Cairn India posted a 40% jump in net profit for the June quarter, beating market expectations as its production rose and rupee depreciation aided earnings. In the coming quarters, the its performance will depend on government approval for raising output, and also on oil prices and rupee-dollar parity.
Cairn India’s net profit was . 3825.7 crore and net sales were up 20% at . 4,440 crore due to an increase in production from Rajasthan, which stood at 1,75,000 bpd. The company reported a fall in operating profit margins on higher cess and exploration costs. Its bottomline was mainly boosted by the . 866-crore forex gain on rupee depreciation.
The company continues to work on debottlenecking the pipeline as well as the Bhagyam field to increase the production from the field to 40,000 bpd. The development work on the Aishwariya field is underway. Crude oil production is expected to commence towards the end of FY13, subject to government approvals. The company also completed the polymer phase of the Enhanced Oil Recovery (EOR) pilot at the Mangala field and submitted the field development plan for full field polymer flood implementation. Once approved and implemented, additional 70 million barrels of oil can be expected from Mangala.
Cairn India continues to face challenges on 80-km portion of the pipeline connecting its Rajasthan oil fields to the Arabian Sea off Gujarat coast. The company expects the pipeline to be completed only by the first half of 2013, which will make the Rajasthan crude truly international crude oil. Higher oil prices and rupee depreciation benefit the company, but it needs government approvals to increase its domestic production, which will be key to drive its future growth.
Cairn India’s net profit was . 3825.7 crore and net sales were up 20% at . 4,440 crore due to an increase in production from Rajasthan, which stood at 1,75,000 bpd. The company reported a fall in operating profit margins on higher cess and exploration costs. Its bottomline was mainly boosted by the . 866-crore forex gain on rupee depreciation.
The company continues to work on debottlenecking the pipeline as well as the Bhagyam field to increase the production from the field to 40,000 bpd. The development work on the Aishwariya field is underway. Crude oil production is expected to commence towards the end of FY13, subject to government approvals. The company also completed the polymer phase of the Enhanced Oil Recovery (EOR) pilot at the Mangala field and submitted the field development plan for full field polymer flood implementation. Once approved and implemented, additional 70 million barrels of oil can be expected from Mangala.
Cairn India continues to face challenges on 80-km portion of the pipeline connecting its Rajasthan oil fields to the Arabian Sea off Gujarat coast. The company expects the pipeline to be completed only by the first half of 2013, which will make the Rajasthan crude truly international crude oil. Higher oil prices and rupee depreciation benefit the company, but it needs government approvals to increase its domestic production, which will be key to drive its future growth.
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