THE INVESTMENT COLUMN : Lasmo is leaner after the escape

Lasmo's escape from the clutches of its rival Enterprise Oil in the middle of 1994 has had a galvanising effect on the management. The housekeeping measures introduced following the failure of the bid are already reaping benefits, as yesterday's figures for 1995 show.

Net profits for the 12 months to December came in above expectations at pounds 34m, reversing the previous year's loss of pounds 3m. That was a very respectable result, even after taking account of the massive pounds 24m bid defence costs which depressed the 1994 figures. Lasmo suffered a 5 per cent drop in production to 164,000 barrels a day of oil and gas last year as it sold older, higher-cost production assets. Last year saw the disposal of stakes in the Forties and Beatrice fields in the North Sea and an interest in the Malacca Straits in Indonesia. More recently a couple of elderly Canadian fields have gone.

But, along with overhead cuts, Lasmo's portfolio tidying has brought it very close to its target of pounds 3 a barrel operating costs by next year. After shaving a further 7 per cent in 1995, they now stand at pounds 3.17.

Although improving on that will get progressively harder, unit costs will be further reduced by higher production, set to rise to 185,000 barrels a day this year and 210,000 in 1997, and the advent of lower-cost fields. Liverpool Bay, for instance, which came on-stream at the turn of the year, pays tax at 33 per cent compared with up to 80 per cent in mature North Sea fields.

But the excitement in Lasmo lies elsewhere. Test results released yesterday confirm that Lasmo and its partners in the Hassi Berkine fields in Algeria have the makings of a massive oil and gas reserve.

The five discoveries there to date suggest a reserve potential of 1.5 billion barrels, with Lasmo's share put conservatively at 82 million barrels or 11 per cent of its total reserves. The eventual figure could be at least double that, depending on the outcome of further exploration: Lasmo plans 10 wells this year.

Meanwhile, the share price has been run up recently on renewed takeover speculation. Shell looks an obvious predator. As one of the world's largest natural gas groups, Lasmo's Indonesian and Algerian assets have obvious attractions.

In the meantime, the shares, down 4p at 184p, still stand at a discount to the 200p net asset value put on them by house brokers NatWest Markets. Good value.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project