OIL exploration and production company, Cairn India, has for the first time, come out with a reserves estimate for its exploration activities, apart from the Rajasthan fields. The development is likely to boost its valuations in coming days. The company disclosed that its exploration portfolio provides exposure to net unrisked recoverable resources in excess of 1 billion barrels of oil equivalent (BoE). This is a significant reserve accretion for the company, which could be valued at around $4-5 billion adding over 40% to its current market capitalisation of $10 billion.
Despite the positives, the company has been unable to resolve uncertainty over the cost of pipeline to transport crude oil to a port in Gujarat. The government has not approved the company’s request to include the $800 million cost of constructing the pipeline in the field development plan (FDP). However, it has already awarded the contract to construct the pipeline and work is expected to begin from second half of 2008.
Cairn India has also raised its estimates of proven and probable (2P) gross reserves from the three main Mangala, Bhagyam and Aishwariya (MBA) fields by 9% to 685 million barrels. The other Rajasthan fields have a gross 2P estimate of 1.7 billion barrels of oil equivalent (BoE). With the increase in reserves, the company also increased its production target from these fields by 16.7% to 1,75,000 barrels of oil per day (BOPD), while emphasising the production to start in H2 2009.
While exploring in different blocks for hydrocarbons, Cairn is also working on methods to extract more from the existing reserves. The production from its Cambay basin field reached its highest ever level in February 2008 as new wells drilled recently became operational. To boost its recoverable reserves from its Rajasthan fields, Cairn India has successfully tested enhanced oil recovery (EOR) techniques in laboratories. This is likely to add nearly 300 million barrels of incremental recoverable oil once implanted from year 2013 onwards.
Cairn posts Rs 24.5-cr loss
Despite the positives, the company has been unable to resolve uncertainty over the cost of pipeline to transport crude oil to a port in Gujarat. The government has not approved the company’s request to include the $800 million cost of constructing the pipeline in the field development plan (FDP). However, it has already awarded the contract to construct the pipeline and work is expected to begin from second half of 2008.
Cairn India has also raised its estimates of proven and probable (2P) gross reserves from the three main Mangala, Bhagyam and Aishwariya (MBA) fields by 9% to 685 million barrels. The other Rajasthan fields have a gross 2P estimate of 1.7 billion barrels of oil equivalent (BoE). With the increase in reserves, the company also increased its production target from these fields by 16.7% to 1,75,000 barrels of oil per day (BOPD), while emphasising the production to start in H2 2009.
While exploring in different blocks for hydrocarbons, Cairn is also working on methods to extract more from the existing reserves. The production from its Cambay basin field reached its highest ever level in February 2008 as new wells drilled recently became operational. To boost its recoverable reserves from its Rajasthan fields, Cairn India has successfully tested enhanced oil recovery (EOR) techniques in laboratories. This is likely to add nearly 300 million barrels of incremental recoverable oil once implanted from year 2013 onwards.
Cairn posts Rs 24.5-cr loss
Cairn India has reported a loss of Rs 24.5 crore for the year ended December 31, 2007, compared with a loss of Rs 18.7 crore in the previous year. The strengthening of the rupee against the dollar resulted in the company recognising an accounting loss due to foreign exchange fluctuation of Rs 14.05 crore ($34.5 million). This arises on account of deposits held in dollars by foreign subsidiaries, which are intended to be used for capital imports. For the fourth quarter, the company has posted a loss of Rs 13.9 crore.
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