Cairn India Q4 net up 19% at Rs3,040 cr; sees flat production this fiscal
24 April 2014
Vedanta group firm Cairn India has reported a 19-per cent increase in net profit for the fourth quarter of the 2013-14 financial year, helped by higher production at its flagship Rajasthan block.
The company, however, expects oil production at the Rajasthan block to remain flat in the current financial year (2014-15), due mainly to an expected fall in output at the prolific Mangala field.
Cairn India Ltd, which operates the nation's biggest onshore oil field, said its net income climbed to Rs3,040 crore ($498 million) in the three months ended 31 March, from Rs2,560 crore a year earlier.
Quarterly sales rose 16 per cent to Rs5,050 crore.
The company, a part of the Anil Agarwal-controlled Vedanta Resources Plc, is planning to spend $3 billion over the next three years to drill more wells in Rajasthan.
Agarwal who made the $8.7-billion acquisition of Cairn Plc's India operations to beat a slump in his metals businesses, saw production at the main Mangala field going down.
However, Cairn India had announced an enhanced oil recovery (EOR) project involving investment of $575 million (around Rs3,000 crore) to improve oil recovery from its prolific Rajasthan block.
Implementation of this scheme has been delayed and it could impact overall production from the block.
"If it (EOR) was done a year back, we would not have faced flat growth," P Elango, chief executive officer, said in a post earnings conference call.
As part of the EOR scheme, Cairn India plans to use the 'first polymer injection technique' in the Mangala field towards the end of this fiscal, in a bid to improve production.
The Mangala field currently produces approximately 150,000 barrels per day (bpd) of crude oil.
Cairn India said it would invest $3 billion on Rajasthan asset with a focus on the key development projects to enhance recovery.
"We shall target to achieve reserve replacement ratio of 150 per cent in next three years subject to PSC (production sharing contract) extension till 2030 and a three-year production CAGR of 7-10 per cent from known discoveries with flat production in fiscal 2015," the company said in a statement.