New Delhi/Mumbai: Cairn India will invest over Rs 16,000 crore in finding more oil and gas in next three years even as it reported 18 percent drop in first quarter net profit after record production was neutralised by higher governments share in Rajasthan oil.
With Rajasthan output touching 180,000 barrels per day (9 million tons a year), the company is now pushing ahead with an integrated development plan for about a dozen finds in the desert block to expedite production ramp up.
Cairn India Chairman Navin Agarwal told company's annual shareholders’ meeting in Mumbai that USD 3 billion investment by 2015-16 will help add 530 million barrels of oil reserves. Of this, Rs 13,000 crore will be in the prolific Rajasthan block alone in drilling 450 wells to raise output.
Cairn is on track to raise output to 215,000 bpd by March.
Integrated development plan will cut down discovery-to- production time by half. It will help bring to production smaller discoveries quickly without having to go through the rigour of submitting individual field development plans after extensive appraisals.
"We have a well-balanced portfolio of exploration, development and producing assets and a clear plan, which will see us aggressively pursue exploration and development opportunities in the months and years ahead," Agarwal said.
Separately, Cairn reported that its profit after tax or net profit fell to Rs 3,127 crore, or Rs 12.9 per share, in the June quarter, from Rs 3,826 crore, or Rs 15.1 per share, in the same period a year ago.
Government's share of profit from oil produced from Rajasthan block rose from 20 percent to 30 percent, the company said in a statement adding it paid Rs 1,054 crore in profit petroleum to the government and another Rs 873 crore in royalty.
Also, average oil price realisation dropped to USD 94.6 per barrel from USD 101 in Q1 of previous fiscal.
Cairn said its flagship Rajasthan block produced a record 173,517 barrels per day, up from 167,146 bpc in April-June 2012. Together with its other producing fields of Ravva and Cambay, Cairn achieved highest ever output of 212,000 barrels of oil and oil equivalent gas.
Agarwal said the company has applied for extension of the Rajasthan licence which expires in 2020.
Internationally, production sharing contract (PSC) term is commensurate with life of the field, which in case of Rajasthan is at least till 2040.
Revenues dropped 8 percent to Rs 4,063 crore in the April-June quarter, the company statement said.
Cairn chief executive P Elango said the company was "excited by the deep gas prospects" in the Rajasthan block and welcomed the recent Government decision on gas pricing that will encourage higher investments in exploration and the development of gas discoveries.
The government had late last month approved doubling of natural gas prices to USD 8.4 per million British thermal unit from April 1, 2014 to allow deeper and economically unviable gas finds to come to production.
"We expect the government to come out with a policy on Integrated Development Plan that will help in reducing the time from discovery to production," Elango said.
The aggressive exploration and fast-track development is designed to bring new fields into production in Rajasthan, where Cairn India has already discovered around 1.3 billion barrels of oil equivalent resources but has drilled only a part of its acreage.
"The block is currently producing around 180,000 bpd and remains on track for the year-end target of 200-215,000 bpd," the statement said.
Elango said: "We are once again delivering robust operational and financial results with the Company achieving its highest ever gross operated daily production.
"We continue to generate substantial cash flow from one of the lowest cost producing assets in the world and are well placed to deliver success from our USD 3 billion capital expenditure programme."
At the AGM, Agarwal said the US energy revolution which has led to the largest ever increase in production growth, is driven by business environment, price and technology.
Market determined prices enabled investment in technology and in turn, technology has transformed uneconomical and inaccessible resources to reserves, he said.
"The message for India is clear - policy reform, enabling oil and gas business environment and deployment of technology are fundamental to enhance energy security and achieve the goal of self-sufficiency," he added.
First Published: Wednesday, July 24, 2013, 19:04