibility to exploit new opportunities.'

A combined company would be in a better position to bid for licences and have a more balanced portfolio risk.

Rudolph Agnew, Lasmo's chairman, called Mr Hearne's logic painfully thin. Lasmo's two largest assets, the Sanga Sanga gas field in the Far East and Liverpool Bay, provided no synergies.

He said Sanga was 1,000 miles from Enterprise's exploration area. Enterprise has assets south of Liverpool Bay, but the two operations would still have to pay for double access rights and tariffs.

And he renewed his attack on Enterprise's accounting policies, particularly the acquisition of Beryle Properties in 1988.

'Enterprise have still not shown why an asset acquired for pounds 158m is recorded in their books at pounds 9m, which is conveniently the nominal value of the shares issued for the related fund-raising.'

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