February 9, 2011 / 7:53 PM / in 7 years

Niko shares plunge on profit, production outlook

* Shares drop 9.5 pct as profit, production disappoint

* Q4 EPS $0.76 vs analysts’ forecast of $0.84

* Says D6 block output lagging forecasts (In U.S. dollars unless noted.)

CALGARY, Alberta, Feb 9 (Reuters) - Shares of Niko Resources Ltd (NKO.TO) fell as much as 10 percent on Wednesday after the oil and gas explorer reported a weaker than expected quarterly profit and said natural gas output from its biggest property is lagging forecasts.

Shares in Calgary, Alberta-based Niko, whose largest asset is a 10 percent stake in the massive D6 natural-gas discovery offshore India, were down C$8.87, or 9.5 percent, at C$84.88 midafternoon on the Toronto Stock Exchange, after earlier falling as low as C$83.85. Volume was more than 376,000 shares, nearly three times the stock’s average over the past three months.

Niko said its fourth-quarter profit more than doubled to $38.3 million, or 76 cents per share, from $14.6 million, or 29 cents, in the year-prior quarter.

Analysts polled by Thomson Reuters I/B/E/S had, on average, expected a profit of 84 cents a share.

The company’s overall production rose 13 percent to 292.4 million cubic feet equivalent of natural gas per day as output from the D6 block rose.

But the company said current production from D6 is 177 million cubic feet per day, well under the 210 mmcf/d the company had forecast.

George Toriola, an analyst at UBS Canada, said in a note to clients that weak production from D6 was “due to a combination of declines and delayed exploitation on the block. We expect full year 2011 volumes to be below the company’s prior guidance.”

Niko’s cash flow, a key indicator of its ability to pay for new projects and drilling, rose 1.6 percent to $69.9 million.

Revenue rose 22 percent to $111.9 million.

$1=$0.99 Canadian Reporting by Scott Haggett; editing by Peter Galloway

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