Edinburgh-based Cairn Energy Plc on Tuesday reported record revenues on the back of higher output from its Indian unit where it is selling majority stake to mining group Vedanta Resources.
The company said it was confident of winning government approval for the sale of up to 51 per cent stake in Cairn India to the London-listed mining group.
Revenues in full year 2010 surged to $ 1.6 billion as compared to $ 234 million in the previous year, Cairn said in a press statement here. It said profit after tax in 2010 was $ 483 million.
After adjusting $ 38 million for exceptional items and $ 638 million towards adjustments for sale of majority stake in Cairn India, the net profit stood at $D 1.08 billion as opposed to restated net profit of $ 53 million in 2009.
“I hope the approval will reach cabinet soon,” Cairn Energy Chief Executive Officer Mr Bill Gammell said on a conference call. “Cairn continues to believe the necessary approvals to complete the Vedanta transaction will be received and is working with the government of India in a positive and constructive manner.”
Cairn in August last year announced sale of up to 51 per cent stake in the Indian unit to Vedanta for $ 8.48 billion.
Upon completion, the Edinburgh-based firm’s residual holding could be up to 22 per cent in Cairn India.
Mr Gammell said the planned sale would lead to a significant return of capital to shareholders whilst maintaining balance sheet strength and flexibility.
“Cairn is continuing its active exploration programme offshore Greenland which has the potential for transformational growth while also seeking to add new opportunities,” he said.
Startup of piped oil production from Cairn India’s Mangala oilfield in Rajasthan contributed to the record revenues.
“Rajasthan crude is now transported to a number of Indian refineries by the world’s longest continuously heated pipeline,” Cairn Energy, whose mainstay assets are in India, said.
While currently output is around 125,000 barrels per day but the total resource base supports a combined potential production of 240,000 bpd.
“The potential completion of the Vedanta transaction would uniquely position Cairn to return significant value to shareholders whilst retaining the financial flexibility to continue to focus on Cairn’s core expertise in exploration,” the statement said. “2011 looks set to be an exciting year for Cairn as we continue to pursue future growth opportunities.”