Cairn India, which held its first board meeting since becoming a Vedanta Group company, hopes to end fiscal 2011-12 at 175,000 barrels of oil a day from its premium Rajasthan block.
Mr Rahul Dhir, Managing Director and Chief Executive Officer, Cairn India, after announcing the company's third quarter (ended December 31, 2011) results, said “Significant part of the currently envisaged basin potential of 240,000 barrels of oil a day (bopd) is to be met from Mangala, Bhagyam and Aishwariya fields (in Rajasthan block) in calendar 2013.”
On the current output, he said, “Mangala is consistently producing at 125,000 bopd since August 2010 and we continue to pursue higher offtake of 150,000 bopd.”
“The Bhagyam field commenced production on January 19, and we are looking at achieving its currently approved plateau rate of 40,000 bopd,” he said, adding that Aishwariya field development was underway.
Cairn is simultaneously pursuing enhanced oil recovery in the fields and based on encouraging results from polymer injection phase, a field development plan is proposed to be submitted by the first half of calendar 2012 for implementation in Mangala fields.
CRUDE oil SALES
Cumulative crude oil sales of over 70 million barrels (mmbbls) to the domestic refiners have been made, which has generated gross revenue in excess of $6.5 billion to date, Mr Dhir said. Crude oil sales were maintained at 125,000 bopd.
CRUDE oil PRICE
The Rajasthan crude oil pricing is based on Bonny Light, comparable with low sulphur crude frequently traded in the region. The implied crude price realisation represents an average 10-15 per cent discount to Brent on the basis of the prices prevailing for the 12 months to December 31, 2011.
“However, with heavy-light spreads narrowing to record levels to weak naphtha and strong fuel oil prices, absolute discount to Brent for Rajasthan crude was at 8.3 per cent during the quarter,” Mr Dhir said.
Q3 performance
Cairn India (consolidated) reported a 12 per cent increase in net profit during the third quarter of the current fiscal, helped by higher crude oil prices and rupee depreciation versus dollar. However, revenues during the quarter remained flat.
According to Mr Dhir, the revenue reported for the quarter was post-profit sharing with the Government and the royalty expense for the Rajasthan block. The royalty estimate (net to the company) for the quarter is Rs 628.5 crore. The royalty is estimated at approximately 15 per cent of the revenue.
The profit petroleum in block provided for the quarter was Rs 572.7 crore. The profit petroleum payments are made provisionally at the end of each quarter on an accumulative basis and final adjustments, if any, are done at the end of each year.
During the quarter, gross contribution to the national exchequer (excluding direct taxes) was $500 million. The gross Rajasthan development capital expenditure till date was $3,323 million.
The company has made a net forex gain of Rs 301.5 crore due to rupee depreciation.
CORPORATE DEVELOPMENT
The Vedanta Group now holds 59 per cent in the company. Cairn India has participating interests in 10 oil and gas blocks. Of this, one is in Sri Lanka and remaining in India.