Enterprise Oil Faces Profit Plunge Amid Oil Price Decline

Strategic Insights -

Enterprise Oil, a UK-based oil explorer, is forecast to experience a significant decline in profits due to the recent 30% drop in the oil price and a 5% decrease in production to 219,000 barrels a day. Despite this, the company is expected to remain in the black, but with net profits plummeting from £71.1 million to £8.6 million and earnings per share dropping almost 50% to 8.1p. Brokers are also anticipating a reduced dividend payout of 6.9p, with a further review of the situation at the year-end.

Key Takeaways:

  • Enterprise Oil's net profits are forecast to decline from £71.1 million to £8.6 million, a drop of 88%.
  • Earnings per share are expected to decrease by almost 50% to 8.1p.
  • The decline in profitability is attributed to the 30% drop in the oil price and a 5% fall in production to 219,000 barrels a day.
  • The company is expected to remain in the black, but with significantly reduced profitability.
  • A payout of 6.9p is forecast, down from previous expectations of 7.1p.
  • Brokers anticipate a further review of the dividend situation at the year-end.
  • Enterprise Oil's venture in Italy has shown positive signs, with a successful appraisal.
  • Other British companies, such as Wilson Bowden, Bunzl, Senior Engineering, Persimmon, and CRH, are also reporting improved results but with varying levels of success.

Statistics:

  • Enterprise Oil's net profits are forecast to decline from £71.1 million to £8.6 million.
  • Earnings per share are expected to decrease by almost 50% to 8.1p.
  • Production is expected to remain at a level of 219,000 barrels a day, down 5%.
  • The oil price has dropped by 30% during the period.
  • Enterprise Oil's venture in Italy has shown positive signs, with a successful appraisal.
  • Wilson Bowden's pre-tax profits are forecast to grow by 20% to £34 million.
  • Bunzl's pre-tax profits are forecast to remain at £62 million for the first six months.
  • Senior Engineering's pre-tax profits are forecast to increase by 20% to £23.3 million.
  • Persimmon's pre-tax profits are expected to rise by 30% to £28 million.
  • CRH's pre-tax profits are forecast to grow by 25% to £80 million.

Sources:

  • BT Alex Brown, "Forecast of Enterprise Oil's half-year results".
  • ABN Amro Hoare Govett, "Forecast of Bunzl's half-year results".
  • Hoare Govett, "Forecast of Senior Engineering's half-year results".
  • "The Times", 1998.