Cairn India has signed a farm-in agreement with PetroSA for crude oil and natural gas exploration in the offshore Block 1 in the Orange Basin, west coast of South Africa.
With this deal, Cairn has acquired its second overseas asset. The company has acreage in Sri Lanka, Block SL 2007- 01-001, where Cairn Lanka has made two successive discoveries in the three well drilling programmes.
The closure of this transaction is subject to South African regulatory approvals, Cairn said in a statement here. Cairn India will be the operator and hold 60 per cent interest in the block, through a wholly-owned South African subsidiary. PetroSA will hold the remaining interest.
Sources told
This acquisition was part of expected capital expenditure in the next two years of $2 billion planned by the company.
Recently, outgoing CEO Rahul Dhir had, at an analyst call, said, “The company is actively pursuing international ventures and is well placed to grow… It’s likely to be farm-ins and acquisitions of exploration blocks.”
Block 1 is in the initial stages of exploration. It has an existing gas discovery and identified oil and gas leads and prospects. Located in the geologically-proven Orange Basin along the north-western maritime border of South Africa with Namibia, the block is on trend with the discovered Kudu and Ibhubesi gas fields.
Today, Cairn has nine blocks under its portfolio, located in Rajasthan -Barmer (one), Krishna-Godavari Basin (four), Mumbai Offshore (one), Palar-Pennar (one), Cambay Basin (one), and Sri Lanka (one).
Rajasthan block
Rajasthan is Cairn’s premium asset.
The block management committee is meeting on Friday to deliberate upon the work programme and carry-forward budget.
The Rajasthan block has a total estimated gross in-place resource of 7.3 billion barrels of oil equivalent with an expected recovery of 1.7 billion barrels of oil equivalent. The resource base supports the currently envisaged basin potential of 300,000 barrels of oil a day.
The three main fields – Mangala, Bhagyam and Aishwariya -- have gross recoverable oil reserves and resources of approximately one billion barrels. The current production from the fields is 175,000 barrels of oil a day.