The Herald: Cairn’s net asset value soared 275%, claims fund manager: “…Cairn is considered a possible takeover target for the bigger multinationals such as BP, Exxon or Shell who need to continue growing their reserves either through new discoveries or buying up smaller players.” (ShellNews.net)

BEN GRIFFITHS

21 Sept 04

CITY fund manager ISIS Asset Management yesterday estimated that Scottish success story Cairn Energy had seen its net asset value soar by 275% thanks to recent discoveries in its Asian heartland of India.

Speaking to reporters, ISIS director of UK equities Derek Mitchell said that had the same discovery been made by oil major Shell, which sold the block to Cairn in 2002, the effect would have been negligible.

On the day when Cairn took its place among the London market's top-flight FTSE-100 index, Mitchell said that Cairn's management had been commercially minded and had delivered to shareholders.

Mitchell, who runs the £60m ISIS UK Select investment trust, counts Cairn among his top holdings and has 20% of the trust's assets in resources, including oil. He said Cairn's proven success with the drill bit and future prospects from exploration in Nepal meant he would continue to hold a stake in the company.

Edinburgh-based Cairn, which is headed by chief executive Bill Gammell, has seen its shares soar since announcing massive discoveries in Rajasthan earlier this year along with newly discovered stocks at its Mangala field in India, estimated at a billion barrels.

Mitchell also remains bullish on the stock because Cairn directors, including chairman Norman Murray, are still buying shares themselves. He said: "They still see value in the shares. There's also the prospect of a takeover."

As one of the only remaining independent oil and gas companies, Cairn is considered a possible takeover target for the bigger multinationals such as BP, Exxon or Shell who need to continue growing their reserves either through new discoveries or buying up smaller players.

Mitchell also predicted that long-term demand for oil was dependent on the rate at which the emerging economies of China and India matured.

If the two countries were to increase consumption significantly then the pressure on supply could mean demand goes unmet.

Shares in the oil and gas group gave up 10p to 1515p yesterday.

http://www.theherald.co.uk/business/24392.html#